eBusiness – The Second Wave
By Cameron Dart (c)
W, W, trouble you, the inevitable dot.com bombs have hit the corporate war zone, leaving but a few die-hards standing. Vultures are circling, picking up what's left, in an attempt to keep the e-revolution alive. 'What went wrong?', 'What's happening next?', and 'Has eBusiness been a complete flop?' - These are the big questions. This paper attempts to answer these corporate-critical questions by examining the 'Second Wave of eBusiness'.
You've heard it 'eBusiness or out of Business!' - Unfortunately, most pure-play 'clicks without bricks' didn't seem to be able to reach second base. Consumers obviously weren't ready to take the required plunges, give up their traditional habits, and all become overnight cyber-goofs. Companies have quickly learned that it takes more than new technologies and massive venture capital expenditure to change human behaviour. It takes education, and this takes time to filter down the ranks. If we could speed up the education process, we could quicken the rate of eBusiness adoption. Most companies have barely scratched the surface of true eBusiness practises.
Since global adoption of the Internet, we have seen remarkable things happen; long-standing business paradigms have changed almost overnight. We have seen many dot.com companies come and go like the wind; stock markets have plunged; and traditional companies have had to restructure their business models to include e-strategies to 'webbify' themselves, for fear of losing out to nimble online competitors threatening their existence. As we have seen, it hasn't been all that easy. Many managers were guilty of jumping onto the eBusiness bandwagon, spending millions on custom-made e-solutions. It has been an exciting time. Many companies became victims of a lack of experience, and a lack of sound leadership; basing their strategies on the premise that dot.coms alone would reign.
Companies have entered the new millennium confronted with the realities of an increasingly networked world and the maturing information revolution. In the past, many eCommerce initiatives have become burdens to many companies. By adding the click-element to business strategies, huge additional costs on web sites and technology have been incurred, not only this, the cost of fulfilment (picking, packing and delivery) has been a major killer. It is essential that companies put this behind them, and having learned costly lessons, ensure that they do not repeat them. Leaders of multinational corporations need to take a fresh look and see where they can maximise their companies' potential on a global level. In the first wave of eBusiness, we watched many pioneers - who recognised the potential of the new economy, yet lacked sound business knowledge re-writing business rules as they saw fit. Millions if not billions of bottom line dollars have been thrown at paper-clever ideas pinned on hopes of mystically projected returns. This obviously didn't work.
What seems to be happening now is 'the big clean up'. Some larger corporations are joining hands or acquiring dot.com skeletons, and creatively restructuring themselves to tackle the future. Leaders with good business understanding have now had a chance to 'catch up', and we are seeing a new breed of leaders emerging. This has led to a lot of restructuring to get companies back on the road to recovery. During the first six months of 2001, as many as 726 Internet companies changed hands for a sum of US$29 billion dollars, according to Web Mergers, an online Internet consolidation watchdog. Category consolidation is also starting to take place. Companies such as TMP Worldwide (owner of Montser.com) is purchasing (or more appropriately should I say, gobbling) Monster's closest competitor, Hotjobs.com. Another typical example of this category consolidation is the proposed merger of Hewlett Packard and Compaq that are caught up in the global race 'to be the biggest'. Companies are becoming more creative by diversifying and including bricks and clicks in their recipes for future success. Many remaining Internet start-ups like eBay and Priceline are re-designing their homepages, and reducing top-heavy staff in an attempt to keep afloat in the wreckage.
Many leading-edge companies are shifting from transaction-based customer interactions to relationship-based customer interactions, which bring a completely different set of performance metrics. These new eBusiness key performance metrics are becoming essential ROI tools to gauge the success of differing e-strategies - hopefully predicting negative trends before it's too late. Companies can now track customer behaviour, and use the insight they gain to strengthen their bonds with their customers. To be successful in the second wave of eBusiness, companies will need to empower their employees, and empower their customers. Companies should strive to deliver seamless customer experiences. In addition, they also need to be able to link all facets of their value chains, including: customers, partners, and suppliers - leveraging a high-performance network infrastructure, through which they can model, measure, and maximize return on investment and value chain relationships.
The second wave of eBusiness delivers an entirely new customer experience by leveraging and bringing together the new high-performance Internet and customer touch points of web, phone, fax, and email, as well as face-to-face communication. Customers will be able to conduct business by many means, moving fluidly across communication channels and receiving service on their own terms, as and when they desire it.
In this review of eBusiness, we are seeing that some of the largest adopters of eBusiness initiatives are starting to shine through. Take General Electric for instance; Jack Welch's push for 'distroyyour business.com', which forced all his managers to revisit each of their operations with an eBusiness thinking cap on, placing eBusiness as the top priority. Since then, GE has emerged to have the world's largest online B2B marketplace - clocking up $20 Billion turnover already this year and trading more than all the other independent marketplaces together.
