copyright guy harley 2004 ec strategy and implementation plan

Copyright Guy Harley 2004

EC Strategy and Implementation Plan


Growth in US eCommerce


IBM’s E-Business’s Strategy – 4 Goals

To lead IBM’s strategy to transform itself into e-business and to act as a catalyst to help facilitate that transformation.

To help out business units become more effective in their use of the Internet/intranet, both internally and with their customers.

To establish a strategy for the corporate Internet site. This would include a definition of how it should look, ‘feel’ and be navigated. In short, to create an online environment most conducive to customers doing business with IBM.

To leverage the wealth of e-business transformational case studies there are within IBM to highlight the potential of e-business to IBM’s customers.


IBM’s E-Business’s Strategy – Key Initiatives

e-commerce— selling more goods via the Web

e-care for customers— providing all kinds of customer support on-line

e-care for business partners— dedicated services providing faster, better information for these important groups


IBM’s E-Business’s Strategy – Key Initiatives

e-care for employees— improving the effectiveness of IBM employees by making the right information and services available to them

e-procurement— working closely with IBM’s customers and suppliers to improve the tendering process and to better administer the huge number of transactions involved

e-marketing communications— using the Internet to better communicate IBM’s marketing stance


Internet Access

Corporate Intranet

Internet Presence

eCommerce

Extranets

Integration of Tecnology

Internet BusinessValue


Industry and competitive

analysis

Implement-ationplan

Strategic Planning for EC

Strategy reassessment

Strategy formulation


Industry and Competitive Analysis

Monitoring, evaluating, disseminating of information from the external and internal environments

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats


Strengths (S) Weaknesses (W)

Opportunities (O)

Threats (T)

INTERNAL FACTORSEXTERNAL

FACTORSSO Strategies

Generate strategies here that use

strengths to take advantages of opportunities

WO Strategies Generate strategies

here that take advantage of

opportunities by overcome weaknesses

ST Strategies Generate strategies

here that use strengths to avoid

threats

WT Strategies Generate strategies here that minimize

weaknesses and avoid threats

Industry and Competitive Analysis (cont.)


Strategy Formulation

Strategy formulation Development of long-range plans

Organization’s mission Purpose or reason for the organization’s

existence


Strategy Formulation (cont.)

3 main reasons for establishing Web site MARKETING CUSTOMER SUPPORT SALES

Products with good fit for EC Shipped easily or transmitted electronically Targets knowledgeable buyers Price falls within certain optimum ranges


Pure EC

Virtual Process

Virtual Player

Virtual Product

Physical Agent

Digital Agent

Digital Product

Physical Product Physical Process

Digital Process

Electronic Commerce Areas

Pure versus partial EC

Traditional Commerce


Cost Curves

Quantity

Co

st

Quantity

Co

st

Physical Products Digital Products


Labour Force Composition USA 1990 - 1996

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

Farming

White Collar

Service

Blue Collar


EC Critical Success Factors Special products or services traded Top management support Project team reflecting various functional areas Technical infrastructure Customer acceptance User friendly Web interface Integration with the corporate legacy systems Security and control of the EC system Competition and market situation Pilot project and corporate knowledge Promotion and internal communication Cost of the EC project Level of trust between buyers and sellers


EC CSF’s - Value Analysis (cont.)

Value chain a series of activities a company performs to

achieve its goal(s) Value added

contributes to profit and enhances the asset value as well as the competitive position of the company in the market

to create additional value using EC channels, a company should consider the competitive market and rivalry in order to best leverage its EC assets


EC CSF’s - Value Analysis (cont.)

Representative Questions for Clarifying Value Chain Statements Can I realize significant margins by

consolidating parts of the value chain to my customers?

Can I create significant value for customers by reducing the number of entities they have to deal with in the value chain?


EC CSF’s - Value Analysis Questions Representative Question for Creating New

Values Can I offer additional information of

transaction service to my existing customer base?

Can I use my ability to attract customers to generate new sources of revenue, such as advertising or sales of complementary products?

