The Role of E-Services Solution Group and Its Own Survival - Essay Example

Table of Contents Executive Summary 2. Introduction 3. The role of ESS and it’s own survival 4. ESS success analysis in through the Business Scorecard and PEST analysis 5. Role of Strategic marketing for HP 6. The way ahead for ESS and some recommendations 7. The industrial networking theory 8. CRM and Post Implementation Evaluation: (See diagram in the executive summary). 9. Towards some conclusions 10 Reflective note 11 References Executive Summary This report pertains to the current business position of Hewlett Packard (HP),its current business problems and the way ahead for this business through the efforts of ESS whose future based on its usefulness is itself at stake.My first impression at the outset of ESS (E-Services Solution)group is to point out that this venture may be a successful at the outset given the period 1999 until 2000 but it has all the ingredients of becoming a victim of its own success and potentially damaging the work culture of HP with the so called aim of “infecting” the entire spirit.The report discusses HP’s failures in its conservative management and how ESS has stepped in to launch a good strategic marketing campaign.All these changes are evaluated through the Business Scorecard analysis.The report then evaluates the truth in the future concerns of ESS and whether they can and if so how they should survive.It is concluded that this can only be done if ESS thinks fast to save itself or chooses to immerse and disappear in HP’s ocean of conservative management. The primary reference for this report is a Case Study(2000) prepared by the Stanford University pertaining HP’s interal marketing strategies involves the identification of its internal customer support processes. Assess the extent to which internal factors support the externally facing processes. This should include an identification of the organisation’s current relationship marketing strategies.The study explores how based on this analysis, and on customer buying processes, the organisation can achieve improvements in either their internal or external processes The service blue print for HP(Hewlett Packard) based on the CRM theory presenting a conceptual model on the perceived effectiveness from three perspectives. Introduction The concept behind e-services is there’s a particular task, asset, or capability that you want to gain access to, that now can be made available to you over the Net, because it’s now being created as an Internet service. ––Linda Lazor, Director of Operations, ESS, Hewlett-Packard (See Case Study 2000) This report pertains to the current business position of Hewlett Packard (HP),its current business problems and the way ahead for this business organisation.My first impression at the outset of ESS (E-Services Solution)group is to point out that this venture may be a successful at the outset given the period 1999 until 2000 but it has all the ingredients of becoming a victim of its own success and potentially damaging the work culture of HP with the so called aim of “infecting” the entire spirit.(see Case Study 2000).I would reach such a bleak conclusion for many reasons which I will discuss below but the pith and substance of my analysis as a management consultant is that “small is beautiful” but once it gets large it becomes ugly. And this is true for HP’s future if the ESS system which is under discussion here is allowed to grown into its organizational management culture.It can be seen that in 1999 alone through the efforts of the ESS ,HP has achieved the status as a leading manufacturer of computer products, including printers, servers, workstations, and personal computers and is generating a revenue of $42.4 billion and net income of $3.1 billion.It has over 80,000 employees worldwide and a strong local presence in Silicon Valley and the Bay Area. The problems of HP and the role of ESS.The case study has given us a bird’s eyes view of the historical problems with the management strategy of HP as follows. 1. In 1939 Bill Hewlett and Dave Packard, found HP and were an instant success with their venture and wanted to pursue their own unique way of doing business: “The HP Way.” The evolution of the HP Way began early. Even though their decentralized management style was a success in the earlier dealing and by 1957 Hewlett and Packard had their own corporate objectives, underling the “The HP Way” through management strategies like Management By Wandering Around, Management By Objectives, and the Open Door Policy inspired later additions, including Open Communication and Total Quality Control .These practices cannot be seen anywhere today and later on the conservative attitude of HP with in a decentralized company and was more product oriented than customer oriented.(refer to Case Study 2000) 2. So far another reason HP has suffered is its insider hiring. Although Young and Platt were good leaders and displayed some good leadership qualities. However by 1998 HP was facing low stock prices and a lot of criticism pertaining to having missed the Internet market. There were other problems like complexity, and a loss of accountability and there was an over all lack of focus on the HRM issues.