The Heart of the Matter
The crucial ingredient in B2B success isn't technological. It's human
By Andrew Brooks
You Ignore the Human Element at Your Peril
Suggested slogans for the New Economy:
- People don't matter - it's technology that counts.
- "Change" really means "take people out of the process."
- Reduce human input and you increase savings and efficiency.
- You will be automated. Resistance is futile.
If you haven't made the big changes yet, you will soon. The first glow of B2B fascination may have faded, with e-markets closing down and B2B vendors sending mixed signals. And the realization may have finally set in that true business-to-business e-commerce is going to require some serious process re-engineering. That won't stop it from happening, but as we enter the next stage it's time to recognize that the crucial ingredient in B2B success isn't technological. It's human.
"This company showed me their new web site where the customers could get account information, see how much they owed, get product pricing or post things like preferred delivery dates -- all your standard CRM stuff. They did a lot of repetitive manufacturing so that was fine, but 40 per cent of their business was based on custom manufacturing, and most of their new business came from that, from custom jobs turning into repetitive manufacturing business.
"So I said 'where's your custom configurator? Show me where a customer can go in and request a custom product.' They didn't have anything like that! You could input repetitive orders alright, but they had nothing for custom work. Basically I told them they'd cut off at least 40 per cent of their business."
The source for this story prefers to remain anonymous, but whether you know the names or not, the experience illustrates the problems that can crop up when a B2B e-commerce strategy isn't thought out completely in advance -- and especially the dangers of not getting the people/process aspects right.
In this particular case, the need for a custom configurator had actually been anticipated, but by someone too far down the food chain to even be heard, let alone do much about it. In addition, the web site had been built around an existing ERP system that would have made the configuration capability difficult to build, if not entirely impossible. So the company decided to press on and ignore the custom end of things for the time being.
A company in this situation may assume it's not losing much, and that custom work and new business will continue to come in the way it has before: by phone, fax, courier or site visits. But as more and more businesses automate their B2B dealings, the ones that get it right the first time and anticipate customer needs are going to have a huge advantage. Customers are quickly learning to expect higher and higher levels of functionality from B2B web sites.
The key to anticipating customer demand, our storyteller believes, is to bring the marketing people, who understand the customer best, into the e-business planning process early on. Which is where B2B planning becomes a human, process oriented operation. Someone has to have the big picture, and the authority to make sure that the project team covers all the bases.
"Technology is not the issue," he insists. "It's the ability of the vendor you're dealing with to understand your technology needs, by understanding your functional needs. Technology is nothing without the functional understanding of what you're doing."
The Right Signals
That functional understanding can't happen without communication within an organization and with business partners. If the lines of communication are not kept open, with information and input flowing both ways, any e-business strategy -- or any other corporate strategy for that matter -- is doomed to become inflexible and rules-driven to the point where it can't adapt, cope with problems or account for the unpredictability of the human element.
It's just the kind of approach that has led to the failures of so many IT-driven initiatives in the past, most notably the spectacularly failed ERP implementations that garnered so much bad press a few years ago. No wonder people get cold feet when they're told about the latest brilliant e-business plan!
"Change doesn't have to be bad," says Joan Mesic, senior consultant, organization effectiveness with the Bank of Montreal. "But I think that especially in some of the technology areas change is seen that way. They're dealing with the systems already, and now the systems are going to change, so that's viewed as negative."
Mesic's job is to deal with organizational change as it affects Bank employees, through communications, training, and by working closely with local managers. Mesic was called in by the head of emfisys, the Bank's internal technical services and support organization, to handle the human side of the migration to a large-scale Oracle-based integrated e-procurement system to be used by the Bank's 33,000 employees. For the project, she was given the title of change management team leader, with a mandate to manage and deal with organizational change as it affected Bank employees.
The e-procurement system will feature an online catalogue of preferred suppliers where employees can order a wide range of goods they need to do their jobs -- everything from stationery to laptop computers. Already in pilot phase at press time, the system will enter production rollout starting in May, and when it's fully operational it will integrate and automate all the subsidiary accounting processes from requesting an order and getting approvals through to receiving and payment -- even the capitalization of goods will be automatic. There will also be an expense claim application online so that expense reports can be automated.
