Strategies and Steps to e-Business Success

Chou-Hong Chen, Ph.D.Professor of MIS

School of Business AdministrationGonzaga University

Spokane, WA 99258, USAchen@gonzaga.edu

Senior Consultant, Taskco.com.tw

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Outline of the Topics Introduction of Information

Systems and e-Business Strategies to e-Business Success Steps to e-Business Success

INFORMATION SYSTEMS

ORGANIZATIONS TECHNOLOGY

MANAGEMENT

INFORMATION

SYSTEMS

Dr. Chen, The Challenge of the Information Systems Technology TM -3

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Roles of Information SystemsRoles of Information Systems

AutomatesAutomates

Innovates/TransformsInnovates/TransformsInformatesInformates

IT problems and solutions

Research and Evaluation Information overload Proliferation of new

technologies Need for rapid adoption

Purchasing and Delivery Need for demos prior to

purchase Complexity of electronic

delivery of business class applications

Complexity of corporate purchasing

Training Technology changes too quickly

to assess and eliminate employees skill gaps

Updates and Maintenance Shortened release cycles,

multiple updates Decentralized workforces with

rapidly changing technology needs

Knowledge Comprehensive info on new

technologies Objective, centralized content Decision, support tools

e-Commerce Demos and evaluations E-Channel Engine (order, inventory,

asset management) Flexible design for corporate

purchasing and global delivery e-Learning

Web-based and computer-based training coupled with research and evaluation tools

e-Services Comprehensive online update

service Centralized and streamlined

enterprise-wide deployment of software and data

Problem Solution

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Internet Society –Each Media Reach to 50 Million

Radio 38 years, Television 13 years, Cable TV 10 years, Internet users only took

5 years to reach this goal.

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Why New Models? We need some new models

for how we go about exploring IT for competitive advantage,

for IT infrastructure how we create it and manage it

for how we acquire, manage and deploy the skills that are needed to run that infrastructure

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eBusiness Key Concepts

eBusinessthe strategy of how to automate old business models with the aid of technology to maximize customer value

eCommercethe process of buying and selling over digital media (e.g., Internet)

eCRM (eCustomer Relationship Management)the process of building,sustaining, and improving eBusiness relationships with existing and potential customers through digital media

E-ChannelManagement

ProcurementNetwork

TradingNetwork

E-Customer Relationship

E-Commerce

E-Portal ManagementE-Services

SCM/ERP/Legacy Appls

Bu

sinesses

Bu

sinesses &

C

onsu

mers

1:NM:1 M:N

Knowledge Management/Business Intelligence

Infrastructure for e-Business Applications

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eBusiness Processes

WHY Customer Relationship

Redesign Business Processes (Outside-In)

Applying Technology

WHAT

HOW

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Why e-Business? Revolution, Revolution ... The e-Business revolution is

impossible to ignore. It is transforming businesses in

virtually every industry and reshaping the global economy.

The e-Business revolution is as fundamental a change to current society as the industrial revolution was to its preceding agrarian society.

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e-Business ... The heart of e-business is

interconnectivity and interaction. The ability to reach more people

while sharing information of increasing richness creates new opportunities for value creation in areas such as marketing, customer service, and operations.

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e-Business (continued)

In this new world, status quo is not an option. Companies have to reinvent themselves to survive.

Given the fast pace of e-business change, actions that once took years to accomplish must now be done in months or weeks.

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How is e-Business Changing Traditional Business? Globalization of markets One-to-one marketing Customization of site and product Integration of systems with clients New forms of E-Service

UPS setting up new computers Commoditization of products

Low margins and brand differentiations

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How is e-Business Changing Business Processes? Increased pre-and post- sale care of

customers Increased use of databases and user

interfaces Flatter organizational structures Development and use of customer

profiles Increased reliance on cooperation

software Faster product-to-market strategies Increased reliance on third parties Faster turnaround of cash flows

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Facilitating Services: Delivery, Escrow, Price Comparisons

The World Wide Web

Business Model:E-Catalog, Auctions, Name your price

Three key success factors for e-Businesses

Technology:

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C

B

C

B

Traditional versus e-Business Models?