With threats of global recession clouding the foreseeable growth for many companies, on the one hand, and promises of 3G and wireless communications on the other, it is critical that companies get a return on their investments. In addition, they also need to get a return on their relationships across the whole scope of their value chains. Most companies, if they haven't done so already, are reviewing their eBusiness strategies to make sure they are not left behind.
Second wave eBusiness needs to be seen in a new light, yet with the same level of optimism as we saw with the first wave, as bringing with it innovative ways of carrying out familiar tasks. With wireless technology and mobile commerce on the horizon, improved infrastructure and increasing bandwidth/Internet access speeds are giving birth to new applications. Globalisation and the proliferation of channels and choice, coupled with soaring customer expectations and technology developments, are creating a digital networked world economy that only 'e'-enabled corporations will surely only thrive in.
Certain megatrends provide some of the backdrop to the eBusiness revolution that is unfolding before us, throughout the business and social worlds. Bandwidth abundance, for example, is a likely and important driver of change as we move from narrowband to broadband communications. Another eBusiness megatrend is 'Enterprise Information Portals', otherwise known as corporate portals; according to Merrill Lynch, emerging portal technologies hit $4.4 billion last year and will reach $14.8 billion by 2002.
Second wave eBusiness is also helping to force out distribution inefficiencies by removing the traditional barriers to commerce; time, distance and physical location. Connectivity of employees to company intranets, extranets and to the Internet, coupled with the current integration of daily operations, is taking ease of communication and work product to new levels.
Leaders and managers need to take a more holistic approach to second wave eBusiness in order for it to be successful. Following are some of the key areas of global eBusiness that will be examined in this paper, giving you some insight into an exciting new business world, which is dominating the majority of the Fortune 500 companies, the results of which are trickling down the ranks to your local corner deli.
1.) eBusiness vs. eCommerce - clarifying the difference.
2.) eBusiness Evolution - how eBusiness has evolved and where it's headed.
3.) Going Global - eBusiness makes the world a smaller place.
4.) eSCM - new trends in electronic Supply Chain Management.
· eProcurement - what's happening?
· B2B eMarketplaces- what's happening?
5.) Knowledge Management
· Corporate Portals - the new thing.
6.) eCRM - new trends in electronic Customer Relationship Management.
7.) Enabling technologies and drivers of Second Wave eBusiness.
· XML, Metadata, Broadband, WAP, Bluetooth.
· mCommerce, vCommerce, tCommerce - tasters of the future.
8.) eBusiness Obstacles and Barriers - what's holding it up?
9.) eBusiness Strategy
· Competitive Advantage
eBusiness vs. eCommerce
For a great many consumers and businessmen alike, the word eBusiness conjures up business communities run by computers instead of people, www this and that, flopped dot.coms, overvalued share prices that fell like rocks - however this is not actually true. eBusiness goes far further than that: essentially it is the course of action of using web technology to help businesses streamline processes, improve productivity and increase efficiencies. It enables companies to communicate more easily with partners, vendors and customers, connect back-end data systems and transact commerce in a secure manner. eBusiness should be seen as a strengthening and improving of knowledge management and operational processes rather than a replacement of people and business relationships with electronic systems and devices.
eCommerce, on the other hand, is a subset of eBusiness. eCommerce focuses on the process of electronic transactions, such as: online order entry, inventory tracking, order fulfilment, and post-sales support.
According to IDC, a global Internet research company, global Internet commerce was worth $272 billion at the end of 2000 with projections of shooting up to a total of $2.7 trillion by 2004.
E-enabling business is a dynamic and evolving process. First world countries have seen rapid evolution of eBusiness in a short number of years and it's still continuing at lightening speed. At any one time, across all industries, we are seeing 'e' adoption taking place. It is important to note that 'e' adoption is not occurring uniformly across all industries - some industries are more advanced than others due to their particular dynamics, and adoption rates within industries also vary depending on country and industry.
With first wave eBusiness, we saw everyone get hooked up to email and Internet enabled computers, running off networked servers. Corporate websites emerged like the plague, offering electronic brochure-ware and online promotions - www this and that. Online retail dawned, offering online shopping carts in the business-to-consumer markets (B2C) with secure Internet payment features, and a burgeon of other facilities, including online banking, online gaming and online education started to flourish.
Intranets and extranets offering network access to corporate databases became the next big eBusiness step, allowing company employees to access digital information rather than having to wade through, lengthy and inefficient filing systems.
Industry specific e-marketplaces and exchanges started to develop, coining new buzzwords like B2B (Business-to-Business) and P2P (Peer-to-Peer) like the famous and controversial music portal Napster.
Since 1995, hundreds of B2B exchanges have started up, most being independent marketplaces run by large buyers or sellers. Many have since dissipated, with companies mostly choosing to work with their own suppliers in private marketplaces rather than with independent exchanges. Most companies' B2B exchanges are still in their infancy, unlike companies like General Electric that are leading the way with their B2B set-up.
