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Running head: Dodd

MBA 18-Week Project in Change Management

Peter Dodd

University of Phoenix

LDR/515

Niraj Kohli

June 12 , 2006

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Table of Contents Page 2

Executive Summary Page 3

Introduction Page 4

Initiatives Page 4

Use Cases Page 5

User Interface Page 7

Internal Staff Impact Page 8

Technology Project Plan Page 9

Databases Page 9

Programming Page 9

Networks Page 10

Use Case Benefit Page 10

Stakeholder Impact Page 10

Risk and Mitigation Page 11

Projected Cost Savings Page 11

Sensitivity Analysis Page 12

Outcomes Measurements Page 13

Models and Theory of Change Page 13

Systems Thinking and Change Management Page 16

Future Change Management Page 17

Executive Summary Page 17

Resource Constrains and Strategies for Mitigation Page 18

Ethical Impact Page 19

References Page 20

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Executive Summary

The following proposal contains justification for two initiatives designed to give

Wells Fargo Bank a competitive advantage over its competitors. In the event it is

determined that the current E-Business functions are no longer ‘cutting edge’ or cost-

effective, Wells Fargo Management is encouraged to adopt the following strategies. The

proposal will define each initiative and provide rationale supporting selection and

implementation of these initiatives. Additional justification for acceptance of this

proposal will be included in the form of Use Cases, a Technology Plan, discussion of

Change Theory Models, Recommendations to lead implementation of these changes and

a plan for sustaining these changes. As a conclusion, I will outline the impact these

initiatives may have on our internal staff and customers.

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Introduction

The following proposal contains justification for two initiatives designed to give

Wells Fargo Bank a competitive advantage over its competitors. In the event it is

determined that the current E-Business functions are no longer ‘cutting edge’ or cost-

effective, Wells Fargo Management is encouraged to adopt the following strategies. The

proposal will define each initiative and provide rationale supporting selection and

implementation of these initiatives. Additional justification for acceptance of this

proposal will be included in the form of Use Cases, a Technology Plan, discussion of

Change Theory Models, Recommendations to lead implementation of these changes and

a plan for sustaining these changes. As a conclusion, I will outline the impact these

initiatives may have on our internal staff and customers.

Initiatives

The first proposed initiative is to add “real-time” customer support via Instant

Messaging (IM) for visitors to the Wells Fargo website. The rationale behind real-time

customer support is to allow registered visitors an exclusive channel of communication

with the Bank in the event they have questions about their checking or savings accounts

which cannot be easily answered with information contained on the website. If

implemented, IM communication will allow Wells Fargo service agents the opportunity

to answer a diverse array of customer questions while the customer is navigating through

the Bank’s website.

Implementation of IM communication will lead to a reduction in operating costs

by reducing the number of telephone inquiries and the number of service agents required

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to answer those calls. Based on a monthly contact rate of 2.1 million inquiries,

Operational savings may be achieved if IM requests account for 30% of total monthly

volume within 12 months, the current monthly contact rate does not increase and the

number of existing customer service agents is reduced by 25% for the same 12-month

period.

The second proposed initiative is to add an exclusive area within the website for

registered visitors maintaining a high-value relationship with the Bank or those that wish

to establish a high-value relationship with the Bank. The rationale behind selection of

this initiative is to encourage use of our website by high-value customers and to reward

them (high-value customers) with perks if their deposit account balances exceed a certain

monetary threshold. Operational excellence will be achieved if the Bank realizes an

increase of at least 35% in the total relationship balance of its High-Value Customer

portfolio in an 18-month period.

Each of these initiatives represents a cutting-edge enhancement because neither of

these services is currently offered by the Bank’s primary competition. If Wells Fargo

implements these initiatives before either Bank of America or Chase Bank, these services

will offer wells Fargo brand identification in the minds of consumers.