C: Individual ConsumerB: Business

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Figure : B2C and B2B Internet Commerce in the U.S. (Source: Forrester Research)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1998 1999 2000 2001 2002 2003

B2C

B2B

Billion

$Bil

lion

$

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Benefits of B2B B2B solutions create competitive

dynamics through: cost savings

the composition of cost (product versus process costs)

the number of intermediaries in the supply chain. new financial (revenue) opportunities

the rate of industry-wide B2B adoption business model

N

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Why Now? B2B catalysts are now arising to

stimulate adoption (mentioned earlier). Interactive networks have recently

become ubiquitous and inexpensive, accelerating the use of B2B applications.

A viral effect will spur copycat behavior throughout the market as more companies continue to implement B2B applications.

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What Makes a B2B e-market Company Succeed? Five Critical Success Factors for e-

markets: Business model, market size, industry expertise, branding and distribution, management execution hustle (not

just the formulation of strategy)N

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Solutions for e-Enterprise Organizations (e-Power Corp.)

Streamlines buying and selling between trading partners

Maximizes trade efficiency across the entire supply chain

Strategic e-commerce capabilities in Internet time

Delivers compelling ROI

Buyers

Sellers

MarketSite

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Solutions for Internet Market Makers

Turn your supply chain into a revenue generation opportunity

Leverage your industry domain expertise into strategic e-commerce solutions

Brings e-commerce to businesses of any size, across all industries

Your Portal

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Strategies to e-Business Success

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The Key to successful business on the Internet ...

Strategy, strategy, strategy … The key to successful business on

the Internet is understanding of the formulation of a conceptual strategy and the execution of that strategy

N

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Two Major Elements determines Organization’s Success

Core Competency A Value-added

Business Model Value, value,

value…

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Core CompetenciesDetailed Customer Knowledge and FocusWe will seek to understand, anticipate, and be responsive to ourcustomer’s needs.

Large-Scale System IntegrationWe will continuously develop, advance and protect the technical

excellencethat allows us to integrate effectively the systems we design and

produce.

Learn, Efficient Design and Production SystemsOur design and production systems will be among the best in the

world,characterized by efficient use of assets, short time-to market,

short flowtimes, short cycle times, high quality and high inventory turns.

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Why e-Commerce Model is beneficial to your Business? The e-Commerce model is a basic

model of competitive strategy, based on the principles of low costs, high volumes, and comprehensive service, combined with a product range unapproachable through traditional channels.

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Planning is everything ...

Products,Services

Customers,market,

competition

Vision

guide

Strategy

create

develop

Tactic

Vision

Mission

Policies

Goals

Metrics Values TimeHorizon

Objectives

Metrics Values TimeHorizon

Strategies

Tactics

Stages of

e-Business

(or IS)

Project

Strategic

Planning

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IT Planning: The Relationship Between Business, IS, and IT Strategies

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PORTER’S FIVE COMPETITIVE FORCES MODEL

THE FIRMTRADITIONAL COMPETITORS

NEW MARKET ENTRANTS

SUPPLIERS

SUBSTITUTE PRODUCTS & SERVICES

CUSTOMERS

Threats

Bargaining power

NDr. Chen, The Trends of the Information Systems Technology TM -32

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Cost leadership Differentiation FocusExpanded generic strategies

Strategic positioning (e.g., internal efficiency)

Customer service

and my own view ... Innovation

Porter’s Competitive Forces Strategies

Dr. Chen, The Trends of the Information Systems Technology

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STRATEGIC ROLE OF INFORMATION SYSTEMS

STRATEGIC INFORMATION SYSTEM:CAN CHANGE GOALS, OPERATIONS

PRODUCTS, SERVICESENVIRONMENT

TO GAIN COMPETITIVE ADVANTAGE

2.23Dr. Chen, The Trends of the Information Systems Technology

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Use of Porter’s Model• List players• Analyze business drivers• Devise a strategy• Investigate supportive information

technologies

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Dr. Chen, The Trends of the Information Systems Technology

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The Value Chain Model

The model views the firm as a series or "chain" of basic activities that add a margin of value to a firm's products or services, indicating where IS can best be applied to achieve a competitive advantage.