Third generation networks (3G), which bring with them a promise of speed and 'always on' connectivity, are currently being deployed in many first world countries. In these developing regions, wireless and mobile Internet are already beginning to reshape the way common business functions are performed.
True second wave eBusiness culminates in 'embedded' Internet technologies giving total integration of appliances, products and communication networks along with fully integrated, digitalised organizations with real-time customer and supply chain management and effective enterprise information portals giving light to new and global sales channels such as self-service and mobile sales forces.
Second wave eBusiness is still in its infancy across most industries, apart from a few pioneers who are blazing the trail, for more efficient future business methods with quantifiable metrics.
By 2004, an estimated 80 percent of B2B companies will globalise their web sites, according to a recent report by the Aberdeen Group research firm. This means large, global companies are putting in place new infrastructures and processes to make eBusiness scalable across linguistic, cultural and national boundaries.
Like it or not, the Internet is making the world a smaller place. Every time you log onto the Internet you are literally going global. Intellectual properties are zooming all over the world in real-time, spreading innovative new ideas for conducting business and significant opportunities for increasing business revenue, improving efficiencies and reducing costs.
Second wave eBusiness is seeing many companies 'going global'. Although globalisation offers unprecedented opportunities, these benefits will only come to companies, that approach, strategically, the complex difficulties and challenges of crossing cultural, linguistic and national boundaries. By going global, companies are heading into uncharted realms, which forces them to strip their original eBusiness and business models to the waist and creatively re-engineer many of their traditional business concepts and practices.
Companies embarking on second wave eBusiness strategies on a global level require a solid infrastructure in order to do so. In a report on globalisation, put out by global company Ernst and Young, four main aspects that are fundamental to understanding of going global were highlighted:
Technological component - new technologies are bringing high speed and constant connectivity to companies and their employees, aiding the global trend. Companies need to digitise their would-be prudent corporations, through e-enabling customer relationship management, supply chain management and knowledge management which will in turn unearth new possibilities and allow them to explore new opportunities.
Organisational component - so they can function to their maximum efficiency, global organizations should be able to carry out their operations in the country or region where the local capabilities are best suited to the need. This means that products can be "conceived in one country, designed in another, engineered in a third, made of parts from the fourth, fifth and sixth, supported by software from the seventh, promoted by media headquartered in an eighth, distributed in the ninth, and so on" according to the report.
Cultural component - leaders and managers need to find ways to break through cultural barriers and differences of beliefs, ideas, norms and values that shape peoples' lives. To do this they need to find common ground between cultures on which to build and market their products. Some things that work in one country won't necessarily work in another.
When it comes to language alone, studies have shown that nearly 80 percent of web site content is English-only, when more than 50% of web users do not speak English. This means that a significant shift in the online population has not been matched by a proportionate shift in the composition of web content. Global customers remain frustrated by their attempts to find relevant product information, pricing and support in their own language, although this is now being remedied.
An Aberdeen report found that the number of Fortune 100 companies with multilingual sites nearly doubled between 1998 and 2000.This report detailed some critical transformations showing the importance of globalisation as a key eBusiness initiative. Global 2000 companies have identified globalization as an essential part of their second wave eBusiness strategy. Globalized eBusiness can no longer be treated as a regional problem, but as a worldwide strategic corporate initiative.
Political component - because 'going global' means ignoring geographical borders, there is a diminishing need for what the less developed countries have to offer; unskilled labour, material resources and low-wage markets are affected the most. Companies should take heed of this factor when developing their global strategies so as not to abuse their power, as many of them have done in the past.
Companies that treat globalization as a strategic business process will see faster uptake in global revenue and greater reductions in the cost of global operations. By developing a globalization plan that is aligned with a company's business objectives, companies can dramatically speed up their revenue growth, cut costs and improve the overall customer experience.
eSCM - electronic Supply Chain Management
"Within 18 months, all of our suppliers will supply us on the Internet, or they won't do business with us." - Jack Welch of General Electric
The second wave of eBusiness revolution has shown that real-time or electronic supply chain management is one of the fundamental elements of the future of sound business practice. Successful eSCM strategies are based on accurate order processing, just-in-time inventory management and timely order fulfillment. The key goal of eSCM strategies is to minimize the total cost of the order-to-delivery process whilst endeavoring to maximize strength with supply chain partners and distribution agents.
Companies are essentially creators of value, not simply makers of products or service performers. Second wave Supply Chain Management focuses on globalisation and information management tools, which integrate procurement, operations, and logistics from raw materials to customer satisfaction. Second wave eSCM requires frictionless supply chain coordination of information, material and financial flows, delivering process optimisation levels never before thought possible in the old economy. Companies need to harness an ever-widening network of supplier resources and exchanges to deliver superior customer value rapidly and efficiently.
Supply chains need to be critically managed, taking heed of process management to eliminate any bottlenecks, as quickly and effectively as possible, as the complete supply chain must be visible and trackable to help ensure seamlessness. Once businesses have improved their internal eSCM infrastructure at a technology level, they can then use the time-savings to focus on streamlining and developing their supply chain partner relationships.
