hbrueck

The Impact of Organisational Change Management on theSuccess of a Product Lifecycle Management Implementation -an Investigation into the Electronics Manufacturing Industry

Masters dissertation at: Fachhochschule Ludwigshafen am RheinUniversity of Lincoln

Submitted by: Hans-Jrgen Brck

Date: March 2002

Supervisors: Mr. Karl A. ScholzMr. Malcolm Myers

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Acknowledgements

I would like to thank a number of people that supported me and provided contributionduring my MBA study programme and especially during the time when the dissertationwas prepared and written.

My sincerest thanks to:

- Mr. Karl A. Scholz from FH Ludwigshafen for interesting and helpful discussionson the topic and for acting as supervisor for this project.

- Mr. Malcolm Myers from the University of Lincoln for useful comments on thedissertation proposal and for acting as supervisor for this project.

- My manager Dr. Andreas Hintz, who supported me with useful hints, interestingdiscussions and assisted in reviewing the dissertation.

- All the people that participated in the survey and took valuable time out of theirschedules to answer the comprehensive questionnaires. Many thanks also to those,who additionally participated in the interviews and openly discussed the issuesinvolved.

- My employer Tyco Electronics (formerly AMP Incorporated).

- John Sandwell for reviewing the abstract

- Stephan Prosser, who assisted in reviewing the questionnaires.

Finally, I want to thank my family, especially my wife Katrin and my children ChiaraLuisa, Lana-Joy and Robbin Joanne for their patience and their support throughout thetime of writing the dissertation. Without them, none of this would have been possible.

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Abstract

The dissertation in hand discusses the implementation of Product LifecycleManagement (PLM) in the Electronics Manufacturing Industry. In particular, the impactof Organisational Change Management on the implementation success of PLM has beenresearched. The methodology used to investigate the topic includes literature research,quantitative research (survey) as well as qualitative research (interviews).

The environment of manufacturers is coined by time to market reduction, increasedvariety and complexity resulting from trends like globalisation, mass customisation andincreased outsourcing. PLM aims to help manufacturers in this environment byproviding an "infrastructure to support management of product related data throughoutits complete lifecycle"1 (from initial concept to product obsolescence). Appropriatesolutions ensure that up to date information are accessible for the right people, in theright format at the right time.

Especially interesting for the product lifecycle is the conceptual phase of the productdefinition process where fundamental design choices are made and the product lifecyclecosts are determined to a large extent. The concept of Concurrent Engineering suggestsimproving this phase by breaking down functional barriers and setting up cross-functional teams. Globalisation and increased outsourcing require collaboration acrossgeographic regions and company borders. Therefore PLM systems do not only providefunctionality to control product related data but also to collaborate within a company aswell as in the extended enterprise.

The reason for failure of new business concepts like PLM is very often due to a poorimplementation phase rather than to the concept itself. It is therefore important not onlyto take the technological but also the organisational perspective of PLM into account.Collaborating and sharing of data within a company and especially in the extendedenterprise challenges existing processes and culture. An holistic implementationapproach will therefore most likely result in process as well as cultural changes. For thatreason, the success of PLM heavily depends on the willingness of the organisation toaccept change and especially on the people that must form inter-organisational andcross-functional teams to collaboratively develop and manage products.

People are not likely to change the way they have been successfully working.Resistance to change is therefore the natural reaction. Organisational ChangeManagement deals with the emotional reaction to change and aims to provide animplementation friendly environment. Communication of the required changes andparticipation of people affected by change are common means of Organisational ChangeManagement to address initial fears and to build trust.

1 cf. Portella (2000)

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It was found in the research, that the most critical success factors as well as potentialproblems are people related issues that can be addressed by Organisational ChangeManagement. In conclusion, the impact of Organisational Change Management onimplementation success can be rated as relatively high.

Including Organisational Change Management methods and tools during a PLMimplementation can play an important role to facilitate changes, in processes as well asin the corporate culture. According to the research the early involvement of peopleaffected by the changes and the barriers between departments and companies have to beaddressed by Organisational Change Management. However the most important factorfor success can be found in the role of senior management whose support andcommitment not least decides if the additional budget for the Organisational ChangeManagement initiative is released.

vTable of Contents

Acknowledgements ii

Abstract iii

Table of Contents v

List of Abbreviations viii

1 Introduction 11.1 Background 1

1.1.1 Product development 1

1.1.2 From CA -Tools and PDM to Product Lifecycle Management (the

technological perspective) 2

1.1.3 From Concurrent Engineering and Physical Co-location to Collaborative

Engineering and Virtual Co-location (the organisational perspective) 5

1.1.4 Organisational Change Management 7

1.2 Main research issues 9

1.3 Literature comment 12

1.4 Research methodology 12

1.5 Dissertation structure 13

2 Literature review 142.1 Concurrent Engineering and physical co-location 14

2.2 Collaborative engineering and virtual co-location 15

2.3 The organisational model for collaborative engineering and virtual co-

location 15

2.4 Organisational Change Management and Information Technology (IT) 16

2.5 Organisational and cultural change and the implementation of a PLM

solution 17

2.6 Change Management and the implementation of a PLM solution 18

3 Methodology and data collection 213.1 Secondary research (desk research) 21

3.2 Primary research 21

3.2.1 Quantitative research (Survey) 21

3.2.2 Qualitative research (Interviews) 23

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4 Results 244.1 Results from quantitative research 24

4.1.1 Survey participants 24

4.1.2 Preparation for analysis 25

4.1.3 Questionnaire results 26

4.2 Results from qualitative research 31

5 Discussion 335.1 Interpretation of research findings 33

5.1.1 What kind of companies do implement PLM? 33

5.1.2 The role of organisational culture 33

5.1.3 The role of organisational structure 34

5.1.4 The role of the product development processes 35

5.1.5 The role of Change Management 36

5.1.6 The Return on Investment (ROI) and the impact of Change Management

on implementation success 37

5.2 The relationship of the research results to published literature and

research 37

5.3 The appropriateness of data collection and methodology 38

5.4 The effect on professional practice 39

5.4.1 The implementation strategy 39

5.4.2 Appropriate Change Management methods and tools 41

6 Conclusions 436.1 Summary of principal features 43

6.2 Major findings 44

6.3 Suggestions for business practice 45

6.4 Recommendations for future research 46

7 Bibliography 477.1 Textbooks 47

7.2 Articles 50

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Appendices 54

Appendix A: Questionnaires - Summary (All) 54

Appendix B: Questionnaires - Summary (Electronic Manufacturing Companies) 62

Appendix C: Questionnaires - Summary (Software Vendors and System

Integrators) 74

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List of Abbreviations

2D Two Dimensional3D Three Dimensionalanon. anonymousCAD Computer Aided DesignCAE Computer Aided EngineeringCAM Computer Aided Manufacturingcf. confer (compare)CoP Communities of PractiseCPC Collaborative product CommercecPDM collaborative Product Definition ManagementCRM Customer Relationship ManagementDMU Digital Mock-UpDr. DoctorEDM Engineering Data ManagementEds. Editorse.g. exempli gratia (for example)EMC Electronic Manufacturing CompaniesEMI Electronics Manufacturing IndustryERP Enterprise Resource Planninget al. et alii (and others)etc. Et cetera (and so on)EU European UnionFH Fachhochschuleff. And the followingi.e. id est (that is)IGES Initial Graphics Exchange SpecificationIS Information SystemsIT Information TechnologyMBOM Manufacturing Bill of MaterialMr. MisterMRP Manufacturing Resource PlanningMS MicrosoftNo./n Number (of respondents)OEM Original Equipment Manufacturerp. pagepp. pagesPDC Product Definition and CommercialisationPDM Product Data ManagementPIM Product Information ManagementR&D Research and DevelopmentROI Return On InvestmentSMC Small and Medium CompaniesSTEP Standard for the Exchange of Product Model Data

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SVSI Software Vendors and System IntegratorsTQM Total Quality Management

Introduction

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1 Introduction

The introduction provides background information about the topics involved in theinvestigation. Furthermore the research question is introduced and explained and set inthe context of existing research and literature. A short introduction to the methodologyused to research the topic is provided followed by a presentation of the dissertationstructure.

