How XTRA Is Expected to Regain Its Lost Business - Case Study Example

Report XTRA Case Study - Task Management Victor Post Graduate Diploma in Strategic Business IT October 28, 2009 Table of Contents 1The existing problem at XTRA and probable solution through e-business 5 1Technical requirements 6 2Technical Constraints 7 3Non-technical requirements 8 4Non-technical constraints 9 1Responsibility Assignment matrix (RAM) 10 1Activity Definition 12 2Project Timeline Estimation 13 3Activity Duration Estimation 14 4Activity Resource Estimation 14 5Gantt chart 14 1Leadership Style Summary 16 5.1Effective leadership 18 6.1E-business implementation problems 22 6.2Role of effective communication 22 1Mentoring 24 2Coaching 25 3Difference between Mentoring and Coaching 26 1 Preface XTRA is a small organization which was established in 1960’s by four movie enthusiasts and deals in Hollywood memorabilia items such as movie scripts & posters, signed celebrity photos, action figures. The company was extremely successful and made huge profits until the 1990’s, after which the company started experiencing lost sales and profits. The company operated locally delivering through post and thus catered to a limited consumer base. The business was operated by a compact manpower resource with eight full time staff and two part-time staff. The use of computer systems was limited to locally networked personal computers which were available only to the full time staff. The company owners are anticipating the launch of e-business as a probable solution to regain their lost business and sales. The e-business is a manifestation of the turnaround strategy that is planned by the business owners. The new platform will lend a global existence and wider consumer base reach for increasing sales. The e-business will support XTRA to restore the company’s business and the market share. The launch of e-business is expected to generate more business for XTRA by offering a reengineering strategy. Also the data collected by the information systems can be used to serve the customers personally. The staff members at are apprehensive of the new technology and fear the change in roles and responsibilities that will be accompanied with the new approach. Also, since the staff has not been using the computer systems extensively at work, they are not very well acquainted with the information systems and how to use it for the business processes. So the decision is a strategic one and the various critical factors and their impact must be evaluated. 1.1 The existing problem at XTRA and probable solution through e-business The basic problem that can be identified for the current situation at XTRA is its limited consumer base and narrow exposure. Also, company serves product line that caters to a narrow consumer segment with fans of Hollywood actors who are interested to buy a memoir of the favorite movie or actor. XTRA has been operating through a centralized outlet at the city centre. The declining sales can be contributed to the limited market exposure and constrained reach in the world of global and transnational businesses. The past success describes that local demand for the related goods has been well satisfied and saturated. The unique range of products needs to reach a newer customer base which cannot be provided by local market. E-business will help XTRA to reach global customers and to provide customer focused products to the potential customers, thus increasing business. The anticipated increase in customer base via e-business is expected to increase the sales volume bringing in huge sustainable profits. The internet and technology driven information systems will support the company’s objective 2 E-business System Requirements The organizational requirements of various types must be identified and fulfilled for successful design and implementation of the IT system. The anticipated increase in customer base via e-business is expected to increase the sales volume bringing in huge sustainable profits. The e-business model describes how a company functions. The figure below shows the four traditional components of the e-business model. Figure1: James E Burk’s e-business model (2008) Identifying the basic requirements both (monetary and non-monetary) and prioritising the requirements in case of trade off due to limited resources are vital activities to the project. 1 Technical requirements As pointed out by O’Brien (1999), the e-business must intend to integrate the company, the suppliers, business partners, customers, and inventory management system. The e-commerce applications may include interactive order processing at the company website; secure electronic funds transfer (EFT) payment systems and electronic data exchange (EDI) of business transactions. At XTRA, the information system must be extensive to cover end-to-end solution to the business problems. The IT business model must provide an on-line ordering portal for the customers, an on-line catalog that is regularly updated as well as an inventory control system. The company will need to strengthen and develop the logistics and supplier network to cater to the broader customer base and requirements. Hardware This includes the cost of PC’s, accessories and the network costs that are needed for e-business set up. The existing 8 PC’s available with XTRA must be considered. Software The new software that will be built or purchased and customized will need a major share of monetary allocation. Data Management The integrated database to store the business data along with an appropriate RDBMS. Facilities The warehouses, inventory and stores must be managed across the globe along with reliable transportation system and smooth running supply chain. IT Personnel Successful implementation of the e-business at XTRA will require manpower resources from both internal and external sources. Financial resources The amount of money IN which will form the initial capital and the working capital. 