To improve global supply chain performance, many companies are outsourcing specific business functions to companies like FedEx and UPS. FedEx, for example, offers Supply Chain Management and IT expertise and solutions to companies wishing to focus on their core competencies, leaving eSCM to industry experts whilst they get on with what they are good at. FedEx has industry-leading capabilities in: Order Management, Inventory Management, Warehouse Management, Transportation Management, Distribution Management, Reverse Logistics Management, eFulfilment Express Distribution Centres, Import/Export Management, and Build-to-Order Management.
We are slowly seeing eBusiness strategies being driven by customers' demands rather than by the previous 'supply side orientated' strategies. Companies learn from their customers how better to customize and configure their products to meet their customers' unique demands, rather than forcing customers to accept their economies of scale. Companies like FedEx have the expertise and capabilities to help other companies execute a fully optimised, demand-driven supply chain. FedEx can " Provide a full picture audit of your supply chain network concentrating on identifying value opportunities. Design in-depth solutions to your unique supply chain issues. Assemble a solution for your needs integrating services from across the FedEx network of alliances. Manage on-going operations allowing you to focus on your core activities".
A great example of eSCM can be seen in the infamous Dell Computer Company with its online, made-to-order PC business. Michael Dell's vision has created a business model which enables a frictionless flow of information right through the supply chain, resulting in enviously thin inventory levels of typically less than 6% of sales, when most of his competitor companies were holding more than 5 times that amount. Best known for its success in selling computers via the web, Dell has also been successful in moving to a build-to-order manufacturing model while holding no inventory. With some products, Dell also emulates a virtual manufacturer by contracting with a logistics provider who is responsible for final product assembly. Dell has also managed to develop a negative cash flow business model, whereby orders have been paid for days before suppliers are paid. Dell, requiring suppliers to hold consignment inventories close to its manufacturing plants, supports this. Internet orders are sent every two hours to Dell's logistics company warehouses for final assembly there, or for component delivery to a plant, within two hours. In hard times like these we can see why this Dell model is the epitome of an advanced and seamless eBusiness model, however, even they have to shed staff when the sales are not there.
Another example is that of Cisco Systems, which maintains an Internet ecosystem that electronically links suppliers, customers and manufacturers, processing over 80% of customer orders via the web. Cisco has tried to develop a pure virtual distribution business model by partnering with FedEx. It plans to hand over all shipping and warehousing functions to them, thus order fulfilment will be accomplished by shipping order lines directly from plants and suppliers, possibly up to 100 order lines from different countries. Order lines will be consolidated and merged in-transit to allow them to arrive within hours of each other for assembly at a customer's site.
At the manufacturing level of eSCM, rapid order fulfilment is essential. Production managers monitor the status of their operations by using key performance indicators (KPIs). Critical KPIs typically include such elements as throughput, yields, and capacity utilization. KPIs are essential to second wave eBusiness success. By analysing and acting upon KPIs without delay, decision makers can make a difference and stay ahead of their competitors, whilst meeting their targeted business goals and objectives.
Within the realm of effective supply chain management comes the management of virtual marketplaces (eMarkets, net markets or exchanges), which are essentially Internet-enabled markets, or intermediaries that connect disparate buyers with sellers within common vertical industries.
Over the past 5 years, an abundance of companies have formed strategic alliances and ePartnerships along the spectrum of the supply chain. Business-to-business systems have been developed to enable seamless exchanges of business documents, such as purchase orders and invoices, between pairs of partners in a supply chain. B2B virtual marketplaces have also been formed, wherein a single large manufacturer can consolidate the purchase of the goods that are the input to its manufacturing process from many smaller companies. eMarketplaces can become trading marts, or exchanges for commodity products, or the range of products, of a given type or associated with a particular industry segment. B2B systems also automate the purchase of goods that support businesses' maintenance, repair and operation.
In the British public sector, Richard Barrington, former e-envoy at the Cabinet Office, has announced as a goal that 80% of the Government's procurement should be done online by 2003, with all public services available online by 2005.
Second wave eBusiness is saying goodbye to inefficient and maverick buying habits which cost companies millions of dollars daily. eProcurement is essentially seen as a subset of effective supply chain management, however it needs to be focused on, and managed separately, as an individual function of the digital enterprise.
eProcurement is still in its infancy but evolving at high speed. Smart eProcurement systems are able to report company-wide purchasing, quickly and accurately, giving a visual and graphical representation of company spending, right down to stationery and the most basic of office supplies like toilet paper.
The National Association of Purchasing Managers in the United States say that the typical cost of generating a purchasing order is, on average, around $130. eBusiness practices, including efficient eProcurement, can reduce this cost to around $40 or less.
