Planning for Electronic Business: Resource and Implementation Issues

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Chapter 12

• Planning for Electronic Business Resource and
  Implementation Issues

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Learning Objectives

• In this chapter, you will learn about
• Identifying the value of electronic commerce
  initiatives
• Aligning implementation plans with strategies
• Deciding which electronic commerce project
  elements to outsource

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Learning Objectives

• Selecting Web hosting services
• Using incubators and fast venturing techniques to
  launch Internet business initiatives
• Using formal project management techniques to
  plan and control electronic commerce activities
• Staffing electronic commerce activities

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Planning the Electronic Commerce Project

• A successful business plan for an electronic
  commerce initiative should include activities
  that will
• Identify the initiatives specific objectives
• Link those objectives to business strategies
• Manage the implementation of those business
  strategies
• Oversee the continuing operations of the
  initiative once it is launched

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Identifying Objectives

• Common objectives include
• Increasing sales in existing markets
• Opening new markets
• Serving existing customers better
• Identifying new vendors
• Coordinating more efficiently with existing
  vendors
• Recruiting employees more effectively
• Resource decisions should consider the expected
  benefits and expected costs of meeting the
  objectives.

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Linking Objectives to Business Strategies

• Businesses can use downstream strategies, which
  are tactics that improve the value that the
  business provides to its customers.
• Businesses can pursue upstream strategies that
  focus on reducing costs or generating value by
  working with suppliers or inbound logistics.

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Linking Objectives to Business Strategies

• Web is an attractive sale channel.
• Web can be used to complement business strategies
  and improve competitive positions.
• Electronic commerce opportunities can inspire
  businesses to undertake many activities.

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Linking Objectives to Business Strategies

• More companies are taking a closer look a the
  benefits and costs of their electronic commerce
  projects.
• A good business plan will set specific objectives
  for benefits to be achieved and costs to be
  incurred.
• Companies use pilot Web site to test an
  electronic commerce idea, and then release a
  production version when it works well.

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Measuring Benefit Objectives

• Many companies create Web sites to build their
  brands or enhance existing marketing programs.
• These companies can set goals in terms of
  increased brand awareness, as measured by market
  research surveys.
• Companies that sell goods or services on their
  sites can measure sales volumes in units or
  dollars.

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Measuring Benefit Objectives

• Companies can use a variety of similar
  measurements to assess the benefits of other
  electronic commerce initiatives.
• Supply chain managers can measure supply cost
  reductions, quality improvements, etc.
• A summary of measuring the benefits of
  electronic commerce initiatives appears in Figure
  12-1.
• Click to see Figure 12-1

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Measuring Cost Objectives

• Many changes in the cost of hardware are
  downward.
• The increasing sophistication of software
  provides an ever-increasing demand for newer
  hardware.
• The project budget must include the cost of
  hiring, training, and personnel.
• Annual cost to maintain and improve a site will
  be between 50 and 100 of its initial cost.

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Comparing Benefits to Costs

• If the benefits exceed the cost of a project by a
  comfortable margin, the company invests in the
  project.
• Companies should evaluate each element of their
  electronic commerce strategies using this
  cost/benefit approach.
• Managers often use return on investment (ROI) to
  evaluate any capital investment.

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Strategies for Web Site Development

• The evolution of Web site functions
• The static brochures of the early day of
  electronic commerce
• Transaction processing tools
• Todays automated homes for business processes of
  all kinds
• Click to see Figure 12-5

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Internal Development vs. Outsourcing

• The key to success is finding the right balance
  between outside and inside support for the
  project.
• Hiring another company to provide the outside
  support for the project is called outsourcing.

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The Internal Team

• The first step in determining which parts of an
  project to outsource is to create an internal
  team that is responsible for the project.
• Business knowledge and creativity are much more
  important than technical expertise in
  establishing successful electronic commerce.

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The Internal Team

• Measuring the achievement of internal team is
  very important.
• Customer satisfaction, number of sales leads
  generated, and reductions in order-processing
  time are examples of metrics that can provide the
  teams level of accomplishment.

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Early Outsourcing

• In many electronic commerce projects, the company
  outsources the initial site design and
  development to launch the project quickly.
• The outsourcing team then trains the companys
  employees in the new technology before handing
  the operation of the site over to them.
• This approach is called early outsourcing.

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Late Outsourcing

• The company do the initial design, development,
  implementation, and operate the system until it
  becomes stable.
• Once the company has gained all the competitive
  advantage provided by the system, the maintenance
  of the electronic commerce system can be
  outsourced.
• This approach is called late outsourcing.

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Partial Outsourcing

• In partial outsourcing, the company identifies
  specific portions of the project that can be
  completely designed, developed, implemented, and
  operated by another firm that specialized in a
  particular function.
• E-mail system, electronic payment system, and Web
  hosting are examples of partial outsourcing
  projects.

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Selecting a Hosting Service

• The internal team should be responsible for
  selecting the ISP that will provide the sites
  hosting service.
• For smaller electronic commerce projects, teams
  can consult an ISP directory such as The List.
• For larger Web sites, the team will want to
  obtain the advice of consultants or other firms
  that rates ISPs and CSPs, such as Keynote
  Systems.
• Click to see Figure 12-6

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Selecting a Hosting Service

• The factors to evaluate when selecting a hosting
  service include
• Functionality
• Reliability
• Bandwidth and server scalability
• Security
• Backup and disaster recovery
• Cost

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New Methods for Implementing Partial Outsourcing

• New ways of implementing the partial outsourcing
  strategy have evolved for Web businesses.
• Two of the more popular methods are
• Incubators
• Fast venturing

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Incubators

• An incubator is a company that offers start-up
  companies a physical location with offices,
  accounting and legal assistance, computers, and
  Internet connections at a very low monthly cost.
• The incubators may offer seed money, management
  advice, and marketing assistance.
• In exchange, the incubator receive an ownership
  interest in the company.

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Fast Venturing

• In fast venturing, an existing company that wants
  to launch an electronic commerce initiative joins
  external equity partners and operational partners
  to scale up the project rapidly.
• Equity partners are usually banks or venture
  capitalists.
• Operational partners are firms that have
  experience in moving projects along.
• Click to see Figure 12-7

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Managing Electronic Commerce Implementations

• The best way to manage any complex business
  software implementation is to use formal project
  management techniques.
• Individual projects were becoming large that it
  became impossible for managers to maintain
  control without some kind of assistance.

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Project Management

• Project management is a collection of formal
  techniques for planning and controlling the
  activities undertaken to achieve a specific goal.
• The project plan includes criteria for cost,
  schedule, and performance.
• It helps project managers make intelligent
  trade-off decisions regarding these three
  criteria.

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Project Management

• Project managers use specific application
  software called project management software to
  help them manage projects.
• Microsoft Project and Primavera Project Planner
  are tools for managing resources and schedules.

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Project Management

• Project management software can help the team
  manage the tasks assigned to consultants,
  technology partners, and outsourced service
  providers.
• The Project Management Institute is a
  not-for-profit organization devoted to the
  promotion of professional project management
  practices.

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Staffing the Operation

• Regardless of outsourcing, it must determine the
  staffing needs of the electronic commerce
  initiative.
• The general areas of staffing include
• Business management
• Application specialists
• Customer service staff
• Systems administration
• Network operations staff
• Database administration

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Post-Implementation Audits

• A post-implementation audit is a formal review of
  a project after it is up and running.
• The post-implementation audit gives managers a
  chance to examine the objectives, performance
  specifications, cost estimates, and schedule
  delivery dates that were established in its
  planning stage and compare them to what actually
  happened.