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Chapter 13. Challenges to Implementation

Foundations of the Net-Enabled Organization

Detmar Straub, 1st EditionCopyright © 2003 John Wiley & Sons, Inc.

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Copyright John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

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Chapter 13. Learning Objectives• To explain why security is the key issue in Internet commerce adoption.• To describe security barriers to use, both from a consumer and an org. perspective,

and to briefly describe workarounds to the problem.• To explicate why download delay is a major factor in online purchasing, even while

bandwidths are increasing.• To explain how to deal with the security issue.• To make the case for why search probs. are a major issue & what can be done to

resolve them.• To desc. the value of metrics, need for better metrics, & how to get them for the

Web.• To overview interface limitations and what is poss. to deal with these.• To discuss how mgrs. can overcome the varying stds. emerging on the ‘Net”.• To describe the social issues, such as:

1. Consumers’ fears in buying or transacting business over the Web2. Lack of brand awareness3. Management/cultural problems4. Lack of firm experience in doing e-business5. Organizational fear doing business over the Internet6. Migrating to Internet computer-computer linkages from more familiar EDI7. Lack of well-accepted/understood e-cash by consumers or organizations8. Ambiguous/hostile legal or regulatory environment

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Chapter 13. Outline1. Introduction2. Technical and Social Challenges to Implementation3. Technological Challenges

– Security Weaknesses– Download Delays– Search Problems– Inadequate Measurement of Web-site Success– Interface Limitations– Lack of Internet Standards

4. Social (Organizational & Environmental) Challenges– Consumer Fear – Lack of Brand Awareness– Management/Cultural Problems– Organizational Fear– Migrating from Computer/Computer Linkages– Lack of acceptance of e-Cash– Ambiguous/Hostile Legal/Regulatory Environment

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13.1 Introduction

• While NE creates opportunities on a vast scale, there are a number of technical and social challenges facing the growth of e-Commerce.

• This chapter deals with these challenges.

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13.2 Technical and Social Challenges to Implementation

• Best practices based on real-world research offer a fresh, relatively objective perspective for change in a world of vested interests, salesmanship, and entrenched positions.

• However, organizational and environmental challenges have been less extensively researched, but can also effect adoption of Net-enhanced business practices.

• While some of these challenges are within a firm’s domain, others are beyond its control.

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Table 13.1a Technical Challenges to Implementation

Tech-1 Security weaknesses

Tech-2 Download delays

Tech-3 Search problems

Tech-4 Inadequate measurements of website success

Tech-5 Limitations to the interface

Tech-6 Lack of internet standards

8Table 13.1b Social Challenges to Implementation

Social-1 Consumer fear of Web-based business

Social-2 Lack of brand awareness

Social-3 Management/cultural problems in instituting e-business practices

Social-4 Lack of firm experience in doing e-business

Social-5 Org. fear of doing Internet-based business

Social-6 Resistance to migration from more familiar EDI to Internet-based linkages

Social-7 E-cash not well accepted by consumers or organizations

Social-8 Ambiguous or hostile legal/regulatory environment for NE

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What Makes Obstacles to Internet Adoption so Different?

• Unlike past technologies, sellers do not exercise control over the points of access to the Internet.

• Instead, half are owned by end-users, either individuals or businesses,

• Internet content is typically provided free-of charge.• Consequently, the Internet is based on a highly

distributed and decentralized operating model. • This dramatically changes things for firms wishing

to do business via the Internet, as well as offering some thorny technological challenges.

10Table 13.2 Underlying changes in ownership of access

Medium Ownership of access

Telephone Public telephone and telegraph (PT&T) services

Cinema Distributor-owned movie houses

Electric/Gas Infrastructure provided by monopolies

Cable Coax and fiber owned by the residence/business

Retail Retailer storefronts

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13.3 Technological Challenges

• The highly decentralized nature of the Internet is both responsible for its success and for its limitations.

• This is mainly a product of its historical evolution, such as:

– Originally it was used for information sharing.– Its original charter was non-profit.

• This section discusses the current technical challenges to using the Internet for e-Commerce, prioritized according to their importance.

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Tech-1: Security Weaknesses

• Currently, the most serious problem for firms doing business on the Internet.

• Well-publicized security break-ins and orchestrated denial of service attacks by hackers show how vulnerable e-Firms can be.

• Security must therefore be taken as a high priority management goal.

• Encryption of transmissions, digital signatures, etc, are amongst the currently available countermeasures than can be implemented.

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Tech-1: Security Weaknesses

• End points of the transmission are extremely vulnerable, but if managers are serious about it, they can institute security controls and own a relatively secure site.

• Often managers do not recognize the solutions available to then, nor do they apply them.

