e-Strategy: Thinking About e-Business Models


Learn how to create value through your e-business strategy by understanding the importance of an e-business model, not just a website. Discover the different types of e-business models in this insightful article.


Do you have a website? Then you must know what your e-Business model is. Do you?

When organizations embark on the e-business journey, they start by thinking of putting up a website. This might very well be the culmination of an e-Business strategy, but it should not be the starting point or the focus of the thought process. The focus of e-Business strategy should be on finding the right e-Business model for the organization. Let me explain.

Introduction

The purpose of any organization's strategy is to create value. It follows then that the purpose of an e-Business strategy is to create value for the organization, albeit using the internet as the source or enabler of this value. Therefore, the first thought and, more importantly, the focus of developing an e-Business strategy must be on analyzing how the internet can create value for the organization, not on creating a website.

The difference between these two thought processes might appear to be semantic. After all, don't they both lead to the same result i.e. developing a website? In other words, can you imagine a "successful" e-Business strategy ever being implemented without a website?

One can argue that an e-Business strategy can and/or should result in an implementation without a website. For starters, not every successful business in the world has a website. Secondly, these days, having a website is akin to having a business card or a phone line or a phone book listing - these business necessities hardly qualify as proof of a well-thought-out strategy!

What is e-Strategy?

However, this argument will have to wait another day because we do not want to lose focus of the core objective of this article: understanding the value creation opportunities offered by the internet. Specifically, the e-Business models and their role in creating shareholder value.

Toward that end, we will make a few assumptions and skip a few steps and acknowledge that should your e-Business strategy culminate in a website, understanding what the website will do can make all the difference between playing with cool technology and creating value.

Our first assumption, of course, is that you are interested in the latter!

Here are some of the other ones:

  1. An organization creates value through its business model
    1. Step 1, in e-Business strategy, is to ascertain the new/improved business model, factoring in the internet ecosystem
    2. There is one and only one business model for an organization
    3. Everything the organization is and does flow from its business model
    4. An organization's success or failure in creating shareholder value is driven by its business model but determined by its business capability.
  2. A website is an organizational interface. Nothing more, nothing less.
  3. The business model determines what, if anything, this organizational interface will do to enable it Now, we are ready to discuss e-Business models!

How to improve e-Business ROI?

The need for e-Business models

When companies think about e-Business strategy they think about their website. When they think about their website, they dive, head first, into functions and features, often at the expense of clearly thinking through the value creation opportunities. A website's functions and features are important. However, they are subordinate to the objective of value creation. An organization creates shareholder value through its business model. An e-Business creates value through its e-Business model. It is the e-Business model that drives specific website functions and features. Taking this journey top down, i.e., determining the business model first, and making this connection between business model, e-Business model, and website functions and features, is critical to creating shareholder value through the internet.

What is an e-Business model?

An e-Business model is a framework that determines the value created by an organization through the Internet. In other words, every organization uses the Internet for different purposes. Your e-Business model defines how you use the internet for shareholder value. Needless to say:

  1. e-Business models are tightly coupled with business models.
  2. As companies create value through differentiation, no two e-Business models should be identical.

What are the types of e-Business models?

There are four types of e-Business models:

  1. Information
  2. Transaction
  3. Knowledge
  4. Community

In the next article, we will dive deeper into the definitions of these models and take a look at information-based e-Business models.


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