(refer to Case Study 2000) 3. At this point HP’s corporate software and support division and corporate systems division was united and put under the control of Ann Livermore to run this new Enterprise Computing Solutions Organization (ECSO), a unit with $15 billion in revenues and 44,000 employees who in turn hired Earle in to develop a marketing strategy for the enterprise group.(refer to Case Study 2000). 4. Also now HP was facing tough competition from its rivals Sun Microsystems and IBM, which had fiercely launched high-profile Internet marketing campaigns, and Sun had a leadership role in the industry, using the tagline “we put the dot in dot com.”. 5. The ESS concluded that the root of the problem was a marketing weakness.HP was already in the Internet space but hadn’t communicated it well. The new strategy of HP was to promote an era of electronically delivered services or “e-services.” and through these e-services, there would be further.transactions, and the partnerships that provided them. HP’s role would be to market its infrastructure, services, and appliances as e-services with a network of partners.This involved the ESS launching a major branding campaign contrary to the traditional decision processes 6. Arguably HP’s success has also come from the change of the company leadership and the charisma and energy of the new leader under the vision that “eventually the whole world will be services that you access through appliances powered by an infrastructure.” 7. The new mantra of the ESS strategy was to gain an amalgamation of the paths of services, appliances, and infrastructure, which once crossed would bring about a production boom.This would essentially mean that the ESS group would provide on behalf of HP a “ product or service, the network infrastructure, billing, security, etc. It would mean that either HP would provide the enabling technology or partner with someone who could. Building this “keiretsu” or ecosystem of partners would allow HP to provide services or technologies it didn’t have in house and would attract more partners who wanted the plug and play solutions HP was lining up.” (Source :HP Case Study:2000). The role of ESS and it’s own survival The way ahead for ESS’s success in alleviating the problems of HP was that they aimed to bring all solutions together through HP to match customer’s needs and perspectives.Through working closely with HP’s sales representatives and 30,000 channel and “membership” along with consulting and thought leadership impressed customers and business partners alike.The risk sharing strategy has proved equally fruitful and HP soon found good partners in Ariba ,Qwest Communication and Yahoo!At this point it is worth appreciating what the ESS has done for HP so far. What I can see is strong leadership, good strategic marketing and solid decision making here. . It has long been recognised by the academia that decision theory does not lie entirely within any one discipline and draws upon a number disciplines like psychology, economics, mathematics, statistics and social sciences. Much of decision theory therefore does not sit comfortably within any one discipline. Furthermore it embraces work from philosophy in the form of work relating to ethics (Bacharach and Hurley, 1991) mathematics of decisions (French, S., 1986) economics and rational choice behaviour (Bacharach and Hurley, 1991) and politics and ethics (Sutherland, 1992).It becomes obvious then from a perusal of the works of ESS that they have attempted some very sound decision making here. ESS success analysis in through the Business Scorecard and PEST analysis It is possible to look at the efforts of the ESS through the lens of the Business Scorecard approach which would take into account all the intrinsic technical and financial hurdles present in the decision making process as well as a brief perusal of the PESTEL approach.It seems that the new management has arrived at a rather balanced Business Score Card approach in its advertising.The balanced scorecard was the Brainchild of Kaplan and Norton and has been endorsed academically as means of measuring sound business performance which will be represented by what Kaplan has termed as “a balanced presentation of both financial and operational measures”. The background to this approach is the author’s quest in setting up a range of measures which will give the top managers a fast yet coherent view of the business. An application of this approach would show that the main actors like Earle and the new CEO have taken into account whether the results if the company’s operations would be financially and politically feasible , which are the “operational measures that are the drivers of future financial performance”. Thus HP’s new management under ESS seems to follow Kaplan and Norton’s approach by forming a fourfold view to approaching their business that is how the customers perceive you as a company(Customer Perspective),what your company excels at ( Internal Perspective),whether the present setup allows you to continue to improve and create value(Innovation and Learning Perspective) and last but not the least how you look at shareholders.