Chapter 9
IDENTIFYING OBjeTIVES Typical business electronic commerce objectives •Increasing existing market’s
sales •Opening new markets •Serving existing customers better •Identifying new vendors •Coordinating
more efficiently with existing vendors •Recruiting employees more effectively Linking Objectives to
business Strategies Downstream strategies •Tactics to improve the value businesses provide to
customers Upstream strategies •Focus on reducing costs or generating value Web use for businesses
•Attractive sales channel for many firms •Complement business strategies, improve competitive
positions
MEASURING BENEFITS: CHALLENGES Some electronic commerce initiatives •Obvious, tangible, easy to
measure •Example: increased sales or reduced costs Other electronic commerce initiatives •More
difficult to measure •Example: increased customer satisfaction or brand awareness Companies selling
goods or services online •Measure sales volume in units or dollars Using Web sites to improve customer
service or after-sale support •Set goals of increased customer satisfaction •Reduce customer service or
support costs •Example: Philips Lighting •Provided Web ordering system for smaller customers •Primary
goal: reduce cost of processing smaller orders •Built pilot Web site and had smaller customers try it
•Results: customer service phone calls from test group dropped by 80 percent •Supply chain managers
•Measure supply cost reductions, quality improvements, faster deliveries of ordered goods •Auction
sites •Set goals for number of auctions, number of bidders and sellers, dollar volume of items sold,
number of items sold, number of registered participants
RETURN ON INVESTMENT (ROI) Measures amount of income (return) provided by specific current
expenditure (investment) •Examples: •Payback method, net present value method, internal rate of
return •Provides quantitative expression of comfortable benefit-to-cost margin ROI built-in biases •ROI
requires all costs, benefits be stated in dollars •Gives undue weight to costs •ROI focuses on predicted
benefits •Initiatives have returned benefits not foreseen •ROI tends to emphasize short-run benefits
over long-run benefits
FUNDING ONLINE BUSINESS STARTUPS Angel investors funded initial startup •Became stockholders
hoping business grows rapidly •Sell interest to venture capitalist Venture capitalists •Very wealthy
individuals, investment firms •Look for small companies about to grow rapidly •Hope for rapid growth
and initial public offering Initial public offering (IPO) System of financing startup and initial growth of
online businesses •Benefits •Access to large amounts of capital early •Costs •Investors, capitalists got
most profits, pressure to grow rapidly Decrease need for venture capitalists and angel investors by:
•Relieving pressure to grow rapidly •Becoming more creative •Learning from mistakes
•Selling stock to public
INTERNAL TEAM: IMPORTANCE First step in outsourcing decision making is create internal team •Team
members •People knowledgeable about the Internet and its technologies •Creative thinkers
•Distinguished within the company •Project lead •Mistake: technical wizard, not business
knowledgeable, not well known •Better choice: person with business knowledge, creativity, respect of
firm’s operating function managers, good sense of goals and culture •Intellectual capital •Employees’
knowledge about the business and its processes •Human capital measures •Include employee
competencies •Include value of customer loyalty and business partne
INTERNAL TEAM: RESPONSIBILITIES •Responsible for initiative •From setting objectives to final
implementation •Internal team decides: •Project parts to outsource •Outsourcer •Consultants or
partners needed
OUTSOURCING Early outsourcing •Company outsources initial site design and development to launch
project quickly •Outsourcing team trains company’s information systems professionals before handing
site operation to them •Company’s own information systems people work closely with outsourcing
team •Develop ideas for improvements as early as possible in project life Late outsourcing •More
traditional approach Company’s information systems professionals
artial outsourcing •Also called component outsourcing •Company identifies specific project portions
•Can be completely designed, developed, implemented, and operated by another firm specializing in a
particular function Examples •Smaller Web sites outsource e-mail handling and response functions
•Electronic payment system •Web hosting activitves
New ways of implementing partial outsourcing strategy evolved specifically for Web businesses
Incubator •Offers start-up companies physical location with offices, accounting and legal assistance,
computers, Internet connections •Very low monthly cost •May offer seed money, management advice,
marketing assistance •Receives ownership interest in company •Incubator sells all or part of its interest
•Company grows to obtain venture capital financing, launch stock public offering •First Internet
incubators: Idealab •Helped [Link], Overture, [Link]
Fast venturing •Existing company wants to launch electronic commerce initiative •Joins external equity
partners and operational partners offering experience, skills needed •Equity partners: usually banks,
venture capitalists •Equity partners sometimes offer money •Equity partners more likely to offer
experience •Operational partners: firms •Systems integrators, consultants, Web portals •Experienced in
moving projects along, scaling up prototypes
POSTIMPLEMENTATION AUDITS Postimplementation audit (postaudit review) •Formal review of project
•After up and running Examine project items established in planning stage •Compare to what actually
happened •Objectives, performance specifications, cost estimates, scheduled delivery dates Blame
identification approach •Used more in the past •Focused on identifying individuals to blame for cost
overruns, missed delivery dates
Enter
Feedback on strategies used more today •Obtains valuable information •Useful in planning future
projects •Gives participants meaningful learning experience Comprehensive audit report •Analyzes
project’s overall performance •How well project administered •Appropriate project organizational
structure in place •Specific project team(s) performance •Should compare actual results to objectives
CHANGE MANAGEMENT Information system projects involve change Employee concerns •Ability to
cope with changes, ability to continue to do good work, job security Concerns lead to increased stress
Change management •Process of helping employees cope with changes •Includes tactics designed to
help employees feel involved with change •Helps employees overcome feelings of powerlessness