Getting Them Where They Live
Implementation will be technically complex. Mesic says that the changes will probably hit hardest in the Bank's accounts payable and fixed assets group, where the existing system is around eight years old. So obviously a primary goal has been to design the new system to be as painless, fast and user-friendly as possible right from the top -- a technical challenge.
But the main challenge as far as Mesic is concerned? The human element. "On the microcosm or macrocosm level, it's always the people. If the processes they work with are going to change, we have to help them change the way they work.
"What I've found in working with people is that no matter how hard you try to convey the 'vision' to people, they'll only get it when it impacts their job -- when their own roles and responsibilities change."
That's why communication has been a cornerstone of Mesic's approach. As a one-person department, she is forced to do a lot of teamwork and team building so that when she has moved on, the people in a given department have their own structure that can help them adapt, and give them a sense of "ownership" of the changes that are affecting them.
One vital tool is measuring the change itself. This can take a multitude of forms, but one important measure for Mesic is the user-friendliness of the system.
"That sounds like really simple statement," she says, "but if the system is not intuitive enough for people to use, they'll simply stay away, and then we just won't get the kind of business results we want."
For users during the system's pilot phase, Mesic has devised an online training guide. But it's very detailed, and Mesic realizes that the system's eventual users just won't have the time or the patience to resolve problems with it. That's why, at press time, she was setting up a usability exercise for people new to the system, complete with screen-by-screen walkthrough scripts and a leader's guide. In a classroom environment, a group of 'raw' users will go through the scripts and any problems or non-intuitive spots will be noted. It will then be Mesic's task to develop online or paper-based job aids that will help the system's future users to deal with the difficult patches. In other words, the system itself can't be changed.
"We've bought these applications at this point," she explains. "And our whole business case for this system has revolved around keeping it 'vanilla.' So we can't change the screens. If there's a screen that for some reason is difficult to navigate, I can't go to the developers and get them to change it for me."
Risk and Response
Being locked in like that could be daunting for anyone. It might be even worse for Mesic, who is well aware of the odds going in: she quotes one industry study that found that of IT projects, 16 per cent could be rated as successful, 31 per cent were failures, and 53 succeeded but were 'challenged,' i.e. they got implemented (or "installed" -- see "i2i" next door) but did not function fully or as originally planned.
"Why is that? It's because of the change aspects," says Mesic. "They gave 26 root causes for troubled projects, and a lot of them have a change management component. Especially with technical changes, people don't take the time to understand the human aspects of that change.
"A company should hire an outside consultant. In some companies, change management may exist as part of someone else's job, say in human resources or learning. Not every company can have a standalone change management person like me, so they should search out that expertise. But if the investment is great enough, they should hire an outside consultant."
Just Do It?
Change can be ugly. The main reason employees resist change is the fear that their jobs may not survive. At the very least, familiar, comfortable habits will change, and established buyer-supplier relationships will never be the same again -- relationships that buyers can depend on in a crunch, when an order is needed on short notice or something has to be returned.
"Change is difficult," says Tom Petersen, president and founder of ThreeCore Inc., an engineering procurement firm based in Beverly, Mass. "But if you're looking at outsourcing your logistics or procurement or bringing in experts to help you with this process, you have to embrace the fear.
"I don't think there's a reasonable expectation that you're going to make a fundamental change and not create fear. How you manage that has everything to do with your success -- but don't think you're going to avoid it or mitigate it."
In that context, what Patricia Wallington told a business audience at IBM's Link_2001 supply chain conference in March makes particular sense. Wallington is president of CIO Associates, a management consultancy based in Sarasota, Fla., and is a former CIO of Xerox.
"Speed counts for a lot," Wallington said. "Act quickly. Expect chaos, expect cries of pain, but don't stop, don't even slow down. I'm convinced that most major corporations could double the speed of this kind of project. So among your project goals, set goals around speed."
Wallington also emphasized the importance of top-level leadership. "If there ever was time for inspirational leadership, this is it," she said. "You can't order your people to do this: you have to lead by example."