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

 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

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

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

Structure Tasks &

Processes

Tools

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

itSME

B C B B B B IT Tools Structure

itSME

B B C B C B IT Systems Strategy

12itSME B B C B B B IT Tools Strategy

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

itSME

C B C B C B IT Systems Strategy

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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