1.1 Background

The following pages are intended to give the reader an overview and backgroundinformation on the various topics involved in the research, namely:- Product development- Product Lifecycle Management (PLM)- Concurrent and Collaborative Engineering- Organisational Change Management

1.1.1 Product development

"In today's industry, New Product Development is often the focal point of competition.Companies that are able effectively to develop, produce and introduce new products arethe key competitors in markets where variety and time-to-market play an increasinglyimportant role." (Victor Paashuis, 1997)

The dominant importance of product development for the manufacturing industry astheir core competence and process is outlined by the quote of Victor Paashuis. Severalstudies carried out throughout the last years have shown that the way in which productdevelopment is executed does have a significant impact on costs and time to market andtherefore on the financial results. Nevins et. al (1989) for example found, that 80% ofproduct lifecycle costs are locked in the early stage of product development, whenfundamental design choices are made.

New product development nowadays is heavily influenced by industry as well as socialtrends. The following section describes industry and social trends and their implicationson product development (especially in the Electronics Manufacturing Industry):

- Increased Outsourcing: Product complexity is increasing and companies areconcentrating on their core competence. Consequently an increasing number ofcomponents making up a product is given to outside vendors for designing andmanufacturing. The increasing number of outside vendors has somehow to bemanaged and integrated. So called extended enterprises have to be established.

- Alliances and Merger: The number of companies that are merging or establishingalliances has rapidly increased throughout the past years. Similar to increasedoutsourcing product development processes somehow have to be integrated oraligned to gain synergy effects.

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- Mass customisation: The role of the customer has changed. Tailor made, individualproducts instead of mass-produced products are demanded. This means a shift frommake-to-stock and assembly-to-order styles of manufacturing to mass customisationand personalisation. Therefore product development has to be much more agile andflexible to quickly respond to customer wishes and fast changing market needs.

- Globalisation: Supported through the falling of borders, the liberalisation ofmarkets and the explosive development of communication technology manymanufacturers have scaled to a global level. Globalisation means more opportunitiesbut also more competition. Power of innovation and especially time to marketreduction becomes critical. This means that product development cycles have to bereduced and innovation has to be fostered.

- After sales market/Recycling: Historically, a product was only as long importantfor a manufacturer as the product was under warranty. Today the after sales market,that was traditionally held by 3rd party vendors, is also seen as a major growthopportunity. This trend, combined with the new EU decree for scrapping andrecycling, forces manufacturing companies to take the late product lifecycle stageslike service and retirement much more into account, especially during the productdefinition phase.

- Virtualisation: Prototypes are expensive and time consuming. Throughvirtualisation, hardware prototypes are increasingly replaced by digital prototypes.The advantage is that manufacturing problems can be recognised in a very earlystage of the product development process.Virtual enterprises are established to develop, produce, operate and support newproducts in order to save costs through synergy effects and increase profit throughdecreased time to market. Vertical integration is replaced by virtual integration.

- Information age/Internet: We are currently in a shift from the industrial age to theinformation age. Information is said to be the currency of the future. Mostcompanies are not suffering from a lack of information. The problem is that aconsistent view on the information is not provided and the information can notassimilated quickly enough. Therefore product related information has to beorganised in a way that it is accessible in the right format and at the right place forthe right people.

1.1.2 From CA -Tools and PDM to Product Lifecycle Management (thetechnological perspective)

The reduction of product development cycle time and the improvement of designquality has been supported in the last two decades through the implementation ofvarious computer aided technologies like 2D and 3D -CAD (Computer Aided Design),CAE (Computer Aided Engineering and Analysis), CAM (Computer AidedManufacturing) etc... All these tools aimed to accelerate, automate and integrate variousengineering and manufacturing processes. The introduction of CA Tools, however,was often only task instead of process oriented. Departments tried to automate theirtasks as good as possible and created an environment which best helps to meet theirtargets. In practice, only little integration took place. Each CA -Tool produced its owndata format which led to so called islands of automation. This problem could onlypartially be resolved by various interfaces and data exchange formats like IGES and

Introduction

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STEP that were developed to facilitate communication between the different CA -tools.Therefore, the result was often an heterogeneous, fragmented, multi-systemenvironment in many companies and especially in design chains for product definition.Romano (1999) in this context states, that "during the engineering supply chain,manufactures and suppliers need to work as design partners, however their design andmanufacturing systems are frequently incompatible. This introduces very significanttime and cost penalties as they attempt to share design information."Moreover, the large amount of data generated by the various CA -Tools was often notcentrally organised and therefore inaccessible to others. New developments instead ofusing already designed parts were often the costly consequences.

Realising this problem and the associated business opportunity several softwarecompanies started in the mid 1980s to develop Product Data Management (PDM)systems2 that initially provided vaulting and file management capabilities forengineering documents like 2D CAD drawings. In the late 1980s and early 1990sengineering change management to control and track the changes made to engineeringdata was added to the functionality together with configuration and classificationmanagement capabilities. As a result of 3D -CAD systems and teamwork approachesentering the market PDM systems started to support the management of complexrelationships between parts, assemblies, drawings, metadata, people and groups ofpeople. In the mid 1990s many PDM vendors switched the operating system fromUNIX to Windows/NT and moreover various improvements in the user interfaces weremade.

Since the main functionality of PDM has been CAD -centric data and workflowmanagement it was mainly used in the engineering organisation, sometimes in themanufacturing organisation. This was due to the existing technology which made theaccessibility for other than design engineering departments difficult. The software wasnot usable without extensive training and the files could only be viewed in the nativeCAD system.

In the late 1990s a new class of software, Product Lifecycle Management (PLM)systems evolved from PDM systems. Besides the term PLM there are other termsexisting that were established by different Research Firms. CPC i.e. stands forCollaborative Product Commerce and was established by the Aberdeen Group whereascPDM stands for collaborative Product Definition Management which is used byResearch Firm CIMData. Other terms are ePLM (electronic Product LifecycleManagement), PDC (product definition and commercialisation) or PIM (ProductInformation Management).

With the advances in user interfaces and database, viewing as well as the Internettechnology the technological prerequisites were provided to share data more easily.Providing integrated visualisation and Digital Mock-Up (DMU) Tools, PLM systemsmake it possible to view, mark-up and redline native CAD data without the need forhaving access to the native CAD system. The Internet serves as highly effectiveplatform to communicate product data information far beyond the engineeringorganisation. 2 cf. anon (1995)

Introduction

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Nadamuni (1999) therefore states that "the vision for PLM is to do more than just CAD-centric data and workflow management and become an enterprise application that tiestogether all the information sources in a corporation".

A PLM system can be described as an enterprise-wide Information Technology (IT)"infrastructure to support management of product definition throughout its completelifecycle"3 (from initial concept to product obsolescence). Including workflowmanagement, PLM systems, as a single source of product information, ensure that up todate information are available and accessible for the right people in the right format atthe right time. It is also viewed as an "effective tool in managing the product definitionsupply chain by serving as an informational bridge connecting OEM's, partners,subcontractors, vendors, consultants and customers" (Miller, 1998f).

PLM systems provide a consistent view on product related information in the extendedenterprise whereas the easily sharing of product data facilitates real-time collaborationacross departmental barriers and among geographically dispersed individuals andgroups. Consequently the Aberdeen Group (2000) defines CPC respectively PLM as "aclass of software and services that uses Internet technologies to permit individuals - nomatter what role they have in the commercialisation of a product, no matter whatcomputer based tool they use, no matter where they are located geographically or withinthe supply net - to collaboratively develop, build and manage products throughout theentire lifecycle."

To cope with the industry as well as social trends described above and to gaincompetitive advantage a new integrated approach for developing products with respectto the whole product lifecycle has to be taken. Integration has to take place internally(between different departments) as well as externally (i.e. with suppliers andcustomers). PLM means "the management of comprehensive, accurate and timelyinformation over the entire product lifecycle"4 in order to realise collaborative productdevelopment. Therefore, PLM systems are viewed as enabler for an integrated productdevelopment approach by industry analysts from Research Firms like Aberdeen Group,AMR Research, CIMData, Gartner Group and Forrester Research.

The future meaning of software for managing the product lifecycle in the manufacturingindustry can be illustrated by figures that were recently released by Research FirmCIMData: " ... the world-wide [Product Lifecycle Management Solutions (software andservices)] market grew 62% to reach $2.86 billion in 2000. CIMData forecasts overallinvestments to continue at a significant pace over the next five years. The firm predictsthe market will exceed $4 billion in 2001 and increase at a compound annual growthrate of 43% through the year 2005, when they expect the market size to exceed $13billion." (CIMData Press Release, February 28, 2001).

