In 2002 Shell Canada, a large Oil and Gas company, launched the eStore software application to service their price-sensitive Agricultural market segment by offering a lower cost service. Calvin Wright (eProduct manager) helped implement the eStore application, which was geared to service this Agricultural Segment market. The Agricultural Segment was considered by Shell to be high costs since local sales representatives were used in order to sell the product. By introducing a cost saving application, eStore, users would be able to place their orders directly online. However, when the number of eStore users remained unchanged, Wright headed to the field to determine the reasons behind the low use of the eStore application.
The data collected between Wright and the consultant (RareMethod) helped determine the issues in order to help determine possible solutions. Wright needed to make some recommendations on how to improve the use of eStore. Why do you think Shell is experiencing low use of its eStore? In order for information systems to be successful they should show direct or potential value added (Planning and Implementation IS projects, Slide 4) something eStore failed to provide due to the reasons presented below.
Shell’s low use of eStore was due to: customers not remembering the link or their passwords, and trouble differentiating between the dual login screens. (Saunders, 2006, pg. 9) Customers were confused by the expired password notices since notification emails came from eBusiness rather than eStore (Saunders, 2006, pg. 10).
Customers found the system to be cumbersome due to time delays when placing orders, and slow system response. Customers thought the application offered them no added value. Furthermore, the client did not consider the eStore to be an e-commerce site since only a select product list was available, and a previous relationship with Shell was required. (Saunders, 2006, pg. 10) Wright’s report concluded when he identified issues with the eStore after a year in the field. These issues included: customers had not heard about eStore, customers preferred dealing with local representatives, call center, or fax their order to Shell directly.
The timely customer relationship with the sales and call center staff made it hard for the customer to see any added value in using eStore (Saunders, 2006, pg. 8). Some sales agents did not promote the eStore solution since they did not feel comfortable using it themselves. Moreover, after the initial eStore registration no one completed any follow-up with the customer (Saunders, 2006, pg. 9).
What are some of the unique challenges faced by large organizations when embarking on innovative technology-based projects? Some challenges faced by large organizations when embarking on innovative technology based projects are the costs involved in developing the system, effective project planning, scheduling and controlling, ensuring various departments work together in order to accomplish the overall business objectives and not just specific departmental objectives, and finally obtain user satisfaction through a user friendly system to help ensure a high return on investment.
(Planning and Implementing IS projects, Slide 9). Some of the other challenges that IT can face are related to cost – how much to spend on a system, which portion of the application developed should the developer concentrate mostly on, which IT capabilities should be companywide, and which should be customer focused only. Other identified decisions that require attention by IT is how good an application really needs to be, how much security and privacy is the company willing to risk, and who is to be blamed if the IT application fails? (Ross & Weill, 2002, pg 7)
Some of the non-technological limitations to e-commerce are the perception that e-commerce is insecure, has unresolved legal issues (such as “use” in the form of a purchase promotion), and lacks a critical mass of sellers and buyers. (Rainer, 2008, pg. 176)
What did Shell do to address these challenges? What else could they have done? Shell’s cost related problem was addressed by having developers work from a centralized location in Canada and remotely through division of sub-teams (United Kingdom, Holland, Australia, and Toronto). Shell’s development of sub-teams in different countries with a centralized location out of Calgary ensured the capture of international collaborative talent working towards a common goal, eCATS.
The collaboration of the IT teams and business teams “learned that interdepartmental coordination was going to be a key success factor” (Saunders, 2006, pg.7). Shell integration of the IT vendor’s program, (eCATS) resulted in cost savings for the company since an entry level development was in place, and only modifications for the specific market had to be completed – Canadian development and bilingual use integration – a strategic decision. (Ross & Weill, 2002, pg 7) Shell could have negotiated a simultaneous bilingual application use of the program as part of the contract with the IT vendor resulting in higher development savings. Shell’ sub-teams development “lacked a single point of accountability” (Saunders, 2006, pg. 8).