• Technologies on the horizon will solve some of the current security problems, such as improved firewalls and virus software, and deeper insights into hacker psychology.

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Tech-2: Download Delays

• Firms cannot assume that their customers are operating at either high or low speeds.

• At low speeds, many interactive Internet applications like “click-to-talk” or multimedia advertisements work poorly and turn off customers.

• Download time is primarily a function of:– The size of the data files being transmitted– The technological configuration of nodes, the

network infrastructure, and the bandwidth connection between nodes and infrastructure

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Tech-2: Download Delays

• Many traditional desktop application data files are often larger than 1 Mb and become impractical on to use on the Web.

• When considering the combination of multiple data files for use in one hyper-document, compromises between optimal communication and reasonable download time need to be considered.

• The following slide shows tests of data delay obtained from loading a 10.5 KB file and a 6.3 MB file.

16Table 13.4 Download delays at different speeds

Data rate 10.5 kB file 6.3 MB file

14.4 kbps 7.83 seconds

56 kbps line 3.84 seconds 23 min., 13 sec.

128 kbps (ISDN)

2.66 seconds 16 min., 17 sec.

1.5 Mbps (T1) 2.06 seconds

500 kbps (cable) 1 min., 34 sec.

1.5 Mbps (DSL) 45 seconds

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Tech-2: Download Delays• Delays in download time can occur at the

server side, in transmission, or on the client side. Potential for bottlenecks in each of these areas are shown in Figure 13.1.

• Three factors in server configuration that can result in increased download time are:– Server and Internet connection– Processing capacity of the Server itself– Security Systems between the Internet gateway

and the Server

18Figure 13.1 Elements of download delay

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Tech-2: Download Delays

• With transmission download time, there are delays in the infrastructure of the Internet itself, especially between certain cities and at certain times of the year.

• On the client-side, the low connection speed due to the use of dial-up modems is likely to persist.

• Client performance is another factor. The slower the processor, the lower its memory capacity, and the larger the number of concurrent applications being run, the longer the download time will be.

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Figure 13.2 Slow average data rates in the US

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Tech-2: Download Delay

• As impediments to improved server delay are basically economic, firms can make decisions on how to overcome these delays by estimating the increase in business that faster response times would bring.

• As a result of disparities in download times amongst customers, meanwhile, retailers need to be careful in devising hypermedia, for example, to ensure the right balance of content and file size to communicate effectively to all customers, as well as giving them choices, without excessive delays.

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Figure 13.3 Cutting content to speed downloads

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Tech-3: Search Problems

• Users need to be able to quickly find out where and how to shop online, or they will not do so.

• Hyperlinks to URLs, for example, can become outdated and the technology for locating these outdated links is not currently available.

• There is a critical need for search engines to become more sophisticated to the point where users get exactly the information they need, rather than more than they need or can process.

• False hits are an ongoing problem, as the following example illustrates.

24Figure 13.4 Likely and false hits on a search for “Shoes in Tokyo”

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Tech-3: Search Problems

• One way to reduce difficulty with search engines is to acquire an intuitive URL.

• Students were asked to find the following Fortune 500 firms without the usual “www” + company name + “com.” nomenclature, but with industrial type for both search and verification purposes.

• The results showed that, of the 130 total pages searched (10 pages/ 13 subjects), 31 pages were not found after 5 minutes, while the average search time for the remaining 99 was 1 min. 37 sec – a significantly negative result.

26Table 13.5 Forms searched for on Web in simple experiment

Company Industry URL

Owens-Illinois Glass and Plastics www.o-i.com

Procter and Gamble Consumer goods www.pg.com

H.F. Ahmanson Banking www.homesavings.com/home.shtml

Omnicom Group Advertising www.omnicommny.com

Dayton Hudson Retail www.dhc.com

Johnson and Johnson Health Care Products www.jnj.com

AMR Corp. Airlines www.amrcorp.com

Fed. Dept. Stores Retail www.federated-fds.com

Minnesota Mining & Manufacturing

Consumer and industrial goods

www.mmm.com

United Technologies Technology www.utc.com

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Tech-3: Search Problems

• The inability of clients to readily locate an appropriate URL is a difficult challenge for NEOs – consumers will generally stop looking for alternatives fairly quickly.

• Among possible solutions are:– Buying intuitively clear/ related domain names

– Spiral branding (advertising in alternate/mass media)

– Portal links

• Alta Vista’s Prisma feature (Figure 13.5) is intended to result in fewer false hits by offering lists of related search categories that can be used to narrow down the number of false hits.

