7 things a CxO should know about eBusiness

Over a decade after Senator Al Gore invented the internet2, organizations are still struggling with leveraging it effectively. The “old economy” or “brick and mortar” organizations in particular, have a tough time integrating it with the rest of their capability.

There are many reasons why this is difficult and we will address that issue in depth in another article. However, one of the biggest issues is the IT Organizations’ lack of “role clarity” vis-à-vis eBusiness. Some, or maybe most, of the “role clarity” issue is political – both CIOs and CMOs want to own eBusiness – but a lot of it comes from a lack of understanding of the nature of eBusiness.

The net result is that these companies continue to struggle and lose an invaluable opportunity to create value for their shareholders.

A good solution for political issues in an organization is to take both - or howsoever many there are - tom cats outside and hang them by their tails, close to each other, on an electrical transmission wire. This way, if the high voltage electricity does not get to them first, they are close enough to settle their issues in a focused, uninterrupted manner and the rest of the organization is spared the spectacle and disruption. (For those of you who are literal, this “electric transmission wire” referenced here is figurative. Please do not do this literally.)

However, I do believe that some of this political issue can be alleviated through a better understanding of the nature, role and power of eBusiness. So here goes…

7 things a CxO should know about eBusiness (Please read the notes/disclaimers at the end of the article)

1. eBusiness is not IT

2. eBusiness is “business”

3. eBusiness strategy is Business strategy

4. A website does not an eBusiness make

5. Websites are not like any other “user interface”

6. Web logs are not system logs

7. eBusiness marketing is not putting banner ads or search ads on google

 

eBusiness is not IT

eBusiness is the business use of the internet. The former is business and the latter i.e. the internet, a technology, is its enabler.

Because eBusiness is a fascinating phenomenon - the likes of which have not been seen since the invention of the telephone - enabled by technology, some people are confused by the difference between them. So let us take a few examples and illustrate this point:

  1. Telephones enabled call centers – or as a professional that I deeply respect, has reminded me repeatedly, “customer contact” centers - and call center technology. Are call centers IT?
  2. Supply chain technology is powering manufacturing and procurement. Are manufacturing and procurement IT?
  3. CRM systems power marketing and sales. Are marketing and sales IT?

Corollary: eBusiness Strategy is not IT Strategy!

eBusiness is “business”

It is not a coincidence that the bigger word in eBusiness is “business”. It is business. The following characteristics should help clarify this concept:

  1. eBusiness has all the business processes – from sales and marketing to procurement and customer service. It is completely integrated with other business processes and their internal counterparts enabled by other IT systems. In comparison, IT Processes such as IT Strategy, governance, implementation etc. are distinct from business processes.
  2. eBusiness is “external” customer facing just like your sales force is. IT systems are “internal” customer facing.
  3. As a matter of fact, eBusiness strategy will have a much more profound impact on IT Capability than anything you have seen so far.

Corollary: eBusiness is not a channel!


eBusiness strategy is Business strategy

The basic idea behind business strategy is to find the “best” way to “serve” a “customer” who will “pay” for this service.

“Customer” is not a homogeneous monolith – there are segments of the target market. A business might choose to serve any and all of them. It might serve them with the same “service” or tailor them for each segment.

The online customer presents a target market. Whether one considers them as a single segment – big mistake – or divides them into sub-segments, the point is that they are a distinct market. They have their own demographic and psychographic. Just because anyone with an “internet” can get on your “website”, does not and should not, take away from the fact that only a few will be your “customers” – you need a strategy to create products/services for them and get them to “pay” for them.

A business cannot have an online strategy disconnected from its “other” business strategy.

  • Your “customer” might go online and then make the purchase at the local store.
  • Your “customer” might buy at the local store but want to be serviced online or on the phone. Does your business have a distinct “telephone” strategy?

It follows then that there is only one “business” strategy – if one must, then it has a separate section on leveraging the internet.

