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A Complete Guide to e-business Strategy

An e-business strategy defines a long-term plan for putting in place the right digital technology for a company to manage it’s electronic communications with all partners – that’s internal through the intranet and externally through to customers, suppliers and other partners.

What is e-business Strategy?

E-business is becoming a key component of business strategy for the future. Strategy in this context will have to take into account a company’s ability to effectively use the Internet for communications, commerce, manufacturing, distribution and support services.

The challenge for a company wishing to implement an e-business strategy is now being seen by leading thinkers and companies as central to a company’s success in the next millennium.

An example of how e-business strategy can be implemented by an existing player in a market sector is IBM. IBM identified the increasing importance of the Internet for companies, and from an embryonic web site in 1994 (www.ibm.com) turned itself into the world’s leading technology company on the web. IBM today has over 100 web sites and dozens of others for individual countries, plus many more for its various products and services. Its massive range of online services include e-commerce sites, discussion groups and portals, on-line training and business information services.

E-Business Strategy steps

We have identified, based on our experience, the steps you need to take to implement an e-business strategy. They include, where appropriate, links to related pages about the topic:

The 11 steps are:

  1. Defining an Internet Strategy
  2. Strategy for e-Business
  3. Brand Online
  4. Internet Directory Online
  5. Browser Software and Online Agents
  6. Search Engines and Directory Search
  7. Internet Advertising
  8. Interactive Multi-user Systems and Networks
  9. Mobile Computing
  10. Security and Privacy
  11. E-business and Regulation

Defining an Internet Strategy

Our recommended top-down strategy approach first identifies a company’s vision and mission for the Internet within the strategies of the company. This includes identifying the company’s objectives and goals for e-business and Internet across the company.

Vision and Mission

The vision for the Internet at the start of the new millennium will see more and more companies using the Internet as a communications media and as a new globalized commercial infrastructure for commerce, advertising and information.

We see a mission to provide businesses with a structured approach to e-business strategy. Business executives recognize the strategic role of the Internet and are increasingly looking at how they can integrate Internet technology into their company’s work. We also see companies being transformed by the Internet and new e-business strategies.

Vision and mission statements will be needed.

Objectives and Goals

Objectives for the Internet will naturally depend on what services the company wants from using the Internet. They might include e-commerce of products and services, using the Internet for transaction management, cooperating with partners through ‘B2B partnerships’, managing customer relationships in a global framework, streamlining internal operations, etc.

Objectives and goals may need to be changed in the light of the above visions and missions, plus other strategic considerations.

In our example about IBM, while the company’s goal is to ‘increase demand and loyalty’, an objective for the Internet might be ‘establish and maintain market leadership (and revenue) on a global level from the Web’.

Vision, mission and objectives are the key points to define an Internet strategy.

Another important factor in developing an e-business strategy are the characteristics of the Internet. In this section we describe some of these:

The Internet as a communications media

The Internet is a new communications medium that is becoming the most effective way for businesses to reach a global marketplace. Studies by corporate executives cite the Internet as the most effective communications medium currently available for reaching their target audience.

One example of the growing use of the Internet is provided by Click Inns, a British bed and breakfast business with a web site at www.clickinns.co.uk. A study by the company found that about 40 percent of their customers were won via the Internet, up eightfold in the past year.

The Internet as a business infrastructure

As e-business becomes more widespread, we can expect it to affect growing numbers of businesses in all sectors. The Internet is a communications media and communications media are used across industries.

In fact, an e-business strategy involves seeing the Internet as a communications media with the characteristics of new infrastructure for a rapidly expanding business environment.

So, for example, the Internet has the characteristics of other communications infrastructures in that it operates around 24 hours a day, 7 days a week. Applications and services can be accessed when needed, regardless of location or time.

This means that information and telecommunication technologies, on which the Internet is based, will be increasingly seen like electricity and water – as a necessary service by which all businesses can operate.

The Internet as a global communications and commercial infrastructure for the next millennium will need to be exploited fully by companies for the business opportunity it presents.

The earlier a company can integrate e-business technology into it’s business operations, the better the opportunities it will have.

Strategy for E-Business

E-Business Strategy is multi-faceted. It covers properties of a website, business models, company structure, organization objectives, processes and technology.

Building Strong Properties

Properties are elements that are seen on a website that reflect a company’s identity – properties are the roles it plays online.