(Financial Perspective).This fourfold view then not only minimises the information overload but also allows the decision making manager to put everything on a paper. The method is popular with all the big corporate entities like Rock water (part of Brown and Root), Intel and Apple computers, BP Chemicals, Milliken, Nat West Bank, Abbey National and Leeds Permanent and public sector organisations like the NHS.Equally it seems that HP’s success can be analysed nicely through this framework. Furthermore it seems that HP has based a number of its decisions on the PESTEL factors which are beyond the control of the companies or their board and management and have to be accepted for whatever they stand for.(PESTEL stands for political, economical, socio-cultural, technological, environmental and legal issues facing the managers and employees).The new plan well understands the external compulsions and to devise internal regulations to manage these problems for example in the issue of trade unions and employment contracts etc.(Refer back to the CRM diagram here). The ESS has used information strategically and allowed HP’s current and future success by balancing short-term, essentially financial performance, with long-term growth opportunities; balance internal and external perspectives by ensuring that comparison against current competitors is undertaken in addition to comparison with the organization’s own past performance.(Kaplan and Norton 1993). Role of Strategic marketing for HP Furthermore HP has learnt its lesson that it does not pay to underestimate the role of marketing, vis-à-vis Strategic Planning, and its former functional, narrow specialist role was injuring its success. Strategic planning, is how an organisation defines its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. (Schultz 1994). Strategic planning concerns the “direction of business”(Robert 1976) as regarding its production, output finance and operations. Marketing Planning therefore brings “strategic” sense to “strategic planning”. Marketing pinpoints the direction of strategic planning (Ashill et al., 2003)).HP was making the mistake of downplaying strategy with it’s “Grey” envelopes and Conservative Functional approach.There is academic consensus by Ashill(2003) and Denison (1995)that the future of marketing depends on recognizing these trends and responding to them. (Denison,Mc Donald,1995).Also apparent from these moves of ESS is the approach of Svensson (2005) who has taken the rather interesting approach of the “spherical marketing concept” which tries to reconcile “the distinct upstream and downstream levels of marketing channels, as well as reconnecting their indistinct subsequent and preceding levels”. The diagram below adopted from Kaplan and Norton shows how these perspectives have been brought together onto a single table for a comprehensive perspective by the leadership of HP.(Kaplan and Norton) The way ahead for ESS and some recommendations However there are pitfalls in the long term strategy of ESS which do not seem to look good. ESS strategy from the very start has the downturn of being more experimental and less conservative.Infact it can even be said that the company has so far survived through sheer luck and could utilise some conservatism.Where as the “Fun” work culture can easily work for a small group of dedicated think tank workers in a decentralized set up such as the main management of HP there will be problems to get that personal touch.Equally risky has been the procurement of the $10 million line of credit and the recruiting policy which ambitiously hires outsiders who are not familiar with the basic set up of HP.Again the unconventional approach of offering people 5000 as a referral bonus and Earle and Hunt’s decision to opt out of the traditional HP pay scheme and to get together a compensation plan and culture that rewarded performance but minimized the risk of joining HP seems unrealistic and there was obvious opposition to the fact that the changes aligned rewards with stock performance and diminished other benefits. The pay cut was the “unkindest” cut of all and HP should be vary of carrying out such experiments in the future as these will just dishearten the employees.Indeed this was a mistake and such measures could backfire in the yet conservative work culture of HP.ESS is also spending a lot of money on training the HR representatives but there seems to be a lack of any major training needs analysis measures. My other advice is based on the development of strong industrial networking systems for HP through the use of CRM and the industrial networking theory. The industrial networking theory The industrial networks theory when applied to the HP case study would pose the query whether the certainty arising from the growth of long term relationships means that the actors will get will reduce transaction risks in business relationships as well as the investment risks arising from informal distribution. (Axelsson et al (1992) The basic aim of the strengthening of these relationships, as can be understood from the pith and substance of the theory is to see the prospects of the ability for HP exploiting business sources which are closely linked to each other in terms of functional interdependence,power and knowledge structures