3 cf. Portella (2000)4 cf. anon. (1999)

Introduction

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1.1.3 From Concurrent Engineering and physical co-location to CollaborativeEngineering and virtual co-location (the organisational perspective)

According to Miller (1998e) the product lifecycle is comprised of three primaryprocesses: product definition, product production and operations support. Especiallyinteresting for the product lifecycle seems to be the product definition process andespecially the early phase where fundamental design choices are made and the productlifecycle costs are determined to a great extent.

The iterative nature of the product design process highlights the point that a great dealof the design activity is redefining and redesigning of ideas. Collaboration has thepotential to dramatically reduce the total number of design changes in a product'sdevelopment cycle and even more important it reduces the late and costly designchanges. Changes take place in the early design phase where their impact on cost andtime is small (anon. 1999)

In the traditional design and manufacturing practice, however, the product life cycle is aseries of independent sequential steps ranging from design and engineering to processplanning, production and servicing. Frequently, information is passed among groups ina sequential process known as throwing over the wall. This scenario can be describedas serial engineering (CMstat, 1996)

Concurrent Engineering (sometimes referred to as Simultaneous Engineering, a laterexpression is Integrated Product Development) offers a solution to the inefficientsequential product development process by breaking down the barriers betweenengineering and other key departments like manufacturing (CMstat, 1996). It describesthe involvement of different individuals with different perspectives on the productdefinition process and the parallelisation of the formerly sequential process of productdevelopment. In other terms, it describes the concurrent accomplishment of product andprocess engineering (Smith and Reinertsen, 1995). Concurrent Engineering has beendefined by the Institute of Defence Analyses (Pennel and Winner, 1989) as a"systematic approach to the integrated, concurrent design of products and their relatedprocesses including manufacture and support."

While Concurrent Engineering used to address mainly intra-organisational aspects ofthe product development process Collaborative Engineering (that has evolved withPLM systems) addresses more the inter-organisational aspect respectively the aspect ofthe (dynamically changing) extended enterprise (sometimes termed as boundary-lessvalue chain). Integrating internal processes as well as suppliers and customers accordingto the vision of PLM requires intense collaboration across the entire product lifecycle,inside and outside the company and across geographic regions. Companies musttherefore implement processes and structures for collaboratively sharing informationwith partners, vendors and customers.

Teamwork is today the fundamental precondition for innovation. Most tasks nowadaysare just too complex for one person to be able to produce practicable and realisticsolutions (Doppler and Lauterburg, 2000). The most common mechanisms for pursuingConcurrent Engineering approaches involves therefore a multi-disciplined, cross-

Introduction

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functional and physically collocated team structure. Physical co-location in this contextmeans that the team members sitting close to each other, ideally within ten metersaccording to a study of Allen (1977), researching the effect of distance to technicalcommunication. He found that the probability of communication rapidly decreaseswithin the first ten metres. Beyond these point the increase of distance does not seem tohave a big impact on communication.

Figure 1.1: From Allen, Managing the Flow of Technology, Figure 8.3, p. 239,The MIT Press, 1977

The greatly enhanced communication and the team cohesiveness has been described bySmith and Reinertsen (1995) as advantage of physical co-location. Growingglobalisation, fast changing marketplaces and the increasing trend to outsource,however, demands globally dispersed and inter-organisational teams which makesphysical co-location increasingly infeasible. Dynamically changing and flexible teamscan only be supported by virtual co-located teams. Virtual co-location does noteliminate the need for occasional face to face meetings, especially in the early phase ofa product development project. However, team members will mainly meet, through theadvances in Internet and communication technology being possible, either in an onlinevirtual workplace or in video - or telephone conferences.

When the environment is dynamically changing communication networks becomecritical. Smith and Reinertsen (1995) in the context of Concurrent Engineering alreadystated that frequent, open communication plays an important role since it fosters fasterand earlier sharing of information. According to Rowe (2000) the key to collaboration iscommunication.

Traditional organisational structures and approaches cannot provide the competitivebasis that is required in this business environment because the product developmentprocess is broken down across the specialist functional departments which renders poorcommunication (Pawar, Sharifi, 2000). Hierarchical organisations are too slow moving

Introduction

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and inefficient for this environment, therefore flexible project organisations becomeincreasingly important. Several theoreticians, including Drucker (1988) and Schein(1989) suggest that hierarchical authority will probably play a much smaller role in thefuture, while co-ordination and coaching skills will become more important. Dopplerand Lauterburg (2000) describe this development as the shift from the hierarchicalorganisation, based on the division of labour to the easily re-configurable networkorganisation. They emphasise that "thinking in organisational categories needs to bereplaced by thinking in terms of quickly changing process chains".

1.1.4 Organisational Change Management

The implementation of an enterprise wide IT system involves often structural as well ascultural changes in a company. Significant change, however, is a disruption in ourexpectations of the future which is viewed as a loss of control (Marshall & Conner,1996). Resistance to change is therefore often the reaction. People are not likely tochange the way they have been (successfully) working, especially when it is not clearwhat the goal of the whole operation is and who will benefit from the changes (Dopplerand Lauterburg, 2000). Fear of the unknown and uncertainty is often the source ofresistance. People need predictability, which has something to do with our basic needfor security. Uncertainty however can reduce productivity to a great extent (Stark, 1999)Therefore, changing a culture, structures and processes is risky and can even producenegative results which is proved by many studies. Kotter (1995) for example found, thattwo third of major change initiatives are not successful. Change has therefore carefullybe planned and the change process has to be managed and overviewed.

Organisational Change Management has proved as a useful tool to facilitate successfulcultural transformations by helping people dealing with 'unknown territory' or asBridges and Mitchell (2000) put it, the 'neutral zone' to ensure that the outcome of thechange initiative is positive.

The roots of Change Management can be found in so-called soft science of psychologywhere Change Management is applied to help people deal with traumatic emotionalissues like death in the family or knowledge of ones own impending death (anon.,1996). The increased popularity of Change Management in an business environmentcan be dated in the mid 1990s when the under Business Process Reengineering (BPR)summarised restructuring efforts of companies often did not deliver the promised resultsAl-Ani and Gattermeyer,2000). Not addressing the resistance of people to change wasidentified as key problem of the poor implementation results of many PBR projects.Change Management, that deals with the emotional response to change is thereforesometimes termed as the soft side of BPR that "helps stakeholders deal with dramaticchanges in how they earn their livelihoods" (anon., 1996).

Change Management suggests that resistance is a natural reaction to change that alwayscontains a coded message and happens on an emotional and not an intellectual level.Accordingly it is important not to 'overcome' resistance i.e. with logical arguments oreven fight the resistance but treat resistance as an emotional process where feelings areinvolved. It is also viewed as important to pause and deal with resistance immediately,

Introduction

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when it appears which can mean a delay in the project plan (Doppler and Lauterburg,2000; Block, 1981). Not dealing with it by ignoring the resistance means to risk severeobstacles and barriers which causes significant delays since the resistance will appearlater in the process again. Therefore it is important that employees are encouraged toexpress their concerns, fears and perceptions so that they pass. This can happen either inan anonymous way, i.e. through employee surveys or in face to face meetings.Resistance can have very different forms. Typical forms of resistance, or bettersymptoms of resistance, beside the most obvious form of attacking, are: Silence,debating unimportant things, staying away, coming to late to meetings, flooding withdetail, intrigues, rumours etc...(Block, 1981)

Different models, methods and tools have been developed to deal with the changeprocess. The tools and methods that are utilised are often dependent on the change thatis required. Most researchers differentiate between two main strategies: incremental andtransformational change (depending on the researcher also termed as 'radical change','discontinuous change', 'major change' or 'profound change). According to Stark (1999)"incremental change does not challenge existing assumptions and culture. It usesexisting structures and processes and is therefore low risk but also slow.Transformational changes intends to change existing structures, the existingorganisation and the existing culture". Moreover a difference is made if the changecomes from inside the organisation (proactive) or if the change is forced from outsidethe organisation (reactive).