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Technological DevelopmentTechnological Development

Human Resource ManagementHuman Resource Management

Firm InfrastructureFirm Infrastructure

ProcurementProcurement

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identifies which resources and capabilities can add value

Information SystemsInformation Systems

MARGIN

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Technological DevelopmentTechnological Development

Human Resource ManagementHuman Resource Management

Firm InfrastructureFirm Infrastructure

ProcurementProcurement

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identifies which resources and capabilities can add value

Information SystemsInformation Systems

eProcurement

eSales

Production Control &

transaction systems

Warehouse & logistic systems

CRM Apps

ERP/Supply Chain Applications

MARGIN

MARGIN

MARGIN

MARGIN


Strategic Systems

Management Systems

Knowledge Systems

Operational Systems

Sales & Marketing

Production Accounting Human resources

Functional Business applications


eCommerce & transactions costs

Firm Size (Employees)

Tra

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EC Critical Success Factors (cont.)

Gartner’s Model of Customer Interaction

CustomersRetention

CustomersExtension

CustomersSelection

CustomersAcquisition

RelationshipMarketing

“How can we increase the loyalty and the profitability of this customer?”

“What criteria determine who will be our most profitable customers?”

“How can we acquire this customer in the most efficient and effective way?

“How can we keep this customer for as long as possible?”


EC Critical Success Factors (cont.)

Return on Investment and Risk Analysis A ratio of resources required and benefits

generated by an EC project Includes both quantifiable items (cost of

resources, computed monetary savings) and non quantifiable items

Some intangible benefits effective marketing channel increased sales improved customer service


Return on Investment & Risk Analysis

Generic IT values & risks fall into the following 5 categories

Values1. Financial values— measurable to some degree

2. Strategic values— competitive advantage in the market and benefits generated by business procedures

3. Stakeholder values— reflections of organizational redesign, organizational learning, empowerment, information technology architecture of a company, etc.

Risks4. Competitive strategy risk— external, due to joint venture, alliances,

or demographic changes among others

5. Organizational risk and uncertainty— internal to company


Electronic Commerce ScenariosOpen, Global Commerce ScenarioIT Events : Internet standards,newmedia, proprietary solutions marginalized,intranets, highly distributed, fat-clientarchitectures prevailBusiness Events : Global trade, logistics onthe Internet, pay bills electronically, digitalcash widely used, smart cards, and fewerwholesaler/salespeople

Members-Only Subnets ScenarioIT Events : Standards vary betweenindustries, objective measures of Internetsecurity, EDI standards widely adoptedBusiness Events : High-performanceinformation networks, cumbersome globalEC

Electronic Middlemen ScenarioIT Events : Transaction processing andinterface, distributor drive EC, EC activityexpands rapidly, and transaction securitydeeply embeddedBusiness Events : One-stop shoppingpopular, professional services popular withsmaller enterprises

New Consumer Marketing Channels ScenarioIT Events : Activity oriented to consumers,price of wireless drops, and growth ofnetworked multimediaBusiness Events : Online transactions seenas less convenient, security not widelytrusted, basic international norms accepted,and wireless links increase sales productivity© Prentice Hall, 2000


Supply Chain Upstream Supply Chain

1st tier suppliers 2nd tier suppliers Etc. to origin of materials

Internal Supply Chain Downstream Supply Chain

Distribution Warehousing Transportation After sales service


Traditional Supply Chain Integration


eCommerce Supply Chain Integration


E-Supply Chains The ability of all supply chain partners to view partner

collaboration as a strategic asset Trust generates speed, agility & lower cost

Information visibility along the entire supply chain Strict management of information

Speed, cost, quality and customer service The metrics by which supply chain is measured

Integrating the Supply Chain more tightly Within the firm and across an extended enterprise


E-Supply Chains

Components: Supply chain replenishment E-procurement Collaborative planning Collaborative design & product development E-logisitics B2B exchanges and supply webs


E-Supply Chains

Tools: Extranets Intranets Corporate portals Workflow systems & tools Groupware and other collaborative tools


E-Supply Chains

Problems: Incorrect demand forecasting Lack of logistics infrastructure Quality control Production delays Bullwhip effect Incomplete & inaccurate information


Target’s Extranet

GE InterBusiness

Partner Extranet

Customer services Portal servicesInventory managementQuality assuranceSupply chainProcess designNew productsBudget controlE-procurement

Customer services Portal servicesInventory managementQuality assuranceSupply chainProcess designNew productsBudget controlE-procurement