2 Technical Constraints 1 Cost constraint The on-line portals require a computer server that will maintain uninterrupted network with the internet. The existing hardware capacity of the existing systems might not be sufficient to support the new software. This might call for additional cost to be incurred for buying the computers and other hardware components. Also, the cost of software, and cost of outsourcing a vendor is a major part of the expenditure. The limited cost resources will also need to be shared for project research, feasibility study, consulting and manpower training. 2.1.1 Time constraint The requirements must be identified and broken down into individual element jobs to be accomplished by various individuals. Historical data and experience can be used in estimating a time frame for each activity, thus adding up to define a total timeframe. The estimated timeline must be allocated to the prioritized activities appropriately. 2.1.2 Scope and Quality The technical constraints such as usability, adaptability and flexibility constitute the scope and quality of the information system. The scope defines the baseline requirements that must be met by the end project. 3 Non-technical requirements The current structure and level of XTRA lacks the global business ability since the orders are collected and delivered by post. The e-business will need a lot of changes in the total environment as well as the staff attitude. 1 Logistics and Supply chain problems XTRA will need to put extra efforts for serving the global customer orders ensuring timely delivery while maintaining the optimum level of inventory. This necessitates experienced logistics consultants, financial resources as well as trained staff. 2.1.3 Legacy system alteration Transforming the legacy business processes into e-commerce system frequently involves planning to redesign business processes following a four stage model consisting of strategic planning, requirement analysis, resource allocation, and project planning. Strategic Information Technology Planning (SITP) requires collaboration with the business partners (Turban, 2006). 2.1.4 Extended support hours Since XTRA has currently been operating locally at the normal office hours only, catering to global customers would mean working in shifts to cover global business hours. 4 Non-technical constraints 1 Processes restructuring Also, the restructuring of the company might pose some threats and crucial decisions might need to be taken to retain the skilled staff. 2 Staff involvement issues The ‘soft’ human issues such as non-participation of the staff and unwillingness to accept the new system are expected to arise. The fear of change in roles and responsibilities of the staff will need to be catered. 3 Experience Curve factor Since XTRA has been operating at a smaller local level, expanding its business to support the e-business will require time and effort before the business turns profitable again. This will require an additional input of finances to support an increased operating cost owing to the experience curve effect. 4 Communication problems The communication level that operates at XTRA will need to be uplifted to ensure that each unit communicates well to achieve a common task. This will necessitate changing the old processes against the staff desire and comfort zone. 5 Staff training The XTRA staff might be unacquainted with the computer software and even using the PC’s. The management will need to ensure that staff inhibitions are diplomatically overcome and they are trained to handle the software efficiently and effectively. Level of trained staff will decide the optimal use of the e-business system. 3 Importance of Resource Allocation The limited resources such as money, manpower and time must be allocated to each activity as per the requirement. Resource allocation is one of the critical success factors and is directly linked to the performance of the information system. After analyzing the various requirements of the e-business along with the constraints, the next step is to map the business requirements and goals and identify transactions for the selected business process. 1 Responsibility Assignment matrix (RAM) Responsibility Assignment matrix (RAM) is a popular resource planning tool used to map roles and responsibilities of different employees at different stages of project. Staff Total Work (hrs) First Stage Second Stage Third Stage Nth stage Project Manager Analyst Development Team Marketing team Trainer Tester Total Hours allocated Table 2: RAM Hiring IT personnel for training the staff and regular upgrading of the information systems will also incur cost. Hiring part time staff to handle the business processes during the training of the full time staff will also need to be considered. Allocation of resources as a part of project plan will affect the timely and successful completion of the project. Resource allocation is a vital component of a project, especially in the e-business venture where the whole set up has to be established a new. Allocating the limited resource efficiently is a prime deciding factor for the project success. The level of funding for the basic allocation decisions as well as for contingency situations must be done after prioritizing the involved tasks. Depending on the priority, funds and resources are allocated to vital items of the project. The contingency plan must also identify the non-critical activities which can be sacrificed if the resource or funds are reduced. Resource allocation is essential part of resource management and is used to assign resources in an economical way. 4 Timescales Defining a timeframe for the project is essential for its success. The basic requirement of the project must be fulfilled in different stages. The priority of the crucial tasks and the respective time needed for accomplishing the individual tasks will define the timeframe. The timescale will define the time to be allocated to the constituent activities which are identified. 