eTRANSFORMATION JOURNEY FOR SMES
Ana Hol and Athula Ginige
University of Western Sydney, Sydney, NSW, Australia
Keywords: eTransformation, Small to Medium Enterprises, Dimensions of eTransformation, Information and
Communication Technologies.
Abstract: To survive in a globally competitive environment business need to change their process and make use of
information systems to make processes more effective and well integrated. A change in the globally
competitive environment requires businesses to modify and electronically transform. This process,
eTransformation, requires businesses to change along a number of dimensions mainly Strategy, Structure,
Tasks and Processes and IT Tools and Systems. Our study indicates that successful eTransformation
requires incremental progression within dimensions across stages. First SMEs require changes in
organisational Strategy – company environment, their goals and objectives as well as their products,
services and operations; then Structure – company departments and divisions followed by Business Tasks
and Processes – automation, streamlining and integration. Only after the above three dimensions have been
achieved, companies can change along IT Tools and Systems Dimension which involves selecting
appropriate tools and system as well as assuring web presence, Internet use and security. To identify how
SMEs (Small to Medium Enterprises) are planning to eTransform we interviewed 17 SMEs. Our study
indicates that businesses foremost identify that they should invest into IT (Information Technology) and
related tools and systems and do not perceive other factors such as company Strategy, Structure or Business
Processes to be determinants or predecessors of a successful eTransformation journey.
1 INTRODUCTION
Throughout the centuries, business required to
change. Each era in history brought new needs,
demands and requirements.
During the Agricultural era land and tools played
important roles, while during the Industrial era
machines and factories played a dominant role in
shaping the organisational and social structures.
Today, we find ourselves in the Information era
where Information and Communication Technology
(ICT) has a crucial role and has become an integral
business component. Survival of businesses
nowadays depends strongly on how well they can
use ICT to enhance their business processes and
sustain pressures of the global markets.
Previous research indicates that Small to
Medium Enterprises (SMEs) in particular are
struggling to find the optimal way in which to follow
their electronic transformation (Austool Limited,
2004; German, 2007). The aim of this study was to
identify how SMEs perceive eTransformation and
make eTransformation decisions. To identify how
SMEs should eTransform we conducted literature
reviews and historical analysis of organisational
change and used this information to conduct a
detailed study to see how SMEs are transforming.
2 ORGANISATIONAL CHANGE
AND TRANSFORMATION
THROUGH HISTORY
The historical analysis indicates that businesses at
various times in history were faced with inventions
and that they were required to adapt and restructure
to welcome new technologies if they were to stay in
business. Utilisation of new technology often
required some or more of the following actions:
Change the way business is done
In the early days, pin makers all worked
independently and it took each pin maker a day to
make one pin. Business changes and new demands
allowed production lines to be formed where each
worker had only a few tasks to complete. This
allowed each pin to be produced through the
115
Hol A. and Ginige A. (2009).
eTRANSFORMATION JOURNEY FOR SMES.
In Proceedings of the International Conference on e-Business, pages 115-120
DOI: 10.5220/0002237301150120
Copyright
c
SciTePress
combined work of a few workers. Consequently, the
amount of pins made became much greater (Smith,
1776).
Change the organisational structures
Divisionalised management structures are an
example of this. In order to follow work operations
and ensure factories functional stability, factory
structure was changed by making the worker
responsible for the tasks he or she was completing
and by introducing various levels of management
(Smith, 1776).
Ensure business activities are redistributed to
maximise production output
In the Ford Motor Company for example (Ford
& Crowther, 1922) each department had its own
specialisation. Work there was distributed so that
each department was dealing with specific raw
material goods and was producing a particular
product. Each department was responsible for its
own operation. The work was organised in this way
so that it could be completed quicker and that
collectively the company could have a higher
outcome.
Ensure that skills and knowledge are adequate to
deal with the innovation
Whenever new technology was implemented it
required assurance that people dealing with it had
the necessary skills and knowledge to follow its
uptake. For example, this happened when manual
tasks were replaced by machines and assembly lines
were introduced (Ford & Crowther, 1922).
Face problems and issues caused by the invention
An overview of the invention of and uptake of
electricity strongly indicates that the new invention
could bring chaotic and turbulent times. In its early
days, electrical appliances were unsafe and they
posed a risk of an electric shock and therefore death.