The site needs to build in the following three main properties:

A robust look and feel as a suitable home for the company’s name and identity. A clear and accessible navigation for employees, customers and any other stakeholders. A reliable information system, with accurate product and company information, fast response times and the company’s business security.

The website should also provide easy access to a company’s history, mission and vision, so that people can understand the company and its values.

Business Models

Business models will become an important factor in any e-business strategy, as they give the structure to a company’s strategy.

The 2 main business models that can be used to build an e-business strategy are:

Retail

This is where a company is the core provider of services to customers. For example, its web site is a repository of products and services which customers can buy.

Shopper

This is where a company approaches e-business from the other side of the business equation. It is a platform for retailers to sell their own products and services.

The distinction between retail and shopper models is blurring, however, and as consumers become more familiar with e-commerce they will expect one point of contact to both buy products and services as well as to sell them.

Strategy Options

The preferred and most common strategy is to be the retailer, who provides this one point of contact.

Strategy Example

As a retail model, companies can select to offer or develop one or more of the following services:

Business-to-Business (B2B)

This is the international electronic commercial exchange of products and services. In other words, this is when companies buy and sell to each other via the Internet. Products and services can include marketing services, direct sales, financial services, human resources, website development, etc.

Business-to-Consumer (B2C)

In this retail scenario, a company maintains a web presence and provides electronic commerce services to consumers. Services can include shopping, creating a community, event organization, etc.

Business-to-Consumer/Business-to-Business This is when a company operates in both B2C and B2B technology commercial models.

Clone

A clone is a direct copy of an existing site’s products, services, information and/or online community. As well as being illegal, clones will increasingly be seen as detrimental to a company’s business model as clone copies can take away a company’s sales and reduce their brand strength.

Channel

Companies can decide to develop an e-commerce channel, allowing other companies to list their products on its website. For example, an electronic marketplace where suppliers can list their products on their website for people to buy.

Direct

Companies can develop an on-line store to allow consumers to easily purchase a company’s products and/or services. This can be integrated and accessible via the website.

Processing

There are 3 main processes needed to build an e-commerce strategy:

Merchandising

This is the practice of selling a product or service online using electronic media. This includes advertising, packaging and marketing. A company can decide what products and services are available on its website.

Editing and refitting

This is the process of editing or refitting the website to be more customer-friendly. It can include both the graphical design of the website and the information.

Payment/delivery

This is the process involved in enabling a customer to use credit or debit cards or other payment methods to pay for an online purchase. Other processes needed to build an e-commerce strategy include transaction processing, financial settlement, packaging and ordering, web administration, etc.

Strategy Options

As well as marketing products on its website, a company can decide to develop an e-commerce channel, allowing other companies to list their products on its website.

Strategy Example – E-commerce Channel

An open-market channel known as the Internet Mall, which enables other businesses to sell their own products via the Internet, has been operating in the Canadian market for the past 2 years.

Organizational Aspects of E-Business

A vital aspect of an e-business strategy is its organizational impact.

As an enterprise, organizations are made up of a number of critical but disparate elements that must be brought together in order to produce a successful result.

A successful e-commerce strategy must be able to address the needs of these elements.

Some of the factors to consider are:

  • Resources – the people, capital, facilities, equipment and finance required to implement the e-commerce strategy;
  • Delivery of products and services – the range of products and services required to fulfill the requirements of an e-commerce strategy;
  • Standardization – a standard set of processes, procedures and guidelines that are adhered to in order to maintain continuity, repeatability and corporate coherence throughout the organization;
  • Interfacing – the incremental linkage, interconnectivity and integration of enterprises with others that will be needed to implement the e-business strategy.

Resources

Resources are required to implement a successful e-commerce strategy such as people, capital, resources, etc. The organizational resources need to be identified.

Training will be needed to ensure that the employees have the necessary skills in e-commerce such as:

  • Internet technology skills, e.g. web site design, programming, etc.
  • Information technology skills e.g. HTML, high volume data transfer, etc.
  • People skills e.g. e-mail, customer service, etc.
  • Process administration e.g. methods, procedures, planning, etc.
  • Resources will also be required to purchase hardware, software and network development.
  • Organizational skills and attitudes will need to be reviewed, such as the development of strong, accountable and measurable processes and appropriate tools to effectively unlock resources.

