Identifying frontline change experiences

¶ … Front Line Change Experiences

The implementation of new enterprise computer software to run the entire website and distribution network of Overstock.com and the resulting financial reporting inaccuracies and potential fines from the Securities and Exchange Commission (SEC) is the basis of this analysis. Overstock.com purchased an Enterprise Resource Planning (ERP) suite of applications from Oracle and found that the frontline experiences of accounting, financial and sales teams did not improve in accuracy or profitability (Kanaracus, 2008).

Analysis of Frontline Experiences

The front line change experience for Overstock.com initially began with the ERP system they had purchased from oracle being configured for a specific order management workflow that captured approximately 60% of total sales. This left 40% not counted, in addition to orders being lost on occasion (Kanaracus, 2008). The Chief Information Officer (CIO) reported the situation accurately and completely to the sales teams, erring on the side of blatant honesty instead of attempting to cover the front-line situation up (Kanaracus, 2008). This caused the CIO to nearly get fired for telling the truth with such unswerving commitment, and eventually led to Oracle having to fix the inaccuracies of the system as the industry press jumped on the story and reported it in depth.

Overstock.com had relied on the professional services teams at Oracle to complete a thorough installation and also had provided a test suite to complete quality assurance of the ERP implementation (Kanaracus, 2008). The initial phases of the implementation were completed on time and under budget. As the implementation progressed, the need for Enterprise Application Integration (EAI) and application server expertise became apparent. Due to Oracle's acquisition of BEA, a leading provider of EAI and application server technologies, the team working on the Overstock.com implementation was required to go and review the BEA applications for quality assurance (Financial Times, 2008). This left the Overstock.com implementation team in need of expertise in the areas most critical to order management implementation. As a result, the installation for Overstock.com failed and the costs associated with the financial errors were assigned to the Oracle consulting contract rates. The net result was that Overstock.com's CIO had to explain that the lack of system integration was also slowing down many of the key reporting functions of the company and as a result there would be a lag time in sales reporting and analysis (Kanaracus, 2008). The net effect of all this was to sent the Overstiock.com share price into a tumble which eventually impacted the company's market evaluation.

Analyzing the Factors of Frontline Experiences

Overstock.coms' CIO could have kept the entire situation quiet yet the reports and analysis generated with the ERRP system would have been completely false and full of errors. Instead the better approach would have been to ascertain which ERP vendor would have been more suitable for the task of managing the Overstock.com distributed order management system implementation without forcing major reporting errors (Kanaracus, 2008) in addition to having professional staff on hand to manage the integration and professional services implementation plan. Second, the distractions Oracle faces during the BEA acquisition (Financial Times, 2008) were also reflected in their acquisition of Sun Microsystems recently (Ricadela, 2009) (Tait, 2010). The front-line experience of the CIO could have been avoided if an analysis of ERP vendors had been completed that took into account the potential distractions and lack of focus from working with a vendor known for their merger and acquisitions (Financial Times, 2008).

In prioritizing this experience, the first is the initial success of installing the ERP system followed by the lack of follow-through of the Oracle professional services teams. This is the most critical issue of the entire change management process, as the oracle change management teams were responsible for Business Process Management (BPM) and Business process Reengineering (BPR) tasks and programs. Without accuracy and clarity of BPM and BPR tasks the ERP systems was essentially useless expect for limited financial reporting. The next prioritized experience is the lack of system definition globally for financial reporting audits and evaluations. The Overstock.com CIO did have the ethical choice of reporting the financial results as being inaccurate and the fact that the problems were quite large or not, and he chose to be overtly honest (Kanaracus, 2008). This nearly cost him his job but it did save the company from making exceptionally large and costly errors over time.