A Case Study on Enterprise Transformation in a Medium-Size Japanese IT Service Provider

Business Process Change from the Ontological Perspective

May 13th, 2013Sanetake NAGAYOSHI, Ph.D

Tokyo Institute of Technology, Japan

3rd Enterprise Engineering Working Conference (EEWC 2013)@Luxemburg

Conclusion

– Based upon the case study on the enterprise transformation of divisions in “Company A”

i. it is not always necessary to change the ontological level of business process in market development

ii. it is necessary to change the ontological level of business process in product development

iii. it is necessary to reengineer the ontological level of business process in diversification

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Introduction

• Organizational change and transformation is an important research topic

• Traditionally, organizational change and transformation mainly focuses on the change in organizations’ structures

• Discourses on organizational transformation has begun to draw from many other disciplines and various perspectives– Process-based research in understanding how and why

organizations change and transform4

Objectives

• To describe business process change based on the case study of enterprise transformation from the ontological perspective

• The relationship between market diversification (in Product-Market Grid) and business process change from the ontological perspective is analyzed and discussed

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Product-Market Grid

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Cur

rent

Mar

kets

Current ProductsN

ew M

arke

tsNew Proucts

MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

Figure 1 Product-Market Grid [1]

Ansoff (1965)

Research Method (1/2)

• Actor Transaction Diagram in DEMO(Design and Engineering Methodology for Organization) for describing business process

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A 01 A 02 T02

Figure 1 ATD (Actor Transaction Diagram)

Research Method (2/2)

• Qualitative Research– Case Study in “Company A” , Medium-Size

Japanese IT service provider– Interview : 4times for 7persons

• First interview: Director • Second interview: CEO and technical director• Third interview: Sales manager and technology

manager from the second solution division• Fourth interview: Sales manager and technology

manager from the first solution division

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Case StudyOverview : Company A

• Medium Size Japanese IT Service Provider• As a software provider in 1969• Several well-known application software

packages in 1980’s• Main Customer

– Local government in Japan , Wholesaler– Large scale IT Service Providers in Japan: as sub-

constructor in projects– No consumer

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Case StudyFive Transformation Stories in Company A

• Division 1 (A)

– Story1: From a software package provider to an application service provider

• Division 2 (B-1,B-2)

– Story2:Systems Integration Service for new market– Story3:Organizational change for continuing the

service• Division 3 (C-1,C-2)

– Story4:Start new product– Story5:New market entry with the product

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Story1: From a software package provider to an application service provider (A)

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Company ALocal

Government

Product

Software

Company ALocal

Government

Infrastructurewith

Software

Service

Before After

Transformatio

n

Story1: New Product Development on Product-Market Grid

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Story1: Business Process “Before”

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Story1: Business Process “After”

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Added process(Actors, Transactions)

Story2: From Sub-Contractor to Primary Constructor (B-1)

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Plan Develop Maintain

Plan Develop Maintain

ConsultingFirm

SoftwareDeveloper Self

Systems Integrator

ConsultingFirm

SoftwareDeveloper

SoftwareDeveloper

SystemsDevelopment

Japan

SystemsDevelopment

Overseas

Primary Constructor

Sub-Contractor

Systems Integration Service In Japan

Story2: From Sub-Contractor to Primary Constructor (B-1)

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Large Scale Systems Integrator(Primary Constructor: Company B)

End Customer(Telecom company )

Before After

Transformatio

nCompany

AOther

Sub-ConOther

Sub-Con

Sub-Contractors

CompleteSystem

Company A(Primary Constructor)

End Customer(Distributor: Company C)

OtherSub-Con

OtherSub-Con

OtherSub-Con

Sub-Contractors

CompleteSystem

Story2: Diversification on Product-Market Grid

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Story2: Business Process “Before”

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Story2: Business Process “After”

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DrasticChange

Story3: Organizational change for continuing System Integration (B-2)

Before After

Transformatio

nCompany A(2nd Division)

End Customer(Other Customers)

Sub-Contractors

CompleteSystem

Sales Eger,PGer

End Customer(Company C : Distributor)

CompleteSystem

Company A(2nd Divison)

Sales Eger,PGer

“Prime Center”

Sub-Contractors

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Story3: Market Development on Product-Market Grid

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Story3: Business Process “Before”

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Story3: Business Process “After”

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Same as “Before”

Story4: Start New Product (C-1)

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Company A Customer

Product

Software

Company A Customer

Before After

Transformatio

n

Product

OtherCompany

ModifiedSoftware

Acquire

Software

modify

Story4: New Product Development on Product-Market Grid

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Story4: Business Process “Before”

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Story4: Business Process “After”

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Added process(Actors, Transactions)

Story5: New market entry with the product (C-2)

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Company ANew

Customer

Before After

Transformatio

n

Product

OtherCompany

ModifiedSoftware

Acquire

Software

modify

Company A Customer

Product

OtherCompany

ModifiedSoftware

Acquire

Software

modify

Story5: Market Development on Product-Market Grid

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Story5: Business Process “Before”

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Story5: Business Process “After”

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Same as “Before”

Five stories on Product-Market Grid

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Product-Market Grid and Business Process Change in the Five Stories

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Story Product Market GridBusiness Process Change

Between before and after

1 Product Development Added Business Process

2 Diversification Drastic Change

3 Market Development Little Change

4 Product Development Added Business Process

5 Market Development Little Change

Result

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Based upon the case study on the enterprise transformation of divisions in “Company A”

1It is not always necessary to change the ontological level of business process in market development

2 It is necessary to change the ontological level of business process in product development

3 It is necessary to reengineer the ontological level of business process in diversification

Discussion(1/2)

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• When a company intends to sell existing products to new customers, change in business processes may not be necessary, because the company only needs to know customer information such as implicit and/or explicit customer needs and sometimes industry-specific knowledge

• This requires substantial changes in employee behavior, company culture, and information systems which are not observable at the ontological level

• This suggests that an ontological-level analysis may miss out some important changes

Discussion(2/2)

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• When a company intends to deal with new products and/or services, it needs to change business processes because production and/or service delivery is directly related with business processes

Limitation

• This research was conducted by a single case study

• Author does not have any intension to claim that the findings are universal

• More studies are needed to generalize the findings beyond this study

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