As Oracle sets out to save its next billion dollars through e-business initiatives, are you left wondering how to get started?
MANY COMPANIES ARE LOOKING to take advantage of economic opportunities in the increasingly popular “e”-world. No question about it: Technology is allowing us to alter the way in which we conduct business today. With the advent of the Internet and the World Wide Web, understanding of an organizational environment, task environment, and general environment (see Exhibit 1) is as static and easy to grasp as corralling mercury. And, as luck would have it, connecting these environments is where the greatest opportunities are found.
There are no two companies alike in their approaches toward the e-world because they differ from one another in their corporate history, culture, and business needs. However, there is a distinguishable four-phased, iterative, migration pattern most companies follow in their efforts to gain greater efficiencies and effectiveness from taking advantage of opportunities in the e-world (as shown in Exhibit 2): (1) making the decision to move into the e-world, (2) developing and executing a corporatewide strategic plan to use as a blueprint, (3) implementing improvements to critical business systems and processes, and (4) entering new businesses and markets by creating sustainable value through innovation. I know what you are thinking: This type of change is easier said than done. You are right. For decades the idea of change has challenged startups and international conglomerate organizations alike. For that reason, organizations have relied on change agents (both personnel and technological) to help manage change and navigate their way to seemingly more stable and profitable markets. There has been no single change agent to date that can affect so much as the Internet promises in the e-world. Gone are the safe havens of stability and profits. The Internet and the World Wide Web will continue to serve as the great equalizers of markets, allowing the startup and international conglomerate to compete for the same business. So, how do we best enable the change agent to take advantage of the e-world opportunities? Execute through the four phases, embrace change, do not fear failure, and divorce any notion of discernable markets.
Tim Rahschulte ([email protected]) is the director of Integration Services for Clerity Knowledge Exchanges, a provider of turnkey information marketplace solutions. He specializes in strategic planning, project and product management, and business process reengineering. He is also an adjunct professor at Thomas More College.
Increased competition, globalization, expanding markets, improving customer satisfaction, consolidations, responding quickly to market changes, profitability, controlling costs, and improving productivity are only a few of the pressures providing reasons for organizations to engage in the e-world. In short, the decision to engage has little to do with technology and everything to do with creating greater efficiencies and increased effectiveness of core business products and processes—the primary functions of business management.
Regarding this decision to engage, Andrew Grove, chairman of Intel, put it this way when asked about e-world initiative's return on investment: “What's my return on investment on e-commerce? Are you crazy? This is Columbus in the New World. What was his ROI?” [Bill Gates, Business @ the Speed of Thought: Using a Digital Nervous System, 1999, Warner Books Inc.] Not convinced by Grove's comments? Consider this: The Organization for Economic Cooperation and Development has released the following e-commerce growth predictions: Spending by businesses in information technology to build an online presence will hit approximately $954 billion in 2002, up from $211 billion in 1998. Internet users worldwide are expected to reach 320 million by 2002, compared with 97 million in 1998. Furthermore, e-commerce on the Internet is expected to reach approximately $425 billion in 2002, up from $32 billion in 1998 [Craig Fellenstein and Ron Wood, Exploring E-Commerce, Global E-Business and E-Societies, 2000, Prentice Hall Inc.].
Still not convinced? Ask yourself these questions: If you are still in an industry where workers do not use computers to perform most of their daily tasks, do you believe efficiencies will be realized in the future via the use of business technologies? Do you believe paper processes of today will be reengineered to exploit the use of technological efficiencies, essentially eliminating paper processes to a great extent? Do you believe that computers will continue to gain widespread acceptance and make their way into homes, becoming as commonplace as TVs and VCRs? If you answered yes to these questions, you have already accepted the inevitability of the e-world transformation. But you still have to answer the question of whether you and your organization can, and are willing to, manage the change aspect of the new world. While this decision will require technology, the issue of more concern is how this will affect the management of your company and its task environment.
