Learning Transformation: Building the Capacity for IT Supported Change

Learning Transformation: Building the Capacity for IT Supported Change

Brent Furneaux (School of Business and Economics, Maastricht University, Maastricht, The Netherlands) and Robert Günther (Business Transformation Services, SAP, Walldorf, Germany)
Copyright: © 2013 |Pages: 15
DOI: 10.4018/jcit.2013040103

Abstract

Information system (IS) transformation initiatives generally present a wide range of challenges for organizations. These challenges are, however, heightened considerably within organizations that have not traditionally pursued such initiatives. In addition to the many difficulties associated with developing and implementing radical business innovation, inexperienced organizations are simultaneously faced with the need to rapidly acquire the underlying competencies necessary to successfully execute a transformation. This case thus presents a mid-sized, globally oriented organization that is in the early stages of developing its transformative capacity while it undertakes a transformation of its human resources (HR) function. The reader is placed in a position to evaluate the challenges and learning achieved thus far in the process and to offer recommendations aimed at ensuring a successful transformation. Recommendations can also be made in relation to how organizations can foster the growth and development of their transformation competencies.
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Organization Background

Tri-Divisional1 is a mid-sized multinational organization headquartered in Western Europe. Founded more than 150 years ago, the organization has since grown to encompass three independent lines of business operating in three very distinct industries. Although somewhat weighted toward neighboring countries, Tri-Divisional’s revenue base and workforce are globally distributed (Figure 1). In the five years leading up to 2008, the company experienced relatively consistent growth in both sales and profitability. Sales over this period rose from approximately 4.2 billion USD to almost 6.3 billion and profitability moved from a loss of 150 million in 2002 to a profit of 322 million by 2007.2 However, the 2008 financial crisis hit the organization hard with 2009 sales falling to 3.4 billion. This precipitous decline in sales resulted in a loss for the year of almost 330 million. In an effort to respond to the situation, substantial restructuring and cost cutting was undertaken that led to a workforce reduction of approximately 12.5% and a reduction in operating expenses of approximately 35%. Despite their apparent severity, these changes placed the organization on a solid trajectory for recovery in the 2010 fiscal year (Table 1).

Figure 1.

Sales and employment by geographic region

Table 1.
Corporate financials
       2006       2007       2008       2009       2010
       Sales (millions USD)       5,785       6,270       4,996       3,406       4,353
       EBITDA (millions USD)       635       647       466       106       424
       Net Profit (millions USD)       330       322       71       -328       163
       Return on Equity (%)       24       17       6       -20       14
       Employees (Year End)       12,900       14,000       14,500       12,700       13,300

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