Change Management and Restructuring at IBM

A STUDY OF THE CHANGE MANAGEMENT AND RESTRUCTURING PROCESS OF AN ORGANIZATION
Introduction
Implementing change is an essential organizational procedure that plays a major role in ensuring organizational efficiency (Alkhafaji, 2003). Implementing change is not an easy task and requires well laid procedures and a strategic planning approach. One of the significant driving factors that could compel business enterprises to implement change processes is the need to keep up with the dynamic nature of the market and generally to foster organizational culture that matches the present management trends (Baum, 1996). Presently, the working environment is experiencing dynamism associated with globalization, advancements in technology and increasing organizational mergers; this form part of the need to implement change in an organization. It is evident that business enterprises can no longer rely on the traditional predictable pattern of business operations. The new organizational trend is the unpredictable and continuous change (Bolman & Deal, 2008). Change process is usually as a result of innovation at the organizational level, this therefore implies that an organization that is stagnant in terms of execution of the organizational processes is in dire need of implementation of change. This report outlines the evidence of the organizational activities pertaining to change management and the restructuring process at IBM. The paper lays more emphasis on the implementation of a new strategic plan and outsourcing of operations such as payroll and technical support to a more efficient third party.
Overview of the IBM
Presently, IBM is leading business research organization in the globe. It prides itself in procession of eight laboratories with a total of 3200 researchers distributed in six nations. Its progress is reviewed annually by its chairman. The IBM strategy and change practices integrates the business processes of an organization with technology in attempt facilitate the realization of the business goals and objectives. Its key strategy dimensions include business, operational, organizational change and technological strategies that are tailored to foster organizational innovation and growth. In the context of the IBM, change is required regularly due to the dynamic nature of the market and the ever changing technological advances that compels the organization to match its organizational processes with changing times and the increasing business requirements (IBM, 2009).
The IBM significantly relies on three conditions that are currently aimed at making business enterprises effectively execute their business operations. The IBM is of the view that the global arena is developing in terms of instruments that are technologically advanced, which in turn enhances global communication. The IBM perceives the business environment as becoming intelligent, facilitated by sophisticated end user devices and complex communication systems. In attempt to implement change process, it is imperative for an organization to put into consideration the above factors since the efficiency in the execution of business processes considerably depends on them. The result of the integration of the above three concepts is a combination of the physical and digital infrastructures globally resulting what the IBM terms as smart systems that are based on information technology infrastructures. As the globe continues to become smaller, the business systems continue to become smarter (IBM, 2009).
Change management in current business environment is a challenging task that business enterprises are faced with. Implementation of the change strategy also comes with its challenges. The study by IBM during 2008, known as Making Change Work reported that most change implementation processes fail due to lack of well laid objectives which represented approximately 80 per cent of the business enterprises. The most successful change projects accounted for only 20 per cent and were strict change objectives, planned budget and other associated constraints (IBM, 2009).
The need to implement change within the IBM
Organizational change is a critical success factor for any organization. The past business environment of yesterday is in no way similar to the present business environment, and so will be the future (Drucker, 2007). This implies that IBM and other organizations are faced with the challenge of ensuring that their change strategies are effective according to the current business requirements and the nature of the business environment. Organizational change can be driven by factors such as the need to have changes in terms of the organizational culture and operational changes.
According to the IBM, the major driving factor that compels an organization to change is the need to meet the increasing client demands and to streamline the business processes with the current technological platforms and recent trends in organizational culture. The factors that compel the IBM to adopt a change strategy is the need to intensify employee productivity, the need to reduce the expenses incurred by the business enterprise in order to increase its profitability and most importantly, the business enterprise needs to sustain itself amidst the challenges associated with the dynamic technological advances and the changing business environment (IBM, 2009).
The implementation of change process within the IBM
Change processes are diverse in nature and can incorporate factors such as technological change, organizational culture changes and changes in the way an organization executes its business process. Before the implementation of a change process, it is imperative to carry out a critical analysis of the current business environment in order to evaluate whether the implementation of change is justified. In the business context of the IBM, change is justified due to the dynamic nature of the computing technologies and therefore, an organizational change is aimed at ensuring the business enterprise remains competitive in the market place. Effective change implementation depends on the effectiveness of the change management strategies that IBM will deploy (Duane & Hoskisson, 2008). Prior to implementation of change, a business enterprise must ensure that there are effective change management strategies in place. Change management strategies serve to combat the challenges associated with the implementation of change in a business enterprise.
