Table of Contents

Introduction:.....................................................................................................................................2
Organisational Structure and Managing Change.................................................................2
The Technological Change and Innovation:..........................................................................3
Phases of e-Business Development:........................................................................................4
Phase 1: Flower Access............................................................................................................4
Phase 2: Flower XL.....................................................................................................................5
Phase 3: Electronic Trading Place.........................................................................................6
Strategic Realignment Issues:...................................................................................................7
Organisational Culture:.................................................................................................................7
Existing and New Technologies:................................................................................................8
Conclusion:........................................................................................................................................9
References:.......................................................................................................................................9
 Change and Implementation Management

Aalsmeer Case Study

Management Report

Introduction:

This management report intends to address and analyse the e-Business

initiatives taken by Aalsmeer in the context of change and implementation
management. The case study of Aalsmeer provides important information
about the e-Business initiatives taken by the organisation in context of
the information technology adaption. The need for technology adaption
was influenced by the Board of Directors of the organisation and the
emerging importance of ecommerce in the business environment. The
report structure takes in to account the considerations on Aalsmeer
organisational structure along with the types of technological changes it
goes through in relation to the e-Business initiatives. The strategic
realignment issues when Aalsmeer decides to enter ecommerce in light of
the business model which Aalsmeer follows and the evolved business
model. The phases of e-Business development are analysed in the context
of the existing and new technologies available and the feedback received
by customers, suppliers, managers and other stakeholders associated
with these initiatives. The report considers the role of change and
implementation management with respect to the considerations described
above.

Organisational Structure and Managing Change

Aalsmeer Flower Auction is a growers’ cooperative. Around 3500 growers

in 15 sections are member of the cooperative society and are joint owners

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of the auction building. The members appoint a board of nine from among
their ranks to determine the policy.

Change in an organisation is driven by the internal or external factors. In

some cases it is a combination of both. In the mid 1990s there were
several simultaneous changes in the environment of Aalsmeer Flower
Auction. The most important factors as described in the case study were:

 The increasing internationalization of the industry

 Increasing trade outside the auction
 The new technological opportunities: the advent and adoption of
internet
 Increasing power of retailers

In context of the above mentioned factors which affected the

development of market. Aalsmeer board felt that in order to maintain
their position in the market they had to react against the possible threats.
The board discussed about using electronic networks and reinventing the
value chain to enable strategic change. As the factors listed above clearly
indicate that technological opportunity was only one of the possible four
drivers for change. The impact of technological opportunities cannot be
neglected in this case as the emergence of Tele Flower Auction with it
success did give Aalsmeer food for thought. The board perceived that as
Tele Flower has benefited from technology so it can help them too, while
there are clearly other change drivers present in the market. This reaction
of the board can only be justified by the magic bullet theory which
perceives that a combination of technologies and methodologies can do
remarkable things with little or no human intervention (Markus and
Benjamin). This is exactly what happened as the reaction of customers,
suppliers and managers was not taken in to account. The magic bullet
theory was employed that IT-enabled change will manage the change as
well. The importance of change and implementation management was
neglected here by the board. Hence the board decided to use electronic

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channels to support its business processes and connect these processes
with those of buyers and suppliers (Aalsmeer case study).

The Technological Change and Innovation:

Initial objectives of e-Business activities were to enable innovation, to

redefine the value chain, to reduce transaction costs, to strengthen the
links between the wholesalers and retailers and to increase market share.
John Stevens was responsible for the deployment and extension of e-
Business applications. He formed a team of 10 members which came from
different backgrounds: IT, marketing and logistics. Marianne Groothuis a
marketing manager was appointed the manager of the team in order to
keep the team open minded, creative and ambitious (Aalsmeer case
study). This team was named e-selling and started to develop its first e-
Business application

Phases of e-Business Development:

Phase 1: Flower Access

The first e-Business application developed was named Flower Access a
web based application directed at retailers. The application enabled
retailers to place orders online to exporters and wholesalers, who would
then pass on these orders to the growers. The growers were then to
transport the orders back to the wholesalers and then the wholesalers
would transport it to the retailers (Aalsmeer case study). One important
aspect of this change was neglected here as Aalsmeer had no business
relations with retailers up until then. This application was also to serve as
an initiative to form business relations with the retailers to drive a change
in value chain. Due to the fact that Aalsmeer had no business relations
with the retailers the system lacked some basic user requirements from
retailer’s perspective. As the application was directed only at retailers
they were only able to act on their feedback after the deployment of the

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application. The application in itself met what was required but good ideas
and designs are not enough to ensure success as change in human
behaviour cannot take place at a distance but requires direct contact with
change agents and targets (Markus and Benjamin). In 1999 when the
system was implemented Marianne and her team visited several
wholesalers, retailers and growers to promote their system and to
demonstrate the potential benefits of using the system. The system only
attracted about 20 percent of the 1200 retailers to use it regularly. The
main problems were the amount flowers ordered via Flower Access which
was not attractive enough for the growers to keep participating. This
ambiguity in the system should have been addressed while the
requirement analysis of the system was taking place. Another similar
problem was that internet speed at that time also played a part where it
would take up to a minute to view flowers on a page. The other factor
was that the participants of the system were not familiar enough to use
computers for the purpose of business. Interestingly the system received
positive feedback from countries where the people were comfortable with
using the internet. It must be taken in consideration that these countries
did not have much of an option to buy flowers from cash and carry shops.
Maybe it would have been better if the application was marketed more
towards this segment where there was more demand and users were
more accustomed to using computers for their business processes. Overall
the application failed to realize the desired potential and caused an
increase in cost of maintenance and development of the system. One
positive outcome was that the management reluctantly continued their
support for the system to be developed.

Phase 2: Flower XL
The second phase went through some iterative changes in the Flower
Access system. The major change in the system was driven by low
amount of flowers ordered by the retailers. So the management decided
to direct the system now towards the wholesalers who place considerably

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larger orders as a wholesaler caters various retailers. Aalsmeer had
already developed business relations with wholesalers during the
introduction of Flower Access. Still the new system also did not live up to
the expectations as the sales figures through it were limited. The main
cause for this was that wholesalers were more comfortable in doing their
business via personal and informal contacts at the auction hall. While the
system still provides what’s required of it but the users for whom it is
created are reluctant to use it due to security and trust issues. Users
value personal contacts and interaction more to a system which does not
identify this fact. The system can still be a success in future when its
users start to accept this platform and become more accustomed to using
computers in their business. An important aspect in buying flowers is that
wholesalers like to smell and see the product in the auction hall before
making a purchase. This property cannot be matched by any system in a
virtual environment.

The two phases collectively were a failure as they failed to live up to the
expectations and also cost a lot. In this scenario these systems act like a
white elephant (Grey & Larson 2008) which showed a lot of potential but
are no longer viable.

Phase 3: Electronic Trading Place

By this time management realised the mistakes made in previous two
phases where the importance of user requirements were neglected. John
Stevens decided to launch Phase 3 named as Electronic Trading Place.
The purpose of this system was to add value to the existing value chain
rather than creating a new one. The management realised that IT is no
magic bullet theory and decided to use IT as a complimentary and
supportive system to add value to their traditional business model. The
development of Phase 3 also took into account the prospective users of
the system (Aalsmeer case study). Requirement analysis being the first
most important aspect was neglected so far. Many new features were
added to help each module of the system. All these additions were

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extracted from the prospective users’ feedback which helped the system
greatly. This approach shows that contrary to what happened in the
earlier two phases the management now took the right steps to ensure a
successful application is developed. Now the aim of the system was also
to integrate the internal departments such as auctions and mediating
departments. After the first six months of deployment, the pilot system
received positive feedback from all concerned parties. This can be of no
surprise as for the first time in the development of the system all parties
were involved closely in determining what they wanted from the system.
While the system achieved gradual success the auction halls were still
available to confirm with organisations traditional business processes.