Corollary: IT must be aligned with the “business” including eBusiness!

eBusiness is NOT a website

One myth about eBusiness is that one needs a website and they are done! eBusiness is more than putting up a website – as argued previously, it is your business.

At best, a website is the “face” to the business. Just like a person is more than their face, let us not forget about the rest of the business’ “body”.

1. The website maybe the least important part of the business – the brains of the business i.e. business strategy, its DNA i.e. business model and its operations i.e. business processes are not visible to the external world but play a critical role in its success

2. The website has to connect with the rest of the business, especially its operations

Anytime, you are forced to think of a website being eBusiness, please think about putting lipstick on a pig would not make it any more appealing to its audience.

 

Websites are like any other “user interface”

A website presents a user interface to your “external” customer. So why is it not like a user interface to your internal systems?

Here are the reasons why:

  1. Your website’s design is closely linked to your brand. Your internal systems aren’t.
  2. Your website’s design is driven by weblog analysis. Your internal systems aren’t
  3. Your website is closely linked to a feedback loop and marketing. Your internal systems aren’t
  4. “External” customer are anonymous and seldom if ever provide feedback to your directly. They typically vote with their feet. Your internal customers are vocal and can find you in hallways. They can and do live with a lot more than your external “paying” customer will.
  5. The design process for the former must include a feedback process. Hence, it is an iterative process.
  6. On your website, your objective is to engage and monetize customer internactions so each word and graphic counts and can and does make a difference. Your internal systems are designed to help users do their jobs. System or no system, they are expected to do it and they do.
  7. Should internal systems be developed in a similar manner? Absolutely. However, that would be cost prohibitive. JAD/RAD techniques can take the bite out of cost and make you more effective without making the investment but IT organizations have yet to embrace these techniques.

Web logs are NOT system logs

Web logs are not system logs that tell you what is working and what is not with your system. They are the dashboard for an eBusiness executive. They provide invaluable information on what is working with you “customers”. There is nothing like them in the internal customer world.

Without weblog analysis, you are driving without a dashboard!

eBusiness marketing is not putting banner ads and buying search ads on google.

Just like eBusiness is business conducted with the online customer, emarketing is marketing conducted with the online customer.

  1. Just like its on ground cousin, online marketing is an art and science of understanding and serving your customer
  2. All rules and processes apply and are the same
  3. Techniques are different just like they would be for a different segment in the brick and mortar world!
  4. One does not have to “advertise” online to get to these customers. Remember, the idea is to get to the demographic and psychographic. That can and is often done on-ground! People live and play online and offline. So, your message must reach them not only, where they are but also where they are likely to read and respond to it! Print and radio ads are still very potent advertising channels even for online services.

Notes/Disclaimers:

  1. Please read this in context of the current functional nature of a typical organization. In this organizational structure, IT is a function distinct from other functions that are referred to as “business”. I have always insisted that IT is as “business” as any of these other functions. But till the pervasive acceptance of my argument for a process based organization structure, we have to contend with the one that we have.
  2. We suggest practicing humane IT Management. NO animals were hurt in the writing of this article. Please DO NOT hurt any animals when you practice IT Management.
  3. Despite the obvious dig, I happen to like Mr. Gore. I just think that like other politicians – and Harvard graduates? – he is a tad into hyperbole. I am sure, in hindsight, he regrets suggesting that he “invented” the internet. To be fair, by relentlessly promoting favorable legislation, he was instrumental in making it the force that it is today.

Sourabh Hajela is a management consultant and trainer with over 20 years of experience creating shareholder value for his Fortune 50 clients. His consulting practice is focused on IT strategy, alignment and ROI. For more information, please visit http://www.startsmarts.com/. Or feel free to contact Sourabh at Sourabh.Hajela@StartSmartS.com or post your questions at www.CioIndex.com/forums/index.asp.


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Posted on 06/04/2009 by


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