Use Cases

Each use case provides “one or more scenarios that convey how the system

should interact with the end user or another system to achieve a specific business goal”

(Wikipedia, 2006).

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The use case for real-time support includes the steps of accessing the Wells Fargo

website, registering as a user, navigating the site using hyperlinks, determining the need

for support, requesting support and interacting with support personnel. Customers and

service agents will each need IM software installed on their PC’s. This software will be

licensed and wholly owned by Wells Fargo. IM Software will be provided free of charge

to customers who request and download the product through the website. If

implemented, the Bank will work with existing IM developers to customize the

version available to customers. A focus on mobil technology is encouraged.

The use case for an exclusive area for high-value customers will include all steps

required to receive online support as well as, user self-selection/registration as a high-

value customer, preference selection/enabling of advanced features, use of advanced

features and preferred placement on a waiting list for real-time online support. Customers

will need a computer with an Internet connection to access the Wells Fargo online

website. Customers may access the Wells Fargo website from a computer in one of the

Bank’s branches or any location worldwide. The Bank will support both dial-up and

high-speed cable modem/DSL connection speeds for website users. Once customers have

accessed the website, their computer must possess a minimum level of speed and

available memory to use our features. Customers will have the option of registering

existing accounts for online viewing, requesting a new account be opened, viewing

general information about the Bank or applying for a Wells Fargo job while on the

website.

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Online account registration will require that the customer enter specific,

confidential information about themselves and their account(s). Customers who choose

not to register their accounts will not be required to enter any confidential information but

will not be allowed access to real-time support or the exclusive high-value area.

While navigating the website, customers will be guided by online menus. By

selecting a menu item, customers will be taken to a specific area within the website. In

the event account information is not available at the level of detail required by the

customer, they will be given the option to click a button and request an online assistant

with which they may converse by typing questions into their computer. Currently,

visitors to the website only have the option of calling the service center on the phone if

they have questions.

While conversing with an online assistant, users will still be able to navigate the

Website. This will allow users the opportunity to execute instructions provided by

customer service agents. Access to confidential account information and conversations

with online support personnel will need to be carried out on a secure link-up to avoid

fraud, loss of confidential information or system intrusion.

User Interface

In addition to the basic systemic requirements needed by non-exclusive

customers, exclusive customers would need to be able to download information into

financial software, such as Quicken or Microsoft Money. These customers would be

allowed the ability to set up an email account on the Wells Fargo servers similar to the

service provided by Yahoo or Hotmail. The exclusive area of the Wells Fargo website

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will need to have a different color-scheme and look to underscore the exclusivity of

membership to this area.

Along with access to special features and email accounts, exclusive members will

have the opportunity to execute trades on financial markets as a fee-based service and

will be placed at the front of the waiting line for requests of help from our online support

personnel.

Similar to the warehouse clubs that offer extended service hours for their business

members, the exclusive area of Wells Fargo’s website will be available at all times. The

normal area of the website goes down for maintenance periodically. Unlimited access

to the exclusive website area will be created by the Bank through dedication of additional

servers.

Customer training for both website enhancements can be facilitated in Bank

branches as ‘how-to’ seminars. This will allow an opportunity for recruitment of new

customers as well as offering personalized services that exceed the ability of the

competition.

Internal Staff Impact

If these proposals are brought to fruition, there will be a significant impact on the

Bank’s internal staff. Staffers who contact customers as online support will need

familiarity with site functionality. As enhancements are made, ongoing training will be

required. As such, the Bank will need staffers who are eager to learn and continue to

gain knowledge. In addition to placing an additional burden on existing staff, there is a

very real possibility that the Bank can reduce operating expenses by ‘off-shoring’ the

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jobs of online support personnel. This makes financial sense because the lower salary

costs may help reduce the expense of implementation for these two initiatives.

Technology Project Plan

The Technology Project Plan for the proposed service enhancements include

expanded databases, programming requirements and network configuration. Each

solution calls for both hardware and software upgrades internally and externally.