Web Applications

Access controlRegistrationAuthenticationDigital signature Certification

Access controlRegistrationAuthenticationDigital signature Certification

Security

EDIERP

EDIERP

Legacy Systems

Connection via Connection via

VPN, encryptionGlobal reach

VPN, encryptionGlobal reach

Public Internet

Private linesecure

Private linesecure

GE Private VAN


Architecture of an Intranet

Internet Intranet

Firewall

Databases(products, customers)

Web Servers

and Email

Servers

Web Publishing

Legacy System

ERP

Client(browsers)


Competitive Strategy

Offensive strategyUsually takes place in an established competitor’s market

Defensive strategiesTakes place in the firm’s own current market position as a defense against possible attack by a rival


Offensive Strategies Frontal Assault— attacker must have superior

resources and willingness to persevere Flanking Manoeuvre— attack a part of the market

where the competitor is weak Bypass Attack— cut the market out from under an

established defender by offering a new type of product that makes the competitor’s product unnecessary

Encirclement— greater product variety and/or serves more markets

Guerrilla Warfare— use of small, intermittent assaults on different market segments held by the competitor


Defensive Strategies

Lower the probability of attack Divert attacks to less threatening avenues Lessen the intensity of an attack Make competitive advantage more sustainable


Cooperative Strategies Collusion— active cooperation of firms within an industry to

reduce output and increase prices in order to get around the normal economic law of supply and demand (illegal)

Strategic Alliance— partnership of two or more corporations or business units to achieve strategically significant objectives that are mutually beneficial

Joint Venture— a way to temporarily combine the different strengths of partners to achieve an outcome of value to both

Value-Chain Partnership— a strong and close alliance in which one company or unit forms a long-term arrangement with a key supplier or distributor for mutual advantage


EC Strategy in Action

What questions should a strategic plan answer? How is Electronic Commerce going to change

our business? How do we uncover new types of business

opportunities? How can we take advantage of new electronic

linkages with customers and trading partners? Will intermediaries be eliminated in the process?

Or do we become intermediaries ourselves?


EC Strategy in Action (cont.)

What questions should a strategic plan answer? How do we bring more buyers together

electronically (and keep them there)? How do we change the nature of our products

and services? Why is the Internet affecting other companies

more than ours? How do we manage and measure the evolution

of our strategy?


Steps to Successful EC Programs Conduct necessary education training Review current distribution and supply chain

models Understand what your customers and partners

expect from the Web Reevaluate the nature of your products and

services Give a new role to your human resources

department


Steps to Successful EC Programs (cont.)

Extend your current systems to the outside Track new competitors and market shares Develop a Web-centric marketing strategy Participate in the creation and development of

virtual marketplaces Install electronic commerce management style


Internet Competitive IntelligenceUsing Push Technology for Competitive Intelligence Allow users to request updates of topics and have the

latest records automatically delivered to users’ e-mail address

Provide corporate snoopers with lots of information, save search time and monitoring time

Several ways push models can provide competitive intelligence information: broadcast model selective pull model distributed push pull model interactive push model


Implementing the EC Plan Starts with organizing a project team Undertake a few pilot projects (help discover

problems early) Implementing EC

Redesigning existing business processes Back-end processes must be automated as

much as possible Company must set up workflow applications

by integrating EC into existing accounting and financial back-ends


Uncovering EC Opportunities

Understand: How digital markets operate How Internet customers behave How competition is created and what infrastructure

is needed What are the dynamics of EC

Map opportunities that match current competencies and markets Many opportunities to create new products and

services


EC Opportunities

Matchmaking— matching buyers’ needs from seller without a priori knowledge of either one

Aggregation of services— combines several existing services to create a new service

Bid/ask engine— creates a demand/supply floating pricing system

Notification service— tells you when the service becomes available, or when it becomes cheaper