British Airways is at the cutting edge of eProcurement. Every year they spend around £3.9 billion, on everything from fuel, hotels and advertising, to office furnishings and in-flight entertainment. "Whether it's fitting out a new Executive Club lounge, equipping our aircraft with the latest avionics, or negotiating landing fees around the world", BA is amongst the first wave of blue-chip companies to have a clearly defined eProcurement strategy; introducing Internet tools and related technologies to integrate the business processes of their organization with the business processes of their suppliers. E-enabling requisitions of goods and services allows BA to put more effective supply arrangements in place and manage their suppliers' performance better. eProcurement ensures that the purchasing process is made fast, cheap and simple.
On the other hand eProcurement also prevents unauthorised employees from purchasing goods, as it is all tracked, allowing for all purchases to be easily managed. Other benefits to large companies of eProcurement are enormous, as one can imagine - by streamlining purchasing processes with their vendors and/or suppliers, and web enabling procurement processes, companies can significantly reduce their transaction costs, offer faster, more accurate transaction processing, and improve order tracking, resulting in lower prices and increased employee and customer satisfaction.
Also, when it comes to sourcing new products, traditional methods are notoriously costly, as much time, effort and dollars go into bargaining, policing and searching the market for the latest goods and services. Now, with eProcurement, auctions and tendering offer new solutions that make procurement easier, more efficient, more honest, and more competitive by nature - giving a chance to others previously unable to tender due to the expense involved in the selection process. eProcurement allows companies to gain access to a broader marketplace to help them find the right item at the right price from the best source.
Knowledge Management (KM)
A typical definition of Knowledge Management is a conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that will improve organizational performance.
I recently read that some employees spend approximately 30% of their time looking for things (files, documents, past figures and so on), and that is not hard to believe. Just imagine the cost implication that goes with that statement. As companies and industries move from hard assets to an 'information world', they recognize the value of their companies often lies in knowledge of their people, as well as in their structure and culture.
The Internet has propelled information into becoming ubiquitous and commodity-like. Most information, especially figures, only becomes valuable when converted into knowledge. Up to now, most organizations have been collecting and consolidating information, but now, successful organizations will be those that can capture information, create knowledge and distribute it to their various constituents in a way that makes a difference by adding value to the enterprise.
For organizations to harvest knowledge, assimilate it, and leverage it in a way that makes it a more competent competitor is no easy task. For KM systems to be most effective, knowledge needs to be quickly and continuously updated, so that it is always accurate and current. To achieve this, KM systems must enable multiple employees or users to work together simultaneously on the same body of knowledge, whilst connecting knowledge capture with communication, and sharing processes with change, innovation, and improvement processes.
The second wave of eBusiness is seeing companies evolve from networked intranets to the more developed 'B2E' business-to-employee concept of an enterprise information system or corporate portal. Corporate portals are becoming a key second wave eBusiness focus in most of today's top organizations.
Enterprise Information Portals/Corporate Portals/Business Portals
"Successful companies in the 21st century will be those who do the best job in capturing, storing, and leveraging what their employees know."- Lew Platt of Hewlett Packard.
A typical definition of an Enterprise Portal is a single gateway to an enterprise, via corporate Intranet or the Internet, for access to relevant workflows, processes, application systems and databases - integrated using XML and tailored to the specific job responsibilities of each individual.
In the past, finding the appropriate knowledge, or even being aware of all potential sources, was more a question of luck and intuition than anything else. Due to this fundamental problem, portals are one of the most promising developments using Internet technology. Companies such as Plumtree, Business Objects and Cognos are forging their way into large multinational companies by offering best-of-breed corporate portal solutions.
Global industry leaders like Ford Motor Company, Procter & Gamble and BP are deploying an enterprise-wide Corporate Portal to deliver information and services from different business systems in a single, simple web destination that employees and partners everywhere can use to build, sell and support products faster.
The mission of a corporate portal is not only to provide a library of information, but also to actively support the user in his or her day-to-day business activities. Typically, 80% - 90% of most enterprises' knowledge resources exists as unstructured data in documents, reports, email, graphics, images, audio and video files. These data sources are largely inaccessible from Data Warehouses and Information Systems. Collaborative Portals have been developed to give access to these unstructured data sources.
Corporate portals integrate with existing document management systems, Enterprise Resource Planning systems, and corporate legacy systems. Fully integrated portals can provide access to Business Intelligence, Knowledge Management, Online Analytical Processing (OLAP) and other Data Warehouse decision support functions.
This concept is best explained in the following example of the Ford Motor Company portal. Ford, the world's second largest automaker, with 200,000 employees, has engaged an ambitious business-to-employee eBusiness strategy managed by Bipin Patel.
Ford has a single, simple web destination for their entire enterprise to find and share the content and services they require to support customers and speed up the process of getting their products to the market. Developed by software company Plumtree, Ford's Corporate Portal is similar in appearance to a consumer web portal, but with a directory of links to corporate documents, embedded collaboration tools, eBusiness applications and Internet services. Features are displayed typically as one would see a sports scoreboard or a stock portfolio. Ford employees, wherever they are, are within easy reach of Ford's knowledge base.