The required resources must be identified, then a deployment and tracking plan must be developed. This will be based on the following:

  • A breakdown of the applications that will be required to achieve the e-commerce strategy.
  • The resources necessary to provide these applications.
  • The people that will be required for the implementation of the applications.
  • The degree of flexibility within the organization to deliver these requirements.

Delivery of Services

The delivery of products and services required by the e-business strategy must be decided upon. These will be based on the length of time required to provide the product and/or service; required resources; organizational processes; and available delivery systems. Delivery processes can be based on:

Personal interaction

This occurs when the company, or a representative of the company, interacts with a consumer or a business on a personal basis. This can occur both face to face, when a consumer visits a company store or business office, or electronically when a consumer interacts with a company’s automated computer systems by phone, email, etc. An example is when a customer calls a company’s customer service line.

Automated interaction

This occurs when a company, or a representative of the company, interacts with a consumer or a business electronically. This is done via the use of electronic kiosks, automated telephone-answering systems, etc. An example is automated banking machines.

The interaction level will differ depending on the type of product or services being offered.

Standardization

Standardization is both a product of, and the key to, e-commerce.

Organizations today are increasingly sharing common technologies, processes, information, and people.

Standardization is an integral component of e-business – the same products and services, etc. are being offered by different companies, and are increasingly being accessed by consumers via the Internet.

Successful e-commerce strategies must be built upon a stable, enterprise-wide infrastructure that enables the capture, storage and dissemination of information in a common, shared environment.

Standardization is the process of deciding upon the applications and technology needed to achieve the goals and objectives of an e-commerce strategy. These do include everything from operating systems to content management systems.

Standardization must include every aspect of writing user interfaces, building core systems, etc., as well as a process standardization approach to deliver a customer-friendly experience.

An example of standardization includes the use of the TCP/IP protocol for the transmission of data, and the World Wide Web for surfing the web, and e-mail for communication to customers.

Standardization facilitates the implementation of e-commerce by ensuring greater coherence and uniformity across organizational units.

Standardization can include the product standardization aspect.

Standardization is an important element in e-commerce when:

  • Consolidated facilities
  • Products are commonly offered in a broad range of necessary forms and designs.
  • Consolidated processes
  • Services are commonly offered in a broad range of steps.
  • Service standards
  • Standards are common across an entire organization for services that are offered.

Standardization confirms that all services are effectively integrated and offer a consistent customer experience that improves repeat business and customer retention. It also ensures a standard set of practices that are effective, efficient, and effective to achieve the goals and objectives of your e-commerce strategy.

Interfacing

Interfacing is the process of integrating your company with other enterprises. This includes:

External interface elements

These include suppliers, customers, channel partners, marketplaces, etc.

Internal interface elements

These include systems, processes, production facilities, manufacturing facilities, etc.

The identification of the various enterprises, systems, facilities, processes, etc. with which an organization is commonly interfacing is vital to the successful implementation of an e-commerce strategy.

An interface may exist for any one or more of the following reasons:

  • To enable the seamless integration of services

This can occur when:

A service is offered by one organization that provides a component of a service provided by another organization.

A service is offered by one organization that provides a service to another organization when it is not in a position to offer the service itself, such as when it is involved with an outsourcing arrangement.

A service is offered by one organization that provides a service to another organization to be delivered via a process different to the receiving organization’s normal process, e.g. a third party logistics provider.

To provide an end item by using common services

This occurs when a service is delivered by one organization that will be used by another organization, such as when the design of web site templates is outsourced to a web design firm.

Capture and Storage

The next stage of the e-commerce strategy is the capture and storage of information.

This consists of:

Capturing information

All information related to e-commerce processes, e.g. orders, customer information, communications, etc.

Storing information

This includes both the long-term storage and the archiving of information.

Any strategy should include policies and practices that support the capture and storage of information. They should explain when information is captured, where it is captured, and how it is stored.

Storage must include policies governing the location of data, e.g. if it is captured on site, if it is captured at a third party site, if it is in the cloud, etc.

Information also must be secured to limit the potential of exposure to risks such as theft or piracy, or the intentional falsification of information.

These rules, policies and practices must be used to inform businesses when customer information is being captured, and where that information is being stored.

The objective is to have customer information in a common location that is easily accessible by all functions, or is accessible on a customer service-by-customer service basis.

Intelligent and Efficient Use of Resources

The e-commerce strategy also requires a plan that enables the efficient and effective use of human and non-human resources.

This includes the automation of tasks, by using systems, and the automation of transactions, by using technology, or a combination of both.

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