and intemporal dependence.Functional interdependence with in the terminology of this theory exists due to the heterogeneity of the consumer base which would then require an equally heterogeneous supply from resources, and the protagonists of the business world.Furthermore in the context of the power structure it may be stated that the power structure is the degree of control and resources in the hands of the various actors and may or may not always be equally distributed and this will have a major impact upon the over all overall structure and decisions taken with in the network.Thirdly we have the impact of the knowledge structure which is described by the theory as amounting to the dependence upon the limited knowledge and resources available to the actors.Last there is in temporal dependence with this so called industrial network which pertains to a large number of investments in business networking,PR and the infrastructure and since this theory talks about network change there is a chance that we are looking at something which aids a smoother transition and more grounded in past industrial practice. (Axelsson et al (1992) Thus when we are applying the industrial network theory it can be seen that there is indeed a trilogy of the interaction, relationship and network research with in the industrial interaction in Business to Business dealings and it can be said that while this book is almost two decades old to the context of modern business it has to be noted that it gives some useful insights into an investigation into the underdeveloped literature in this regard .This is evident from the fact that it is largely cited in peer-reviewed journals and other books on the area as a credible and primary source.However it can be said that Axelsson et al (1992) are not the first authors to delve into study of industrial networking with in the arena of service business markets,and this has been previously done by the likes of Thorelli (1986) and later on by (Zolkiewski, 1999). The theory can immensely benefit the HP managerial arena whereas the managers need to cultivate an awareness of the power and knowledge structures and then allocate resources and take decisions pertaining to control resources such as finance,people, materials, expertise and knowledge accordingly.Axelsson et al’s (1992) work also suggests that the senior managers of HP in the industrial networks have to be aware of the management of direct and indirect power flows which will then have significant implications for the ability to influence the network or extraneous factors like the media or political arena’s .The quality of industrial networking is said to be an interesting variable by its authors in contributing to the matter of organisational and fiscal success of the organisation from an industrial perspective.Thus when the authors discuss that a profound and strategic management of these relationships is vital to the health and wealth of marketing research and success one cannot help but agree with them as this theory of Industrial Networking may actually prove to be an excellent mechanism in the understanding of the intricacies of the relationships between the industrial business to business actors. Axelsson et al (1992) have cited Gattoron (1978) and made an interesting point when they say “it is apparent that while theorists have experienced little difficulty in recognizing the outward sign of a distribution channel few have even approached any fundamental understanding of the mechanics which underlie observed behaviour.” HP could also benefit of the “ 80-20 rule” (Axelsson et al (1992) which is said to apply to many industrial markets which would mean that almost a fifth of the firms customers may lead to a four fifth of the total turnover .Which would in essence mean that if the HP company is to make a big investment in new industrial purchases this has to be done closely with the collaboration of the customers and suppliers so that the new machinery corresponds to the industrial counterparts needs. CRM and Post Implementation Evaluation: (See diagram in the executive summary). Finally the ESS experience could have done better with a better Post Implementation evaluation of the planning phase of any project implementation exercise. When the study of the existing system of HP was being undertaken, the performance of the current systems is rated. In order to do this effectively, the planners did set out to identify the Key Performance Indexes (KPIs) that are important for HP to realise benefits in the Customer Relationship Management (CRM). Some of the KPIs normally taken into consideration would involve the following: 1. Customer Response time 2. Customer Support Duration 3. Customer Delight factors All these KPIs are picked up and appropriate metrics are fixed for these. This will bring out the current status of the CRM system in force (McNeeney 2004). Following this the team needs to evaluate, to what degree the KPIs are to be improved and whether the CRM that is being planned for the company would enable them to achieve this level. Before commencing the implementation of the project, it is essential that the target KPIs for the project is fixed. If there is a KPI for raising an invoice