The second critical process in implementation of change is the outlining of a clearly stated vision for the change process. A clearly articulated vision for change plays a significant role in keeping the change implementation process on track. What this implies is that the key driving factors behind the implementation of the change process are put into consideration. With a clearly outlined vision for change, challenges such as change resistance are easily dealt with. In fact, having a vision for change process is one of the most effective approaches to ensuring change readiness in an organization through outlining of the benefits associated with the adoption of new approaches to leadership and execution of business processes. The vision for change helps the organization to outline its business goals and daily business processes that are significant in determining the success of the organization (Fuchs, 2004). A shared vision implies that the organization commitment towards the change is exhibited at all the organizational levels ranging from the top level management to the lower level in house staff. This plays an important role in ensuring that change implementation process is successful. A vision for change is likely to be more effective if it is initiated from the middle and entails the participation of all the members of the business organization at all the levels, including the external stakeholders (Goldsmith & Hu-Chan, 2003).
The actual implementation is the third stage during the implementation of change at the organization. Organizational change is implemented according to the organizational requirements that fostered the change process. Change can be structural, management oriented or even operational oriented depending on the key business functions of the organization (Hill & Cronk, 2010). The change strategy adopted by the IBM should such that it provides a favorable business environment that can cultivate the concept of innovation. It is arguably evident that innovation is one of the key requirements of organizational behavior that a company must adopt. Innovation requires adoption of right structures that incorporate the identification and addressing of the organizational weakness, decision making concerning the direction to implement and finally evaluating the outcome of the innovation and the growth that will be stimulated by the innovation strategies. Change implementation is not over until the business enterprise adopts effective strategies to manage the transformational period (Hill & Jones, 2007).
Implementation of a new strategic plan
Strategic management involves the transformation of organizational resources into elements that can enhance the performance of the organization, mostly in their external business environments. Some of the effective approaches to strategic management include the specification of the organizations vision and mission, development of well-planned policies and effective allocation of resources in order to facilitate the realization of the stipulated goals and objectives of the firm (Kwiatkowski, 2005). Organizations are in dire need of strategic planning primarily because of the unpredictable trend of the global market place. The main objective behind strategic management is to uphold the competitive nature of business enterprise in the current dynamic and turbulent market place. This paper attempts to discuss two of the contemporary events that firms and organization can undertake during strategic management.
The two basic contemporary events undertaken during strategic management is strategy formation and evaluation, and strategy implementation. Both the steps are significant in determining the success of strategic management process in the current global market place. In most cases, strategy formation precedes strategy evaluation. If strategy formation and evaluation are effective, the implementation of strategic management will not be a significant challenge to the business enterprise (Baum, 1996).
Strategy formation typically entails option generation, which involves the establishment possible plan of approaches. Strategic formation is a sequential process, which begins by conducting a situation analysis for the organization, an evaluation of the status for the business enterprise and carrying out analysis of the competitors in the market place, which encompasses an analysis of both external and internal entities that affect the business enterprise. Having carried an analysis, objectives are set in accordance with the long term and short term business requirements. Vision statements are also drafted, financial goals and strategic business objectives are set up. It is important that the proposed objectives put into consideration the results of situational analysis, as a result, facilitate the establishment of strategic plan. The strategic plan should outline the process of the realization of the proposed objectives. Strategic evaluation on the other hand investigates the effectiveness of the strategic plan. It involves carrying out a SWOT analysis in order to determine the strengths and weakness of the strategy. The evaluation of potential threats and opportunities is also important during strategy evaluation. Strategy evaluation also entails the use of criteria such as suitability, feasibility and the acceptability of the plan (Kwiatkowski, 2005).