1 Activity Definition The work breakdown structure (WBS) is used break the larger work pieces into individual activities so that it is easier to estimate, schedule, monitor and manage (Mulcahy, 2005). The timeframe will require the critical tasks to be identified. On-line product catalog: The prime requirement of e-business is to have an online product catalog that will help the customers in across the globe to know about XTRA and buy its products. This online information guide will require minimum development time and will support the marketing efforts. It can even be used even with traditional postal delivery system. The company will need to widen the product variety to be offered and ensure that the catalog items are regularly updated and match with the inventory. Ordering System: The online ordering system will expand the customer reach of XTRA, allowing the global customers to place orders over the internet. The customers will have the opportunity to have a look at the merchandise in the online catalog, check its availability and place the order by paying through the available options. The online catalog will be linked to the inventory management system. This will allow the catalog to show availability in real time as well as update the inventory stock as soon as a customer places an order for merchandise. Inventory Management System: This system will assist value chain by reducing the lead time and minimum inventory costs. A computerized system will allow the company to ensure that the procurement of products and shipment of orders are done on time and as per the demand of the market rather than pre-determined procurement numbers. Inventory management system must be able to accept updates from the online ordering system as well as send inputs to the purchase department and the accounting system. Efficient inventory management system saves money for the selling company as holding costs of inventory is reduced. Accounts system: A computerized accounting system will help maintain the ledgers, profit and loss as well as balance sheet of the company. The accounting system will also have facilities to track the cash flow of the company. This system will keep track of the customer payment status and match the sales records with the incoming money The accounting system must also be able to track short term liabilities of the company and payments due to the company. All the systems will need to be integrated at the backend with a reliable RDBMS system and interactive and attractive front end for business and customer use. The front end and the backend of the system must be integrated via a robust application layer which will be able to process the information coming from front end, execute the orders and maintain the information in the backend. 2 Project Timeline Estimation The sequence of activities to be carried out in a project must be done based on the dependency of one activity upon others. Network diagrams are drawn to chart out the sequence of tasks. The critical path (using CPM) so developed will determine the shortest timeline for executing the project. This timeline may increase based on certain lags that will be introduced between the activities to cater to the risks involved in the project. 3 Activity Duration Estimation The time required for each activity of the project is estimated based on past experience of doing similar tasks, historical data and risk management. It may not be possible to have historical data for some tasks so a qualitative assumption will have to be made for such tasks. A calendar based schedule is then developed and followed by network analysis techniques such as CPM (Critical Path Method) or PERT (Program Evaluation and Review Technique), etc. 4 Activity Resource Estimation The project must be broken down into multiple subtasks so that resource requirement of each task can be easily estimated. Manpower, machines, material and money are the vital resources to be estimated for each task. The accuracy of this estimate is dependent on the level to which the main project is broken down. The greater the granularity, the greater will be the accuracy with which resource requirement can be forecasted. 5 Gantt chart The preparation, planning, development, implementation, system testing, and user acceptance testing of all the identified systems can be broken down into work units. A Gantt chart is then used to assign timeframe to each task and dependencies. Allocating timeframe to each activity is done on the basis of experience and historical data. Figure 3 A Sample Gantt chart Preparation Time: Based on historical data of similar projects, selecting an outsourcing firm, gathering the related data, aligning the business processes as per the IT approach, evaluating system feasibility and getting ready to initiate the process will take up around 3 to 5 months. This constitutes around 22 % of the total time. The management of XTRA must also consider the time taken for re-doing the preparation, in case the outsourced firm is changed after this stage. Implementation Time: This is the actual implementation time and is estimated to take around 70 % of the total time. The various implementation stages will be distributed over a period of 14 months. The four sub-stages will take 3 months each for development and implementation. The first sub system will become live after about 7 months of project initiation. Finalization and live testing: This stage will have the entire system live and updated for the management to use and test for redundancies. 