Introduction of new technology required careful
analysis and understanding of the problem not
previously known (Sciencemuseum, 2008).
Life through resistance and rejection of the
invention
From the review of the changes that the
invention of coal, steam or electricity for example
brought, it can be seen that often people at first
rejected innovations. The main reasons for this were
that they were frightened of something, which was
unfamiliar. In addition, as they, for example, saw
power in steam they were scared that they will be
retrenched and lose their current jobs, which in turn
did happen to some. Therefore, it can be concluded
that it is essential to face up to the new technology
as resisting it will slow the uptake and the
development (Sciencemuseum, 2008).
From the above it can be seen that new
inventions in history at first created shock and chaos.
After this, quick intervention or a line of action was
required to stabilise the created turbulence. Next
steps were hard. They often required those
immediately affected by the implementation of the
new technology to deal with rejection and resistance
and mistakes until that technology was understood,
used and correctly implemented. To identify how
organisations can change as a part of
eTransformation we reviewed Organisational
Change and eTransformation models.
3 MODELS OF
ORGANISATIONAL CHANGE
AND TRANSFORMATION
Studies assessed following models: Cycle of
Organizational Development Model (Wons, 1999);
The Drivers for the Advanced Organization Model
(Mawson, 2002); 7 Steps to Business Crisis
Management Model (People and Process, 2005); 7S
Model from McKinsey & Company (Waterman,
Peters, & Phillips, 1980); Nolan’s Six Stages of
Growth (Nolan, 1979); Earl’s Stages Model (Earl,
1989); Evolving the E-Business (Earl, 2000);
Internet Based B2B Stages (Rayport & Jaworski,
2002); eBusiness Transformation Model (Burn &
Ash, 2005); Galliers and Sutherlands six Stages of
Maturity (Galliers, Merali, & Spearling, 1994);
SOGe (McKay, Prananto, & Marshall, 2000) and
eTransformation Road Map (Ginige, Murugesan, &
Kazanis, 2001). From the study undertaken it was
identified that the eTransformation Road Map is one
of the most comprehensive models assessing the ICT
Dimension, later renamed to IT Tools and Systems
Dimension (Hol & Ginige, 2009). Multidimensional
nature of eTransformation
4 MULTIDIMENSIONAL
NATURE OF
eTRANSFORMATION
A search for possible eTransformation dimensions
was based on the use of 7 S Model comprising of
Structure, Strategy, Style, Staff, Shared Values,
Skills and Systems (Waterman et al., 1980). The
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model was used to create semi-structured interview
questions so that they can be used to gather data
from SMEs.
Based on the 7 S model Interviews were
conducted and data collected for each of the 7 S
dimensions. Following this, collected data was
analysed. Analysis identified that eTransfomation is
not only staged but also multidimensional. The study
helped identify dimensions that play roles in the
process of eTransformation the most. In addition, the
study conducted helped identify that SMEs need to
develop and progress across eTransformation
dimensions incrementally in order to advance and
move to the next eTransformation stage (Hol &
Ginige, 2008).
Furthermore, study highlights that progression in
one dimension alone is not sufficient for the
successful eTransformation journey. Therefore an
eTransforming company needs to follow its journey
across dimensions in a particular order (Figure 1).
IT Tools &
Systems
Strategy
Structure
Tasks &
Processes
Change Acceptance
Figure 1: Iterative Model of eTransformation (Hol &
Ginige, 2008).
First company is required to identify its Strategy,
then its Structure following by its Tasks and
Processes and finally IT Tools and Systems.
Within each dimension however there are a
number of Categories within which changes need to
happen. Categories of Strategy are the Environment,
Plans & Visions, Customers, Products & Services,
Employees and Goals. Categories of Structure are
Centralisation / Decentralisation, Functions /
Divisions, Formalisation. Categories of Tasks and
Processes are Nature of Tasks, From Tasks to
Processes, Task & Process Streamlining and Task &
Process Integrations. Categories of IT Tools and
Systems are IT Tools, Tool Users, Internet, Website,
IT Support, IT Systems and Security. Detailed
explanation of the eTransformation dimensions and
their categories is presented in Tab 5.
