THE SEVEN E'S IN eTRANSFORMATION - A STRATEGIC ETRANSFORMATION MODEL

THE SEVEN E’S IN eTRANSFORMATION -
A STRATEGIC ETRANSFORMATION MODEL
Shiromi Arunatileka
School of Computing & IT, University of western Sydney, NSW, Australia

Prof. Athula Ginige
School of Computing & IT, University of western Sydney, NSW, Australia
ABSTRACT
This paper describes the Seven important stages of a successful eTransformation methodology using the 7-E model
highlighting the need to commence the E-transforming process by studying the external environment and the forces
acting on an organization due to advances in IT and changing business needs. Equal priority is given to the e-readiness of
the company and the e-readiness of it’s external partners such as the customers, suppliers, financial institutions, the
market etc. Many other existing eTransformation models have been studied in order to get an in-depth knowledge of the
existing models and their strengths and weaknesses. The proposed Seven E’s in eTransformation model is currently being
tried and tested with a group of companies in the region of Western Sydney, Australia. The paper also highlights the
issues such as importance of analysing the external environment when reengineering the business, business-IT alignment,
implementing and managing systems restructuring, issues related to business re-engineering, e-readiness and the
eSystems maintenance and policy issues.
KEYWORDS
eTransformation, eBusiness Model, 7E Model, eBusiness Strategy, eTransformation Roadmap
1. INTRODUCTION - THE EMERGING GLOBAL E-ECONOMY
With the evolution of the Internet, eBusiness opens up new possibilities for businesses to carry out the
business activities more effectively. The methods of operations of organisations are changing rapidly with
paradigm shifts and new IT/business strategies for B2C and B2B being introduced everyday. Enterprises
operate in a global scale today with operations occurring in many countries simultaneously. The global
village concept has introduced a whole new way of doing business in an ever increasing competitive world.
Therefore, the need to introduce and use IT as an effective strategic business tool is crucial to gain the
competitive advantage and successfully achieve the company’s business goals.
1.1 eTRANSFORMATION - THE KEY TO SUCCESS
Business processes have been changing continuously due to business driven forces and IT driven forces.
Business driven forces are market pressures, customer needs and competition. IT driven forces result from
advances and merging of Information and Communication technologies (ICT) and the introduction of
business communication systems. Exchange of information in a company has changed dramatically with the
introduction of facsimile, e-mail, intranets and the internet.
This effects the internal business processes and external business processes in dealing with its’ suppliers,
buyers, financial institutions, etc. The Internet has tremendously increased the quality of customer service,
after-sales service, customer relationship management and supply chain management. Many organizations
have web sites providing valuable information and services to thousands of potential customers. The process
of transforming in to an innovative and effective IT-enabled organization is eTransformation.
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THE SEVEN E’S IN eTRANSFORMATION - A STRATEGIC ETRANSFORMATION MODEL
In the CommerceNet 2000 global survey on barriers to Electronic Commerce [9], the top five barriers for
SMEs (Small and Medium Enterprises) were found to be as follows which show that there is a great need for
an effective e-business model for SMEs. (i)Lack of qualified personnel, (ii) Lack of Business Models, (iii)
Fraud and risk of Loss, (iv) Legal Issues and (v) Not sure of benefit
2. IN SEARCH OF A SUCCESSFUL MODEL FOR eTRANSFORMATION
There are many eTransformation models and strategies published in journels, conferences and on the web
proposed by many renowned researchers, academics and professionals around the world today. Most of them
concentrate on the issue of managing the change in dealing with eBusiness. We have analysed a number of
models but, will discuss only a few in detail.
2.1 The Seven Steps to Nirvana
Prof. Mohan Sawhney, has expressed the following ideas in his book “The Seven Steps to Nirvana –
Strategic insights in to e-business transformation” [6]. “What becomes obvious is that the first thing you have
to do, before you understand e-business priorities, is to understand business priorities! Which, by the way,
makes sense because in the end there is no "e-business". It will all be "business." “ He describes, seven steps
in the model which are: Catalyzing, Diffusing, Motivating, Skilling, Externalizing, Structuring, Staffing.
This model successfully concentrates on the three key areas vision, strategy and organizational structure.
It also addresses the issues in change management, concentrating more on the human factor such as the
importance of the CEO leading the project, motivating the management to e-transform, training, incentives,
etc. It clearly gives the message that eBusiness is not about technology but, it is about organizational change.
The model does not clearly address the issues related to strategy development, E-readiness of the company
and it’s external partners, the changes in ICT infrastructure, policies, etc.
2.2 The Seven Co-business Strategy Formulation
This model, developed by Pricewaterhouse Coopers consultants in 1999 [5] discusses seven major strategic
areas of E-business to be covered in any eBusiness Strategy. They are grouped in to Strategic Positioning,
Corporate Strategy and Implementation Strategy:
A. Strategic Positioning - Community & Content B. Corporate Strategy – Collaboration, Competition &
Company, C. Implementation Strategy – Computing & Corporate change
This recognizes the key players in the new environment. When formulating an eBusiness strategy, it is
important to identify the players and understand the significance and the role each member plays in the game.
This model concentrates mainly on the external environment and little is discussed about the internal change
management issues.
2.3 The Seven S Model
Many who s peak of eTransformation and orgnisational change have been inspired and guided by one model,
the 7S model, developed by consultants in McKinsey & Company over 20 years ago which has gained wide
spread acceptance. This model discusses how to achieve organizational excellence by achieving superior fit
among seven different dimensions, namely, Strategy, Structure, Systems, Style, Staff, Skills and Shared
Values.
The Seven S model addresses all possible issues and aspects of organizational change like no other theory
has done so far. It provides a very useful check list to drive an organization in to excellence. It is very
effective for internal change management, but does not discuss the complexities of linking up with the
external world with no geographical boundaries and faster speed of communication.



