E-Business Design and Strategy

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E-Business Design and Strategy

• MIS 4133
• Software Systems
• Fall 2005

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Outline

• Design and Strategy
• Phases
• Why e-Businesses Fail

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E-business Strategy

• About the uncertain future
• Based on assumptions, premises, and beliefs about
  customer priorities, technology evolution,
  competition, and the core competencies

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A Generic Business Model
Supplier called or invoices mailed
Inventory warehoused or stored
Products delivered to retailer
Company manufacturers for industry schedules
Traditional media used for advertising. Sales
force sells product.
Customer sees ads and goes to retailer to make
purchase
Payments are made at retail funds used to pay
suppliers. Information flows
(Kleindl, 2003)
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A Generic E-Business Model
Suppliers linked through Extranet deliver
just-in-time
Products delivered through independent shippers
such as UPS
Manufacturer customizes product and sells at
lower price
Web page provides information and ordering
Customer gathers information and purchases
through Web page
Payments are made online through Web page
(Kleindl, 2003)
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E-Business Design Phases

• Phase 1 Knowledge building
• Phase 2 Capability evaluation
• Phase 3 E-business design
• Phase 4 Blueprint design
• Phase 5 Business case creation
• Phase 6 Blueprint execution

Kalakota et al., 2001
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Phase 1 Knowledge Building

• Enables managers to understand customers
  priorities
• Categorizing customers
• Changing customer priorities
• Targeting customers
• Adding value
• Dazzling customers
• Distributing products
• Analyzing the environment and industry trends
• Understanding technology trends
• Prioritizing in the supply chain
• Knowing the competitors

Kalakota et al., 2001 Rayport and Jaworski,
2001 Turban et al. 2002
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Phase 2 Capability Evaluation

• Assessing capabilities
• Determining strengths and weaknesses
• Aligning firms vision and capabilities

Kalakota et al., 2001 Turban et al. 2002
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Phase 3 e-Business Design

• Select design
• Category killer
• Unique customer need remain ahead of competition
• Channel reconfiguration
• Directly access customers
• Transaction intermediary
• Process purchases
• Infomediary
• Reduce search cost
• Self-service innovator
• Services customers employees can use directly
• Supply chain innovator
• Streamline interactions among all parties in the
  supply chain
• Channel mastery
• Sales and service channel supplement to existing
  channel

Kalakota et al., 2001 Treese and Stewart, 2003
Turban et al. 2002
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Phase 3 e-Business Design Cont.

• Refinement
• Customer selection
• Customer experience
• Customer capture
• Scope of design
• Ease of doing business
• Organizational systems

Kalakota et al., 2001
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Phase 3 e-Business Design Cont.

• Clarify differentiation
• Product features
• Marketing channels
• Service and support tailoring
• Brand / image positioning
• Price

Awad, 2002 Kalakota et al., 2001
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Phase 4 Blueprint Design

• Active projects are constantly updated, revised,
  and prioritized
• Prioritize
• Manages streams of innovation
• Plans for long-term success
• Business case for action
• Details of blueprint plan
• App implementation
• execution

Kalakota et al., 2001
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Phase 4 Blueprint Design Cont.

• Investment in integration
• Capital budgeting, investing in new technologies,
  and allocating scarce resources
• Project types
• Incremental Derivatives, add-ons, and
  enhancements
• Break-through substantial changes in firm
  foundation
• Platform new structural foundation

Kalakota et al., 2001
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Phase 4 Blueprint Design Cont.

