Operations management and the Internet: managing internal business processes in ebusinesses

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Operations management and the Internet managing
internal business processes in e-businesses

• A research seminar
• David Barnes - School of Management Royal
  Holloway, University of London
• (david.barnes_at_rhul.ac.uk)

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The research

• A three year project investigating the effect of
  e-commerce on the management of core business
  processes
• Funded by the OUBS and CIMA
• The researchers
• David Barnes - Royal Holloway
• Matthew Hinton - Open University
• Suzanne Mieczkowska - Open University

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What is e-commerce?

• The sharing of business information, maintaining
  business relationships and conducting business
  transactions by means of internet-based
  technology
• Includes three types of e-commerce
• Business to consumer e-commerce (B2C)
• Business to business e-commerce (B2B)
• Internal (intra-organisational) e-commerce

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Operations management is the management of
business processes

• A process is a system transforming input into
  output, which uses resources, and which is
  subject to controls
• Business processes can be classified as
  materials, or customer, or information
  operations, but are likely to be a mixture of
  more than one of these

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The Internet changes everything?

• The Internet creates almost unlimited information
  flows within and between organisations and their
  supply chain partners.
• An explosion in connectivity and .. the open and
  almost cost-free exchange of rich
  informationeveryone can communicate richly with
  everyone else

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What does this mean for the management of
operations?

• The research aims to investigate the impact of
  e-commerce on the management of internal business
  processes.
• This is a neglected area of study most attention
  on technology, web design, dotcom booms and busts
  etc

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Research Aims

• Identify and describe the business processes used
  for order fulfilment and delivery in e-commerce
• Identify common patterns in those processes
• Identify what factors may affect those processes
• Develop testable propositions for future research
  
• Investigate how business process performance is
  measured in e-commerce (funded by CIMA)

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A framework for investigating e-commerce
business process
BUSINESS PROCESS INTEGRATION INTERNAL Between
clicks bricks processes EXTERNAL Outsourcing
of clicks processes Between outsourced clicks
bricks processes
INFORMATION SYSTEMS INTEGRATION INTERNAL
Across functions Between clicks bricks
processes EXTERNAL With customers With
suppliers
OPERATING CONTEXT CUSTOMERS B2B or B2C
E-COMMERCE MODEL Clicks mortar dotcom
start-up ORGANISATIONAL TYPE MNE, SME, for
profits, not-for profits
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Empirical Research

• Investigates how organisations are adapting their
  operations for e-commerce
• Focuses on the use of Internet-based ICTs in
  business operations
• Uses a case study methodology
• Data collection via semi-structured interviews
  with company managers
• Uses the framework to guide data collection

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The 12 case companies
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The case companies (1)

• Multi-insure UK subsidiary of a large US
  insurance broker
• Rebankco The central mortgage office of a large
  retail bank
• UK Insure a multinational insurance broker
• Creditinsure an export credit insurer
• E-insure A Creditinsure spin-off, offering
  credit and risk management to online trading
  companies
• Shareco a London SME share trader

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The case companies (2)

• ARB a major steel producer
• Pharmco a small therapeutic pharmaceuticals
  manufacturer
• Equipco an industrial equipment manufacturer
• E-accounting an on-line finance and accounting
  consultancy for SMEs.
• Clothingco an online specialist clothing
  retailer
• Legalco an on-line legal services provider

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Findings - 1

• Motives for e-commerce are confused
  contradictory.
• They can be
• Technology driven (the fear of being left behind
  experiential learning seek technological
  leadership) and/or
• Marketing driven (target niches raise exit
  barriers differentiation through on-line
  service reach new customers cross selling)
  and/or
• Operationally driven (reduce costs improve
  efficiency improve communications)

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Findings - 2

• Barriers to increased use of e-commerce are
• social (e.g. conservative organisational and
  industry cultures) and
• technological (e.g. lack of industry standards
  and open systems)
• financial (e.g. lack of, or competition for,
  investment funds)

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Findings - 3

• E-commerce tends to automate (rather than
  re-design) existing business processes
• This reinforces existing functionally-based
  structures
• There is no learning from BPR (whatever happened
  to Obliterate dont automate?)

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Findings - 4

• Increased integration between bricks and clicks
  business processes is inhibited by technology
  barriers.
• Limited IS integration due to
• Internal legacy systems
• Poor recent technology choices
• Incompatible IS of customers/suppliers
• Lack of industry standards

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Findings - 5

• Increased integration between bricks and clicks
  business processes is inhibited by business
  barriers
• Companies may chose to separate clicks from
  bricks processes in order to
• Limit risks to existing business relationships
  with customers and suppliers
• Avoid culture clashes between bricks clicks
  workers
• Penetrate new market segments through e-commerce

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Findings - 6

• The adoption of e-commerce challenges existing
  supply network relationships
• Disintermediation was predicted but this risks
  relationships with existing intermediaries
• Other possibilities
• Use e-commerce to support existing intermediaries
• Collaborate with partners (e.g. shared platform)
• Collaborate with competitors (e.g. joint
  ventures, using their platform)
• New intermediary businesses (reintermediation)

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Findings - 7

• Performance measurement in e-commerce is poor
• Little evaluation of the impact of e-commerce
  investments (including little or no
  post-investment appraisal)
• No agreement about performance measurement in
  e-business (with few, and ad hoc performance
  measures for e-business processes)

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Future Research Plans

• Develop testable propositions from this research
  and test in a large sample via a questionnaire
• Develop a performance measurement system for
  e-businesses
• Develop a decision-making framework for
  determining the right mix of bricks and clicks