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E-Business
by Stuart Cooke
Introduction
This paper is intended to provide
business and IS managers with an insight into the realities of E-business.
The paper starts by explaining what E-Business entails, it then goes on to provide advice on the major benefits and
pitfalls, finally outlining CEC Europe’s approach to defining an E-Strategy.
The Global E-conomy
Most surveys state that in the
foreseeable future 35-40% of business transactions will be conducted on the
Internet, leaving around 60% to traditional channels.
It is projected that by 2002, over 25% of corporate sales in this country
will be attributable to the Internet. From
now on, the markets are global, and they need to be serviced 24 hours a day, 365
days a year.
There is still some confusion as to the
correct usage of the terms e-business and e-commerce.
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business-to-consumer (B2C), business with our consumers
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consumer-to-consumer (C2C), business between consumers
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business-to-business (B2B), business with our suppliers, and them with their suppliers
In essence, E-business has been around
for over twenty years with electronic trading between organisations in the form
of EDI (electronic data interchange). The
principles of EDI are really no different to those of business-to-business
e-commerce. However, EDI has failed
to be successful because of technical difficulties and high set-up costs.
Only the larger companies have had the ability to implement EDI, and with
limited coverage.
Improved Customer Service, Satisfaction and Retention
Customers now have more choice, features and products available to them and organisations will have to adapt to do doing business the customer way. With e-commerce the organisation can present a new face, develop proactive one-to-one relationships and personalise products and services. This will help to:
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retain the best customers
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improve development and cross-selling of new products
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gather, analyse and act on customer information.
Market Leadership
With market leadership, organisations are able to influence market
behaviour such as size, brand position and market share.
Through the operational flexibility, foresight and innovation of an
e-strategy, organisations will develop a brand reputation and position; and
train and orient staff for e-business.
Optimised Business Processes
Business processes are improved to reduce costs, speed time to market and improve customer satisfaction. E-business improves the way the organisation operates by:
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integrating and streamlining business processes
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improving relationships with partners
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sharing and enhancing information
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improving relationships with customers and responding better to their needs.
Enhanced Product Offering
New marketing and sales opportunities allow the organisation to offer new
products or existing ones that were previously uneconomical to provide.
Sales can be developed by creating a range of services that support a
product or initial service, providing the customer with more reason to stay with
your company.
Access to New Markets
Channels extend their reach both nationally and internationally, crossing
industry sectors and marketplaces.
Better Resource Usage
E-business drives vast organisational change. Organisation structures and cultures are no longer bounded by
geography, function or time. Virtual
organisations can develop, drawing on global resources.
Knowledge is now at hand allowing employees to become more skilled
Experience suggests:
Changing Business Environment and Technological
Issues
With the traditional business environment changing rapidly as customers
and businesses want the flexibility to change trading partners, platforms and
networks at will, many companies now have different technologies, products and
tools competing across their organisation, increasing the overall cost of
ownership and reducing flexibility. It
is not surprising that 75% of today’s e-business projects fail.
One of the most common reasons is that most projects are not backed by a
formal business or IT strategy.
Privacy and Security
A serious deficiency arises from the use of the Web as a marketing
channel. 60% of the users do not trust the Web as a payment channel. Opening up
the business to the global market place exposes it to new and dangerous security
risks.
Legal Questions and Public-Social Policies
This issue is one of the major issues regarding e-business. There are a
number of questions concerning marketing through the Web: validity of an
electronic signature, non-reputability, legality of an electronic contract,
risk, trademark and copyright violations, loss of right to trademarks, loss of
right to trade secrets and liability. There are also government's soles,
regulations, economic policies and censorship.
Complacency
At this stage of the formation of the e-economy, complacency is the greatest danger. Tentative, incremental steps are likely to yield only tentative, incremental results. Many businesses and business leaders still think of the Internet as a technology playground, or at best, an opportunity for new forms of advertising.
Experience suggests:
Choose the best Timing
Businesses have to decide whether to adopt a ‘first mover’, ‘fast
follower’ or ‘me too’ approach. First
movers definitely open up a new opportunity, but it’s still a people-centric
world where leadership and management are the cornerstones of success.
The two most successful businesses in the IT industry, IBM and Microsoft,
have usually been fast followers, not first movers.
Focus on B2B
Most Internet e-business attention has been focussed on the B2C space.
However, this is only 10% of the opportunity.
The remaining 90% lies in B2B trading.
Take the Single Customer View
The Internet is just one of many new important digital channels.
Others include mobile telephony and digital TV.
‘Single customer view’ is critical for customer relationship managers
and is vital for all e-business development.
Customers must be able to trade with businesses seamlessly using any
available channels. Leveraging the
loyalty of existing customers is critical to success in the world of e-business.
Redefine the Business Model
The shift to e-business requires a re-evaluation of the entire business
model. Web pages, electronic channels and "e"-enabled processes are
not substitutes for an enterprise-wide vision. Organizations must begin with
strategy and implement that strategy quickly, simultaneously, and globally
across all its people, processes and technologies.
Extend the Boundaries
Resist the impulse to withdraw and protect the organisation during these
times of transformational change. Successful organisations will break down the
walls of their enterprise and let suppliers and customers in.
When organisations let their suppliers and customers in, this eventually
includes the supplier's supplier . . . the customer's customer.
Gain Commitment from Senior Management
Senior management’s role is critical and not one that can be delegated
down through the company ranks. Senior management must be involved from the
start because the change will be strategically critical, and, therefore, not
cheap. Changing the business’ organisational beliefs and understanding is
going to require a great deal of support and guidance from management.
Invest in People
As well as changing the business processes and technology, employees will
require new and extended training and support to operate the processes and
technology in the new business environment.
Get Your House in Order
It is vital to get existing processes and systems working effectively.
For example, bar coding should be in place with a well-structured, standard
product numbering scheme. Inventory must be under control.
Confirm Supporting Strategies
An e-strategy must be based on existing, and well defined, corporate, IT,
supply chain, HR and marketing strategies
The
CEC Approach to Developing an E-Strategy
A successful outcome requires a
structured approach:
Step 1: Visioning
Establish the business objectives and
goals to be addressed, the key performance indicators to be achieved and the
business benefits to be delivered. Involve the Executive Sponsor and a Visioning
Team of senior business and IT managers.
Step
2: Develop Business Model
Identify and define:
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the business processes that will support the e-business strategy
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the organisation structure, the people and skills required to manage the processes.
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the infrastructure or IT infrastructure required to support the new e-business processes.
Step 3: Develop Road Map
Identify the e-business initiatives
that support the overall strategy and identify which ones will provide quick
wins in terms of being easiest to implement and bringing greatest benefit.
Develop these into Systems and Technical Architectures.
Step 4: Build Solutions
Develop or source solutions based on
best of breed products
Step 5: Implement Solutions
Deploy the new and changed organisation
structure, processes and technology.
Step 6: Review
Regularly review the strategy,
fine-tuning and redirecting as the environment and needs change.
Remain flexible and continuously innovate.
Awareness & Education
From the outset, run an awareness and
education programme that specifically targets
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Senior Management: |
ensuring they understand, and are committed to, investing resources |
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E-Business Project Team: |
ensuring they understand the information technologies and their impact on the business processes |
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Employees: |
ensuring they understand the changes that are taking place and their roles |
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Trading Partners: |
ensuring they understand the benefits of doing e-business. |
For more information please e-mail us or call Consulting on 44 (0) 20 7251-4646
© Copyright 1998, CEC Europe Limited