Figure 1.2 shows that a typical change process moves through several phases that areaccompanied by typical reactions of people involved and must be met by differentChange Management methods and tools. After announcing a change initiative confusionis increasing. Fear of the unknown, not being able to cope with the new patterns and oldrules overlaying new rules are reasons for confusion. Communication as an ongoingprocess during the change process as well as early participation of the people affectedby change play an important role to address the initial fears and concerns and to buildtrust. Coaching people during the change process and facilitate learning of the skills thatare needed to deal successfully with the new environment is essential. In the diffusionphase marketing of the change initiative is important for example through publishing offirst successes. In order to institutionalise the changed behaviour consistently rewardingadequate behaviour and accordingly punishing inadequate behaviour is viewed as anessential element (Stark, 1999; Doppler and Lauterburg, 2000). To hold the gains of thechange initiative and to avoid erosion effects the installation of a continuosimprovement process has proved as successful (Reiss, 1997).

Introduction

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Figure 1.2: Success characteristics of implementation. From Reiss, Managing Change, Figure 14, p. 28,Schaeffer-Poeschel, 1997 (translated from German)

1.2 Main research issues

Great things are expected from PLM ranging from faster time to market, closercollaboration, better quality products to more innovation. The Aberdeen Group (2000)terms PLM respectively CPC even as the 'next big thing' for manufacturing companies.Indeed, implementing Product Lifecycle Management promises manufacturingcompanies a competitive advantage and a major step towards increased productivity.Regarding collaboration i.e. GM expects to double design productivity and increaseproduct development workflow by 70% using a collaborative system [built around aPLM system]", according to a Press release from May, 20, 2001.

In order to realise major improvements Harrison (1995)5 and Bergh (1996) remind usthat a product information management system works best in a reengineeredenvironment. Business Process Reengineering (BPR) has been defined by Hammer andChampy (1995) as "the fundamental rethinking and radical redesign of businessprocesses to achieve dramatic improvements".

5 Harrison made this statement at the 'EMDS Focus 95 User Forum' (Feb. 27 to March 2, Orlando)

IDEAL

REAL

DesiredState

CurrentState

ImplementationSuccess

ImplementationFailure

Implementation Time

Coaching

Marketing

Supporting

Confusion Diffusion Erosion

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The introduction of a PLM system by itself, however, does hardly initiate the changesthat are required to improve the product development process. It is therefore importantto recognise that PLM "is not a tool to improve the product development process but atool to support an improved product development process" (Stark, 1999)6. Before it canwork to its full potential there must be changes in organisational processes as well as inthe organisational culture.

A significant impact on the success of the introduction of a PLM system shouldtherefore be the willingness of the organisation to accept change7 and to develop, asWildermann (2001) put it an "outward-facing collaborative culture", which means aculture that is based on openness and trust. Changing a corporate culture meanschanging people's values, norms, inner attitude and behaviour. This means that thesuccess heavily relies on the people, making up an organisation, that must form multi-disciplined, cross-organisational and virtual teams to improve and accelerate the productdevelopment process. Lipnak and Stamp (1997) remind us in this context, that in theestablishment of virtual teams "90% is people and only 10% is technology" and Ali(2001)8 describes the experience of Ford Motor in overcoming the barriers to usingcollaboration tools as 80% people and only 20% technology'.

However, old habits die slowly and the sharing of data is often counter-cultural(Peterson, 2001) which is why Bourke (2000) and Krouse (2001) remind us to considerthe organisational and cultural issues that are involved with a PLM implementation.Nevertheless, the organisational and cultural implications of the implementation of anenterprise-wide information system like PLM are often neglected or ignored in practice,although researchers suggest that these aspects might be even more important than thetechnical aspects (Bourke, 2000).The trouble is, however, that senior managers often imagine that transition is automatic-that it occurs simply because the change is happening. But it does not. Just becauseeveryone does have access to the PLM system does not mean that virtual teams developcollaboratively new products and improve the product development process in the waythe consultants promised it would (Bridges and Mitchell, 2000).

Child (1987) suggests, that technical integration should be mirrored by organisationalintegration if its full potential benefit is to be realised. In essence, this would mean, thatan holistic implementation approach of PLM would not only consider the technicalissues but also the organisational and cultural issues. Changing the organisational form(i.e. to a project based organisation to support globally dispersed and inter-organisational virtual teams) and accordingly the culture (i.e. to an "outward facingcollaborative culture") to support collaboration, however, means for mostmanufacturing companies not only structural alterations but a radical change.

Implementing organisational change offers "tremendous potential for improvedperformance for todays product development organisations" according to Stark (1999).But Stark (1999) also adds that it is a major activity that is "difficult, time consumingand costly". Moreover it bears the risk of producing negative results. 6 Stark (1999) made this statement in conjunction with the implementation of PDM7 cf. Miller (1998d)8 Ali made this statement at the International Quality and Productivity Center Conference , June 2001

Introduction

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Organisational Change Management, as a discipline to deal with the emotional reactionto change has proved to support major change initiatives and should also significantlyimprove the change process during a PLM implementation.

The research is therefore focused on the question if the implementation of PLM, inpractice, is understood as a change process that touches organisational and culturalissues. Furthermore the research aims to find out if, how and to what degree ChangeManagement methods and tools can support the implementation process in order toevaluate 'The Impact of Organisational Change Management9 on the Success of aPLM Implementation'.

In order to research these issues it is intended to answer the following questions:

How does, in theory and practice, the implementation of a PLM solution influencethe organisational structure, processes and culture of a company? What are theorganisational and cultural consequences or prerequisites?

If Change Management is utilised during an implementation, what ChangeManagement tools and methods are utilised and can they be related to the success orfailure of the implementation?

What Change Management strategy is appropriate? How can Change Management programmes be integrated in an overall

implementation project?

The research is focused on the Electronics Manufacturing Industry (EMI) which ischaracterised by short product lifecycles and has enjoyed a time of unprecedentedgrowth as providers of components and products10 to the formerly fast growing marketsof communication, computers and consumer products. With the current economicdownturn combined with deregulation, emerging markets, increasing globalisation andthe rise of consumer power the competitive pressures are stronger than ever. Thesedriving forces require the Electronic Manufacturing Companies (EMC), beside time-to-market reduction, innovation and cost reduction to be more agile and responsive tochanges. Since the EMI relies extensively on outsourcing, supply chain managementcapabilities are extremely important (Miller, 1999a). Effective interaction andcollaboration among globally distributed design and engineering resources in theextended enterprise is therefore vital. In conclusion, EMC have especially the potentialto benefit from the introduction of PLM.

9 To avoid mixing up Change Management with engineering change management which describes themanagement of changes that a product faces during its lifecycle, the working title includes the termOrganisational Change Management, which is, however, also to a certain extent misleading becausechange is always a personal and emotional matter and therefore organisations do not change, people do(Marshall and Conner, 1996). In the context of the dissertation in hand Change Management equalsOrganisational Change Management.10 cf. http://www3.ibm.com/solutions/plm/pub1/05256965005b0639/6/3fc8f66c401eaaa88525684d00787896.jsp

Introduction

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1.3 Literature comment

The importance of the product development process, especially for manufacturingcompanies has been widely discussed (Smith and Reinertsen, 1995, Paashuis, 1997,Pawar and Sharifi, 2000) and is confirmed by various studies (i.e. Nevins et al. (1989).PLM respectively CPC systems, as relatively new IT infrastructure to support animproved product development process are currently intensively discussed, especiallyamong Research Firms (like the Aberdeen Group, AMR Research, Forrester Research,Gartner Group and the Meta Group) as an opportunity for manufacturing companies formajor improvement and competitive advantage.The role of organisational change and IT is controversially discussed amongresearchers, however, all agree that there is a certain relationship.Organisational Change Management is described by many researchers as an appropriatetool to support and facilitate organisational and cultural change (Kotter, 1995; Dopplerand Lauterburg, 2000; Schein, 1997).

In the context of PDM, the predecessor of PLM, various information can be found onorganisational and culture issues i.e. an end user study of product data managementusers that was carried out by Dataquest in 1997 relates the implementation success of aPDM system to organisational structure and culture.Considering Change Management while implementing a PDM system has beensuggested by Stark (1999) and Miller (1998c) states, that "without proper culturalchange management and education, most PDM implementations fail or fall short ofexpectations." In the context of PLM solutions as an inter-organisational informationsystem for product related information, however, only little can be found aboutorganisational or cultural change. Some researchers like Bourke (2000) and Krouse(2001) remind us on the organisational and cultural implication of a PLMimplementation. Information about how these implications can be taken into accountduring the implementation are very rarely found.