Plumtree's Internet-based portal platform is helping Ford control a sprawling intranet, streamline content creation and publication processes; and drive collaboration and e-learning initiatives for 200,000 employees worldwide.
Corporate Portals brings to Ford the following features and benefits to the modern organization:
Integration - the world's largest portal, hub.ford.com, spans 800 Ford facilities and 150 manufacturing plants worldwide. It integrates the hundreds of thousands of web pages into one enterprise-wide web destination. The portal brings together more than one million documents on Ford networks and the Internet in a single, searchable directory of links to files, web pages and reports. Ford employees can draw on a common base of best practices, market news, product specifications, performance metrics, and policy and procedures for the information they need to make confident business decisions and act quickly on revenue opportunities, with no geographical restrictions.
Personalization -Each user can tailor his or her portal experience to his or her role by choosing from a menu of options. To assemble a complete view of the business, Ford employees can select options including e-mail, real-time news feeds, stock reports, sales histories, personnel directories, self-service travel booking, corporate expense reporting, and pay and benefits, from personalized portal pages. In addition to job needs, the Ford portal is designed to address personal needs; employees can customize human resources needs and healthcare such as stress relief tools.
Collaboration - In portal pages, Ford employees can embed web-based workplaces, that Ford is deploying by the hundreds enterprise-wide, for drag and drop file sharing, multi-threaded discussions, real-time messaging and polling. For example, paint shop workers from manufacturing departments on different continents can share skills and ideas easily, shortening development cycles and increasing product quality.
Community -To encourage collaboration, project managers at Ford are creating community pages of content and services shared by entire business units.
Scalability - Plumtree's distributed architecture helps ensure that hub.ford.com can deliver dynamic content and services for employees at peak load times, estimated by Ford at 10,000 hits per minute.
Security -The Plumtree Corporate Portal synchronizes with Ford's existing LDAP directory of over 150,000 users, ensuring that employees see only the content and services that correspond to their specific roles and security profiles when they log in to hub.ford.com.
Corporate portals also give a new meaning and dimension to Business Intelligence (BI), by enabling intelligence tools to analyze one pool of data instead of the disparate data sources of the past. BI, by its nature, consolidates and analyses raw business data and turns it into conclusive, actionable information. It enables companies to tap into disparate sources of customer, operational and market data and then use this information to gain a competitive edge. According to an international Data Corporation case study of 65 companies, the mean return on a business intelligence investment was greater that 400% over 2.3 years.
Results generated form BI applications also provide companies with the intelligence data needed to spot trends, enhance relationships, reduce financial risk and create new sales opportunities. In addition, BI helps transform customer and operational data into knowledge, allowing companies to make better decisions, gain competitive advantage in the market, control cash flow, detect fraud, and reduce costs.
It is estimated that out of 2,000 of the world's largest firms, 85% will use a portal by 2003, up from 50% this year.
eCRM - electronic Customer Relationship Management
The second wave of eBusiness solutions unifies and personalizes customer interactions while delivering world-class business efficiency. All customer interactions, regardless of origin, are seamlessly coordinated so that customers receive the same knowledgeable, personal service across the board of a company's sales and service channels, regardless of the method of touch-point communication.
Although the principles of CRM have been around for a long time, recently more and more businesses have started focusing on 'smarter' systems that can dramatically impact upon profitability. The electronic 'e' of eCRM basically enables seamless 'integration and automation' of previously manual tasks and processes through the use of the Internet. It does not dehumanise as it necessarily suggests - but 'enables' and 'equips' companies with more efficient tools so they can service their customers better, by understanding them better.
Second wave eBusiness enables organizations to leverage off new technologies by integrating multiple communication channels, business processes (sales, marketing and customer-service/support) and people. eCRM essentially adopts a customer-centric approach to doing business by putting the customer first. Ideally, eCRM systems aim to improve sales and bottom-line profitability by improving the quality and length of interactions with current and potential customers.
Companies like Siebel are leading the way in second wave eCRM practises. Siebel has risen from nothing to $1.8 billion in annual revenues in only eight years, with a software product that manages customer relations. They must be doing something right.
Return on relationship is the driving force behind eCRM initiatives, which is revolutionizing the way companies interact with their customers. eCRM is not just software to manage customer relationships, but rather a customer-centric business strategy.
Customer-centric solutions integrate all customer-facing functions, to deliver a single 360 degree view of the customer and a single solution for eBusiness, sales, and service initiatives ensuring seamless, global interaction among web sites, call centres, field sales and service teams. Companies worldwide use these solutions to orchestrate every aspect of the customer life cycle, unite their approach to customers, and promote collaboration that nurtures customer loyalty, whilst still serving unique business needs.
eCRM systems thrive on information gained from overnight sales figures, customer-satisfaction scores, employee turnover, on-time delivery rates, cancelled orders, and so on. Second wave eCRM Technologies allow leaders and managers to track their companies by every conceivable detail and drill down into data, to an extent never before thought possible.