The second event in contemporary strategic change management is strategic implementation of the plan, which entails the putting of the proposed strategic plan into action. Strategic planning depends on strategic evaluation, after the choice of effective plan of approach that clearly outlines the goals and objectives of the contemporary strategic management. Some of the activities undertaken during strategic implementation include change management, evaluation of the limitations of the plan of approach and eventually analyzing the benefits or drawbacks realized after implementation. It is also imperative to analyze economic factors such as returns on investments, the effects that the plan has on overall productivity of the business enterprise (Bolman & Deal, 2008).
Why employees resist change at IBM
It is important to note most individuals are not receptive to change, solely because they do not like being subjected to new environments and the challenges that are associated with implementing change such as the long durations for adaptability and the need to alter the organizational culture that was part of them. Within the IBM, people perceive the adoption of change as a more risky venture than the present state of affairs. With such perception, it is difficult to motivate people to actually embrace the change that they do not know the outcome (IBM, 2009). Another significant reason for change resistance within the IBM is that people are somewhat connected to the present system and they are more used to the present state of affairs, initiating change is therefore bound to cause tension within the organization and will instill an element of resistance towards the implementation of change of any perspective. Observational learning is a significant aspect of change that an organization should never underestimate, lest it is exposed to the risks associated with change implementation. Even a well-articulated vision for change is subject to resistance. People within an organization are always threatened by the idea of organizational change, since it will have an influence on the way they execute their daily tasks within the organization. With every change, there are bound to be winners and losers; looser tend to be affected negatively from the implementation of change, such as loss of jobs, salary cuts and organizational restructuring. Therefore, losers are bound to be more resistant towards the implementation of change in that context. Having reviewed the potential causes of resistance to change within an organization, it is therefore important for the change implementation strategy to develop effective measure that can be used to counter the possible causes change resistance (Petch, 2009).
Strategies for overcoming change resistance
Change motivation is one of the most significant approaches that a change strategy should put into consideration. In fostering motivation for change, the management should outline the various drawbacks that are associated with the current system, and the proposed benefits that are bound to be realized to the organization in case it adopts change. It is important also to outline the proposed benefits that the members of the organization will realize. This helps in the creation of a perception that the proposed change not only considers the organization’s needs, but also the needs of the individuals within the organization. Such an approach is bound to reduce the resistance that may be witnessed due to change implementation. This can only be achieved through effective communication. This involves the education of people in the organization concerning the change that is to be implemented. Effective communication provides the employees with a framework through which they can access the benefits associated with the implementation of change, this can make them see the logic that is associated with the change to be implemented. It also helps in elimination of the unfounded rumors concerning the effects associated with the organizational change. What this implies is that, it is important to clearly outline the potential outcome of the change and the affected parties. The change strategy should also put into consideration the various ways through which they handle the affected individuals. For instance, in cases of job lay-offs, individuals can be sent off by hefty packages or reassigned elsewhere. Education and communication therefore serves as a motivation for the employees to embrace change, therefore, it plays a significant role in reducing resistance to organizational change (Fuchs, 2004).
It is also imperative that the change process be gradual. Rapid and static changes in the organization structure are subject to resistance. Gradual changes in the organization provide an opportunity for employees in the organization to adapt to the new system, at the same time keeping them attached to the old system. It is important for the management to state that the change is not an overhaul of the current system, but just a modification or an improvement on the current system that is aimed at enhancing organizational and individual productivity (IBM, 2009). Gradual change can be effectively implemented through incorporating change procedures that offer facilitation and required support. This is important in cases whereby the resistance to change is primarily due to difficulties in adjustments. The change management procedures have to incorporate supportive services during the transition period in order for the change to be a success. Supportive transitional services that can be implemented can include employee training, appropriate counseling and providing an avenue through which they can express their views concerning the implemented organizational change. The change approach should therefore be gradual in order to eliminate the resistances associated with the acceptance of the proposed change on the basis of adaptability. Another important aspect of gradual change procedure is that it provides an avenue through which the effects of change to the organization can be evaluated and appropriate steps undertaken in order to curb any potential risks (Fuchs, 2004).
