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 eBusiness strategy but it certainly should not be the starting point or the focus of the thought process. The focus of eBusiness strategy should be on finding the right eBusiness model for the organization.
Let me explain.
The purpose of any organization’s strategy is to create value. It follows then that the purpose of an eBusiness 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 eBusiness 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” eBusiness strategy ever being implemented without a website?
One can argue that an eBusiness 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!
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 eBusiness models and the role they play in creating shareholder value.
Toward that end, we will make a few assumptions and skip a few steps and acknowledge that should your eBusiness 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. Step 1, in eBusiness strategy is to ascertain the new/improved business model, factoring in the internet ecosystem
- There is one and only one business model for an organization
- Everything the organization is and does flows from its business model
- 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 eBusiness models!
The need for eBusiness models
When companies think about eBusiness 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 eBusiness creates value through its eBusiness model. It is the eBusiness model that drives specific website functions and features.
Taking this journey top down i.e. determining business model first, and making this connection between business model, eBusiness model and website functions and features is critical to create shareholder value through the internet.
What is an eBusiness model?
An eBusiness model is the framework that determines the value created by an organization through the internet.
In other words, every organization uses the internet for different purposes. Your eBusiness model defines how you plan on using the internet for shareholder value.
Needless to say:
- eBusiness models are tightly coupled with business models.
- As companies create value through differentiation, no two eBusiness models should be the same.
What are the types of eBusiness models?
There are four types of eBusiness models:
In the next article we will dive deeper into the definitions of these models.
About the Author
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