Databases

In order to provide real-time contact with visitors to the website, the Bank needs

to add information to existing databases. Currently, these databases include customer

account information consisting of names, addresses, account numbers and purchasing

histories. If a real-time interface with service personnel is offered each customer needs

an IM address, IP Address and an IM communication tool. If an area is created within

the website for the exclusive use of existing high value clients, databases will need to be

expanded to include qualifying information, such as current balance, ancillary financial

relationships and frequency of use.

For both initiatives, the Bank needs to either build or buy a database that

interfaces with the existing database infrastructure. If accepted, this step would require

additional use-case analysis to determine which option would be more cost effective.

Programming

In addition to expanding our database capabilities, the Bank would need to

conduct the progr5amming steps requir4ed to allow legacy systems to communicate with

new software. We would model these programming tasks on our past successful

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combination of Norwest Bank and Wells Fargo Bank merger tasks.

Networks

Networking configuration would need to be modified to allow customer service

agents the opportunity to view the key strokes and screens utilized by website visitors.

This would allow our internal network to communicate with the external internet as well

as allow us to communicate with other business’s intranets in the event customers contact

us from their work PC. Our solution design would take into account as many variables as

our use case research is able to uncover.

Use Case Benefit

The benefit of use case application will be to uncover the needs of our

development staff so they can design an interface that gives customers a confident feeling

when visiting our website and utilizing these enhancements. As we conduct our analysis,

we will seek input from each stakeholder to determine their needs. Participant

stakeholders will include customer service staff, trainers for internal/external users,

content developers, computer programmers, online security coordinators and the human

resources department. Gaining information from these groups will benefit the

organization by combining the needs of each group into a product that meets as many

needs as possible.

Stakeholder Impact

The stakeholders that are impacted will include each group surveyed in the use

case analysis as well as our branch banking locations. The branches will be impacted

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significantly because their primary task will be to educate external customers regarding

the ease and convenience of online banking.

Risks and Mitigation

The business risks we face include leading our competitors to an untapped

marketplace. If we are successful providing real-time online service and establishing and

exclusive area on our website, out competition may try to emulate our practices. To

mitigate this risk we must continuously plan improvements for each of these added

services. By doing this, we can maintain the momentum we enjoy during roll-out and

stay steps ahead of anyone who attempts to duplicate our products. We will also consider

licensing agreements for others to use our product in the event we are successful and our

competitors are unsuccessful providing these services.

Projected Cost Savings

The estimated costs for full implementation for both of these initiatives are

represented in the following tables. Projected costs include training 1,100 customer

service agents, adding database software, upgrading desktop PC’s/Servers, training our

staff and marketing these services online/in-store and through various media outlets such

as TV/Radio and print:

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Real-Time

Exclusive Area

Human Resources 400000 250000

Hardware(PC and Server) 950000 800000

Software (database and IM) 195000 175000

Training 980000 600000

Marketing100000

0 500000

NPV

The following tables represent the Net Present Value for the expenses outlined

over a 1-year period. All figures are in U.S. Dollars and calculated at a rate of 3 %

annually.

Real-TimeExclusive Area

Human Resources$388,349.5

1 $242,718.45

Hardware(PC and Server)

$873,786.41 $776,699.03

Software (database and IM)

$189,320.39 $169,902.91

Training$951,456.3

1 $582,524.27

Marketing$970,873.7

9 $485,436.89

Source: CCH Business owner’s Toolkit, 2006

Sensitivity Analysis

Each of the projected costs bear the risk of change based on factors within the

economy. Human Resource expenses are sensitive to the availability of skilled labor. If

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there are no skilled employees to hire, the cost for skilled labor will increase. Hardware

is sensitive to the availability of raw manufacturing materials. Items such as plastic,

memory chips and metals may drive these costs up or down. The software cost is based

on an internal development effort. If we face resource shortages when developing

software or if we cannot program efficiently, costs could increase significantly. Training

and marketing costs may fluctuate because we have a finite number of advertising

minutes. If there is high demand for these minutes on radio or TV, the Bank may have to

increase efforts in print media.