Resistance to change by the employees within the IBM can also be eliminated through initiating participative change methodology. The participation and involvement of the employees in the change process plays a significant role in eliminating change resistance. In addition, their involvement enhances their motivation towards the embracing the change because they would have a well-informed knowledge concerning the consequences of the change adoption or rejection to them and the organization as a whole. In cases where the initiators of change have no complete information concerning the change design, it is important to involve the employees in gathering information concerning the areas that need significant changes and the ways in which they perceive the implementation of the proposed change. It is also imperative that the top level management should display some commitment towards the change in order to reduce instances of change resistance within the IBM (William, 2003).
One of the most effective strategies for combating change resistance is through the implementation of a change strategy is bound to develop a strong organizational culture. A strong organizational culture means that the organizational operations and activities favor the realization of the organizations goals and objectives. This basically involves informing the employees within the organization the significance of adopting change as important in determining the organizational performance. The change strategy should therefore attempt to streamline the business processes, the employees and the organizational goals and objectives. An integration of the three organizational elements plays a significant role in overcoming of the change resistance at the IBM (William, 2003).
The above strategies do not usually guarantee that change will not be resisted. There are some cases where the above tactics will not work. Kotler (1996) suggests that in such cases, the most effective approaches are manipulation, whereby a change strategy deploys the use of co-option in getting those employees resisting change to abide by change. One such approach is giving those resisting change a chance in the decision making process during the change process, without having to impair the change process. Manipulation and co-option usually serves as an incentive to those resisting change in an organization. Coercion also compels employees to withdraw their resistance to change. This achieved through outlining the consequences to the individual of failure to embrace the change. Threats such as job losses, transfers and firing can be deployed to get the employees embrace the change (Kotler, 1996).
Outsourcing of operations to a an efficient third party organization
Outsourcing refers to the process of contracting to a third party or an external provider to perform an in-house business task. This implies that a contractual agreement exists between two organizations that entail the barter of services and money (Burkholder, 2006). A growing trend in outsourcing that is raising more concerns is the off shore outsourcing, whereby organizations outsource beyond borders. The subject of outsourcing has been under contentious criticism regarding its effectiveness and drawbacks to business organizations. In the present business environment, it is almost impossible for a business enterprise to meet all its needs by itself, the viable solution that may seem appropriate at that instant is outsourcing. Although there are other strategies such as employee training, they are only effective in the long terms and come with high implementation costs, and have no guarantee that the Return on Investments is worth the undertaking. Business enterprises may outsource for several reasons depending the urgency of the looming crisis. Irrespective of the approach to outsourcing, the underlying causes behind outsourcing are universal to any business enterprise. Despite the disadvantages associated with outsourcing such as quality issues, language barriers, competing problems, and management challenges, it is evident that outsourcing is inevitable in the business context of IBM.
The first prime reason why outsourcing is inevitable is the reducing number of expertise in Information Systems, Management Information Systems, Computer Science, and Computer Engineering disciplines. These disciplines play a significant role in the execution of core business functions, implying that their services are always on demand. In addition, technological changes require constant availability of technologists for its implementation (Burkholder, 2006). The challenge that many business enterprises face is the lack of availability of technical expertise to aid in the implementation of technology infrastructures to aid in the execution of business process. It is increasingly becoming evident that businesses need to adopt recent technological trends in order to upbeat the current business challenges associated with operation and management of business functions. The increasing need to adopt up to date technological infrastructures and the lack of availability of such expertise results to an increase in the demand for such services. In addition, many business enterprises put much emphasis on the core functions of the business, which may be technological infrastructure, investments or human resource (Engardio, 2006). For the case involving technological infrastructures, companies may require outsourcing their payroll and technical support to companies that are more specialized in IT in order to facilitate business efficiency. The present state of affairs makes outsourcing of IT support services a key requirement for existence of business enterprises. The limited number of IT increases their demand, as a result, the increasing preference to work on contractual basis rather than on a full time basis to a particular company. Despite the few number of IT professionals, there are other alternatives to outsourcing such as embarking on employee training, which is more effective in the long term (Verhoef, 2009).