As a result, teams sometimes found themselves having contradictory information, and lacking communication through regular meetings. (Saunders, 2006, pg. 8) As a company Shell could have developed a “Go to meeting” centralized communication forum where IT developers could exchange vital information against those in the field to try and minimize information conflict. Shell’ IT teams collaboration with the business teams should have extended to the client collaboration in obtaining an opinion on what the customer considered “added value” – an execution strategy (Ross & Weill, 2002, pg 7).
IT developed an application that was to be used by the Agricultural Segment, however the eStore design was not created nor considered by the customer user-friendly (complex security password design). Such complex features are more likely to be seen in Intranets. Since this application is supposed to act as an eStore more security should have been implemented for the invoicing portion, and less when browsing for a product.
What differences are evidenced in this case between the development and deployment of customer-facing applications versus employee-facing applications? How did the type of application affect the use of eStore? When developing the eStore, Shell did not seem to adhere too much to the customers’ needs, but rather servicing the needs of the company (developed a cost effective system). In the consultant report it is identified that customers had trouble differentiating which login application they should choose since they presumed to be presented with two options.
The customer had the perception that by using the left side of the screen they would use an insecure login (Rainer, 2008, pg. 176). The IT development of eStore was approached as being used by someone that had some application knowledge and training prior to navigating the system.
When developing eStore, Shell did not obtain any preliminary data based on customers’ needs in order to make it a user friendly environment for the customer. The customer did not see eStore as an added value, but rather a complicated system which created confusion when placing orders. Customers had trouble with the expiration of the password (system rather than customer created), the emails regarding the system were sent from eBusiness rather than eStore.
The customer also complained that when placing their order the processing took a long time, and also resulted in having long delays before a response was received from the system. (Saunders, 2006, pg. 10) Developing a system for external customers is much different than developing a system for an internal system. Companies need to ensure that the systems developed for external customers are much more user friendly and meet customer requirements as much as possible because it is much harder to deal with external customers issues rather than your own internal staff. Much like internal systems which are customized to meet the organizations objectives, it is vital to have customer involvement in the development of an application so it meets their objectives. (Planning and Implementing IS projects, Slide 13)
In the context of this case, discuss the statement “eBusiness initiatives make visible connections between organizational groups that would not be evident in traditional operations.”
As seen in this case it is apparent eBusiness initiatives make visible connections between organizational groups that would not be evident in traditional operations. While implementing the eStore, Shell setup a project team that consisted of eBusiness project manager, an eCommerce strategist and various sub teams located in United Kingdom (for eBusiness program management), Holland (for application hosting and support), Australia (for user interface design), and Canada (for software development). These individuals and teams had to work with each other from various locations for a common goal; eStore. (Saunders, 2006, Pg. 5) In addition to this Shell Canada went a step further and assigned software developers, business analysts, a quality/test lead and architecture lead on the eCats development project. (Saunders, 2006, Pg. 6)
This shows the ability of the various groups to work together that normally don’t during traditional operations. Connections between organizational groups that would not be evident in traditional operations are also visible when local sales agents and distributors work on promoting the eStore to their customers by providing demonstrations, and in guiding customers through the processes of signing up and using the system.
Even hiring a consultant to help in branding and positioning the eStore shows untraditional connections. Overall, these connections are vital to any eBusiness initiatives because most systems effect the organization as a whole and therefore it is necessary for the various departments to work together in accomplishing the common goal at hand.
The eStore business project initiative first started with the development of eCats which appears to have been a success in both bringing together sub-teams and implementation of the software. The eStore development brought together IT sub-teams (UK, Holland, Australia, Toronto), and business operations teams all working toward a common goal. Without the development of the eBusiness software, these sub-teams would have most likely never been formed and collaboration would have never developed. How did Shell strategically employ information technology?