NDr. Chen, The Trends of the Information Systems Technology

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Activities of Value Chain

Inbound Logistics

OperationsOutbound

Logistics

Marketingand Sales

Services

Administrative and Other Indirect Value Added

Administrative and Other Indirect Value Added

Primary Activities

Support Activities

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The Value Chain

Com

petitive

Adv

anta

ge

(Value)

A Transformation Model from Market to Customer

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Steps to e-Business Success

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Seven-step Process ... The following seven-step process

can help guide a company through its e-Business transformation. Cover the gamut of e-business

activities, from conception to operation

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Seven-step Process (continued)

1. Start High 2. Think Fresh 3. Know Your Market 4. Set Vision 5. Define Strategy 6. Create 7. Refresh Regularly

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Seven-step Process (continued)

1. Start High e-Business is more than developing a fancy

Website e-Business is a business rather than a technical

endeavor radical change (BPR) e-Business initiatives may also cut across

corporate boundaries, shifting organizational structures, redefining job descriptions, and upsetting established processes.

Only corporate executives can marshal the forces and commitment to launch an e-Business program and respond the concerns of internal and external stakeholders.

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Seven-step Process (continued)

2. Think Fresh The Internet revolution is radically changing the

business game. Start with a fresh viewpoint and assume that

everything is open to question and change. What your customers are really buying from you? Is how you deliver your product more important

than the product itself? Porter’s model (commodities vs. differentiation from

competitor, e.g., DELL) New ways of pricing your products and services. SWAT, outsourcing

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Seven-step Process (continued)

3. Know your market assess your company’s current market

needs of your customers, partners, and suppliers how you can meet or exceed their needs through e-

Business capabilities. expand upon this market awareness by identifying

possible new products, services, and business lines

encroaching competition from existing and unknown sources

formulate your e-Business vision and strategy. Knowing your market means exploring your:

branding, customers, competition, supply chain, demand chain (e.g., auto online)

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Seven-step Process (continued)

4. Set Vision a long-term vision to guide your company as it

enters the e-Business world the vision defines

what a company wants to do, what it wants to be.

do not rush to strategies, actions, and results Vision <--- Mission <--- Goals/objectives <---

Strategies <--- Tactics Complete executive buy-in is essential; executives

must promote the vision and make it part of the corporate culture - therefore, employees will be imbued with new corporate vision

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Seven-step Process (continued)

5. Define Strategy define, select, and prioritize the initiatives

needed to implement the company’s e-Business vision

the strategy defines how the company is going to get there.

incremental actions are not enough expect high potential returns and advantages

other factors to consider: process change, organizational change, technical

architectures, creative needs, fit within overall vision

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Seven-step Process (continued)

6. Create a company transforms itself through a set of

coordinated initiatives that implement that needed organization, technology, and process changes

the most difficult part of an e-Business transformation is changing the underlying business model (but does not mean to undercut the importance of technology nor underestimate the complexity of the implementation)

when building e-business site, consider: design, content, promotion, legacy integration,

development (SDLC), organizational change implementation, training

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Seven-step Process (continued)

7. Refresh Regularly to be viable, a company must continually review,

reexamine, and revise its vision, strategies, and implementations.

Speed, innovation, and change are implicit parts of the e-Business world

survey customers continually to learn if it is meeting their needs and goals - making money, reaching prospects, satisfying stakeholders - in order to know when and what to change

keep company’s Website design and content fresh and exciting to attract new visitors and to keep them coming back for more.

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Seven-step Process (continued)

7. Refresh Regularly (continued)

launch promotional campaigns to drive traffic to its Website.

Products, and services; to maintain and enhance its

brand identity; and to garner a greater share of a

market where switching costs are low or nonexistent

e-Business promises lower prices and better selection for consumers, and unlimited opportunities for new businesses.

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Conclusion The need for interdisciplinary

thinking has never been greater … companies that can continually

combine innovative business thinking, creative design and content, and advanced technology

will lead the way in e-Business success.

SURFING THE NET

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THANKS and GO for your Successful e-Business!!