5 eTRANSFORMATION OF SMES
Following the initial analysis of the eTransformation
dimensions and their characteristics we selected a
group of 17 Australian based SMEs. The aim of the
study was to identify how they perceived
eTransformation. When doing this we carried semi-
structured interviews based on the identified
dimensions.
Participants in the study were 4 Toolmakers
marked in Table 2 as SME4, 8 IT Provider SMEs
marked as itSME and 5 SMEs studied via other
eTransformation projects that expressed a wish to
follow their eTransformation journey (service
SMEs).
Initial analysis required all companies to be
assessed along the eTransformation road map which
in turn marked their position at the IT Tools and
Systems dimension. Companies that have reached
Stage 1 were marked with A, Stage 2 with B and
Stage 3 with C. There were no Stage 0 and Stage 4
companies.
In addition, through interviews we collected data
for dimensions of Strategy, Structure, Tasks and
Processes. Data is presented in Table 1.
From Table 2 it can be seen that 14 out of 17
SMEs interviewed wanted to invest in IT Tools and
Systems Dimension. The analysis carried however
indicated that 12 of these companies required
investing in Strategy, 4 in Tasks and Processes and 1
in Structure. The observation of the data signified
that none of the studied SMEs should have been
investing further into IT Tools and Systems as they
have not yet positioned themselves appropriately or
identified where and how to use IT Tools and
Systems to the full potential.
eTRANSFORMATION JOURNEY FOR SMES
117
Table 1: eT Dimensions and Categories (Hol & Ginige, 2009).
Category Stage 1 Stage 2 Stage 3 Stage 4
Strate
gy
The Environment 1.1 SMEs
competitors
awareness
1.2 Competitors –
products & services
1.3 Matching
competition
1.4 Be better then
competition
Plans & Visions 2.1 Meet essential
deadlines
2.2 Meet all
deadlines
2.3 Create
improvements
2.4 Vision for the
future
Customers 3.1 SMEs Customers
awareness
3.2 Customer
requirements
3.3 SMEs marketing 3.4 SMEs learn from
Systems
Products &
Services
4.1 Standards &
certifications
4.2 Marketing
strategies
4.3 Support &
guarantee for
customers
4.4 New improved
products & services
Employees 5.1 Knowledge
requirements
5.2 Education and
new ideas
5.3 Employees &
Future
5.4 Innovation
Goals 6.1 SMEs goals
6.2 Reality VS goals 6.3 Strategy VS
goals
6.4 Skills &
resources VS goals
Structure
Centralisation /
Decentralisation
1.1 Decision – CEO 1.2 Decision-
Managing director
1.3 Decision - Some
employees
1.4 Decision- Whole
organisation
Functions /
Divisions
2.1 Operations fixed
2.2 Diversification
present
2.3 Operations can
be changed if needed
2.4 SMEs adaptable
to new
circumstances
Formalisation 3.1 Business
functions /
operations
3.2 SMEs Focus 3.3 Global needs
3.4 New ideas,
innovation and
future
Tasks and Processes
Nature of Tasks 1.1Streamlining
1.2 Automation 1.3 Creation of new
tasks
1.4 Reassessment of
existing tasks – fit
From Tasks to
Processes
2.1 Removal of
repetitive tasks
2.2 Improvement in
operations
2.3 Improvement in
profitability
2.4 Reassessment of
existing processes –
fit
Task & Process
Streamlining
3.1 Avoid change
3.2 Change when
essential
3.3 Change for
benefits
3.4 Change for
innovation
Task & Process
Integrations
4.1 Activities are
independent
4.2 Activities are
grouped – tasks
4.3 Activities form
processes
4.4Activities across
processes are
integrated
IT Tools and S
y
stems
IT Tools 1.1 Stand alone
Tools
1.2 Networked –
sections, whole
integration not
present
1.3 Networked-
Partially integrated
1.4 Enterprise wide
network – fully
integrated
Tool Users 2.1 Few employees 2.2 All departments
not all employees
2.3 All employees
2.4 All employees &
some stakeholders
Internet 3.1 Searching 3.2 Customer
Contacts
3.3 Advertising 3.4 External &
business contacts
Website 4.1 Static 4.2 Interactive 4.3 eCommerce 4.4 Convergence
IT Support 5.1 Limited support
(internally or
externally)
5.2 Some support –
usually ongoing
5.3 Basic IT
Department
5.4IT Department
fully operational
IT Systems 6.1 Office
Management – File
management
6.2 Operational
Systems – CRM,
TPS
6.3 KMS, DSS –
emerging
6.4 ERP, DSS, ESS
Security 7.1 Antivirus and
anti-spyware
software
7.2 User access
rights,authorisation
and authentication,
proxies and firewalls
7.3 Network traffic
encryption (SSL,
TLS)
7.4 System
monitoring
(intrusion detection,
full system disaster
recovery plan)
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Table 2: Results of the Study with 17 SME.