The second prime reason why more outsourcing is inevitable is due to standardization and commoditization in the IT sector. This means that businesses can have access to software that were only accessible to high end corporations, thereby levelling the play ground and proving an opportunity for outsourcing companies that will have specialized in the new computing architectures. Vendor consolidation is one of the key driving factors behind outsourcing of IT support by large corporations since it provides an avenue through which outsource companies can focus on application development and integration into the new architecture (Burkholder, 2006).
Another principal reason that makes outsourcing a key requirement for business enterprises is the decreasing adoption of corporate computing. This is due to increasing cases of leasing applications rather than develop applications and providing an in-house support. Software developers are currently focusing on utility computing where billing is based on usage. Atypical example of this scenario is the increasing implementation of cloud computing architectures, whereby cloud data centres lease applications to companies and billing is done using the volume of data transferred and application usage within a given period. Utility computing implies that the IT infrastructure is based on a service-centric approach and is self-managed by the application vendor. A dynamic computing infrastructure ensures that there are high levels of computing reliability and less redundancy; this implies that the cloud computing data centers have the capability to respond quickly to the computing needs of its customers therefore facilitating IT staff to focus on key business needs. The effectiveness associated leasing applications is one of the key driving factors behind the end of corporate computing and the increasing embracement of utility computing, thereby compelling corporations to adopt outsourcing as a means of ensuring business efficiency (Engardio, 2006).
Benefits to the company associated with outsourcing of the payroll and technical support to third party organizations that are more efficient
The first reason why the company should outsource its application development project is that it allows the company to focus on the core business activities. This is because the company is currently experiencing a rapid growth, implying that the scales of its operations are bound to expand. The current application project development is subject to consume the company resources on the basis that its development serves the purpose of meeting the expansion needs of the company. In case the payroll application and technical support is undertaken using the in-house development team, the project will consume both human and capital resources of the company. Therefore, outsourcing the application development project will make the company to focus on other core business functions that are important to the continuity of the business without having an effect on the process of the application project development (Engardio, 2006). For example, if the application development requires a short period of time, the outsourcing the application project development is the most effective approach to be deployed instead on relying the in-house development team, which will consume a lot of capital and human resource towards the project, and the same time result in a shift in the attention of the business priorities.
The second reason for outsourcing the current application development project to a third party is because of the complex nature of the back-office operations at the company, in addition, the size of the company is a significant constraint in undertaking the application development project at a lower cost (Verhoef, 2009). This makes outsourcing the most viable alternative of making sure that the application project development is cost effective. A typical scenario associated with this case is that the in-house development team has no ability to meet all the requirements of the application development. This makes outsourcing the most suitable strategy for the company in such a context basing on the argument that it fosters cost and efficiency savings (Verhoef, 2009).
Currently, the expenses associated with performing a specific business process using the in-house staff is normally expensive, characterized by high values of overhead expenses. One of such back-office business processes is the current application development project, and outsourcing the project implies that the company is free from incurring extra overhead expenses associated with undertaking the project using in-house staff.
An important aspect associated with outsourcing the application development project is the flexibility of staffing. This is due to the fact that business processes to the company such as the application development project are seasonal, and its implementation is only done once, while not on a continual basis such as other business functions like record keeping. Therefore outsourcing the project implies that the company will only contact the providers in times where there are cyclic demands such as the application development. The in-house staff in charge of application development project is short-handed, and outsourcing such like business functions implies that there are supplementary resources for a specified duration of time at a steady cost (Engardio, 2006).
It is arguably evident that outsourcing the application development has significant benefits to the company such as a focus on the core business processes, flexibility in staffing, and a reduction in the overhead expenses for the company and cost and efficiency enhancements to the organization. All these variables transform to the profitability of the company and enhance business continuity.
In conclusion, outsourcing is increasing becoming an important business strategy that business enterprises are deploying in order to foster cost restructuring, transfer risks, and provide a means of accessing expertise that is unavailable in-house or might take more time to develop in-house. In addition, outsourcing provides an avenue for quality improvement through adoption of new Service Level Agreements (SLAs) and product innovation (Engardio, 2006). The most underlying reason why outsourcing is becoming an inevitable business concept is due to the limited number of technologists required to implement the new technological infrastructures aimed at fostering business efficiency.
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