Organizational Environments, Forces, and Conditions
Exhibit 1. Every organization's management team strives to understand its environments, forces, and conditions. To understand the current state and expected future state of these environments will assist managers in making better, more informed, business decisions.
Entering the E-World
Exhibit 2. No organization can implement e-business initiatives successfully without thinking and planning in a holistic fashion. As organizations enter the e-world, there is a need to pass through several frontiers, starting with a decision frontier. This decision frontier will outline the determination and focus of the organization's “e” involvement. The strategic planning frontier is necessary to integrate all “e” initiatives into the organization's strategic planning efforts. As a result of the strategic plan, all critical business processes within the organization may be subject to process reengineering.
One key success factor required to succeed in the e-world is to understand that the online medium demands the acknowledgment of unique business rules:
■ Innovation is constant and required
■ A holistic view is essential
■ Standards are critical
■ The Internet reports to no one
■ Downtime will be a reflection on profitability, productivity, and brand equity
■ There is continuous downward pressure on development cycles
■ Systems and clients cannot be controlled.
To comply with these rules, a holistic organizational approach is needed. To that end, engaging in the e-world will require reevaluating and redefining strategic plans. (Some organizations may need to go as far as redefining their vision and values.) This notion starts with an organizational definition of how e-world initiatives will be managed, coordinated, and executed within the company. No matter how in-depth, articulate, or philosophical the definition, it should include: the use of the Internet, an intranet, and an extranet to support relationships within the organization, its task environment and its general environment. Fellenstein and Wood explain that, “It is essential that business enterprises develop new strategies that will leverage e-business technologies and e-commerce applications for strategic objectives; not just commonplace applications, but business-critical applications.” These business-critical applications need to address corporatewide initiatives driven to achieve efficiencies, eliminate redundant tasks, and enhance product and market effectiveness resulting in increased revenues.
This new e-world is more easily compared with Charles Darwin's Origin of Species than with any strategic planning textbook. To be sure, the e-world (at this point) is more about evolution toward success (and survival) as opposed to managing core business practices in alignment with the 60-year economic cycle known as the Kondratieff Wave. Having said that, there is value in outlining a 6–18 month plan or blueprint as to how your organization can best engage in the new e-world economy. Many companies start this process with an internal view of their companies and their task environments.
Ask yourself: What business are we in? This may sound simple, but let's look at Amazon.com as an example. Is Amazon.com a low-cost provider of books and other products or is it a distribution/logistics firm? Dell Computers offers a similar paradox. Is Dell a custom-computer manufacturer or a production and distribution warehouse? Is Schwab a full-service broker or simply an executor of financial transactions? These examples illustrate the idea of how companies (succeeding in the e-world) do not necessarily plan as much as they evolve as a result of their environments. To do this, you must have a clear understanding of what business you are in today because your task environment would look much different if you were a low-priced bookseller versus a logistics firm.
Think about your task environment. Now, describe it as a process or a value chain of events. How do the various divisions or business units within your company work together today to sell products? Design and develop products? Procure raw materials and other supplies? Distribute products through marketing channels and ultimately to the final consumer? Who are your customers? And, whom do you perceive as your competitors today and in the future?
One key success factor required to succeed in the e-world is to understand that the online medium demands the acknowledgment of unique business rules.
The more in detail you describe your value chain of events the better chance you have to determine the value components of this chain. However, there is a delicate balance in managing the value of content and time to completion. Once complete, analyze how data and information is managed and flows throughout the chain. How and where is the valued information? Therein lie the opportunities of the e-world. With this analysis build your business around the flow of information. Develop the ideal system to distribute and gain the data and information you need to run your business efficiently and effectively and to understand your task environment in greater detail. Regardless of whether or not you produce tangible products, the e-world is about providing service. Constantly ask yourself how you can exploit this new online medium of exchange to be more efficient and effective throughout your value chain.
Reader Service Number 059
Aligning for the E-World
Exhibit 3. As with most major business objectives, entering the e-world requires a significant amount of corporate alignment and overall collaboration. This exhibit outlines a simplistic view of how to best achieve collaboration.
