Commentary
11/4/2004
11:45 PM
Commentary
Commentary
Commentary

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 [email protected]


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



    Question A: Hype aside, what role should Web services have in our B-to-B E-commerce plans?

    Our advice: In an enterprise where IT is viewed as a strategic enabler, the use of Web services is increasingly seen as a key to simplifying partner interoperability. As the enterprise starts to see IT providing competitive advantage, B-to-B E-commerce brings "real time" business closer to reality, providing cost savings from inventory control, quick delivery, and customer satisfaction. B-to-B E-commerce plays a key role in supply-chain management. Web services also have started to replace the older EDI networks. In a competitive business environment, B-to-B E-commerce plays a key role in an effective trading-partner relationship, providing an efficient and reliable interaction point for a business.

    Web Services In E-Commerce
    Because of the flexibility, resilience, common standards, and ubiquity of Web services, they have provided acceleration in B-to-B E-commerce, and opportunities for value-added networks. Examples can be seen in the hospitality and travel industry, where networks such as Amadeus, Sabre, and Worldspan act as interconnections to both small and large hotel and travel service providers, creating global distribution systems. These systems provide a Web-based infrastructure to sell travel-related services, from marketers to service delivery.


    Related Links
    ebXML

    World Wide Web Consortium

    Microsoft Web Services Developer Center

    Web Services Pipeline
    In a multienterprise partnership, where each enterprise uses different tools and infrastructure internally, Web services are emerging as the interoperability glue for a network of providers and brokers. This requires common standards such as ebXML (Electronic Business eXtensible Markup Language), supported by industry-specific VANs which provide interface connections to these standards.

    Developing E-commerce IT Partnerships
    In developing E-commerce partnerships using Web services as a tool for interoperation, enterprises have to evaluate their relationships in terms of strategic importance and level of IT sophistication. The level of IT sophistication is a key to B-to-B E-commerce between two enterprises. Seamless interoperation using Web services requires the partners to work together to build a common interface, adding complexity not faced in internal projects. Most enterprises will have to convince their suppliers to adopt, and collaborate with willingness to compromise.

    A well-developed and managed B-to-B E-commerce strategy, using Web services to achieve interenterprise interoperability, can increase business-operations efficiency, lower overall costs, and improve ROI.

    --Humayun Beg



    Question A: How might we use a customer Web portal effectively in a traditionally high-touch business?

    Our advice: A goal of almost any business is to serve more customers, better, and more profitably. In a traditionally high-touch business, whether B-to-B (such as management consulting) or business-to-consumer (such as a doctor's office), this is accomplished by creating opportunities to spend time with more prospects and more customers, to constantly add value for them, while simultaneously striving to reduce the cost associated with the service delivery. Customer Web portals can help accomplish all three objectives:

  • Serve more customers by enabling routine customer-oriented activities, such as scheduling, billing, feedback and inquiry, to be moved to the portal.
  • Provide better customer service by enabling anytime/anywhere access to routine, yet personalized and valuable, information.
  • Increase profitability per "transaction" by reducing the need for expensive labor to provide the above routine functions and information.
  • The value that a customer receives in a typical high-touch business can be depicted as a bell curve, with "value received" on the Y-axis and the "time sequence of touch-points" on the X-axis. While the high-value touch-points toward the center of the service cycle are hard to replace by the use of a portal, since they require the personal expertise of the service provider, many of the touch-points before and after these high-value touch-points can at least partially be offloaded to a self-service portal.

    Portal Features
    What makes a customer Web portal effective, efficient, and useful are some or all of the following features:

  • Quick access to personalized information, order transactions, and support.
  • The ability to communicate with other customers, and to create peer networks.
  • The ability to select the information one will receive, when they receive it, and how they receive it.
  • Simple methods of sending feedback or for asking questions.
  • Critical Success Factors
    Here's a checklist of the most-critical aspects to consider when implementing a customer Web portal:

  • High customer awareness: Customers must have a high degree of awareness of the portal and the services it offers.
  • Ease of use: Make products, services and information easy to find and access. The portal must be customizable.
  • Encouragement of revisits: Provide quality content and transactional capabilities. Encourage and reward customers to use it.
  • Trust: The portal must be in the spirit of the business itself by being trustworthy and secure, especially if it's to provide access to private data.
  • Customer control: Allow maximum possible control to the customers while ensuring compliance with privacy and other regulations.
  • Integrated service delivery: The portal must align with, integrate, and support the brick-and-mortar side of the business.
  • Stakeholder Advantages
    The various internal and external organizational stakeholders are affected as follows:

  • The service provider is able to focus on those critical and valuable aspects of the customer interaction that require a personal touch.
  • The support staff at the business is freed from mundane tasks. They're now reachable not just in-person, but also via the portal using such features as chat.
  • The customers have access to personalized and valuable information anytime and anywhere.
  • High-tech and high-touch don't have to be mutually exclusive. Instead, implemented properly, they leverage each other's strengths, and support one another in areas where the other may present such opportunities. While technology won't replace the human touch, it can and does enable humans to serve others more quickly and efficiently.

    --Sanjay Anand

    Sourabh Hajela, TAC Expert, has more than 15 years of experience in strategy, planning, and delivery of IT capability to maximize shareholder value for corporations in major industries across North America, Europe, and Asia. He is a member of the faculty at the University of Phoenix, where he teaches courses in strategy, marketing, E-business, and leadership. Most recently, he was VP and the head of E-business with Prudential Financial.

    Humayun Beg, TAC Thought Leader, has more than 20 years of experience in business IT management, technology deployment, and risk management. He has significant experience in all aspects of systems management, software development, and project management, and has held key positions in directing major IT initiatives and projects.

    Sanjay Anand, TAC Expert, has more than 20 years of IT and business-process-management experience as a strategic adviser, certified consultant, speaker, and published author. More than 100 personal clients, large and small, have included companies from a diverse array of industries and geographies, from academia to technology and from Asia to the Americas. Often referred to as a "consultant's consultant" for training and mentoring skills. He is author of books "The Sarbanes-Oxley Guide for Finance and Information Technology Professionals" and "J.D. Edwards OneWorld: A Beginner's Guide."

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