IT-Enabled Business

Transformation

Five levels of IT-enabled

business transformation
High

Degree of business
transformation

Business Scope Redefinition

Business Network Redesign
Business Process Redesign

Revolutionary
Levels

Internal Integration
Localized Exploitation

Low
Low

Range of potential benefit

Evolutionary
Levels

High
2

Level 1
Localized Exploitation

Leveraging of IT functionality to design focused,

high-value areas of business operations.

Example:

Customer Order Entry System

Toll-free Customer Service System
Inventory Control System
Internal Electronic Mail System

Level 1
Localized Exploitation

Strength

Easy to identify and exploit potential IT

capability.
Minimal organizational resistance to change.

Weakness

Potential duplication of efforts with in the same

organization.
Lack of organizational learning.

Level 1
Localized Exploitation

Management Challenges

Identification of high-value areas

Benchmark against best practice
Redesign performance assessment

Level 2
Internal Integration

Leveraging of IT capability to create a

seamless process both technical
interconnectivity & business process
interdependence.

Example
-Lexus and Infiniti

Level 2
Internal Integration

Strengths

-Supports the total quality movement.

-Streamlines the organization process to deliver
improved customer service.

Weaknesses
- limited impact if competitors using newer logic of
organizing

Level 2
Internal Integration

Management Challenge

-Business process interdependence and technical

interconnectivity
-Performance reassessed criteria
-Benchmark results against best-in-class

Level 3
Business Process Redesign

Redesign key process for competing in the

future
Use IT capability for future organization
capability

Level 3
Business Process Redesign

Strengths
-First mover advantage
-Not be hindered by historical process

Weakness
-Redesigning process might be
obsolete or outsourced to partners

10

Level 3
Business Process Redesign

Management Challenge

Articulate business rationale for redesign

Recognize organization issues and challenges

11

Level 4
Business Network Redesign

Leverage related participants in the

business network to provide products and
services.
Exploiting IT functionality for learning from
extended network.

12

Level 4
Business Network Redesign

Strengths

Elimination of activities where the focal organization

may not have required level of competence.
Streamlining business scope to remain flexible.
and responsive to fast-changing and diverse customer
needs.
Exploit sources of competence in the larger business
network.

13

Level 4
Business Network Redesign

Weaknesses

May not provide the requisite source of differential

advantage if the participants in the business network
not well-coordinated.
Lack of a streamlined internal IT infrastructure could
hinder the ability to learn from extended business
network.

14

Level 4
Business Network Redesign

Management Challenge

Articulate of the firms strategy

Elevation of importance of business network
redesign
Redesign of performance assessment criteria

15

Level 5
Business Scope Redefinition

Redefining corporate scope enabled and

facilitated by IT functionality

16

Level 5
Business Scope Redefinition

Strengths

Opportunity to Create a more flexible and effective

business entity
Substitution as an effective alternative to vertical
integration

Weaknesses

Not developing a consistent competence for the future

Possibility of Hollowing the corporation

17

Level 5
Business Scope Redefinition

Management challenge

Creative mix of internal activities, external relationship and

business arrangement.

Assessing business success by measuring return on value

added or return per employee.

18

Strategic Management Challenge :

Alternative Approaches to BPR
High

Degree of business
transformation

Business Scope Redefinition

Business Network Redesign

Seek
Efficiency

Business Process Redesign

Enhance
Capabilities

Internal Integration
Localized Exploitation

Low
Low

Range of potential benefit

High
19

Perspectives of BPR

Seek Efficiency
- rectifying current weakness
Enhance Capability
- creating strategic capabilities for future
competition

20

10