In order to strategically employ information technology, companies need to ensure that critical factors such as client/stakeholder involvement is evident, top management support is evident, and there is a clear statement of project objective/scope. (Planning and Implementing IS Projects, Slide 7) In this case it is not obvious that there was customer or stakeholder involvement during the implementation stages. Customer involvement was only apparent when the consultant conducted a review at the end.
This took place after eStore was fully implemented and occurred because someone had to explain the low usage of eStore. Moreover, one can argue that there wasn’t a clear statement of the project objective/scope. Shell’s objective was to provide a self-serving system to its customers to help reduce cost of operations. By implementing a cost effective system that the customers didn’t end up using shows that the objective was never met. If the project objective was clear then someone on the development team would have noticed the drawbacks in the early stages of development.
One critical factor that Shell did ensure when strategically employing information technology was by having management support. It can be seen that there was management support throughout the implementation of eStore. Various teams around the organization were lead by mangers Calvin Wright (eProducts manager), Roger Milley (IT manager), Kathtryn Wise (Business manager), and Marian Mann (IT) in employing the technology.
To strategically employ IT a plan, developed in alignment with the business strategic objectives, would have been implemented to have better communication between sub-teams in order to avoid information duplication. The eStore plan was geared to reduce costs, and transfer such savings to the customer. However, the application development did not involve the input of the customer, and the customer did not see any added value by using the system. In order to strategically employ information technology the business staff should have obtained collaboration from the Agricultural Sector.
To strategically employ IT, Shell would have had to obtain preliminary customer information from the sales group in order to help develop an added value application. Furthermore, Shell should have had a project planning process that identified all stakeholder groups associated with the project (IT, Business, and Customer). In doing so, Shell should have identified a member out of each group and provide up to date information about the application progress to meet the required criteria (class slide note – Planning and Implementing IS Projects).
Shell’s core problem with eStore was when it did implicate the client/stakeholder in the application development. Overall, I think Shell only employed information technology, it wasn’t employed strategically because successful Information systems are included as part of a strategic plan, thoroughly train users, and take multidisciplinary approach to implementation. (Enterprise-Wide-Information Systems, Slide 13)
Recommendations In conclusion, Shell Canada’s implementation of eStore appeared to be good from a business perspective as it was making use of IS to provide a solution to a business problem (low profits) however; it was not carried through strategically. In order to make effective information system Shell should have conducted some preliminary research outlining the customers’ needs. By doing this, it would have become evident that the customers appreciated the local sales representatives and found the relationship to be a value added service.
Therefore, Shell could have focused its resources elsewhere to reduce cost of business operations. Furthermore, if developing an information system was the ideal solution to reduce costs, then Shell should have included its key stakeholders/customers in implementing the system. This would have addressed customer needs and there wouldn’t be as many technical issues. Lastly, Shell needed to train its employees to effectively and efficiently carryout the marketing and promotion of eStore. By having poorly trained employees that found the system confusing, adversely impacted the customer’s understanding and adapting of the system.
Businesses need to have a clear understanding of how information systems add value to the organization. Otherwise it adds expense and no value, creates additional work for everyone, alienates the staff, and reduces the quality and productivity of the business; which is evident in Shell’s eStore. (Information Systems: The Big Picture, Slide, 39) Since the issues with eStore have been properly identified through the consultant’s report, Wright will need to decide what to do to save the application.
To save eStore the IT development groups need to go back to the design board and collaborate with the customer. The eStore application should be modified by creating separate web pages for customers and employees. If such implementation does not prove to be cost effective, than better labeling of the login pane should be designed.
Also, the sales staff should be trained in how to use and promote the eStore to the Agricultural Segment. One of the key promoters should be identifying and relating the added value to the customer and avoiding any legal challenges by encouraging “use” as a promotion. Once the application is modified a follow-up with the customer should be completed within the first 6 months by either the call center or the sales staff.