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3. DEVELOPMENT OF THE SEVEN E’S IN eTRANSFORMATION
The key driving forces for Organisational change are the IT and Business driven forces. Both these are
external forces such as vanishing geographical boundaries, ICT explosion/ advancement, virtual connectivity,
Internet and bargaining power of customers/suppliers, strong competition, market changes, etc. The need to
commence the eTransforming process by studying the external environment was highlighted by the above
driving forces for organizational change. The team leading the eTransformation process should have a very
good idea about the global IT and Business trends as well as the strategic situation of the company. Equal
priority should be given to the eReadiness of the company and it’s external partners such as the customers,
suppliers, financial institutions, the market etc.
3.1 The Need To Develop A New Model
The big bang approach which is adapted by ERP solution providers, have lead many companies to chaotic
situations. The main criterion for the selection of an information system is the best fit with current business
procedures but, several studies have shown that configuring and implementing ERP solutions can be costly
and may even require reengineering entire business operations[10].This is one cause which lead the ERP
systems usage a living nightmare. The 7 E’s in eTransformation deals with seven aspects evolved after
carefully anlysing the existing eTransformation models & strategies and considering various eTransformation
projects the University of Western Sydney has tried and tested in the Western Sydney region.
4. THE MODEL - SEVEN ‘E’S IN eTRANSFORMATION
This model consists of seven very important aspects of eTransformation. Each stage is important in it’s own
right and as a part of the whole process. Six steps which could be achieved one after the other are linked to
the seventh step ‘Evolution’ which deals with the crucial issues related to change management. After each
stage, the organization can go through the changes horizontally to the evolution stage and through that, go to
the next stage, which is vertically up or down. The model - 7E’s in eTransformation is described below.
4.1 The 7 E Model

1.
Environmental Analysis
7.


2.
eTransformation Goals/Strategies
Evolution




3.
eReadiness (Internal/External)

–

Overall change mgt.


