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Simply put, an e-business strategy is fundamental to e-business success. I can’t think of a leading e-business that doesn’t have a clear and compelling e-business strategy. The also-rans and the failures, on the other hand, often have no real strategy in place. The bottom line is, if you want to be successful in e-business, you need an e-business strategy.
Yet the word “strategy” has a strange affect on folks. It conjures up visions of grandiose, masterful plans that lead to stunning victories. Strategy hints of high-level planners meeting in secret. The word suggests something esoteric or even mystical. And it inspires assumptions about a tedious, painful, and prolonged process. All told, it has rather a daunting image. But it is unnecessary baggage–particularly the assumption about the strategy-planning process.
A strategy simply is a plan to achieve specified goals, and you can jump-start the process with a few simple techniques.
Know your business
In essence, it boils down to “What are our goals, and how will we achieve them?” Answering these questions requires an understanding of the essential business, assessing its e-business capabilities and opportunities, and creating a vision of the company as an e-business, as well as a plan on how to get there.
Judging by industry experience, understanding the essential business is not the no-brainer it might appear to be. It is a long-standing problem, but e-business has made it even worse as companies try to “e” themselves. Rather than finding ways to leverage existing strengths through e-business, companies try to define their entire identities as e-businesses. For click-and-mortar companies, this is both inaccurate and distracting, and it will undermine e-business strategy planning (to say nothing of e-business success).
Understanding your essential business begins with a question: “What business are we in?” The answer should be simple and product-oriented. For example, AT&T Co., MCI WorldCom, and Sprint Communications Co. L.P. are telecommunications companies. Sprint PCS, on the other hand, is a wireless communications company. Daimler-Chrysler, Ford Motor Corp., and General Motors Corp. are automotive companies. Your answer should be just as straightforward.
“We’re in the information business” is not a good answer unless you are IBM Corp., Microsoft Corp., or Oracle Corp. And even for these companies, such a response really is not specific enough. The essence of your business is defined by your product–the thing you sell to your customers.
Identify your goals
Once you know what business you’re in, the next question to address is how you’re going to run it. What’s the operational model? Is it low-cost manufacturing? High-touch partnering with customers? Sales through intermediaries (wholesalers and retailers) or direct to consumers? The key to answering this question is to explicitly identify the basis for performing each of your key business functions. It may turn out the answers change as your e-business strategy evolves, but it is important for you to have specific answers at each stage of the planning process to provide a basis for assessing your alternatives.
| “Business goals may lead to seeing new e-business possibilities, and e-business possibilities may lead to new business goals. “ |
A good example of how an operational model can evolve is that of a traditional build-to-plan manufacturer. In this model, the manufacturer uses historical data and sales forecasts to estimate product demand for some future time period. This demand then is translated into a master production schedule, which, in turn, is translated into raw-material requirements and purchase orders. The key to success with this model is to make forecasts that correspond to actual demand (in the form of customer orders).
As the company considers specific e-business possibilities it may decide to adopt a build-to-order model. Under this approach, the company can use Web-based ordering and supply-chain management to schedule production, calculate materials requirements, and issue purchase orders. Before e-business, this model was impractical. Starting with a conventional model allows the company to compare concrete alternatives, which encourages good decisions.
Learn from industry leaders
Once your company defines product lines and a preliminary operational model, the next step is to consider which e-business capabilities make sense for your business. Assessing these capabilities often is a stumbling block to strategy development. The wealth of e-business technologies and applications available today presents an often confusing array of alternatives. Deciding which e-business capabilities make sense for your company can be jump-started by analyzing e-business benefits in terms of your essential business and by studying leading e-businesses to learn from their examples.
E-business benefits fall into one of three categories: (1) revenue enhancement, (2) greater efficiency, or (3) improved goodwill. Your primary business model dictates where to look first for e-business benefits for your company. For example, if you are a low-cost manufacturer, you naturally will look for applications that can enhance efficiency to further reduce your costs. The various supply-chain management packages (from developers such as i2 Technologies Inc. and Oracle) are the first places to look. If you are a high-touch partner with your clients, customer relationship management (CRM) packages (from vendors including Clarify, a Nortel Networks Co., and Siebel Systems Inc.) are a likely first step.
Studying leading e-businesses shows what is possible with e-business today. Once a category or application is selected, leading practitioners can be identified by searching the Web or by reviewing leading periodicals. If, for example, supply-chain management is of particular interest, Dell Computer Corp. and Ford are good places to start. For CRM, Amazon.com, Cisco Systems Inc., and Ford are good candidates. For employee-facing applications (such as travel-and-expense reporting and knowledge management), Oracle and Ford offer illustrative examples.
Business goals may lead to seeing new e-business possibilities, and e-business possibilities may lead to new business goals.
I’ve mentioned Ford repeatedly to underscore a point: Your appropriate e-business strategy may be to pursue multiple e-business initiatives at the same time. Ford is successful with intranet applications such as employee reviews, sharing best manufacturing practices, supply-chain management applications, and customer-facing applications (including Web-based sales). Plus, the company has joined forces with GM and Daimler-Chrysler to develop an industrywide automotive-procurement electronic marketplace. The caveat before pursuing multiple projects, of course, is to ensure you have adequate resources available to support all initiatives. It is far better to succeed with one focused e-business initiative and then move on to the next than it is to fail with some comprehensive effort.
Vision made real
Although it is convenient to present the e-business strategy planning process in a linear fashion, the reality is, once the process gets started there is a natural give-and-take between business goals and e-business possibilities. Business goals may lead to seeing new e-business possibilities, and e-business possibilities may lead to new business goals. The key is to get the process started and let the vision develop as it may. Then, by applying business constraints (such as budgets, schedules, or staff availability), the vision is captured in a plan that details its realization.
Executing the plan–implementing the e-business vision–is the final step in establishing an e-business strategy. The implementation should be managed with an eye toward the problems that particularly plague e-business initiatives.
Technical infrastructure is one such potential problem. Of particular concern are performance, reliability, and scalability. On the other side of the fence, business infrastructure issues pose another frequently encountered problem. Fulfillment systems must be able to scale along with Web-based sales volumes, and customer-service staff needs to be ready to handle volume spikes, to list a couple of examples.
When you get down to it, jump-starting your e-business strategy is a matter of common sense. The ultimate goal is to develop a strategy that’s right for your business, so start by knowing your business and identifying your goals. You then can take advantage of industry experience to pick the e-business capabilities that make sense for your company. You also must make sure your e-business execution is properly supported. It may not have any mystical qualities, but jump- starting your e-business strategy will produce an e-business strategy that works for you. //
Chris Pickering is president of Systems Development Inc., an IT research and consulting firm. He also is a senior consultant for the Cutter Consortium, where he has just completed a survey on the state of e-business. He may be reached at cpickering@mail.planetkc.com.