How your organization approaches the e-world is going to be unique because of its history, culture, and needs. However, the approach outlined in Exhibit 3 can get you started. This exhibit describes a phased-in approach geared toward corporate alignment. It is unlikely organizations execute this approach in a linear fashion. Typically, organizations implement their approach and logically move toward empowering their workforces. However, most companies usually do not wait (nor should they) for full empowerment within the various business areas or lines of business prior to the commencement of organizational alignment.
You will want your e-world initiatives to take advantage of the Internet, an intranet, and an extranet. These three components should focus on and be measured against their abilities to provide a direct bidirectional connection with the company and customers; expedite the flow of data and information—streamlining the overall value chain; serve as a medium to design, develop, and deliver new products and services; gather knowledge; and, to the extent possible, control customers and users.
The first step for most companies delving into the e-world is creating a presence on the Internet. Usually this entails publishing a website, and can be done with very little risk and on a very small budget. However, having a web presence is just the cost of being in the game. Engaging in and winning the game will require active management of the information flow in your value chain. For example, Finance and Human Resources departments are targets rich for e-world initiatives due to the nature of their business processes: heavy flow of information, interdependent to/with others in the company and the task environment, and redundancy of process. Exhibit 4 offers an understanding of some e-world opportunities.
Any goals, especially as you begin to empower and align your company, should be increasingly focused on the measurement of speed. In Business @ the Speed of Thought, Gates said, “If the 1980s were based on quality, and the 1990s were about reengineering, then the 2000s will be about velocity.” To accomplish the goal of speed, focus on targeted, well-defined departmental business functions with minimal application scope; maximum extendibility; and maximum portability. In other words, start small and simple, but be prepared to grow fast. Continuously build on what you have; and remember, it is about the business, not the technology. We have all seen, if not fallen victim to, chasing technology. Many times the result is devastating. Not only is the result a bad investment, negative ROI, and decreased morale, but you also have idle technological capacity. Many organizations have purchased 100 percent of a good piece of technology but utilize only 20 percent of its capacity. That is 80 percent idle technological capacity! This occurs due to a lack of understanding of the technological capacity and not realizing the potential opportunity of the technology utilization in the company and throughout the task environment. This is part of the reason for taking a holistic approach. In order to successfully apply technology to solve a business problem, that problem must be thoroughly understood and defined from the business perspective. Only then can business requirements be used to find a sound technical solution. Just as important is knowing how technology is currently being used within the organization to support business processes. Make no mistake about it; you will fail to meet some of your goals when implementing e-world initiatives. This is part of the necessary evolution into the e-world. In a 1999 report, the Gartner Group estimated as much as 75 percent of all e-commerce projects will fail due to the lack of technological understanding and poor business planning. Other common reasons for failure include these: individual projects are viewed as ends in themselves rather than as vehicles for improving results in the overall business; projects are managed poorly, with insufficient understanding of the technologies being implemented; projects are launched without clearly defined business goals; and projects are launched with insufficient awareness of what competitors are doing in the e-world.
E-World Opportunities
Exhibit 4. Depending on the e-opportunity, your organization will implement most initiatives with one of three major channels of media: the Internet, an intranet, or an extranet. Outlined here are some opportunities and solutions that are found using the three channels.
Creating value that proves to be a sustainable advantage (if there still is such a notion) of one company over another is easier said than done. Companies that strive to create value in the e-world, using the Internet as the medium, should start by asking themselves a few questions: What additional data, information, and/or services can I offer my customers? Is my knowledge (based on data and information), or a derivative thereof, valued in another market? What supplemental products and services can I offer customers throughout my value chain?
AS YOU VENTURE into the innovative e-world, remember that real value is no longer measured merely by hard assets and profit/loss statements. Rather, value is and will continue to be measured in the intangible skills, knowledge, brands, and other like assets that can be leveraged, transferred, and shared within your organizational environment and throughout your value chain.
Reader Service Number 187