4.
eTransformation Roadmap




5.
eTransformation Methodology




6.
E-Systems (ICT/Busi.,Maintenance)


Figure 1. The Seven E’s in E-transformation






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THE SEVEN E’S IN eTRANSFORMATION - A STRATEGIC ETRANSFORMATION MODEL
4.1.1 Stage1: Environmental Analysis
§ Significance and Outcomes: To understand the Global IT and Business Trends and the Company’s
Strategic Situation In the book “E-Business- Roadmap for Success”, Dr. Ravi Kalakota [2] explains the
major trends driving organisations to changing the way they have been doing business. They are
Consumer Trends, Service/Process Trends, Organisational Trends, Enterprise Technology Trends.
§ Methodology used: The following analysis is proposed to be carried out:
• Industry Analysis – Michael Porter’s Five Forces Model, the forces being Rivalry among existing
competitors, Bargaining power of suppliers, Bargaining power of buyers, Threat of new entrants,
Threat of substitute products/services
• Internal/External Strategic Factor Analysis – The SWOT analysis deals with the assessment of
external Opportunities and Threats a company will face with it’s internal Strengths and Weaknesses.
4.1.2 Stage 2: eTransformation Goals/Strategies
§ Significance and Outcomes: A corporate strategy/goal has to be arrived at taking in to consideration all
the strategic factors looked at so far which will explain the driving force for change. Depending on the
status of the organization, the strategy should be adopted for Survival, S ustainability or Growth[1].
§ Methodology used: After determining the type of organization, the organization should decide on it’s
strategic positioning. According to Michael Porter, Strategic Positioning means performing different
activities from rivals or performing similar activities in different ways [12]. Porter's generic strategies
can be used to derive the most effective one of four strategic positions. They are Cost Focus, Cost
Leadership, Differentiation Focus, Differentiation.
4.1.3 Stage 3: eReadiness (Internal/External)
§ Significance and Outcomes : None of the eTransformation models developed so far try to see whether
the organization is ready to go through the eTransformation process. It is very important for the CEO to
see the implications and check the eReadiness of the company to go through this major transformation.
§ Methodology used : Seven important aspects are discussed in relation to the e-readiness of the
organization. They are Business processes, Applications & Infrastructure, Web presence, Skills,
Executive mgt, External connectivity, Future directions.
4.1.4 Stage4: eTransformation Roadmap
§ Significance of this Stage: The organization is fully aware of it’s strategic position and where the
competitive advantage is, and it’s readiness to eTransform. It now needs a clear path to follow. The road
map assesses the current status of the company in the roadmap and shows the direction to proceed.
§ Methodology used: The eTransformation Roadmap developed by the University of Western Sydney
(UWS), Australia is the guideline being used for the successful eTransformation of many enterprises in
the region of Western Sydney along with the evolutionary eTransformation methodology[10].


Finance
Basic


Website
Links to

External
Interactive
Production
Suppliers
Site
Processes
External Business

E -Commerce
Corporate

Site
Data
Interactive
Ne
Repository

Convergen ce
Purchasing
Web site
w
Processes

Effective


Organisation
IT Sophistication
Marketing
Links to
Effective
Distributors
Team


Internal Processes
Human

Effective
Resources
Individual
Internal Business


Figure 2.The eTransformation Roadmap [10]
Figure 3. The Convergence Model [10]


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4.1.5 Stage 5: eTransformation Methodology
§ Significance and outcomes: The successful eTransformation is not easy. There are so many techniques
used in the world, but some organizations have failed miserably, damaging rather than enhancing their
competitiveness. The Evolutionary eTransformation methodology developed by the University of
Western Sydney, Australia is a strong believer of the importance of the business aspect of
eTransformation. This methodology is being used successfully in e-transforming a number of companies
in the region of Western Sydney.
§ The Overall Methodology used: The following eTransformation Methodology [10]diagram shows the
iterative evolutionary process, which enables the enterprise to become more adept in handling the
change, which in tern will help to transform itself successfully and relatively quickly.


Change Management
Business Process Modeling



Enhancing Process with IT
Business Process Re-engineering

Figure 4. Adapted from the eTransformation Methodology[10].

• Methodologies used in each step and Outcomes:
The iterative nature of this stage makes sure that the changes are not drastic and not difficult to cope
with. In the business environment, modifications and changes to systems are inevitable. This approach
solves that problem by managing each change step by step and revisiting the business goals and
strategies to make sure that the company is going in the right direction.
• Business Process Modeling
The business processes of the company are studied and divided in to 3 categories - Core processes,
Support processes and Management processes according to the methodology used by Martyn A. Ould in
his article “Business Processes – Modelling and Analysis for Re-engineering and Improvement” [3].
• Business Process Reengineering
All organizations are built on three main pillars which are People, Processes and Technology [4]. First,
the processes of the firm have to be identified along with the problems faced. Then the technology and
the people issues have to be addressed in order to re -engineer a single process or a whole set of
interconnected processes in order to add value to the customers.
• Enhancing Business Processes with IT
A component based development technique could be used for the implementation, which is cost effective
rather than developing software from scratch. Various applications such as invoicing, purchasing,
marketing etc can be developed as components and plugged into a Shell. A study carried out with the
eTransformation of the Garment Industry in Sri Lanka proved the above point to a great extent [13].
• Change Management
The reengineering of business processes triggers changes in business processes, applications, employee
and skills, technology infrastructure, and executive management. The implementation of the changes are
done according to the 7 S Model developed by McKinsey and Company in1980s. It addresses issues
related to Shared Values, Strategy, Systems, Structure, Skills, Staff and Style.
4.1.6 Stage 6: eSystems (ICT/Business Systems Maintenance, Policies/Security, Support)
§ Significance of this Stage: After Business Process Reengineering, there will be a proposed
organization-wide ‘Business and IT’ integrated system. Along with this, the business thinking, the IT
policies and the support systems will also need to be in the proper place for the organisation to
successfully sustain in the long run. According to the U.S. Department of Commerce – NIST Handbook
[7], the eTransformed organization must apply the appropriate Management controls, Operational
controls and Technical controls along with the incorporation of the IT policy in to the corporate policy.
§ Methodology used: This section deals with the proposed eEnabled systems in the transformed
organization, which could be broadly categorised in to 4 areas: ICT Infrastructure, Business Systems, IT
Policies/ Security Measures and IT Maintenance/support for the Organization
4.1.7 Stage 7: Evolution –Overall Change Management