In doing so, the customer can relate any feasible improvements they would like to see in order to create a better relationship. To avoid legal challenges Shell could provide discount incentives for customer satisfaction surveys. This could lead to an increase use of the eStore which would solve the low-use problem, increase the product, sales, and potential savings for Shell.
APPENDIX ESTORE AT SHELL CANADA LIMITED Case Synopsis -Wright trying to spearhead implementation of online system to reach customers (eStore)
-Customers don’t like it or use it -Wright is trying to figure out why customers are not using the system Shell has developed internally (eStore)
Industry -Canadian oil industry is the 9th largest producer of crude oil in the world with exports almost exclusively to the US -3.8/6.4 trillion cubic feet of natural gas produced annually was exported -85% of all oil refining in Canada owned by: Shell, Imperial Oil, Petro Canada, Suncor, and Husky Energy -Upstream industry activities: search and recovery of oil & gas -Downstream industry activities: refining, marketing, sale & distribution of oil, gas & chemical products to industrial and retail customers
Organization -One of the largest integrated petroleum companies in Canada a leading in manufacturing, distributor & marketer of refined petroleum -14th largest company in Canada -Headquartered in Calgary -3850 employees -810 million consolidated earnings on 9.5 billion in assets -Shareholder ownership: 22% public shareholders and 78% Shell Investments Ltd. which is owned by Shell Petroleum N.V of the Netherlands who is owned by The Royal Dutch/Shell Group based on 60/40 split in group interest. -Shell made up of two customer groups: price sensitive (Transactors 95%) and price insensitive (Progressives 5%). Transactors
-obtain a commodity product as easily as possible for the lowest possible price -concerned about the cost per liter of Shell’s product and the cost per transaction Progressives
-look for added value in the form of additional consulting services to improve efficiency of operations -concerned with the cost per unit of output in their respective operations and therefore look at Shell for services that increase those operational efficiencies The Agricultural Segment
-moving towards a low cost product made up of 2% market share – their remoteness provided unique challenges in managing communication, delivery, and sales settlement for these customers
Wright – Decision Maker -commercial eProducts manager -spent 1 year in the field working with local sales representatives and the agricultural customers to understand the low use of eStore -played a part time role in the International development of eStore. Milley
-responsible for Canadian project operations -2nd eCATS lead by Milley
System eStore -No other players in the market were pursuing initiatives to eStore -Canadian held project in Calgary -Sub-teams: United Kingdom – eBus program management, Toronto – Software development by vendor, Holland – application hosting and support, Australia – user interface design -eCATS platform once done implemented in Holland, UK, Brazil -released in March 2002 installed in May and officially launched in September 2002 -targeted 2000 customers sign up over 1 year
-systems made up of: ofront end – the part of the system that the customers would interact with in order to browse a catalog, get price quotes, place orders, review reports and initiate requests for customer service oback end – provide all the business logic, systems interfacing and data storage services -4 business operation teams
oCall center oBusiness subject matter experts working on ERP oData warehouse and the product catalogue oMarketing and sales teams rolled the eStore to customer
IT Departments -Lead by Milley & Mann -Interdepartmental coordination was going to be a key success factor -eBusiness forum application lacked a single point of accountability – sometimes weeks or months would go without having a meeting -due to the high number of teams anecdotal information was pouring in from all sides and sometimes the information was contradictory -about 2000 customers sign-up but number of customers actually using it was unchanged -7 teams involved in programming
oAddress the desktop standard oThe user log-on single sign-on mechanism oWeb application server software oThe middle ware transport layer oThe ERP system oData warehousing oReporting system
1.Rainer, R. (2008). Introduction to information systems, Canadian edition. Mississauga: John Wiley and Sons Canada Ltd.
2.Ross, Jeanne W., & Weill, Peter. (2002). Six IT Decisions Your IT People Shouldn't Make. Harvard Business Review, 13.
3.Saunders, Chad. (2006). Estore at Shell Canada Limited. Richard Ivey School of Business, 14.
4.In class chapter slides.