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11/4/2004
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SmartAdvice: Make Sure E-Business Bids Make Sense And Offer Value

Don't jump on the E-commerce bandwagon just because, The Advisory Council says--look for the business value. Also, Web services make building links with partners easier; and customer Web portals can work even in high-touch businesses.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers three questions of core interest to you, ranging from leadership advice to enterprise strategies to how to deal with vendors. Submit questions directly to smartadvice@tacadvisory.com


Question A: What are the key factors in the business optimization of an E-commerce initiative?

Our advice: The rise and apparent demise of the Internet economy has left us with invaluable lessons in its aftermath. Perhaps the most important one is: It's all about the business.

E-business is the art and science of creating business value through the Internet. At every step of an E-business initiative's life cycle, one must evaluate its ability to create business value.

Identifying And Selecting
A company's business model is its formula for success. Hence, assuming that this formula is correct, everything that follows must conform to it, and this includes E-business initiatives.

Consider only those E-business initiatives that provide clear and, if possible, quantifiable business benefits. These benefits should be sustainable and in line with the company's business model.

Every initiative should address these key questions:

  • Does this E-business initiative support or enhance our business model?
  • What is it supposed to deliver? When?
  • Does it change the fundamentals of our business? How?
  • How does it relate to the rest of our organization's capability?
  • If an initiative doesn't adequately address these issues, in the least it requires more analysis, and, possibly, it shouldn't be pursued.

    Here are some common pitfalls to avoid:

  • Competitor is doing it: Just because a competitor is doing something does not make it the right thing for you to do. It might fit their business model, but does it fit yours?
  • Great technology innovation that "the customer will definitely like": Many times in our fascination with new technology we assume what the customer wants: This is such as neat feature that our customers will definitely appreciate it. Ask your customers what they need and want, don't assume.
  • Funding
    Many initiatives will pass the criteria outlined in the previous phase. However, only a few deserve to be funded. To be funded, an initiative should address these key questions:

  • Will this investment produce results?
  • How will we measure them?
  • One should always:

  • Focus on results: Results should be not only quantifiable, but also sustainable.
  • Question the promise: If it sounds too good to be true, it usually is.
  • Stay focused on the business model: An initiative should enable or support an area of competitive advantage. If it doesn't, do not spend time and money on it.
  • Focus on a short payoff period: Do not accept an initiative that delays the payoff. Break an initiative into smaller phases, with the investment in each phase being less than 20% of the total effort. Make a go/no-go decision at each step.
  • Build And Deploy
    A lot of good work often goes to waste in this phase. To deliver on a great promise one must plan its implementation to the last detail. Time and money saved in planning is lost exponentially in implementation.

    Implementation planning should address this key question: How will all the pieces of my organization work together during and after this implementation?

    A company's processes, organization, and infrastructure must work in harmony with the new initiative or it will fail.

    Monitor And Adjust
    Nothing goes exactly as planned. Hence, one must monitor and make course corrections as necessary. One should also try to document lessons learned so mistakes aren't repeated, and best practices incorporated in future endeavors.

    One should address these key questions:

  • Have we realized the promise?
  • What's keeping us from it?
  • Getting business value from an E-business initiative is a matter of acting as if your own money is on the line. The fundamental rules of business still apply.

    --Sourabh Hajela

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