1.4 Research Methodology

Literature research has been used to identify the key concepts of PLM solutions and theorganisational and cultural implications that a PLM implementation might have on aelectronics manufacturing company. Accordingly for identifying different ChangeManagement approaches, methods and tools a literature research has been applied. Theresults from the literature research have been used to develop the following hypothesis:- A company culture and organisational structure determines to a great extent thesuccess of a PLM implementation.- Organisational Change Management, if used properly, is a significant factor for

implementation success.

These hypothesis' have been tested by a survey, that was carried out in form of a postalquestionnaire. The questionnaires have been sent to EMC as well as Software Vendorsand Integrators and Research Firms in the field of PLM. PLM Software Vendors andIntegrators as well as Research Firms have been included in the survey to gain a broaderperspective on the implementation issues surrounding PLM.

Introduction

13

In order to triangulate the topic and to obtain different perspectives qualitative researchin form of telephone interviews has been added.

1.5 Dissertation Structure

The dissertation consists, besides the introduction, of six additional chapters.

Chapter two contains a literature review that is dealing with various concepts in theresearch areas product development, Product Lifecycle Management and OrganisationalChange Management.

The research methodology, outlined in chapter three, explains the different methods thatwere utilised to answer the research question. Furthermore an overview is given on howthe gathered data has been analysed.

In Chapter four the results obtained through quantitative and qualitative research arepresented and described.

Chapter five discusses and interprets the findings of the research, their relationship tothe objectives set out and to the published literature. Moreover the role of theory isdiscussed as well as the effect on professional practice. Also the appropriateness ofmethodology and data collection is reviewed.

In Chapter six a summary of the main findings and principle features of the dissertationis provided. Moreover, suggestions for professional practice and recommendations forfuture research are given.

The bibliography can be found in chapter seven. The appendices contain the results ofthe survey.

Literature review

14

2 Literature review

The literature review is divided into various sections dealing with the main areas ofresearch.

2.1 Concurrent Engineering and physical co-location

In the last decade the main focus of manufacturing companies has been the time tomarket reduction in order to stay competitive (Paashuis, 1997; Smith & Reinertsen1995; Hammer and Champy 1995). Some companies and industries could significantlydecrease product development cycle time for various products. (Smith and Reinertsen,1995). One of the concepts underlying to reach this goal has been 'ConcurrentEngineering', sometimes termed as 'Simultaneous Engineering', 'Rapid ProductDevelopment' or 'Integrated Product Development'. Concurrent Engineering has beendescribed and defined in different ways and with various implications (Garrett, 1990;Duffy, 1989; Hurst, 1993; McKeag, 1994; Walker, 1997). A widely accepted definition,however, has been developed by the Institute for Defence Analyses (Pennel and Winner,1989). According to them, "Concurrent Engineering is a systematic approach to theintegrated, concurrent design of products and their related processes includingmanufacture and support. This approach is intended to cause the developers from theoutset to consider all elements of the product life cycle from conception through todisposal, including quality, cost schedule and user requirements."

Common to all of the definitions of Concurrent Engineering is the emphasis of theintegration effort on technological as well as organisational level. Technologicalintegration has been supported by Computer Aided Technologies like Computer AidedDesign (CAD), Computer Aided Manufacturing (CAM) and especially Product DataManagement (PDM) systems that handle the access rights to product data information.Concerning the organisational level Bessant et al. (1985) remarks that "Integrating aDesign-Engineering-Manufacturing process is much more challenging from anorganisational point of view, than introducing a single stand alone system." Tantoush &Clegg (2001) found that during a [CADCAM] implementation technical problems aremore obvious and widely recognised than the organisational challenges involved. Child(1987) therefore suggests, that "technical integration should be mirrored byorganizational integration if the [implementations'] full potential benefit is to berealised." Accordingly Smith and Reinertsen (1995) state, that "to achieve the fullpotential of [Concurrent Engineering] demands a fundamental change in organizationalbehaviour."

In order to break down functional borders among the individuals participating in theproduct development process it is proposed by Pawar and Sharifi (2000) to set up cross-functional product development teams "comprising individuals with specialist skills,experiences and different perspectives on the product development process." Forcommunication reasons physical co-location, which is defined by Rafii (1995) as"physical proximity of various individuals, teams, functional areas ... involved in thedevelopment of particular products or processes" is proposed by many researchers tofacilitate Concurrent Engineering (Smith and Reinertsen,1995; Bergring and Andersin,

Literature review

15

1994). Allen (1977) developed a relationship between technical communication anddistance which shows that the probability of communicating at least once a weekdramatically drops within the first ten metres. As a consequence Smith and Reinertsen(1995) conclude, that "team members must be located close together, definitely closerthan ten meters, to communicate effectively."

2.2 Collaborative Engineering and virtual co-location

Through globalisation, increased outsourcing and the increased number of alliancesthere is a gradual shift from an intra-organisational to an inter-organisational level(Pawar and Sharifi, 2000). This also touches product development. According to Guha(2001), however, "collaboration across company borders in the extended enterprise isfundamentally different than collaboration among users within a company." Technicalas well as organisational integration across organisational borders has to take place. Thetechnical integration aspect is covered by PLM software solutions that are viewed as anopportunity for major improvement and therefore as definite competitive advantage formanufacturing companies (Miller, 1998; Bourke, 1999; Maynard, 2000).

In this inter-organisational context respectively the context of the extended enterprisecollaboration and cross-functional product development teams and the appropriateorganisational form hereof might be defined differently as in the classical ConcurrentEngineering environment.

Rafii (1995) therefore argues, that physical co-location is increasingly infeasible and notan efficient use of resources as corporations become more global. Similar to Lipnackand Stamps (1997) he sees the emerge of virtual co-location as an alternative and morepromising approach since new information technology can enable a project team ofhundreds of geographically dispersed team members.

In contrast Smith (2000) states, that even through new communication technology(e-mail, WEB etc..) and more globally dispersed manufacturing operations andtherefore dispersed product development teams physical co-location should be preferredwhenever possible because of the informal information that gets lost in a virtual team.Pawar and Sharifi (2000) compare in their research physical and virtual co-location.They propose a combination of physical and virtual co-located teams and found thatvirtual teams outperform physical co-located teams in changing environments whereasphysical co-located teams face less motivational and technological problems.

2.3 The organisational model for Collaborative Engineering and virtual co-location

Many researchers including Drucker (1988)11 and Kanter (1992)12 have described thetraditional model of an hierarchical structured organisation as not competitive in a fastchanging marketplace.

11 Drucker describes in his publication: 'The Coming of the New Organization" the shift from a commandand control organisation into an information based organsiation.

Literature review

16

In the context of Concurrent Engineering Pawar and Sharifi (2000) explain that"traditional organisational structures and approaches cannot provide the competitivebasis that are required in the business environment because they break down the productdevelopment process across the specialist functional departments which renders poorcommunication." Accordingly Doppler and Lauterburg (2000) suggest, that thetraditional model of organisational structure, with it's strict hierarchical guarantees forpower at every level, involves a number of severe problems that reduce it's overalleffectiveness. Among others the 'cult of individual responsibility' is mentioned as aneffect of the strict division of labour that leads to competition instead collaboration,both at the individual level and at the level of groups and departments.' They furtherargue, that rapidly changing marketplaces and the increase of complexity demands adifferent organisational model and are proposing a network organisation, that enablesquickly changing process chains instead of a hierarchical organisation, that is based onthe division of labour.

In their research about the emerge of virtual or network organisations Black andEdwards (2000) conclude accordingly, that "when this new set of organizing rules areoverlaid with the conditions and processes facilitated by the use of advancedcommunication technology and computing technology, virtual or networkedorganizations are logical forms of organizations and that this form allows firms to copewith the rapidly changing environment."

Rafii (1995) in the context of virtual co-location states, that "networks are inherentlyinformal and anti-hierarchical, and thus their use tends to minimise the formalorganisational structure. Knowledge and the willingness to share it, rather than positionor job title in a chart, become the key indicators of relevant contribution to a project.These factors contribute to cross-functional integration by making functional wallsmore transparent and by facilitating the measurement and evaluation of individuals andunits contributions to project success."

2.4 Organisational Change Management and Information Technology (IT)

The role of IT and organisational change has been widely discussed. Some researchersremark, that instead of being used to support (i.e. automate) existing procedures, IT nowin large parts determines the design of work processes and has become a majorcomponent for organisational change (Currid, 1993; Applegate et al, 1996; Bradley etal., 1993). Furthermore many Information Systems (IS) researchers have pointed outthat the broader social and organisational context in which IT is implemented has aprofound influence on the way in which IT is used (Bussen&Myres 1997, DeSanctis1993, Myers 1994).