5 Leadership Styles Leadership style is the manner or approach of providing direction, implementing plans, motivating people and is based on the different assumptions and theories (changingminds.org, 2009). A leader has the knack to use power effectively and understands motivational forces of the followers thus using them tactfully to get work done. The leader must possess certain qualities such as commitment, trust and devotion towards the followers in order to be a successful leader. Trust, competence, loyalty, openness, consistency and integrity are the five key dimensions of leader. The leader must display high level of commitment towards his/her own responsibility to motivate people. As defined by Koontz & Weihrich (1990), leaders envision future; they inspire organization members and chart the course of the organization. At XTRA, the new business venture is a strategic decision to be taken by the top management and owners. The staff and other company employees already fearful of the change might not accept the new system willingly. This necessitates a strong leader who can listen to the staff problems, reassure them about the benefits and change their mindset towards contributing to the new system. 1 Leadership Style Summary The different approaches of leadership are known as Leadership styles. Different leaders use different approaches to lead a group of followers with varied levels of motivation. Leveraging the strategic IT platform requires the involvement and participation of the entire staff. The leader will not only guide the transition, he will also motivate the staff to work together towards the shared company goals. Generally, leadership is divided into four types of approach (NCC Education, 2004). Delegation Participation Authoritarian Persuasion Figure 4 Types of leadership styles 1 Delegation This style of leader merely passes the responsibility down the lower level. Such leaders believe in non-interference. Such leaders are not committed to completion or maintenance of tasks. This leadership style is characterized low level of commitment and trust, thus resulting in low employee morale, wastage of time and resources. 2 Participation This leadership style is characterized by low task orientation and high relationship orientation. Co-workers are made to feel important and responsible by sharing ideas and objectives. Such leaders are able to get people to participate by developing good relationship through approaches such as Management by Objective (MBO) and other relationship building exercises. However, the task accomplishment is not given much importance. 3 Authoritarian Although quite unpopular, this style is highly task oriented. The leader is autocratic and retains the power and decision making authority and there is low team morale and low relationship between the leader and the followers. Even though the tasks accomplishment is high on priority, the relationship is not developed. 4 Persuasion This leadership style is high on task orientation as well as mutual relationship. The leader is emotionally connected with the team after having established high level of credibility and staff understanding. Incentives are used by such leaders to push the subordinates into task completion without straining the relationship. The leader is successful at getting work done while remaining popular. 5.1 Effective leadership Effective leadership is the key for strategic implementation of the e-business and depends on theory variables as well as the situational factors. The main function of a leader is to clarify and set goals with subordinates, motivate and guide them and remove obstacles. The best suited leadership style depends on the stage of development and situation at hand. The situation factors include the characteristics of subordinates, their needs and abilities, as well as the work environment that includes the tasks, existing reward system at the organization. Successful e-business implementation at XTRA will need a strong leader who can build relationship with the employees without bothering much about the output. Participation style must be used at this initial stage to invoke team building and cross-functional cooperation. The second stage of implementation will also need the leader to spread the awareness and benefits of the system to the staff while involving the staff to participate in the new venture. Participation style will work at this stage. The next stage, when the logistics and the financial systems will be aligned with the on-line ordering system and the inventory management system, will need the leader to use persuasion style to overcome the staff fears and get the system rolling smoothly. The staff can be given extra incentives to get the task done while building good relationships with them is a good tactic for the persuasion style of leadership. The training and testing phase after the implementation needs full support of the staff. Participation style of leadership can ensure deep involvement of staff to use and test the system rigorously and point out the discrepancies before the outsourcing team finally delivers the project. 