Put your money where your mouse is: How to succeed in e-business

TPJ - THE TUBE & PIPE JOURNALĀ® SEPTEMBER 2000

February 19, 2001

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To decrease your chance of failure in e-business, focus on the business issues first and the technology issues second.

Succeeding in e-business is all a matter of emphasis. And when you pronounce the word "e-business," where do you put the emphasis? Most of us emphasize the "e."

That emphasis on the electronic part of the equation is easy to understand. The technology has advanced so fast that it has mesmerized us all. As a result, it's all too easy to start an e-business project by focusing on the fun technology questions. However, neglecting to put the emphasis on the business portion of e-business greatly increases your chance of failure. Some industry watchers say that failure to develop a good business plan could cause as many as 75 percent of all e-business initiatives undertaken in the next decade to fail.

To avoid being part of that statistic, focus on the business issues first and the technology issues second. The chart in Figure 1shows a critical path to e-business success that begins with asking questions. Note that the first column of questions focuses entirely on business issues.


Figure 1:
In planning, building, and managing an e-commerce site, a business needs to answer a lot of tough questions from the beginning.

Strategies, Options, & Priorities

One successful strategy for exploring the e-business questions is to use the following three-step method:

1. Strategies—List your company's strategic business goals. Dig deeper than the standard response of "make more money." Do you want to increase customer retention? Increase your share of business with key accounts? Introduce a new product line? Open new geographic territories? Reduce order entry costs? Reassign customer service people to actively seek new business?

2. Options—List all of the options for using e-business to accomplish the strategic objectives you have listed. Don't worry about listing only the best options; write down everything. Seek input from two groups: your top management team and the people who actually work in your key business processes. Ask them what works really well, and ask them what could work better. Explain the strategic goals that affect their areas, and ask what they need to accomplish these goals.

When you list all of your e-business options, think beyond your own Web site. Industry-specific business-to-business purchasing and selling sites are popping up almost overnight. A good e-business plan will strike a balance between independent efforts and participation in industry sites.

3. Priorities—By now, you should have a long list of options. You obviously can't do them all, so prioritize. The best way to prioritize is to use standard business measures. Use the tool that's appropriate for specific goals. It may be a return on investment calculation, or it may be as simple as a goal for new customers or a decrease in costs in a certain area.

Use your priority list to create the tools that will guide your e-business initiative: a time line and a budget for site development. It may take six weeks, six months, or two years to accomplish everything you want to do, but there is no reason you can't have portions of your site up and running in a short time. A time line is a great tool for helping you accomplish this goal. A budget is an indispensable tool for this business undertaking.

Opportunity's Knocking

When you are building your strategies, options, and priorities list, it's easy to remember the obvious opportunities for communicating with customers and suppliers. However, don't forget the less obvious opportunities.

First, e-business isn't just about communicating and interacting with those who are outside the four walls of your enterprise. Ask how it can benefit you internally. Could you save money by giving employees access to basic human resources information in a secure online environment? Could you monitor projects or exchange information more efficiently? Could you deliver training or technical manuals online?

Second, e-business should be integrated into your existing information systems. The online order that has to be keyed into your internal e-business system or the customer information that has to be keyed into your Web site increases your costs and your chance for errors.

Third, online customer service can be a great source for gathering product improvement information. Notice which customer service areas are being accessed most frequently.

The Big Questions

The first two questions that many companies ask about e-business are:

1. Should I build my own system or buy one "out of the box"?Often, the answer is both. If your accounting or manufacturing package offers modules that automate the process of putting certain information on the Web, you probably will save money by using those modules instead of creating your own. However, it is unlikely that any package out of the box will accomplish all of your goals. You will most likely invest a significant amount of time and money in modifying or adding to the capabilities of the package.

It is also important to ask whether you intend to use your basic business package for several more years. If the answer is probably not, then it may not make sense to make a significant investment in technology that you will abandon later.

2. How will I handle the deluge of orders I will get from the Web?While the Web is a significant marketing tool and you should integrate your Web presence with your back end systems, the Web is not marketing magic. In fact, it is a confusing place. It may be hard for your potential customers to find you.

If marketing or selling your product is a major e-business goal, you should develop a well-thought-out marketing plan to promote your Web presence. That plan should include both online and real-world efforts.

The Rules Remain the Same

What is the bottom line on e-business success? Just remember that the rules of business have not been suspended in cyberspace. If you take all of the business skills and analytical tools that you have developed over the years and apply them to your e-business venture, you will greatly increase your chances for success.



Bob Jackson

Contributing Writer

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