Part II: Finding a Home for eBusiness

Last week we discussed the problem with the current configuration of eBusiness in "brick and mortar" organizations. This week, we discuss why it should change!

Now that we have defined the problem and declared the existing solutions incorrect, it is only fair that we look at the possible correct answer!

What is eBusiness?

There is no dearth of definitions of e-Business. Everybody has their favorites. Personally, I like to think of e-Business as business use of the Internet. The “use” results in a business benefit such as higher revenues, reduced costs or reaching an underserved market. The “internet” includes all technologies and applications enabled by the Internet.

 

A simple framework to think of the processes in a business is:

  • Service – processes required to support customers after the sale
  • Sell – processes required to distribute the product to the end customer
  • Make – processes required to create the product or service
  • Buy – processes required to buy the “raw materials” to “manufacture” the products or services

eBusiness encompasses all these processes – from integrated product development, supply chain to CRM and everything left or right or top or bottom. The key difference is that the external interface to these processes is not human or “brick and mortar” but a “website”

  • Customers and others interact with these processes through this website
  • The website does not preclude some portions of these processes being manual
  • It does not preclude these processes from being completely integrated with their “offline” process counterpart. As a matter of fact, unless the eBusiness organization is a separate entity, online and offline processes are required to be completely integrated for optimal results
    • Provide economies of scale
    • Provide a single face to the customer
  • It does not preclude the same organization enabling both sets of processes

The key difference between eBusiness and eCommerce is that the latter focuses on only one aspect of eBusiness namely selling the product/service online.

Why is eBusiness different?

The website “face” of eBusiness seems to get all the attention, often, at the expense of its more important “brain” and the rest of the “body.”

The new ecosystem

eBusiness has lit up a whole new customer demographic. More importantly, there is a whole ecosystem that this demographic lives in.

Our new ecosystem is online. Online connectivity has made the delivery of products and services and the message about them ubiquitous. It has also made this interaction 24x7x365 with ease that has not been seen since the advent of the telephone. The big difference this time is that there are many more options available to make this interaction more meaningful than the voice interaction made possible by the telephone. Now, our interaction is multi point, bi-directional and leverages the immense power of multimedia.

Despite these obvious and powerful changes, one needs to focus beyond the fact that they are online, and focus instead on the unique requirements they place on business today. For example, the online customer is impatient. They are more affluent than their offline counterpart. They are also likely to be into “self service.” They demand unique and personalized products and services that they can configure themselves. Customer loyalty is fleeting, as the options for access to products and services from millions of sources across the globe has compromised it like never before. These incessant and compulsory window shoppers can process loads of information and then make their decision to “buy.”

The need for a new business model

So, what are these new requirements placed on business?

  • Shrinking product lifecycles – a “new” product only lasts a few weeks or months. Then our new demographic wants something else
  • “My way” or in business terms, personalization has increased the need to look beyond normal product packaging and provide means of personalization. Customers can design their jeans online and get them delivered to their specification and taste. They can now design their own cars and take delivery within 5 days!
  • Customer loyalty can be bought for less than the infamous “2 cents off”
  • Brands are still important but the branding game has changed
  • Security is paramount. Customers would like to feel that their privacy is uncompromised by their interaction with you. They would like to know that their financial information is secure with you.

If you are not nimble enough to keep up with this fast paced and demanding customer, they will vote with their feet and you might never know where they went! This means not only understanding this faceless customer fast but also serving them faster with no time to breathe. Because in the time you took that breath, they got the information they needed and went somewhere else to shop!

Everything about your business, especially its processes and enabling technology must change – simply putting up a website is playing in your grandfather’s league. If you want to compete, you’d better, yes better, change your business model. And did I mention, fast?

The need for integrated processes

Dell is a dominant player in the “made to order” and “direct distribution” world. Their success is obvious but what is not so obvious is that their business model was built on processes and technology that their competitors could not match. It is not a coincidence that IBM had to go the Lenovo route. It just could not compete with Dell.

“Made to order” is not “made possible by” a grant from some foundation but integrated processes and enabling technology. Integrated product development is the name of the game. Providing functionality to your customer so they can pick from a Chinese menu of product options and then shipping this order to your manufacturing is simple enough. Then starts the complexity because manufacturing has to be geared to make and deliver that product fast and that means an inseparable integration of demand forecasting, production planning, distribution, procurement and the rest of the supply chain as never seen before.

You see, the website did the simple stuff in taking the order and then it left it to the rest of the body to fulfill it!

The need for integrated systems

Integrated processes without integrated systems are like chili without spices. “Just in time” manufacturing does not happen without a cutting edge demand forecasting capability. The latter does not happen without cutting edge business intelligence.

You get the picture?

This picture of a website powering your business should start to look like the tasteless chili you were about to serve your customers. Now, let us make it worse.

Your online customer also wants to know, along the way, where you are in the process? If they call, does your call center know where their order is? If they go online, is the order information there? Is it the same as what your customer service representative gave them? Can you up the ante and ship that information before your customer calls?

Delta calls you if your flight is delayed. Dell tells you where your order is through email. UPS and FedEx can tell you precisely where your package is. Can your “diversified” financial company provide you a single bill and a simple and consistent answer when you call them or visit their website?

Who da dinosaur?

I hope we have made the case for integrated processes and enabling technology. But we left out, perhaps, the most important aspect of this new world – data.

Anything and everything about every transaction and interaction in this new world is captured in a log. This wealth of information might as well be in a dumpster because the big boys are not interested in it. I have seen multi billion dollar companies that do not have the capability to analyze web logs!

Businesses are still focused on customer surveys and for good reason. However, the pot of gold in web logs provides invaluable “feedback” This feedback must drive all your actions, especially those related to customer interaction. It follows therefore that the process for collecting this information, processing it and the action taken must be integrated.

eBusiness has provided this wealth of “free” information but also placed a requirement that the process for its analysis and the design of your eCapability, or “website” for the recovering offender, must not be separated into functional buckets.

Next week, we will look at the design of the eBusiness organization through our new found lenses!

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 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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