6 Effective Communication The goal of communication is to convey information and its understanding from one person to another. Communication is an organized, standardized, culturally patterned system of behavior that sustains, regulates and makes possible human relationships (Haslett, 1987). The purpose of communication is “to share” the vision, to motivate organization members, to help achieve the vision, and believe in the vision. Figure 5 Communication Process (articulate.com) The critical factor measuring the effectiveness of communication is the common understanding which exists when all involved parties have agreed to not only the information, but also its meaning. The other factors include the content to be communicated, the people between whom the communication takes place, the responsibility, frequency and method of communication. Effective communication among the leader, the management, the stakeholders and the staff is the key to successful IT implementation in any organization. Effective communication occurs when the transfer of an idea from a source to a receiver results in a change in knowledge, attitude and overt behavior on the part of the receiver. The communication method and plan must ensure that the message is correctly decoded and understood by the receiver. Figure 6 Communication Flow Acceptance of change, represented by acceptance of IT vision is one of the most important factors of Information system implementation. Effective communication occurs when audience agrees to understand the communicated message and stands in consensus to collective actions. For the e-business to be popular among the staff the IT vision of the company must be communicated properly. Proper communication will ensure that they understand and share the objectives and are willing to participate in the change. The issues related to the IT implementation can be communicated by spreading the awareness about the strategic value of IT in the company. Communication must be both ways with minimum cost in terms of resources expended. The communication should not only be effective to ensure that the message is decoded appropriately by the receiver, but should also be efficiently used. The management must evaluate the situation and decide about the potential trade-off between efficiency and effectiveness as required. The effectiveness of the communication defines the level of agreement and acceptance received from the staff. 6.1 E-business implementation problems The implementation of e-business would require a strategic level transformation and is accompanied by a lot of problems and constraints that must be catered to. Once the problems are identified, management tools such as communication and leadership can then be used to solve the problems. Also, the cost, quality and Information system (IS) performance and time constraints are crucial factors for IS implementation. Sharing information across the supply chain, by means of effective communication at every stage of project, is a vital element and can actually wade off many supply chain problems such as demand forecast, delivery and quality issues that need to be handled. E-business must cater to the problems that resulted in the decline. Effective communication between the management, staff and the project consultant is the key to identify and solve the key issues. 6.2 Role of effective communication Effective Communication can help to solve the problems that occur with IS implementation. In order to be effective, the communication must be planned to create a positive attitude for the new information system to ensure the meaning of information is intact. Many human issues such as fear of change, skepticism regarding the change of roles and responsibilities and non acquaintance with the computer system can be tactfully solved by effective communication. The leader must listen to the staff before addressing their problems and ensure that it is always a two way communication. This will boost the employee morale, help them regain confidence and interest and enhance their participation in the change. With due communication, the processes and the planned changes will become clear to the staff and they may gradually come out of their own inhibitions. Also, the risks, threats, uncertainties and opportunities must be properly and efficiently communicated across the various levels to work for contingency planning. Meetings and presentation at each stage of planning and implementation will ensure that the status report and status meetings are on track with the plan. Each department and location can communicate their problems and status to the rest, thus keeping all the staff, stakeholders and managers informed about the condition of business. Maintaining a log of the activities and encouraging the staff to provide a candid feedback will help smoothen the problems and motivate the staff. 7 Mentoring and Coaching Mentoring and coaching are two powerful tools to provide a unique learning environment and leadership capacity to the employees at the workplace Management tools such as leadership, mentoring & coaching and communication are the key to successful IS implementation. The choice between mentoring and coaching depends on the identified need and desired learning objectives of the organization. XTRA being a small company operating at the locally, will definitely rely on such management tools to ensure success in its new venture into e-business. The new business may pose many challenges such as strategic business challenge, information architecture challenge, globalization challenge, investment challenge, responsibility and control challenge. Mentoring and coaching are often used together but there are inherent differences between the two concepts. 1 Mentoring Mentoring is an important knowledge transfer strategy where the relationship between the two people involved in the learning process is the driving force. It is a power –free, mutually beneficial two way relationship where a more experienced person passes on his knowledge to another less experienced person by way of providing guidance, support and understanding (upwebsite.com, 2009). Mentoring encourages learning to happen when someone transferring his knowledge to another (NCC Education, 2004, lecture 21) based on self-selection, where the mentoree proactively maintains the relationship. The level of perceived value that derives from the mentor’s influence defines the mutual respect of the reciprocal relation. Mentoring also forms the backbone of training, so that mentor can successfully help the staff to learn and accept the IT and get rid of the fear of change. Mentors play multiple roles of being a coach, counselor and even a sponsor. Mentors are role models providing support to the proteges who emulate their traits and actions. Planning and implementation of e-business at XTRA would require boosting the self confidence of the apprehensive staff and provide the mental support and reassurance to them. Mentoring can be used as a powerful tool to attain commitment and participation of the hesitant employees. A mentor can listen to their problems, work out solutions, and help them understand the benefits of the new system. Such mentoring would enhance the staff’s proactive participation under the guidance of a mentor who can even guide them about their career and skill development. Mentoring evolves through the four stages of initiation, cultivation, separation and re-definition. 