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Background of Ecommerce

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What are the signs that a firm is ready? Questions to ask II. What does the firm need to begin its ebusiness initiative? III. – PowerPoint PPT presentation

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Title: Background of Ecommerce


1
  • Assessing ebusiness readiness
  • What are the signs that a firm is ready?
  • Questions to ask
  • II. What does the firm need to begin its
    ebusiness initiative?
  • III. The importance of strategic
    orientation
  • IV. Measuring ebusiness activity

2
I. What are the signs that a firm is ready?
Although, e-business may help an organization
gain competitive advantages over competitors,
it unfortunately incurs high level of
implementation risk. Companies need to know
whether they are really ready for implementing
e-business before they jump onto the
bandwagon. If they are not ready, they may want
to know where they should improve themselves so
that they will be ready for implementing
e-business later on. Huang, J.H., Huang, W.W.,
Zhao, C.J., and Huang, H. (2004). An E-Readiness
Assessment Framework and Two Field Studies.
Communications of the IS. 14 Article 19, p2
3
I. What are the signs that a firm is ready?
Key members of the organization have expressed
interest in an ebusiness initiative They have
noticed that their main competitors have web
sites that are selling goods and/or
services Market research tells them that a
significant of their customers (and potential
customers) are online Presupposes an awareness of
IT, the net, the web, and their impacts on
business practices Also knowledge of part of
business that will be affected by ebusiness
4
I. What are the signs that a firm is ready?
An e-readiness assessment framework Internal need
for ebusiness Are the goals of the ebusiness
initiative suitable and effective? Do the
products and services of the firm meet the
requirements of ebusiness? Can the firm
benefit from implementing ebusiness? How and
how quickly? Huang and Huang (2004), 368
5
I. What are the signs that a firm is ready?
An e-readiness assessment framework External
environment Does the firms ebusiness initiative
fit well with trends in the industry? Does the
firms value chain fit with the initiative? IT
diffusion and change management Is the firms
change management aligned with the
initiative? Is IT adoption and diffusion being
resolved in the firm?
6
I. What are the signs that a firm is ready?
First 3 levels of the readiness
assessment framework Huang and Huang (2004) 369
7
I. What are the signs that a firm is ready?
Internal needs for e-business Are the goals of
the e-business initiative are suitable and
effective? Do the products or services of a
company meet the requirements of
e-business? Can a company really benefit from
implementing ebusiness? Is the overall
e-business plan appropriate?
8
I. What are the signs that a firm is ready?
External environment Does the companys
e-business initiative fit well with the whole
industrys development? Does the a companys
value chain fits with the ebusiness
initiative? IT diffusion and change management
Is the change management of a company ready for
and aligned with e-business implementation?, Is
the IT adoption and diffusion issue is being
resolved within a company?
9
I. What are the signs that a firm is ready?
Tasks Identify ebusiness opportunities and
drivers Business processes, IT apps
(customer, supplier and internal
orientations), systems integration Uncover
weaknesses in current IS applications Work out
an effective e-business budget Analyze
e-business trends in the industry Monitor a
sample e-business project Evaluate e-business
investment (ROI) Identifv e-business skills
training and development
10
I. What are the signs that a firm is ready?
Early questions to ask Why do you want to do
this?  Do you have a plan to do this? Is the
firm ready to do this? What will you be selling
and who are your buyers? What is the business
model for this initiative? What are the goals
for this initiative? How will it address market
needs?
11
I. What are the signs that a firm is ready?
What will you be selling? Why it is a good idea
to sell the product or service online? What
is it about this product that makes it feasible
to use this channel? What will your customers
gain by being able to buy it online? What
are the potential costs of selling it online?
12
I. What are the signs that a firm is ready?
What of your market sectors business is
online? Who will be your main competitors
online? What are the main characteristics
(architectural, functional, usability) of
their sites? Business processes How will the
business have to change to integrate this
marketing and distribution channel? How will
peoples work be affected by the ebusiness
initiative?
13
I. What are the signs that a firm is ready?
Why firms get involved External marketplace
factors (32.3) Internal revenue generation
(25.8) Process improvement (22.5)
67.7 Cost containment (19.4) Internal factors
seem to be more important in the decision to
implement ebusiness Saban, K.A. (2001). Strategic
Preparedness A Critical Requirement to Maximize
E-commerce Investments. Electronic Markets.
11(1). 26-36.
14
I. What are the signs that a firm is ready?
Perceived barriers External marketplace factors
(18) Internal lack of strategy
(55) Leadership (18) 82 Organization
al factors (9) Perceived barriers to
strategy Lack of vision Lack of business
plan Lack of perceived benefits
15
  • Assessing ebusiness readiness
  • What are the signs that a firm is ready?
  • Questions to ask
  • II. What does the firm need to begin its
    ebusiness initiative?
  • III. The importance of strategic
    orientation
  • IV. Measuring ebusiness activity