Different views are provided regarding the question if new-technology basedInformation Systems (IS) are enabling desirable organisational change (Scott Morton,1991; Hammer and Champy 1993; Turner, 1998) or if IS are resulting from social 12 Kanter et al. sees the competitive model as "a more flexible organization, adaptable to change, withrelatively few levels of formal hierarchy and loose boundaries among functions and units ..."

Literature review

17

dynamics of the organisational change process (Ciborra, 1991; Orlikowski andWalsham, 1996).

2.5 Organisational and cultural change and the implementation of a PLMsolution

The organisational and cultural implications of implementing inter-organisationalintegration and collaboration via a PLM solution is emphasised by some researchers inthis field. Krouse (2001) e.g. reminds us, "that there are a number of organizational andcultural obstacles to overcome to implement collaboration." According to him, peopleoften resist new procedures. Similar to Miller (1998)13 and Peterson (2001)14 he sees thesharing of data or handing off ownership of data to others "as the project moves throughvarious phases of the product development" as potential cause for conflicts." Moreoverhe reminds us that "Groups that previously operated autonomously may resent having toco-ordinate their activities with others and that work styles and customs may varybetween companies located in different areas around the world."Bourke (2000) in the same context emphasises, that "collaborative product design [in avirtual design environment] especially implies the need for a high degree of opennessand trust for best results'. He concludes, that 'on the road to success...., addressingcultural problems may be as important, or more important, than technical solutions.'The importance of taking cultural and organisational implications into account is alsosupported by an end user study of Product Data Management (PDM, the predecessor ofPLM) users that was carried out by Dataquest in 1997. The following was found: Those organisations with strong information networks and lines of communication

are more apt to implement and are more successful when doing so. Despite users feelings about the strength of information networks within their

company and how well their PDM deployments are progressing, they still see thecompanies structure and culture as the biggest roadblock to expansion.

Being in line with theses findings Doppler and Lauterburg (2001) remind us, thatimplementing organisational change by switching to a network organisation is afundamentally different way of approaching tasks together that requires "radicalstructural transformation." For successfully transforming the organisational structurethey suggest that the corporate culture has to be changed to one that is based onopenness and trust.

13 Miller writes that "one of the greatest challenges .... is resolving inevitable question about who controlsdata in the enterprise."14 Peterson emphasizes, that "old habits die slowly, and while the benefits of collaboration are intuitivelyobvious, the sharing of data with third parties is often counter-cultural. "

Literature review

18

2.6 Change Management and the implementation of a PLM solution

The hidden, informal dimension of change is often explained with the 'Iceberg model',describing that only 10-15%, namely the formal systems like products, policies,procedures etc. is visible, whereas the rest, namely the informal system like perception,feelings, attitudes, norms, behaviour and values are below the 'water surface'. (i.e.Bourke, 2000; Jarmai, 1997).

Many researchers including Senge et al. (1999) and Doppler and Lauterburg (2001)therefore state, that successful change requires a inner shift in peoples' values, attitudesand behaviours which means peoples' basic ways of thinking. Marshall and Conner(1996) state in this context that change initiatives must be translated to implications foreach individual who will be affected.

Significant change, however, is a disruption in our expectations of the future which isviewed as a loss of control (Marshall & Conner, 1996). Resistance is therefore thenatural reaction to change and has been described by various researchers (i.e. Reiss,1997; Kanter et al. 1992). Block (1981) states, that "resistance is an emotional process,not a rational or intellectual process". According to him the major cause for resistance is'fear of the unknown'. Uncertainty in a working environment, however, reducesproductivity and can paralyse a whole organisation. Organisational change has thereforeto be carefully planned and the change process has to be managed and overviewed.(Doppler and Lautenburg, 2000).

Implementing organisational and cultural change is described as difficult, time-consuming and costly (Stark, 1999) and therefore the result of Kotters study (1995) thatonly one third of major change initiatives is successful is not very surprising.

Many theorists and practitioners alike are proposing the utilisation of ChangeManagement techniques to successfully deal with the change process. ChangeManagement, that aims to provide an implementation and change friendly environmentwithin an organisation (Reiss, 1997) has been and still is one of the most popular topicsin business management. Many books and articles have been written about ChangeManagement including well known business researchers like Kanter, Kotter, Schein,Schaffer and Senge.

The roots of Change Management can be found in the science of psychology. Many ofthe techniques helping people to deal with traumatic emotional issues have been appliedto "help stakeholders deal with dramatic changes in how they earn their livelihoods"(anon., 1996). The nature of change has been described by Conner (1993, 1996). Basedon Kuebler-Ross (1969) who researched the stages that terminal patients and theirfamilies go through he developed a model (Figure 2.1) that describes the emotionalresponse during a change process that is viewed as negative. According to Conner(1996) this model can also be applied to organisational change.

Literature review

19

Figure:2.1: The Nature of Change. From Conner, D.R., Managing the Speed of Change, 1993/1996

Nadler, Shaw and Walton (1995) suggest that there are different types of change thatrequire different management strategies, approaches and methods. In a business contexttherefore the scope of Change Management ranges from planned evolutions and reformsto business transformation. Top-Down approaches like business transformation (i.e.Business Process Reengineering or crisis management) are characterised by a highdegree of intervention whereas bottom-up approaches like planned evolution or reforms(i.e. organisational development) are characterised by less intervention and byharmonising the goals of the corporation and the affected employees (Reiss, 1997).

Traditionally the change process was described as moving from a stable state throughthe unstable state of changing to the desired state, being stable again. Lewin (1951)characterised these three stages as: 'unfreezing, changing and refreezing' theorganisation. Consequently Nickols (2000) states, that "a very useful framework forthinking about the change process is problem solving'. He sees managing change 'as amatter of moving from one state to another, specifically from the problem state to thesolved state."

Many researchers, however, emphasise that due to the economic environment ofconstant and accelerated change the stable states of an organisations are becomingshorter (Reiss, 1997) or even diminish. Consequently researchers remark that there alsohas to be a constant change process within an organisation and that the change processhas to be viewed as a learning process (Agyris, 1985; Senge 1999; Doppler andLauterburg, 2000; Dobiey and Wagner, 2001). In order to facilitate a constantlychanging organisation the focus is therefore laid on changing the organisation into a socalled 'learning organisation' (Senge, 1991, 1995; Doppler and Lauterburg, 2001).

IMMOBILIZATIO

DENIAL

STABILITY

ANGER

BARGAINING

ACCEPTANCE

TESTING

DEPRESSION

TIME

Passive

Active

EMO

TIO

NA

L R

ESPO

NSE

Literature review

20

Conventional reactive models aim to react in an optimal way to changes that are forcedfrom the environment, like technological or legal changes. In contrast hereof proactivemodels like learning organisations moreover aim to anticipate change and to generatechange from within the organisation. People are not being changed, they change (Reiss,1997). Arie de Geus (1988) in this context states, that "the only competitive advantagethe company of the future will have is it's managers' ability to learn faster than theircompetitor."

Independent of the method that is used the capacity of an organisation to change isviewed as a critical success factor and important corporate asset in a world ofaccelerated and constant change (Pagliarella, 2000).

Methodology and data collection

21

3 Methodology and data collection

This chapter gives an overview on the techniques that were used to research thedissertation topic. Both, desk research (secondary) and field research (primary) has beencarried out to achieve the aims of the dissertation.

3.1 Secondary research (desk research)

Desk research has focused on examining the literature and has covered the areas ofproduct development, Product Lifecycle Management (PLM) and OrganisationalChange Management. Moreover the Internet has been searched, especially the webpages of System Integrators, Software Vendors and Research Firms for valuableinformation about the topics involved. Subscription to various journals and periodicalsprovided another source for desk research.

Literature research has been used to identify the key concepts of PLM solutions and theorganisational and cultural implications that a PLM implementation might have on aelectronics manufacturing company. Accordingly for identifying different ChangeManagement approaches, methods and tools literature research has been used. Moreoverdesk research has been utilised to develop a hypothesis for the survey.

3.2 Primary research

In the primary or field research quantitative as well as qualitative research methods havebeen used. A survey, comprised by mainly closed or partially open questions hascovered the quantitative research. Interviews covered the qualitative research. Thetriangulation of the topic aims to provide different perspectives on the research topic.