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THE SEVEN E’S IN eTRANSFORMATION - A STRATEGIC ETRANSFORMATION MODEL
§ Significance of this Stage: After going through each of the other stages, there could be internal changes
the organization may want to go through, which can be done by going through to this stage and
implementing them using the 7 S model. This stage runs across all stages linking them to each other
linking and implementing the Strategic, Managerial and operational changes.
§ Methodology used: The model used to deal with the strategic, operational and other changes is the well
accepted 7 S model developed by McKinsey and Company over 20 years ago.
5. CONCLUSION
Information from a European survey of 2400 companies show that the main criterion for the selection of an
information system is the best fit with current business procedures but, several studies have shown that
configuring and implementing ERP solutions can be costly and may even require reengineering entire
business operations [10].
The proposed eTransformation model, takes in to consideration the environmental aspects and the model
transforms the organization along the selected business strategy using the roadmap as the guideline. The
model addresses the important issues of change management, infrastructure and maintainability.
Michael Hammer and James Champy in their best selling book ‘Reengineering the Corporation’[1] have
stated the most common errors that lead companies to fail in reengineering. Some of them are
§ Trying to fix a process instead of changing it
§ Not having a focus on business processes
§ Ignoring everything except process redesign
§ Neglecting peoples’ values and beliefs
§ Willing to settle for minor results or quitting too early
The Seven E model addresses all aspects mentioned above ensuring success to the organization in the
eTransformation process.
REFERENCES
1.
Hammer, Michael, Chapmy, James, 2001, Re-engineering the Corporation – A manifesto for Business Revolution,
Nicholas Brealey Publishing, London, UK.
2.
Kalakota, Ravi, Robinson, Marcia, 2000, E-Business- Roadmap for Success, Addison-Wesley, India, pp 31.
3.
Ould. Martyn, Business Processes- Modelling and Analysis for Re-engineering and Improvement, John Wiley and
Sons
4.
Peppard, Joe, Rowland, P., 1997, The essence of Business Process Re-engineering, Prentice Hall India, p 45
5.
Pricewaterhouse- Coopers Consultants, 1999, Seven Co-business Strategy Formulation,
http://www.pwcglobal.com/lu/eng/ins-sol/spec-int/ebusiness-tools-7co.html
6.
Sawhney, Mohan, Zabin, Jeff, 2001,The Seven Steps to Nirvana – Strategic Insights in to eBusiness Transformation,
McGraw-Hill, USA.
7.
U.S. Department of Commerce– NIST Handbook, National Institute of Standards and Technology
8.
Weill, Peter, Vitale, Michael, 2001, Place to Space – Migrating to eBusiness Models, Harvard Business School
press, Boston, Massachusetts.
8.
CommerceNet 2000, Barriers to Electronic Commerce, , http://www.commerce.net/research/barriers-
inhibitors/2000/Barriers2000study.html
9.
Communications of the ACM , ERP adaptaton by European Midsize Companies, , April 2000, Volume 43, p27.
10. Ginige Athula, Murugesan San, Kazanis Phillip, A Roadmap for Successfully Transforming SMEs in to E-
Businesses, Cutter IT Journal, May 2001, Vol 14.
11. Porter, E. Michael, Harvard Business Review, Volume 74, Number 6, pp 61 - 78
12. Arunatileka, Shiromi, Ginige, Athula, eTransformation Strategy for the Sri Lankan Garment Industry, International
IT Conference–2002, Colombo, Sri Lanka

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