16
II. What does the firm need to begin its
ebusiness initiative?
Do you have the personnel and infrastructure to
to this? Do you have the distribution and
logistical system in place to handle
this? What organizational resources will be
devoted to this? How many people will be
working on it? Who are they? Will there be
adequate budgetary and technical resources
made available for this project? What is this
venture going to cost?  How will you measure
success?
17
II. What does the firm need to begin its
ebusiness initiative?
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18
II. What does the firm need to begin its
ebusiness initiative?
Whats involved in estimating costs? Page design
industry standard 1,000-10,000 and up Site
hosting industry standard 100-100,000 and
up Its more expensive if you have own domain
name Advantage the host worries about the
servers, firewalls, and data
backup Maintenance industry standard
20-200/hour, 2 hours minimum a month This
consists of content updates, changes to the
pages, performance reports, and monthly link
and image checks
19
II. What does the firm need to begin its
ebusiness initiative?
Other costs Software and personnel industry
standard 0 to 350,000 Staffing grows depending
the volume of business (web server admin,
programmer and) Merchant-level software helps
manage orders, invoices, customer contact info,
inventory and shipments Some may be done in
house, some outsourced Databases industry
standard 1,000-100,000 and up What is the
range of appropriate solutions? How will this
database be integrated into the legacy
databases in the organization?
20
II. What does the firm need to begin its
ebusiness initiative?
Security industry standard 0-40,000 and
up What types of payment options will you
offer? What protections should be in place for
customers? What protection should be in place
for your site? Backups, redundancy,
mirrors Advertising and marketing industry
standard 100-100,000 Online search engine
registration, meta-tags, keywords, and
reciprocal links with other companies Offline
billboards, phone book, media ads (newspaper,
radio, television), stationary, business cards
21
II. What does the firm need to begin its
ebusiness initiative?
Electronic payment systems This system should
offer alternative means of payment Relationships
with credit card companies The company needs
secure real time processing of credit card
numbers Relationships with banks The company
needs a merchant account that can accept
electronic funds transfer
22
II. What does the firm need to begin its
ebusiness initiative?
Technical infrastructure Either in-house or with
a hosting solution Reasonable availability of
computing Technical expertise Someone in the
organization should be able to understand the
basics of the ebusiness initiative Web-business
expertise Someone should be able to understand
what goes on in ebusiness in the relevant market
sector
23
II. What does the firm need to begin its
ebusiness initiative?
The organization also needs Business planning and
strategizing The ebusiness initiative should be
closely linked to the organizations core
business Managerial infrastructure People who
can manage a digital enterprise High-level
buy-in Decision makers should agree that this
initiative is worth the time and effort needed
succeed
24
II. What does the firm need to begin its
ebusiness initiative?
This leads to a integration plan Project
management Set out roles, responsibilities,
timeline, benchmarks, and deliverables Change
control Testing and evaluation, metrics for
assessing performance Ownership and rights,
confidentiality agreements, dispute resolution
25
  • Assessing ebusiness readiness
  • What are the signs that a firm is ready?
  • Questions to ask
  • II. What does the firm need to begin its
    ebusiness initiative?
  • III. The importance of strategic
    orientation
  • IV. Measuring ebusiness activity