3.2.1 Quantitative research (Survey)

Quantitative research has been carried out through a survey. As technique for datacollection postal questionnaires have been chosen.

The following hypothesis have been concluded from the literature research:- Especially the culture of a company determines to a great extent the success of a

PLM implementation.- Organisational Change Management, if used properly, can be a significant factor for

implementation success.

The aim of the survey has been also to find out if, to what extent and how successfulChange Management methods are utilised during a PLM implementation.Heterogeneous sampling has been used to select the participants for the survey. In caseof the Electronic Manufacturing Companies (EMC) the participants needed to meetspecific criteria to qualify. They should at least being in the process of evaluating orbenchmarking PLM solution. In order to gain a broad perspective on the topicsinvestigated also PLM System Integrators, Software Vendors and Research Firms have

Methodology and data collection

22

been, beside EMC, asked to participate in the survey. Table 4.1 in the next chaptershows the number of companies that have been asked to participate and the number ofrespondents categorised by profession. A great help for identifying potential participantshave been various articles dealing with PLM and conference manuals of appropriateconferences (i.e. solutions.conference of CSC Ploenzke, eeuc-european engineering userconference). Contacts have been made either by e-mail or phone calls.

Two different, comprehensive questionnaires have been designed. One has been sent toEMC aiming to analyse the current state of the company and the internalimplementation process regarding organisational, cultural and Change Managementelements. A slightly different one has been sent to System Integrators and SoftwareVendors (SVSI) aiming to benefit from their broader experiences in PLMimplementation projects, especially regarding Change Management elements and theimpact of those on the overall implementation success.

The questionnaire for the survey was developed in an iterative process through literaturereview and conversations with various experts in the area of PLM and ChangeManagement. Especially Starks' 'pdm e-zine' newsletter and various publications ofMiller (1997, 1998, 1999) have been contributed to the questions in the area of PLM.Kotters (1995) ideas in his publication 'Leading Change-why transformation effortsfail', Senge et al. (1999) with his publication 'The Dance of Change' and Doppler andLauterburg (2000) with their publication "Managing Corporate Change" contributedmuch to the final questions in the areas of organisational change. Mainly closed orpartly open questions have been used in the survey in order to identify trends andpatterns. For these kind of questions answers have been predefined that could be tickedoff. However, there was also space left for inserting own ideas and comments. Openquestions have been used in those areas that have been selected for further research viaqualitative research.

For better understanding and guidance the questions have been grouped intothematically sections provided with appropriate sub-headings. The following sub-headings for example have been utilised in the manufacturers questionnaire:- Product development process and relationship to customers/suppliers- Project set-up of the PLM implementation- Changes (because of the PLM implementation)- Organisational Change Management

Before sending the questionnaires to the participants they have been reviewed by theGerman supervisor. Moreover the questionnaires have been pilot tested. This hasinfluenced the questionnaires in a way, that the answers have been classified and somequestions have been formulated clearer or a complex question has been divided into twoeasier questions. To make sure that the intention of the survey was well understoodtelephone calls or e-mail correspondence took place with the participants before sendingthe questionnaire. Additionally a covering letter has been sent with the questionnaireand it was guaranteed to keep the information gathered by the survey confidential toincrease the reply rate.

Methodology and data collection

23

Appropriate coding (two examples can be found in the next chapter) has been used toprepare the data for analysis. Because of the small sample size it has to be mentionedthat the data will not be statistically significant. However, they highlight differences andsimilarities. Tables have been chosen as the best way to display the results in order toidentify trends and patterns and compare the data received. The tables contain mostlyclassification and rank or percentage values (an example can be found in the nextchapter)

3.2.2 Qualitative research (Interviews)

Qualitative research has been used to triangulate the topic in order to provide differentperspectives on the topics involved in the research. Structured telephone interviewshave been chosen to carry out qualitative research. In total, three interviews have beenconducted each lasting approximately one hour. A pilot interview has been conducted aswell. The interview partner (an individual person) have been identified and chosen afteranalysing and evaluating the results of the quantitative research. In order to get the mostvarieties of views the interview partner had different backgrounds. One interviewpartner came from an EMC, one from a System Integrator and the third from a SoftwareVendor.Interviews have been chosen as qualitative research method since it seems the mostappropriate method to get an understanding about the relevance of so called 'soft issues'during a PLM implementation. The topics involved and resulting questions were chosenbased on the results of the survey. Qualitative research mainly concentrated on theorganisational and cultural implications, the implementation strategy and on the utilisedChange Management concepts, methods and tools during a product lifecycleimplementation.

Results

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4 Results

In this chapter the obtained results through qualitative and quantitative research arepresented. Quantitative research has been covered by questionnaires that were send toElectronic Manufacturing Companies (EMC) on the one hand and to Software Vendors,System Integrators and Research Firms on the other hand. The results of the qualitativeresearch that were conducted by telephone interviews are also presented in this chapter.

4.1 Results from quantitative research (Survey)

The result of the survey is presented in the following section. The main trends andpatterns are described and differences in the answers of EMC on the one hand andSoftware Vendors and System Integrators (SVSI) on the other hand are mentioned.Each question of the survey and its intention is presented as well as the result that wasobtained from it. Before that the response rate is introduced and an explanation is givenon how the data was prepared for analysis and interpretation. A detailed summary of theresults can be found in the appendices. The tables in appendix A consolidate theanswers of EMC and SVSI. Appendix B summarises the findings from thequestionnaires sent to EMC. The tables in appendix C show the results of the surveyfrom SVSI.

4.1.1 Survey participants

The overview in the following table shows how many companies have been asked toparticipate in the survey and how many companies finally participated:

Category No. of companies'Being Asked'

No. of companiesthat participated

ResponseRate (%)

Manufacturing Companies 16 7 44SystemIntegrators/Consultants

12 8 67

Software Vendors 6 5 83Research Firms 4 0 0

Table 4.1: Survey participants

The companies participating in the survey are not named explicitly because it wasguaranteed to keep the information confidential. In case of EMC the participants havebeen the project leader of the PLM implementation. In case of SVSI they have mainlybeen the PLM practice leader respectively knowledgeable consultants in the field ofPLM.

Results

25

4.1.2 Preparation for analysis

In order to reveal trends and patterns the answers have been summarised, ranked andordered as described in the examples below:

Example 1:Most questions are organised as shown in table 4.2. For each question differentpredefined answers15 are offered that could be weighted from 'very important' over'important' and 'less important' to 'not import' (respectively 'frequently'/'occasionally'/'seldom'/'never' or 'true'/'partially true'/'not true'). A factor is assigned to each answer asshown in table 4.2. The numbers are then summed up and divided by the number ofrespondents for that answer (sometimes not all possibilities where marked by eachrespondent).

Calculation example for 'Cultural Changes' (Rank2):7 (number of respondents that ticked that box) x 3 (factor for very important) = 213 (number of respondents that ticked that box) x 2 (factor for important) = 62 (number of respondents that ticked that box) x 1 (factor for less important) = 20 (number of respondents that ticked that box) x 0 (factor for not important) = 0----------------------------------------------------------------------------------------------------------Sum = 29Number of respondents for that answer No = 12Result /No = 2,4

Depending on the result the answers were reordered and assigned a rank.

What changes are required to successfully implement a PLM system?

Rank Predefined Answers veryimportant

important lessimportant

notimportant

No /No

XXX Weight/Factor 3 2 1 0 X X XX1 Reengineering/Redefinition of product

development processes (i.e.interdisciplinary virtual team approaches,workflow changes)

6 7 32 13 2,5

2 Cultural changes (i.e. opencommunication and collaboration culture)

7 3 2 29 12 2,4

3 Empowering of people / teams (i.e.designers having direct customer contact)

5 3 5 26 13 2

Table 4.2: Extract of questionnaire

15 However, there was also space left to insert own answers.

Results

26

Example 2:For the second type of questions there is no range to choose from. Depending on thequestion, multiple boxes or just one could be ticked. For those kind of questions apercentage value is generated as result.

How is the implementation of a PLM system and the changes required hereofcommunicated with the people affected (n=13)?