in the company and if that is measured in hours and it take four hours to raise an invoice originally. The second set of evaluation keys normally employed would be more on human perceptions. It has been the case of most software successes; the ESS project has done better not only because of the products capabilities but also the perception that the product meets the requirements of the users. A number of models for evaluation of the IS systems are available. However, there is none specifically made for CRM IS evaluation and integration. Since CRM is a full fledged IS system and has all the issues and systems of any IS system, it is comfortable to evaluate it using any of the other post evaluation systems for the IS . In the case of ESS it can be said that most often a project is perceived as successful and not performs as successful (Gemmel & Pagano 2003). Success of a project would depend on managing user expectations effectively and more holistically (Clegg et al 1997). Whyte & Bytheway (1996) proposed that the three elements, the product, the service and the process need to be managed and perceived by the user to have been managed appropriately to ensure that the project is a success which holds true for the HP’s ESS management. As far as the implementation of the ESS for the HP company was concerned we saw overall that the process of managing the project also plays an important role. Towards some conclusions Furthermore I don’t see the third goal of Earl going very far i.e. the aim to “ Transfer knowledge from ESS. Take the learnings of the group and “throw them over the wall” to the rest of HP.”(Case study)And this brings in the fears of organizational change as this could lead to an overall resentment with in the traditional HP set up with is yet untouched by the innovation of ESS .The mistake that has happened here is that ESS has become an alienated blue eyed boy and it seems that HP has been ignored despite ESS’s claim of partnership with the work force of HP. In the long run ESS should be prepared to either merge with HP’s culture in a balanced marriage or risk disbandment.HP is indeed a large organisation and it would take a long time to get rid of inherently conservative nature of the HR and the red tape with in the large organizational structure.ESS is not really a part of HP.It reports to Ann Livermore’s organization which shows a lack of a connection which will become pivotal to ESS’s future.It is indeed true that ESS will still play a role in the future of HP but there will be organisational merging here which will again entail the use of the business scorecard approach.ESS will need to survive with its own talent and offer something new and sustainable to HP giant.This is the time for ESS to go with the flow and for HP to learn not to repeat the same mistakes it has donebefore as discussed elsewhere in the report.Overall ESS has made some innovative yet risky decisions for HP but it is time it has to think creatively to save itself or risk disappearing in the storm of the large,calm and conservative ocean called the “HP way”! Last but not the least on a concluding note I would like to cite a very wise (and humorous) quote from the genius Lewis Carroll in his very famous work “Alice in the Wonderland” to illustrate the difficulty faced by large organizations like HP in keeping their internal and external processes in harmony and relevant while at the same time having problems in being able to estimate their own direction and stance in relation to the future of their business strategy. Would you tell me, please? Which way I ought to go from here?" "That depends a good deal on where you want to get to," said the Cat. "I dont much care where -" said Alice. "Then it doesnt matter which way you go," said the Cat (Alice in the Wonderland-Lewis Carrol) Reflective note: This study of HP was a chance for me to learn that Industrial networking and Consumer strategies are very imp in gaining a better outcome for the over business management of projects.A few years ago, little did I know that my incentives to undertake business in the first instance based on my penchant for financial management would patent themselves in the corporate world to test my ideals of business studies and necessitate further academic study in the diverse field of management. Initially, the osmosis of business decisions into the permeable fabric of the corporate society had birthed, for me, nascent passions for Business Management.I enjoy doing these assignments and I look forward to my degree being an adventure into the intricacies of wealth creation and business management.Even as a child I was thoroughly impressed by the likes of Bill Gates and Martha Stewart and wondered with much curiosity how these top class entrepreneurs conquered the marketing world.Some day I intend to see my business acumen take me all the way to the top in the corporate ladder and allow me to have my company trade as one of most successful corporate entities on the world’s prominent stock exchanges.It is only from these business giants that their marketing strategies and successes and failures can be studied and used as a guide for future reference. 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