26
III. The importance of strategic orientation
An estimated 210 dot.coms failed in 2000 Many
had high cash burn rates and could not raise
more capital They did not maintain high
growth rates and were not profitable Some
had problems with CRM and order
fulfillment Problem not understanding the
importance of strategy Grover, V. and Saeed, K.A.
(2004). Strategic orientation and performance of
Internet-based businesses. Information Systems
Journal. 23-42
27
III. The importance of strategic orientation
Two important conceptions of strategy Strategy is
an ongoing process of evaluating the firms
purpose (Miles and Snow) Evaluating,
questioning, verifying and redefining the
firms interactions with its environment Assume
s patterns of organizational adaptation to
environments Strategy allows the firm to adapt
to dynamic, competitive, and uncertain
environments Strategic orientations differ in
risk disposition, innovativeness and
operational efficiencies Types defenders,
prospectors, analyzers, reactors
28
III. The importance of strategic orientation
Porter's five forces model defines the relevant
components of the environment These competitive
forces work at the industry level Existing
companies Potential new companies
Substitutes for products offered Suppliers
Customers Two adaptations are low cost and
differentiation The goal is to alter the
firms position in the industry in relation
to competitors and suppliers
29
III. The importance of strategic orientation
Porters 5 forces
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.gif
30
III. The importance of strategic orientation
There is also a view of strategy as resource
based (Barney) This involves gathering and
making use of resources and developing
capabilities that competitors cant easily
imitate The goal is superior market position
It links the firm closely to its suppliers and
customers Strategic orientation can be an issue
of how firms position themselves with respect to
competitors It focuses on the exploitation of
firm-specific assets and capabilities
31
III. The importance of strategic orientation
Saban, K.A. (2001). Strategic Preparedness A
Critical Requirement to Maximize E-commerce
Investments. Electronic Markets. 11(1). 26-36.
32
III. The importance of strategic orientation
Realistic view of strategy Firms are
simultaneously acquiring and making use of
assets and are repositioning themselves with
suppliers and customers Some groups of firms
share strategic orientations Strategic decisions
cover Market segmentation, product
characteristics, costs diversification,
geographic reach Resource commitments
How resources are deployed to maintain
competitive advantage
33
III. The importance of strategic orientation
Strategic orientation and ebusiness Three key
issues in e-business implementation
e-operations,e-marketing, and e-services A
firm should know how to develop in these
opportunity domains before implementing
e-business. An e-business framework has four
crucial strategic quadrants Technology Brand
Service Market
34
III. The importance of strategic orientation
Strategic orientation and ebusiness There are
differences between ebusiness and offline
business that matter The number of customers
that can visit the store The range of products
that are available The nature of the
interaction with customers Higher costs of
acquiring customers The nature of the
interaction with suppliers Different form of
inventory management
35
III. The importance of strategic orientation
Other differences that matter Economics of
information and other digital services High
fixed costs in compiling the product or service
Low marginal costs value-based pricing
strategies, such as bundling information
products and providing personalized
services Many ebusinesses could not create
adequate value They had to invest large
amounts of cash to acquire customers and
attempt to become profitable Customization and
personalization are expensive ongoing costs
36
III. The importance of strategic orientation
Goal of ebusiness strategy To leverage net
infrastructure and digital economics in order to
gain strategic positioning in the marketplace Key
factors in developing a strategic
orientation Risk disposition Managements
willingness to invest in projects to
stimulate growth Financial resources are used
to pursue risky projects Risks can be short or
long term Continuum aggressive aversive
37
III. The importance of strategic orientation
Dimension of strategic orientation Innovation
The firms commitment to support new
initiatives This includes the ability to
generate slack resources and allocate funds
to support innovative initiatives
Technological changes (disruptive or
incremental) Marketing innovations (targeted
or pervasive) Developing reliable and
consistent customer relationship
management Continuum innovative conservative
38
III. The importance of strategic orientation
Another dimension Operational efficiency
Managerial control over routine operations and
assets Efficiency and effectiveness of
organizational processes Extent of
system integration with the web front-end Also
efficient co-ordination of the firm with its
suppliers Continuum efficient
inefficient
39
III. The importance of strategic orientation
Another dimension Marketing intensity The
aggressiveness of the firm in pursuing
customers Investing in customer-facing
processes Marketing and advertising
Efficiency in customer acquisition and order
fulfillment Continuum innovative
conservative
40
III. The importance of strategic orientation
Developing a strategic orientation for
ebusiness Firms make multifaceted resource
deployment decisions that shape their
strategies A key decision deals with the
management of ICT Recent research indicates that
ICT do contribute indirectly to
productivity How are ICT resources used along
with other resources to generate superior
performance?
41
III. The importance of strategic orientation
Mature orientations Larger, older, with large
customer bases, brand equity and reasonable
performance This can mean lower marketing and
customer acquisition costs Reasonable cash
flow with low short term risk and high slack
resources Risky orientations Efficient at
co-ordination, advertising, order fulfillment
Low cost to sales ratios High levels of short
term risk/debt, low cash reserves
42
III. The importance of strategic orientation
Moderate orientations Smaller, with low costs
and low levels of advertising, coordination and
marketing efficiency Low short and long term
risk, moderate innovation Moderate cash flow
allows marketing expenditures but these tend not
to be effective Novice orientations Smaller,
with low advertising, coordination, and order
fulfillment efficiency Moderate short term
risk Negative cash flow, high RD expenses
43
III. The importance of strategic orientation
Benefits of an integrated ebusiness
strategy Enables management to close any
performance gaps before a the processes are
implemented Creates a unified plan of action
that all operations, departments and employees
can endorse Reinforces that ebusiness is a means
to improve the value chain, not an end unto
itself Six managerial implications to launching
an integrated e-business plan Leadership
innovation organizational learning
structure support and resources
44
  • Assessing ebusiness readiness
  • What are the signs that a firm is ready?
  • Questions to ask
  • II. What does the firm need to begin its
    ebusiness initiative?
  • III. The importance of strategic
    orientation
  • IV. Measuring ebusiness activity