Tailoring customer-facing activities to provide this type of service, be it B2C or B2B, will help ensure that the business can attract and retain customers. Wise organizations will take advantage of new technology's ability to drive and measure customer satisfaction, retention, and lifetime value. Successful eBusinesses will build sustainable demand generation by tightly integrating customer and supplier management systems.
eCRM is all about discovering and delivering value to customers. Knowing clearly what makes the customer tick can help companies develop better and more successful products.
Enabling Technologies and Drivers of Second Wave eBusiness
One of the major problems with the early dot.coms, was that they did not have adequate technology to support their wishful business models. In addition there was a myriad of other barriers preventing dot.coms from taking off, as explained in the eBusiness obstacles and Barriers section of this paper. It seems that most pure-play dot.coms were before their time. The Internet, as we know it, was an overnight phenomenon, but true eBusiness is taking a bit more time, although it is certainly playing the largest role in corporate history.
Second wave eBusiness strategies are of little help without a sound, reliable, and efficient technology infrastructure. New economy companies must be secure; they must be able to store and quickly retrieve huge loads of data quickly, and their systems and employees must be able to communicate with each other and with other companies. Whereas most companies have an infrastructure to serve a known quantity of users who are almost exclusively employees, the eBusiness world requires around-the-clock access for an unlimited and unpredictable number of internal and external users.
The W3C (World Wide Web Consortium) is one of the committees, comprised of vendors, academics and consultants, that is charged with defining standards for the Internet, including those of HTML (Hypertext Markup Language) and XML (Extensible Markup Language).
Other standards, like WAP (wireless application protocol), Bluetooth (used to make appliances communicate with each other) and the IEEE 802.11 (a developing standard for wireless local area networks), are also playing a key role in second wave eBusiness. These standards, coupled with increasing bandwidths, will allow even better process support, and are responsible for breathing life into the second wave of eBusiness, making it possible for businesses to realise the real benefits of the digital revolution.
As these technologies develop and standards become commonplace, new windows of opportunity appear and build on the eBusiness infrastructure. The embryonic mobile commerce industry is starting to develop.
The infrastructures behind Corporate Portals are based on data warehousing technologies, using Metadata and XML to integrate both structured and unstructured data throughout an enterprise. Metadata, XML and Corporate Portals will be vital elements of the 21st century enterprise.
Extensible Markup Language enables metadata tags to be included with data content to indicate data meaning. Metadata tags comprise both start and end tags that surround the data content as in this example: <customer-name> ABC Inc </customer-name>. This clearly shows that ABC Inc is a customer name.
Metadata is terminology or jargon, used as a business language to communicate specific meaning; in the same way that marketers use marketing jargon, while doctors and hospital staff use a different jargon to communicate medical meaning. This meaning must be understood for effective communication. Metadata tags are used by XML to surround data content and so identify data meaning. When surrounded by '<' and '>' characters, it is called a start tag as opposed to a tag surrounded by '</' and '>' is called an end tag. Each metadata tag must have a start tag and an end tag that surround relevant data content, according to the meaning of that metadata. For example, <customer-name> ABC Inc </customer-name>, uses a start tag and an end tag to delimit the customer name 'ABC Inc'.
The wireless revolution is aiding the rapid growth of mobile commerce (mCommerce). Handheld devices bring exciting new benefits and challenges to second wave eBusiness. New devices are linked into dynamic, real- time corporate networks and portals, allowing users to access critical and valuable information at their fingertips 'anywhere and everywhere'. Voice over Internet protocol (vCommerce), comprising voice recognition and response systems, is also developing at rapid speeds, whilst tCommerce, or television commerce with internet enabled digital TV's, is also becoming popular.
All these technologies are the key drivers of the second wave of eBusiness.
eBusiness Obstacles and Barriers - what's holding it up?
In the Cutter Consortium report named eBusiness: Trends, Strategies, and Technologies, a groundbreaking survey ranked 'benefits not demonstrated' as the number-one eBusiness obstacle, followed by financial cost and technological immaturity.
Leaders are realising that another major eBusiness hurdle is not technology, but culture. Typically, sales people have been paranoid about losing their jobs to order-taking computers. At the start of eBusiness, some companies had to close their mail and printer rooms to force staff to use email instead or letters. Imagine how much large companies, like General Electric and Ford for instance, must spend on stamps each year!
The promise of eBusiness is great, but limitations must be recognized. Many impediments stand in the way of progress in the adoption of web-based business models.
The main obstacles can be summarized as follows:
· Lack of Internet culture - Customer resistance needs to be overcome by converting customers to the Internet culture through education; pointing out the advantages, benefits and processes required, to make eBusiness successful. Here governments should also take responsibility by introducing the Internet into all schools, and IT skills training, at an early age, into all national schools' curricula Employees need to be seen in a new light - they need to be seen also as customers, as they are the ones who are employed to communicate with external customers, thus it is essential for companies to overcome any internal resistance to new eBusiness method adoption.