EC Opportunities

Smart needs adviser— if you want it then you should…

Negotiation— price, quantity or features are negotiated

Upsell— suggests an additional product or service

Consultative adviser— provide tips on using the product


Finding IT Applications Brainstorming by a group of employees Soliciting the help of experts, such as

consultants Review what the competitors are doing Ask the vendors to provide you with suggestions Read the literature to find out what’s going on Use analogies from similar industries or

business processes Use a conventional IS requirement analysis

approach


Organization and Staffing

Define the roles and responsibilities of: Gatekeepers Web team

EC Project Team

Senior management Web champion Webmaster

Building System

Infrastructure

Web Page Design

Business Process

Reengineering

Security and Control

MarketingFinanceAccountingInformation Technology


Evaluating Outsourcing

Ease of configuration and setup Database and scripting support Payment mechanism Sample storefronts Workflow management Documented database support Integration into existing accounting and financial

back ends


Web Hosting

Hosting Internally Vs. Hosting Using ISP System Cost

bandwidth capabilities and specifications firewall system wireless delivery buy, rent, or lease maintenance, upgrade, and service of the

equipment


Web Hosting

Purchase a suite of software that claims to integrate storefront functions into a single box iCat Corp.’s Electronic Commerce Suite and

Commerce Publisher Open Market’s Transact and LiveCommerce Microsoft Corp.’s Site Server Commerce Edition IBM Corp.’s Net. Commerce Pro Saqqara Systems’ StepSearch Professional AT&T


Web Hosting

Making a Web catalog into a multimedia extravaganza Not easy and expensive Lower end systems : begin at $25,000 High end systems : $250,000 to $2 million


Web Content Design

Content takes many shapes Will change dramatically More robust, comprehensive, and usable medium

Challenges in developing a successful online storefront Choosing the right software solution for your site 3 options

build your own software purchase a commercial software product rent from a Web host


Web Content Design Considerations

The services wanted How much your company can contribute to the site, from

manpower to electronic content The time to design your site The time to create and program your site Extra fees for software development Fees for off-the-shelf applications tools The size of the site The amount of traffic the site generates Vs. flat rate


Web Content Design Considerations

Training requirements Installation and server maintenance Programming On corporate site hosting Vs. off-site Secure Server for financial transactions Your bandwidth needs Your server capacity needs Location of your server at the Web company or ISP

company location


Web Application Features

Electronic shopping mall Unique URL Electronic commerce/

financial transactions Shopping cart software Online catalogs Direct order procedures Dynamic databases Static databases Multimedia Telephony Chat rooms

Audio Video FTP Forms VRML Statistics Customer tracking E-mail response and

forwarding Java applications Animation Security


Home User Logs

On

Home Page

Catalogue Purchase Order &

Transaction Processing

Order Information

Legacy Systems

Payment Options

User Profile

Legacy Integration Bank


Security and Control in EC

80% of all computer crimes reported involve the use of the Internet to break into computer systems

Effective guidelines would be needed Address the Internet features that must be

monitored for developing policy on access and use

Disclosure of information through the Internet


Strategy Reassessment Webs grow in unexpected ways Reasons for a not having a worthwhile project

The goals were unrealistic The web server was inadequate to handle traffic The actual cost savings were not as much as

expected Important

Develop a checklist Project Team compiles statistics that can be tracked CIOs and other executives are trying to extract the

business value from their investment in information technologies


Assessing Project Effort and Outcome

What were the goals?

What were the expectations?What products and services did

your company want to offer?

Did unanticipated problems occur?If so, how were those handled?

What costs did you hope to reduce?Did other costs increase unexpectedly?

What were the sales objectives?Were those goals realistic?

Did you intend to reduce distribution costs?

Were your expectations reasonable?

Did you intend to reduce travel expenses for corporate staff?

Are Web and Internet communications reducing

traditional communication costs?Did you intend to improve customer relations?

If you did not, what went wrong?

How can those errors be corrected?


Revisit Each Phase of EC Project

Is each needed service performing as expected?

Is each needed service still relevant? What, if any, additional services are needed? What do customers want that you are not

providing? What impact will they have on the

infrastructure, from bandwidth to software? What will the additional services cost?


Revisit Each Phase of EC Project

What specific changes have taken place among your competitors that might affect what you are trying to accomplish?

Have your vendors provided adequate service?

Has training of employees been adequate, or is more required?

What new internal needs have arisen that need to be addressed?


Management Issues

Considering the strategic value of EC

Conducting strategic planning

Considering the risks

Integration

Pilot project

copyright guy harley 2004 ec strategy and implementation plan

Documents

copyright guy harley

ibms strategy

wealth of e

potential of e

ibms customers

ibms marketing stance

web ecare

emarketing communications