• Aim of overall e-business design
• Scope
• Classify and analyze the application frameworks
• Prioritize
• Execution plan

Kalakota et al., 2001
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Phase 5 Business Case Creation

• Develop clarity of purpose that allows scarce
  resources to be targeted for maximum results
• Developed using a cross-functional process and
  varying people and and skills

Kalakota et al., 2001
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Phase 5 Business Case Creation Cont. (Case
Elements)

• Project Justification
• Strategic
• Operational
• Technical
• Financial
• Preliminary Scope of the Project Assessment
• Organizational
• Functional
• High-level app architecture
• High-level project plan
• Resource requirements

• Feasibility Assessment
• Financial
• Organizational / Cultural
• Technical
• Suppliers, partners, and customers

Kalakota et al., 2001 Turban et al. 2002
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Phase 6 Blueprint Execution

• Detailed pattern for execution
• Imperatives speed, efficiency, flexibility, and
  quality
• Transition from old apps to new apps

Kalakota et al., 2001
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Why e-Businesses Fails

• Too many projects
• Lack of funding (takes a few years to get
  customer base)
• Resources / people spread too thin (increases
  cycle time)
• No tough decision points and poor project
  selection decisions (therefore good projects are
  starved for resources)
• Decisions based on politics, disputes, and emotion

Turban et al., 2002
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Another Approach to an E-Business Plan

• Used to seek funding for a new or existing
  e-business and serves as a design for operating
  an e-business after it is funded
• Executive summary (miniature version of complete
  business plan)
• Vision (long-term goals) and mission (how reach
  vision) statements
• Description of e-business idea (outline of
  e-business background and business concept)
• Info on target audience
• Info on products/services to be offered
• Analyses on the e-businesss overall industry,
  target market, and competition
• Marketing, operational, financial, sales,
  technology and managerial plans
• Identification of critical risks (SWOT analysis)
• Exit strategy (tells investors how they will
  recover their investment, and identifies the
  long-term plans for the e-business and its
  principals)

Awad, 2002 Napier, et al., 2001
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Example EC Mission Statement

• eBay.com
• We help people trade practically anything on
  earth. eBay was founded with the belief that
  people are basically good. We believe that each
  of our customers, whether a buyer or a seller, is
  an individual who deserves to be treated with
  respect.
• We will continue to enhance the online trading
  experiences of all collectors, hobbyists,
  dealers, small businesses, unique item seekers,
  bargain hunters, opportunistic sellers, and
  browsers. The growth of the eBay community comes
  from meeting and exceeding the expectations of
  these special people.

Turban et al., 2002
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References

• Awad, E.M. (2002). Electronic Commerce From
  Vision to Fulfillment, Pearson Education Inc.,
  Upper Saddle River, New Jersey.
• Kalakota, R., Robinson, M. and Tapscott, D.
  (2001). E-Business Roadmap for Success 2.0,
  Addison Wesley Longman, Inc.
• Kleindl, B.A. (2003). Strategic Electronic
  Marketing Managing E-Business, Thomson Learning.
• Napier, H.A., Judd, P.J., Rivers, O.N. and
  Wagner, S.W. (2001). Creating a Winning
  E-Business, Course Technology, Thomson Learning,
  Inc.
• Rayport, J.F. and Jaworski, B.J. (2001).
  E-Commerce, McGraw-Hill Companies, Inc., New
  York.
• Treese, G.W. and Stewart, L.C. (2003). Designing
  Systems for Internet Commerce, 2nd edition,
  Pearson Education Inc., Boston, MA.
• Turban, E., King, D., Lee, J., Warkentin, M. and
  Chung, H.M. (2002). Electronic Commerce 2002 A
  Managerial Perspective, Pearson Education, Upper
  Saddle River, New Jersey.

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Example

• As manager of networks and computing operations
  for Fashion Land, a retailer of womens clothing
  and accessories, you have seen the business grow
  from seven stores in Kansas City to over 100
  stores located throughout the Midwest. Fashion
  Lands marketing research team has found that
  many members of its target customer group
  females between the ages of 15 and 35 are
  becoming regular users of the Web. The
  researchers have found that these customers would
  not want to buy major clothing items on the Web
  however, they would like to buy accessories.

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Example Cont.

• Outline a business strategy for Fashion Lands
  electronic commerce initiative. The outline
  should include
• List of specific objectives
• Costs/benefits of accomplishing each objective
• Recommendation regarding what to outsource
• Web hosting services that will be needed
• Staff that should be hired
• Existing applications that will need to be
  integrated
• Etc.