Outcome Measurement

The outcomes we will measure o determine success include customer use of our

enhancements, feedback from employees and customers, the number of new accounts we

can book and the profitability of these new accounts. Additionally, we will measure the

rate of return we see on the investments of hardware, software, training and marketing

during the first year of implementation.

Models and Theories of Change

Change Management Theory involves looking at the following principles,

“Reaction of individuals to change, individual needs, loss reconciliation, expectations and

fears” (TeamTechnology, 2006). The impact of these theories on the proposed changes

for Wells Fargo customers will be significant because consumers may fear technology, be

resistant to manipulation of their money through electronic channels and doubt the

integrity of these cost-saving proposals. Only after they have successfully used the new

resources could they begin to trust the benefits of change.

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The critical success factors related to these changes will be consumer acceptance.

As such, the Bank’s investment in training both consumers and employees will be critical

to consumer acceptance. The human implications of the proposed changes will involve

establishing trust in the processes defined as well as trust in the system used to deliver

these enhancements.

The responsibility of Wells Fargo employees consists of gaining as much

knowledge and understanding about the enhanced website portal and online banking tools

as is feasible to project confidence in the products. Leadership within the organization

will carry the responsibility to gain employee and consumer acceptance.

Change Model Application

The proposed changes are included in the Bank’s long-term, large-scale strategies.

The Bank will save money by reducing contact through the telephone and will gain a

Competitive advantage by offering exclusivity for high net-value customers.

For the Bank’s initiatives, John Kotter’s 8 steps of change is appropriate.

Employees will reap a sense of urgency and communicate this to customers. The right

team will be placed to communicate change to the staff. The vision will focus on the

emotional elements of the changes. Communication and Empowerment will be used to

disperse key learning points and execute the change. Short-term wins will be created for

customers as the changes are seen as successful. When financially feasible, the Bank

won’t back off of the proposed changes. The changes will become the industry norm for

online banking.

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The plan for addressing the critical success factors will include measurements of

customer satisfaction and usage. The contingency strategy for managing resistance to the

changes will be to gradually phase-out the existing telephone contact interface. This will

allow consumers and employees an transition period until the changes are widely

accepted.

The leadership behaviors required to keep momentum moving will be a two-way

flow of ideas from customers to the Bank and from the Bank to customers, internal and

external. As long as each impacted individual feels their opinions are being heard,

momentum will be maintained.

The cultural elements of the Bank include long-time customers and employees

who are resistant to change. By establishing a culture of inclusion and setting online

banking as the convienient alternative to visiting a Bank branch, acceptance will be

achieved.

A continued focus on external education for employees will overcome the

organizational cultural barriers for these changes. Employees will be encouraged to

attend school to learn about technology and in turn, communicate this knowledge to

potential customers.

The post-implementation strategy for ongoing success will be to benchmark Wells

Fargo’s customer enrollment in and usage of online banking tools. This data may be

shared among competitors so the banking industry as a whole can generate consumer

confidence in online banking.

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Systems Thinking and Change Management

With regard to Systems Thinking and Change Management Evaluation, the

following topics will be addressed: application of system logic in decision making,

incorporation of systems thinking in project development, the application of systems

thinking in future change management projects, stakeholder interests and resource

constraints faced as the project moves forward, strategies employed to achieve balance,

the impact of technology on effective managerial decision making and the role of ethics

in the management of change and transition.

Application of Systems Logic

Systems logic implies that all elements of a system must be looked at as logical

components of a system. The two enhancements being proposed involve expanding

existing systems. As such, the components of these systems must be viewed as

interacting with each other. Systems Logic will be applied as this interactivity is

analyzed.