Rank Predefined Answer %1 Workshops 12 922 Intranet 10 773 Notice Board 10 774 e-mail 7 545 Internal newspaper 7 546 Employee Survey 5 387 Global Town Hall Meetings 4 31

Table 4.3: Extract of questionnaire

4.1.3 Questionnaire results

The implementation of a PLM solution can be used to automate existing processes andprocedures or to change existing processes and procedures. This can be done for only apart of the enterprise or the whole enterprise. The first question16 about the mostimportant goals to define for the implementation of a PLM system respectively the mostimportant reasons for the decision to implement a PLM system therefore intents to findout the context and scope of the implementation. Overall, time to market reduction isviewed as the most important reason for implementing a PLM solution. Enablingextended enterprises through integration of customers, increase of productivity andimprovement of quality are also viewed as important goals. While most of the answersof EMC and SVSI are similar, differences can be found regarding the improvement ofthe classic PDM functionality and the integration of internal islands of automation.While EMC view the improvement of the classic PDM functionality as very importantSVSI rank this aspect very low. Integrating internal islands of automation is viewed bySVSI as important while EMC view this as subordinate aspect. Enabling masscustomisation through the implementation of PLM systems seems for EMC as well asSVSI less important.

The intention of the second question asking who generally is involved in the productdefinition process is to find out what departments and stakeholders are typicallyinvolved in the product design process. Manufacturing, suppliers, purchasing andmarketing are mostly named to be involved besides the typical departments like productdesign and R&D. Customer, service and sales departments seem to be less involved.The role of senior management and manufacturing in the product definition process isviewed differently by EMC and SVSI. While SVSI state that manufacturingdepartments are frequently and senior management is seldom involved the answer of

16 Numbering according to results in Appendix A

Results

27

EMC indicate the opposite. Some respondents comment that this is very differentdepending on the division and the phase in the development cycle.

Accordingly the next question is about who has access to and is using the PLM systemin order to find out the scope and penetration of the PLM system. A difference is madebetween using and accessing because having access does not necessarily mean that it isalso used. The result is quite similar to the second question. Contrary to the questionbefore the answer of EMC indicate that manufacturing departments have, exceptproduct design departments, more than any other department access to and are using thePLM system.

Having a vision is viewed as essential by many researchers for initiating and managingchange17. The fourth question therefore aims to find out if a vision is connected with theimplementation of a PLM system. The answers are very heterogeneous. Half of theanswers, however, indicate that a vision is defined.

Analysing the current state and developing a roadmap to reach the target state is typicalfor problem solving. Change Management can be viewed as some kind of problemsolving18 and therefore those elements could also be an important element during aPLM implementation. Nearly two third of the respondents state that an 'as is' or currentstate analysis is being performed before implementing a PLM solution. Basically thesame number of respondents state that a strategy is defined how to reach the 'to be'situation.

Establishing a pilot group is viewed by researchers as important element to successfulimplement change and to minimise risk19. Question number seven therefore asks if apilot group is established during a PLM implementation. Nearly two third of SISVconfirm this statement whereas all of the manufacturers that responded to this questionhave worked with pilot teams.

The reduction of productivity and motivation is typical for the confusion phase at thebeginning of a change process. Therefore the intention of question number eight is tofind out if the productivity is influenced during the implementation phase in order todraw conclusions to the appropriateness of different Change Management strategies.59 % respond that the productivity is slowed down only a little bit, whereas 35% do notrealise any negative influence on productivity. 6% realise a significant decrease ofproductivity.

Question number nine and ten of the questionnaire try to find out the relationshipbetween PLM and Enterprise Resource Planning (ERP) systems and the resultingownership of data hereof which is viewed as potential source of conflict20. More than75% of the respondents state that there is an interface to an ERP system. All variationson how this situation is handled appear in practice. From keeping the data in both

17 cf. Kotter (1995)18 cf. Nickols (2000)19 cf. Senge (1999), Reiss (1997)20 cf. Miller (1999a)

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systems (39%) to keeping the data in the ERP system (28%) respectively in the PLMsystem (11%) to transferring the data from the PLM into the ERP system (22%).

Changes in processes as well as in the organisational structure and culture are regardedby some researchers21 as prerequisite for a successful PLM implementation. Therefore,the aim of question number eleven is to find out, if, in practice, appropriate changes takeplace. Overall, the redefinition of product development processes (i.e. workflowchanges) is viewed as the most important change that is required for successfullyimplementing a PLM system. Changes in the organisational model and cultural changeshave not taken place during the PLM implementation according to the respondents ofEMC. SVSI, however, view cultural changes (i.e. an open communication andcollaboration culture) as critical. Empowering of people and changes in theorganisational model are viewed as less important. One respondent added to thepredefined answers, that the management awareness of PLM related issues has to beincreased.

Question number twelve intents to find out how well the implementation of PLM andthe changes resulting hereof are communicated since this is an important element ofOrganisational Change Management.22 The responses show that different ways are usedto communicate the implementation and the changes that are required. Mostly used areWorkshops and the Internet to communicate whereas employee surveys and GlobalTown Hall Meetings are seldom used. One respondent remarked that awarenesssessions are utilised that are combined with feedback questionnaires. Anotherrespondent mentioned that 'since PLM is an integration program, a marketing andcommunication strategy and roadmap is required. All channels/media for internal andexternal (suppliers, customers, partners) communication should be part of this strategy.'

The aim of question number thirteen is to find out what changes are required in theorganisational structure to best support the implementation of PLM. Researcherssuggest as the future organisational model a flexible and process oriented networkorganisation to deal with a quickly changing environment23. A variety of different viewsis provided. The manufacturing companies that participated state that no changes in theorganisational model have taken place during the implementation whereas most of theSISV emphasise the importance of a project or process organisation and the tearingdown of functional borders.

Question number fourteen asks for Change Management methods and tools that areutilised during a PLM implementation like aligning and mobilising leaders and vocaland visible support from senior management (walking the talk). The early involvementof people being affected by the changes is viewed as very important by EMC as well asSVSI. Establishing a communication concept as the logical consequence hereof is alsoviewed as important. Moreover the establishing of a shared and motivated vision andthe creation of an atmosphere of openness and trust is ranked high. Changing the rewardsystems to support the change initiative however is ranked very low.

21 cf. Stark (1999), Bourke (2000)22 cf. Stark (1999), Doppler and Lauterburg (2000)23 cf. Doppler and Lauterburg (2000)

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Coaching plays an important role during the change process especially during theconfusion phase24. Question number fifteen therefore aims to find out what kind oftraining users receive during a PLM implementation. Of special interest has been thequestion if other than software functionality is trained like working in a team tosuccessfully deal with the new environment. However, besides software training, othertraining like team specific training (communication, conflict management, teamworking) is quite seldom offered to users. According to the results intercultural trainingis very seldom considered to support the PLM implementation.

Question number sixteen tries to find out the main barriers and problems during a PLMimplementation. Especially interesting in this context has been the question if theproblems can be located in the organisational culture and people related issues or if theyare centred around technical aspects. The overall result was that not enough visible andvocal support from senior management was given the highest rank, followed by barriersbetween departments and laying the focus too much on technological aspects and notenough on people. Other answers that received a high rank were the resistance ofmiddle management and users to change. A remarkable difference can be found inevaluating the technological limitation. SISV assign this problem a very low rank,whereas EMC assign this problem a very high rank. Intercultural problems (i.e.language barriers) seem to be no problem and are therefore ranked very low.

Aiming to find out what factors positively influence the success of a PLMimplementation question number seventeen asks for the main success factors. Overall itwas felt that the early involvement of people being affected by change and thecommitment and buy in of senior management are very important for a successfulimplementation. Aligning and mobilising leaders and the commitment of middlemanagement are also viewed as important. Establishing a sense of urgency25 andchanging the reward system to support changes 26,however, are ranked as lessimportant.

The next question (18) asks if the results of a PLM implementation are satisfactoryrespectively deliver the promised results. The question intents to relate the success of animplementation to the utilised Change Management methods and tools in theimplementation phase. The overall result was that 53% classified the implementation assatisfactory whereas 40% responded that the implementation can be rated as partially orsometimes satisfactory. One respondent classified PLM implementations as notsatisfactory. Explanations were given on the ratings described above. One respondentmentioned that a successful implementation actively supports users in living newprocesses and leads to long-term profitability. Another respondent remarked that thepotential of benefits is so big, that it will even be hard to not be successful. A differentparticipant remarked that companies make different experiences that are not alwayspositive but that a number of visionary companies have achieved a tremendous stepforward through the implementation of PLM. Another explanation suggests that projectbenefits are overestimated at the beginning of the project because otherwise the

24 cf. Reiss (1997)25cf. Kotter (1995), sometimes referred to as creating a burning pl