28Figure 13.5 “Redefined” Alta Vista search for “Italian Shoes in Tokyo”

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Tech-4: Inadequate Measurement of Web-site Success• e-Commerce sites require the use of metrics to

measure their effectiveness. • Commonly used measures, such as the number of

“hits” can be misleading since there is no way to determine how long a client has viewed a page.

• “Cookies” can help overcome some limitations, but they are increasingly viewed as a security problem with browsers being configured to block them.

• Buying metrics from organizations such as MediaMetrix (Fig. 13.6), which combine off-line and online sampling, may be another option.

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Figure 13.6 Media Matrix and other Web measurement products

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Tech-5: Interface Limitations• Sensory limitations of the interface constrain the

levels at which customers can be reached, but these are not terribly different from other common media.

• Most media lose richness in one dimension or another. Some believe that for e-Commerce to replace face-to-face commerce will require creating 3 dimensional displays.

• Eventually, advanced forms of virtual reality, using VRML, such as that being explored by consortium on the next slide, is expected to be a vibrant area for future development.

32Figure 13.7 Web 3-D consortium home page

(www.vrml.com)

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Tech-6: Lack of Internet Standards• A lack of standards can impede progress, since it

prevents developers from knowing how to implement a solution.

• Standardization on the browser interface is just an example of an area where complete standards have not yet emerged.

• Because many solutions to a single problem may exist simultaneously, making a Web-site readable by all customers can be a challenge.

• Most clients can read frames, but may not accept XML, so firms would be advised to seek out lower common denominators to be able to reach the majority of its customers.

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13.4 Social (Organizational and Environmental) Challenges:

• The organizational and environmental difficulties confronting the implementation of e-Commerce have so far been much less rigorously analyzed than the technological hurdles, but are no less significant.

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Social-1: Consumer Fear of Buying or Transacting Business over the Web

• Consumer perceptions and lack of trust in the security of the Web and NE systems undermines usage, particularly as regards payment.

• While firms may have instituted state-of-the-art security measures, many consumers are unaware of these improvements.

• Customers also worry about the privacy of personal data that may be sold to 3rd parties.

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Social-2: Lack of Brand Awareness/ significant penetration of the Total Market for Specific Products by Companies

• First mover advantages are formidable and difficult to overcome.

• Brand awareness is proving just as important in cyberspace as in traditional commerce but, in fact, barriers to entry may be higher.

• As the Web is a “pull” medium, customers can easily resist inducements to buy by just moving pages or closing a “pop-up”. Even spiral branding may be less effective.

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Social-3: Management/Cultural Problems in Instituting e-Business Practices & Ideas

• Resistance to change is a well known phenomenon in business.

• Many organizations change processes on only a superficial level so as not to “stress out” their culture or significantly alter their routines.

• While this may produce a conflict-free environment, the result is likely to be a firm that is less competitive.

• Workers at a firm may be aware of the need for change, but firms are often able to accomplish this only slowly at best.

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Social-4: Lack of Firm Experience in Doing e-Business

• Firms that have not developed experience from exploring the unique characteristics of the Web are at a considerable disadvantage.

• Recognizing the need to adapt to a dramatically changing competitive environment may be key to survival.

• Bill Gates demonstrated this when he radically refocused Microsoft in the late 1990s to align the company with networked computing.

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Social-5: Organizational Fear of Doing Business Over the Internet

• In cases of either horizontal (complementor) or vertical (supplier) integration, the firm needs to be assured that the information it is sharing is not being shared with competitors.

• Fear that data is not being held confidentially is what keeps the advantages of networked connections from being realized as soon as possible.

• Non-disclosure clauses and other contractual solutions at least provide legal recourse.

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Social-6: Migrating to Internet Computer-Computer Linkages from more familiar EDI

• Firms such as Ford have huge sunk costs in EDI, which may mean the movement to XML, etc., will take some time because firms are still trying to recoup the benefits of these past investments.

• Transferring over to ETNs means that virtually none of the legacy systems will interface well with the data from the ETN and new software and database schemas may be required.

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Social-7: Lack of Well-accepted or Understood e-Cash on the part of Consumers or Organizations

• While e-Cash will facilitate business on the Internet by regularizing the payment process, they are only just beginning to be accepted by NEOs and their customers.

• Firms who are in the e-payment spectrum need to create an atmosphere of interest and trust in these innovation.

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Figure 13.8 Architecture of typical e-Cash settlement

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Social-8: Ambiguous or Hostile NE Legal or Regulatory Environment

• The full mechanism of global law and regulations will heighten confidence in transactions over the Internet.

• While over-regulation must be avoided, it is crucial that international regulations establish standards for digital signatures and for 3rd party certification authorities.

• Ambiguous attitudes to issues such as the enforcement of copyright on software in some countries may also impact FDI and other forms of investment.

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End of Chapter 13