45
IV. Measuring ebusiness activity
Its important to be able to explain to
management the return on investment for any major
ICT project in a firm This is especially the
case for ebusiness Numbers of unique visitors
does not work anymore ROI helps determine the
metrics that matter Once ROI is calculated, it is
easier to do it for similar projects It provides
a sense of which ebusiness applications produce
the best and fastest results Mogollon, M. and
Raisinghani,M. (2003). Measuring ROI in
e-business a practical approach. Information
Systems Management. Spring. 63-83.
46
IV. Measuring ebusiness activity
Measuring ROI of projects Investment is measured
as the total cost in time, dollars, or other unit
needed to plan,execute, and complete the
project Return is the savings intime, dollars, or
any other measurable unit generated by
theproject ROI is the ratio of the total return
divided by the total cost of the project The
difficulty in calculating ROI is determining what
is the total cost and what is total returnof
the project
47
IV. Measuring ebusiness activity
Tangible benefits for ROI Sales
increases Production increases Increases in
leads and higher conversion rate Shorter time to
market Reduction in operating costs Reduced
network downtime Increased mean time before
failure Reduced time to configure the network
48
IV. Measuring ebusiness activity
Intangible benefits for ROI Improved customer
satisfaction Increased customer
retention Increased customer base Improved
managerial knowledge Increased employee
retention Improved employee morale Stronger
channel ties
49
IV. Measuring ebusiness activity
Measuring ROI 1.Determine internal and external
costs of implementing and maintaining current and
new ebusiness application processes 2. Calculate
cost savings between the current and new process
(all should be measurable) Add the benefits in
productivity and efficiency It may be easier
in some cases to measure value in 3. Calculate
the ebusiness apps risk and determine companys
cost of capital for that specific application
50
IV. Measuring ebusiness activity
4. Calculate net present value 5. Compare present
value of expected cash flow with required
outlay If present value of the ebusines app cash
flow exceeds cost, the project should be
implemented Otherwise, it should be
rejected So ROI Current process cost - new
process cost expected benefits Cost to
implement the project operation and maintenance
costs
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