Article: Reorganize for a Balanced E-business

Reorganizing your 'bricks and mortar' business to survive or improve sales and profits can be beneficial or disastrous according to the organizational balance and make-up of the planning team. Also, as most businesses have already discovered, the journey into adding effective e-business isn't without its challenges and hard work. Automating and reengineering business processes can require equal amounts of innovative thinking and technology skills. Teaching customers and employees to use new systems effectively often demands patience and persistence.

But these tasks pale in comparison with the difficult process of linking an organization's various systems such as; commerce (sales), procurement, manufacturing, fulfillment, payables, receivable and more, into a seamless e-business environment.

At issue is the fact that all too often, companies wind up applying the same strategies they've used in the brick-and-mortar world to create islands of automation in the click-and-mortar world by creating the same set of problems that have plagued reorganization and enterprise application development since the advent of the PC.

We are all aware that in a typical organization there are four major personnel groups, namely in order of importance; sales and marketing; manufacturing/fulfillment; accounting and administration. Yet, it's hardly news that the administrative burden both in time and costs increases exponentially as a company grows and that's forcing many companies to take a step back and reevaluate their current business and proposed e-business strategy in an effort to curtail rapidly soaring costs.

As such, when any reorganization is proposed, the largest entrenched departments, being administration and accounting, typically become the reorganization team leaders with little input from sales and manufacturing. This typically leads to an increase in the number of people reporting to administration management and a diminution of the direct reports to sales and fulfillment, thus leaving an administratively orientated rather than sales focused organization.

This is a common stumbling block in many organizations leading to an overemphasis on perfecting administrative and reporting systems, front-end web interfaces and order entry systems at the expense of building optimal business architectures that actively supports and increases sales plus improves efficiencies in the fulfillment cycle.

Remember, providing sales are being made, order entry, billing and collection is the easiest part of the entire e-business process, but it does not ensure success any more than a cash register does in a retail store. More important is taking steps to ensure that valuable point-of-sale and order data reaches systems and people who can use it to leverage competitive gains. You may have a reorganization model that on the surface purports to be sales friendly yet has been populated and staffed by administrators. It's the task of management to ensure that a reorganization team is composed equally of all four of its major departments and that the mandate is to improve sales and fulfillment not pour needed resources into a further expansion of the business cost structure.

And that's a task that can challenge even the most knowledgeable technology companies let alone companies hovering on the edge of an e-business commitment.

Another key to successful e-business is linking systems to e-procurement and electronic payment capabilities. It's no secret that paper and manual processes create islands of inefficiency; they also prevent organizations from unlocking the true value of e-business. By moving from paper purchase orders and invoices to electronic systems, and by creating a system that looks for exceptions rather than requiring approval for every transaction, it's possible to automate the process, cut costs and provide better service.

However companies prefer to think about e-business, one fact remains clear: Those that embrace a sales and fulfillment model supported by a lean administration and accounting departments subservient to its role in expanding sales and profitability are far more likely to succeed. As such, administrative and finance professionals who understand the ramifications of connecting systems and doing business in this new environment are far more likely to help their enterprise gain a strategic advantage.

The goal of e-business is to create more efficient and creative business interactions. When companies tie all the loops together into a single strategy, the results are often impressive. When used effectively, you can obliterate transactional costs through a combination of technology and process redesign and eliminate a lot of steps and business practices that shouldn't have existed in the first place. - John Shenton - February, 2003