When expanding access to our existing website, it is incumbent upon the design

team to determine logical navigation paths for website visitors. When designing the

website, logic must be considered for a host of components such as, internet connectivity,

power sources, occupancy limits and communication channels for learning.

Project Development

The role of Systems Logic in project development is clear when multiple

components are involved in a system. A full understanding of the function of each

component is necessary before an individual or team can understand the impact of one

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component on the other components of a system. It is only after these impacts are

analyzed that decisions can be made regarding their individual or collective impact on the

system.

When looking at the website enhancements, developers must

consider the human element of the system and the different preferences for learning each

possesses. Learning habits, age, gender, and enculturation all played a role in the end

user’s ability to use these proposed enhancements.

Future Change Management

When looking at the impact of these proposals, it was important to use “common

language to describe complex components” (Agoshkova, 2006a). With regard to future

change management initiatives, this application of and conversion to common language

will be important for two reasons; end users may have never been exposed to the high –

level technological backbone of either system and common language will ease user’s

intimidation at impending change and it will be easier to translate common language into

languages other than English for training purposes.

Stake Holder Interests

The primary stake holders for each enhancement are the customers of Wells Fargo

Bank. The changes and enhancements to these systems should have a minimal impact on

these stake holder’s time and should be easily understood so they are not rejected or

under utilized. Secondary stake holders include Wells Fargo employees and investors.

Employees must understand these enhancements so they can communicate to the

customers. Investors must see value created by these enhancements in order to realize an

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increased return on their investment.

Resource Constraints

Resource constraints include time, money and people for each enhancement.

Timelines were provided for project completion as well as limits placed on the amount of

money budgeted for each enhancement. Additionally, training for staff members was

allotted during normal working hours. This required a realignment of resources to make

sure that the normal tasks associated with non-enhancement related activities did not go

unattended. The proposed website enhancements were given an even lower level of

financial latitude because they used existing technological infrastructures. Checkpoints

for the effectiveness of each enhancement have been designed to measure increases in

customer activity.

Strategies for Mitigating Constraints

Each of the constraints listed was mitigated through analysis of the impact of

exceeding limitations. The primary constrain was money as all labor and time converted

to an actual cost. In order to balance these constraints, input related to saving time and

the amount of resources were considered and applied as appropriate.

Technological Impact

Technology is the basis for each of these enhancements and it assisted the job of

decision-making by bringing all stakeholders closer together. Technology also

eliminated expensive travel for stakeholders to meet as many collaboration sessions were

conducted electronically via Net Meetings or E-mail conferences. Additionally,

technology made training employees and customers a much more streamlined process.

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Because each enhancement relies on presenting cutting-edge technology to the customer,

a forward-looking approach was used to determine systemic requirements.

Ethical Impact

Because each proposed improvements touched the customer on a personal level,

the choice to make these features available created an ethical dilemma. A decision was

made to offer enhanced website access to customers with more money on deposit with

the bank. To offset this dilemma, the decision to offer real time support to those

customers who have minimal balances was made as a strategic option to try to increase

business. Additionally, by reaching out to these existing and prospective customers, the

Bank demonstrates diversity in its business practices.

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References

Agoshkova, Elena B (2006). Systems Thinking in the Twenty-First Century. [Online].

Bank of America (2006) Home. Accessed 3-10-06. Available:

http://www.bankofamerica.com

Businessballs.com (2006). Change management. [Online].

Available: http://www.businessballs.com/changemanagement.htm

Chase Bank (2006) Home. Accessed 3-10-06. Available:

http://www.Chase.com

TeamTechnology.co.uk (2006) Change Management. [Online].

Wellsfargo.com (2006) Glossary: use case. Accessed 3-10-06. Available:

http://www.wellsfargo.com

Wikipedia.com (2006) Glossary: use case. Accessed 3-10-06. Available:

http://en.wikipedia.org/wiki/Use_case