6 HISTORICAL ANALOGIES
To fully understand the impact of eTransformation
to the SMEs of today it is necessary to draw
analogies to business changes and transformations
that have happened in the past. When comparing the
two it can be seen that eTransformation has brought
similar changes to what for example steam or
electricity powers brought to the organizations
century ago.
eTransformation and use of technology is
changing the way business is done. Technology has
now allowed new business models to be formed and
new business structures to be formed such as for
example those of Amazon or Dell. Such business
models would not be possible if companies were not
ready and willing to innovate and change.
To successfully eTransform technology alone is
not enough. Companies need to be willing to change
and modify their structures and create new
departments, rules and dependencies.
Furthermore, new business tasks and processes
can allow organisations to redistribute jobs,
streamline operations or just simply automate tasks
to be able to achieve maximal benefits and increase
business outputs.
Moreover, each new innovation will bring
problems, resistance and will require its users to
update their skills and gain new knowledge to be
able to innovate. When reviewing what happened in
the past it can be seen that for example electricity,
we all use today, caused many accidents due to lack
of knowledge and skills of its users. Similar is
happening with technology. Dot.com crash for
example was one instance where technology brought
disasters. It can also be seen that lack of knowledge
is stopping SMEs to make adequate eTransformation
decisions.
Therefore to sustain global market pressures and
survive global changes it is necessary to face
problems and issues caused by the invention.
Companies need to be ready to learn more to be able
to understand full benefits technology may help
them bring.
ID Road
Map
Stage
Strateg
y
Structure Tasks &
Processes
IT
Tools
IT
Systems
Company
wants to
invest in
Company
Should
Invest in
1sme4 A A A A B A IT Strategy
2 sme4 A A A A B A IT Strategy
3 sme4 A A A A B A IT Strategy
4 sme4 A A A A B A IT Strategy
5 A B B A B A IT Tasks &
Processes
6 A A B A B A IT Strategy
7 B B C B B B IT Systems Strategy
8 itSME B B C B B B IT Tools Strategy
9 itSME B B B B B B Structure Strategy
10
itSME
B C B B B B IT Tools Structure
11
itSME
B B C B C B IT Systems Strategy
12itSME B B C B B B IT Tools Strategy
13
itSME
B C C B B B Tasks &
Processes
Tasks &
Processes
14 B C C B B B Strategy Tasks &
Processes
15 C C C B C B IT Systems Tasks &
Processes
16
itSME
C B C B C B IT Systems Strategy
17
itSME
C B C B C B IT Systems Strategy
eTRANSFORMATION JOURNEY FOR SMES
119
Businesses, in this case SMEs, need to be able to
handle life in the electronically demanding world
and be able to select and use IT tools and systems.
Our research helped identify the way SMEs see
eTransformation and has pointed out that
eTransforming SMEs require experts guide,
knowledge and understanding of how they can
overcome technology rejection and understand that
new inventions like those linked to IT Tools and
Systems may need some large structural and
functional changes to assure technology is going to
bring full benefits.
7 CONCLUSIONS
In summary, it can be seen that in order for the
companies to successfully eTransform they are
required to have a multidimensional scope.
Successful eTransformation requires a holistic
approach encompassing company Strategy,
Structure, Tasks and Processes and IT Tools and
System. Our results indicate that SMEs are unaware
of these and still struggle to adjust to the global
needs and demands by primarily concentrating
into investing into IT Tools and Systems without
realising that many other dimensions play a role in
successful eTransformation. Our future studies look
into developing an online system that SMEs can use
to be able to guide their eTransformation journey
successfully.
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