2 Coaching Coaching is a collaboration in which the person being coached defines the agenda and the coach serves as a committed listener, active inquirer and instrument of change (Watt, 2004). The coachee defines the objective and the coach offers navigation support for holistic personal development. The key elements of coaching include discovery and alignment. The coach is a facilitator and provides the necessary opportunities and tools that enable him to develop himself. The coach possesses implied level of authority that is used to impart knowledge for a specific task deriving team harmony and job performance. Coaching is based on equal partnership and will increase the staff skills and improve their performance. At XTRA, coaching will be needed at all stages of e-business implementation. Right from the planning to the testing phase and the post-implementation stage, coaching is needed to train the staff about the use, advantages and constraints of IS. 3 Difference between Mentoring and Coaching The essential difference between Mentoring and Coaching is that the coach does not give advice or answers but rather asks effective questions to help the individual reveal the current vision and reality (Watt, 2004). While mentoring is all inclusive description to support protégés’ orientation, coaching is technical support focused on development of techniques. Mentoring by definition includes the larger context and covers coaching. Figure 7 Differences between Mentor and Coach (Brefigroup.co.uk, 2009) COACHING MENTORING Relationship is often finite and short-term (3-12 months) Coaches are more frequently external to the Organisation Coaches are most often paid for their Services Goals are clearly identified Action-oriented Results- oriented Relationship is a partner-approach A coach may be the same age or younger than the person they are coaching A coach may not necessarily be an expert in the area they are coaching in (i.e. they are expert at coaching the best out of people) A coach is not necessarily a mentor Coaches are most often formally trained in coaching Relationship is often long-term, on-going ( 1-2 years) Mentors are often found within the organisation Mentoring is seen as a benevolent and goodwill gesture Goals not always as clearly identified Process- and relationship oriented Outcomes are often oblique A mentor is usually higher in the organisational hierarchy A mentor is usually older, more senior than their mentee (although peer and reverse mentoring are also gaining momentum). A mentor is usually an expert in the area the mentee is aspiring to achieve in but may not be an expert at coaching the best out of people A mentor will usually have good coaching skills Mentors are not necessarily formally trained although many may be naturally good mentors Figure 8 Mentoring and coaching (oyestercorp.com, 2009) 8 Conclusion XTRA is expected to regaining its lost business by venturing into e-business. However, the top level decision must ensure total involvement and contribution of the staff and management. A thorough analysis of the various factors involved in the implementation is needed in the planning stage of the project. The success of the project is defined by the level of planning and preparation to ensure that the technical as well as the non –technical requirements are identified and satisfied using appropriate management tools. The various aspects of the information system project along with the challenges and opportunities must be critically weighed. The stage wise implementation of the new project will help in smoother transition and make it easier for the staff to accept the new business approach. The company must gear up the finances to support the elaborate and extensive system before the system starts gaining on the learning curve. The e-business project has immense potential to revolutionize XTRA’s current situation provided it is planned and implemented strategically. References Coaching and Mentoring: what’s the difference?, (2009). [Online] Available from http://www.brefigroup.co.uk/coaching/coaching_and_mentoring.html [Accessed October 27, 2009]. Haslett, B.J., (1987) Communication: Strategic action in context (Communication Series), Lawrence Erlbaum, [Online] Available from http://books.google.co.in/books?id=lWoTMnECyqEC&pg=PA3&dq=communication#v=onepage&q=&f=false [Accessed September 9, 2009]. http://www.articulate.com/rapid-elearning/wp-content/uploads/2007/09/comm_process.jpg Kent, D. 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(2004) Mentoring and Coaching in the workplace: an insight into two leading leadership development programs in organizations, allbusiness.com, [Online] Available at http://www.allbusiness.com/human-resources/careers-career-development/257160-1.html [Accessed October 27, 2009]. 9 Appendix A: E-business model A business model describes the logic of business system’ for creating value that lies behind the actual processes. It is a conceptual and architectural implementation of a business strategy and as the foundation for the implementation of the business processes. (Osterwalder & Pigneur, 2002) Business Logic Triangle E-Business Framework Read More