Strategic Realignment Issues:

From the experience of the initial two phases of e-Business developments

the management decided to realign there strategic issues. They no longer
perceived IT strategy as a separate business model to their existing
model. They incorporated IT strategy with their traditional business model
(Venkatraman 1993). Initially the IT was considered as the intended
strategy at Aalsmeer which later turned in to a deliberate strategy
(Mintzberg & Water 1985) as it was evident during the first two e-
Business initiatives. The change was initiated only due to some
technological advancement in the environment which Aalsmeer operated
coupled with the emergence of Tele Flower. By the time management
realised this they had already spent a lot of time and money on the e-
Business projects. Although the projects didn’t provide the desired results
it gave Aalsmeer a very clear knowledge about the change initiatives they
had to take to put this right. In this typical scenario the directors
overestimated the immediate impact of technology and underestimated
the benefits in the future. As Phase 3 was a success in terms of the
requirements it fulfilled. But in relation to the time and money spent in
the first two phases it was still termed as a failure.

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 Business
model

Source: Venkatraman, 1993

Organisational Culture:

Change in an organisation at any stage occurs inevitably due to various

factors internal or external. At Aalsmeer the change was driven by
external factors. The directors reacted with the magic bullet theory that IT
will solve every problem and lead their organisation into a new strategic
direction. Due to cultural differences, the employees of auction and
mediation department saw each other as competitors while the business
processes of these two channels are strongly interrelated (Aalsmeer case
study). The mediation department followed the price settings set by
auction department. The main role of mediation department was to help
buyers set up contracts for customer. The main operational departments
HRM, logistics and IT provided all kinds of services to mediation and
auctioning department. This represents strong cultural relationships
between the departments at Aalsmeer. When the e-Business initiatives
were funded heavily for the E-selling department, the employees of other

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departments felt isolated. Along with the management of E-selling
deciding not to include their feedback in the initial two Phases did not
form a productive image in front of other departments. This situation
effected Aalsmeer as an organisation to achieve a new strategic direction
through technological channels without the support of other departments
which are integral part of its operations. The mediation department
should have been the focal attention of E-selling department as this was
where the opportunity was to use the technology.

Existing and New Technologies:

From 1997 to 2002 the three e-Business initiatives were developed. The
first two application Flower Access and Flower XL were integrated in the
third Phase in which the development of Electronic Trading Place took
place. The developments of these applications were outsourced to
different software companies which followed different standards. By the
time Electronic trading place was built the technology of Flower Access
and Flower XL was outdated. Lessons were learnt from the previous
development experience as electronic trading place defined its own
standards which made easier for other components to be integrated with
mediation and auction departments. Now the electronic trading place also
serves as information management platform where the mediation
department can benefit from the market trends and the orders they
receive. In relation to the new technology EDI (Electronic Data
Interchange) can be of great benefit if incorporated with the electronic
trading place. But the success of this integration will be dependent on the
same factors which Aalsmeer failed to address in the initial two phases. It
has to assess that other parties are capable enough for this integration
which can simply reduce the order management and transition costs. The
suitability of other departments internal and external will determine if the
change can take place or not.

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Conclusion:

In conclusion the Board of Directors and Senior Management at Aalsmeer

did what every organisation thinks of technology. The same magic bullet
theory as mentioned above. They neglected the change agents within
their organisation and also failed to address the external change agents
such as growers, wholesalers and retailers. The major development of
systems initially was handed to E-selling department with little or no
cooperation from other departments. This resulted in cultural issues
within the organisation which hampered the success of initiatives within
the organisation. After learning from Flower Access and Flower XL
application a positive decision to develop an integrated electronic trading
place was taken. This step proved to be easier than the previous two
steps as the basic development of modules and information gathering was
covered. The important aspect which made electronic trading place
successful was that it took into consideration the feedback of stakeholders
related to the system.

References:

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