Title: E-Commerce: The Second Wave Fifth Annual Edition
1E-Commerce The Second WaveFifth Annual Edition
- Chapter 12
- Planning for Electronic Commerce
2Objectives
- In this chapter, you will learn about
- Planning electronic commerce initiatives
- Strategies for developing electronic commerce Web
sites - Managing electronic commerce implementations
3Planning Electronic Commerce Initiatives
- Objectives of electronic commerce
- 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
4Linking Objectives to Business Strategies
- Downstream strategies
- Used to improve the value that the business
provides to its customers - Upstream strategies
- Focus on reducing costs or generating value
- Work with suppliers or inbound shipping and
freight service providers
5Linking Objectives to Business Strategies
(Continued)
- Electronic commerce opportunities can inspire
businesses to undertake activities such as - Building brands
- Enhancing existing marketing programs
- Selling products and services
- Selling advertising
- Developing a better understanding of customer
needs
6Measuring Benefits
- Tangible benefits of electronic commerce
initiatives - Increased sales
- Reduced costs
- Intangible benefits of electronic commerce
initiatives - Increased customer satisfaction
7Measuring the Benefits of Electronic Commerce
Initiatives
8Managing Costs
- Total cost of ownership
- Includes costs of hardware, software, design work
outsourced, and salaries - Change management
- Process of helping employees cope with changes
- Opportunity costs
- Lost benefits from an action not taken
9 Web Site Costs
- International Data Corporation and Gartner, Inc.
- Cost for large company to build and implement
entry-level electronic commerce site is about 1
million - 79 percent of cost is labor related
- 10 percent is the cost of software
- 11 percent is the cost of hardware
10Starting a Web Business Three Price Tags
11Web Site Costs (Continued)
- Experts agree that annual cost to maintain and
improve site will be - 50 and 200 percent of initial cost
- McKinsey Company study
- Full portal site cost estimate was 2.4 million
to build and 4.3 million per year to maintain - Companion site cost estimate was 150,000 to
build and 270,000 per year to maintain
12Cost Estimates for Building and Operating
Magazine Publisher Web Sites
13Cost Estimates for Building and Operating
Magazine Publisher Web Sites (Continued)
14Comparing Benefits to Costs
- Capital projects (Capital investments)
- Major investments in equipment, personnel, and
other assets - Key part of creating business plan for electronic
commerce initiatives - Identifying potential benefits
- Identifying costs required to generate benefits
- Evaluating whether benefits exceed costs
15Cost/benefit Evaluation of Electronic Commerce
Strategy Elements
16Return on Investment (ROI)
- Techniques provide a quantitative expression of a
comfortable benefit-to-cost margin - Built-in biases that can lead managers to make
poor decisions - ROI requires that all costs and benefits be
stated in dollars - Focus is on benefits that can be predicted
- Tends to emphasize short-run benefits over
long-run benefits
17Strategies for Developing Electronic Commerce Web
Sites
- Typical early Web site
- Static brochure not updated frequently
- Seldom had any capabilities for helping the
companys customers - Todays Web site includes
- Transaction-processing tools
- Automated homes for business processes of all
kinds
18Increasing Complexity of Web Site Functions
19Internal Development vs. Outsourcing
- Outsourcing
- Hiring another company to provide outside support
for all or part of a project - Internal team
- Should include people with enough knowledge about
the Internet and its technologies - Should be creative thinkers
- Measuring achievements of internal team is very
important
20Early Outsourcing
- Outsource initial site design and development to
launch project quickly - Outsourcing team trains companys information
systems professionals in the new technology - It is best to have
- Companys own information systems people working
closely with outsourcing team
21Late Outsourcing
- Information systems professionals
- Do initial design and development work
- Implement system
- Operate system until it becomes a stable part of
business operation - Once company has gained competitive advantage
- Maintenance of electronic commerce system can be
outsourced
22Partial Outsourcing
- Company identifies specific portions of the
project that can be completely - Designed, developed, implemented, and operated by
another firm - Many smaller Web sites
- Outsource their e-mail handling and response
functions
23Selecting a Hosting Service
- Factors to evaluate when selecting a hosting
service - Functionality
- Reliability
- Bandwidth and server scalability
- Security
- Backup and disaster recovery
- Cost
24New Methods for Implementing Partial Outsourcing
- Incubators
- Company that offers start-up companies a physical
location with - Offices, accounting and legal assistance
- Computers, and Internet connections
- Receive ownership interest in company
25New Methods for Implementing Partial Outsourcing
(Continued)
- Fast venturing
- Existing company that wants to launch an
electronic commerce initiative joins external
equity partners and operational partners - Equity partners
- Banks or venture capitalists
- Operational partners
- Firms that have experience in moving projects
along and scaling up prototypes
26Elements of Fast Venturing
27Managing Electronic Commerce Implementations
- Project management
- Formal techniques for planning and controlling
activities undertaken to achieve a specific goal - Project plan
- Includes criteria for cost, schedule, and
performance - Project management software products
- Microsoft Project
- Primavera Project Planner
28Tracking Activities in Primavera Project Planner
29Project Portfolio Management
- Each project is monitored as if it were an
investment in a financial portfolio - Chief Information Officer
- Records projects in a list
- Updates list with current information about each
projects status - Assigns ranking for each project based on
importance and level of risk
30Staffing for Electronic Commerce
- General areas of staffing
- Business managers
- Project managers
- Account managers
- Applications specialists
- Web programmers
- Web graphics designers
- Customer service
- Systems administration
31General Areas of Staffing
- Business manager
- Should be member of internal team that sets
objectives for project - Project manager
- Person with specific training or skills in
- Tracking costs and accomplishment of specific
objectives - Account manager
- Keeps track of multiple Web sites in use by a
project
32General Areas of Staffing (Continued)
- Applications specialists
- Maintain accounting, human resources, and
logistics software - Web programmers
- Design and write underlying code for dynamic
database-driven Web pages has increased - Web graphics designer
- Person trained in art, layout, and composition
- Understands how Web pages are constructed
33General Areas of Staffing (Continued)
- Customer service personnel
- Help design and implement customer relationship
management activities - Call center
- Company that handles incoming customer telephone
calls and e-mails for other companies - Systems administrator
- Responsible for the systems reliable and secure
operation
34Postimplementation Audit
- Formal review of a project after it is up and
running - Gives managers a chance to examine
- Objectives
- Performance specifications
- Cost estimates
- Scheduled delivery dates
35Postimplementation Audit (Continued)
- Allows internal team, business manager, and
project manager to - Raise questions about the projects objectives
- Provide feedback on strategies
- Final report should analyze
- Projects overall performance
- How well the project was administered
- Specific performance of the project team(s)
36Summary
- Plans for electronic commerce implementations
- Set objectives
- Benefit and cost objectives should be stated in
measurable terms - Project evaluation technique
- Return on investment
- Determining an outsourcing strategy
- Form internal team that includes knowledgeable
individuals from within company
37Summary
- Project management
- Formal way to plan and control specific tasks and
resources used in a project - Project portfolio management techniques
- Used to track and make trade-offs among multiple
ongoing projects - Critical staffing areas
- Business management
- Application specialists
- Systems administration