· Global Cultural differences - As explained in the globalization section of this paper.
· Lack of awareness of potential eBusiness benefits or ' benefits not demonstrated' - In other words, it is difficult for most people, even for those within the IT industry, to keep up with the rapid speed of change, and developments of new technologies. Even at the best of times, people generally dislike change. If people don't understand the benefits of new processes and technologies, then they will not readily adopt new methods no matter how much money a company has spent on them.
· Lack of IT skills - There are not enough skilled IT specialists able to keep up the many imposed demands in keeping up with this speed of change.
· Concerns over Internet security - Security issues regarding the Internet are still rife, particularly with regards to online payment, however with the introduction of wireless payment systems, which boast of being 'more' secure, and with more people getting used to online payments, we should see many of these fears decrease, yet I believe they will never totally disappear.
· Other Security Issues - Firewalls, viruses, hacking, site certificates, encryption and privacy policies are all still major areas of concern which are holding corporations back from entering the digital world too deeply as it makes them more vulnerable to corruption and breakdown.
· Costs of technology - New technologies are generally very expensive, and the standard of leadership that goes hand in hand with successfully implementing these technologies, does not come cheap either.
· Constraints of technology - There are also ongoing concerns about Internet security, bandwidth, and quality service that must be considered by anyone thinking about relying on Internet-based applications to support critical business functions. However, as mentioned earlier, many of these concerns have been overcome and improved, yet many people are not aware that these improvements exist.
· Unresolved legal and regulatory issues - Many intellectual property cases regarding the Internet are still up in the air, as no one has yet found a suitable solution to policing these legal issues on a global level; each country abides (or should abide) by its own set of rules and laws.
· Lack of proven solutions - As many eBusiness solutions are all so new to everyone, none have stood the true 'test of time'. Until we see companies' bottom- line profits constantly rising, due to second wave eBusiness initiatives, I feel it will be difficult to overcome this obstacle.
· Lack of technology standards - New standards, including XML and WAP, are being developed and improved; yet there are still areas where global standards have not been reached or put in place.
· Limited internal technology skills - The demand for technical know-how is ever-increasing; however, most of the second wave eBusiness technologies offer state of the art self-help and easy to use interfaces offering online training and prompted suggestion tools.
· Unclear ROI analysis - Many eBusiness initiatives are intangible, making it difficult to gauge accurate returns on capital and resource outlay. This is slowly being overcome by proven positive results by e-pioneers, in addition many business decisions need to take calculated risk into account.
· Global market volatility - There are profit pressures, due to forecasted lower growth and a projected increase in market saturation; industry consolidation through mergers and acquisitions, brand proliferation and fragmented consumer understanding.
Of course, companies need eBusiness strategies that consider the nuances of their specific industries, for their unique goals, processes, and requirements govern their business strategy. These are industry-specific implementation issues, like integrating legacy systems, general eBusiness readiness, culture and human element management abilities.
Some common eBusiness fears can put off the design and implementation of eBusiness strategies. In reality, many of the fears can be overcome, as is seen below.
Buyer's Fears eBusiness > Reality
Losing accountability among vendor companies > It leaves companies with more time to focus on their customers
Poor support or service > eCRM usually improves customer satisfaction levels
Frustrating process of finding a person > Account reps and concern for accountability will still be prominent
Supplier's Fears eBusiness > Reality
Their products are becoming commodities > Your company will still be able to position itself
Divulging proprietary information to competitors > Your solution providers can prevent that from happening
Burdensome catalogue management > The rewards of ecataloguing paying off
Difficulty with customers orders > You will still have people behind the scenes to make things happen
Manager's Fears eBusiness > Reality
Losing profitable personal relationships > eBusiness is all about building relationships
Inadequate security measures > As business models improve and develop so are security issues
Programs that cost too much or have a weak ROI > Designed properly, eBusiness initiatives can provide huge ROI
Adapted from article from Novoforum
Another important point to make is that, as customer service improves through second wave eBusiness initiatives, standards rise, and all companies will increasingly be obliged to adopt eBusiness working practices.
Business strategy core vs. eBusiness strategy
An effective, forward-thinking eBusiness strategy radiates from the solid business strategy at its core. Recognizing the importance of core business strategy starts with a thorough understanding of products, markets, sales channels, customer requirements, competitive differentiators, priorities, organizational structure, and growth plans. Once these basic business fundamentals have been established, a solid foundation is formed, on which an effective eBusiness strategy can be built. eBusiness strategies take heed of the fact that businesses are vulnerable to encroachment from overseas competitors, yet new opportunities are offered at the same time to those willing to take on global markets.
Second wave eBusiness helps companies reach the benefits to be had from the digital revolution more effectively, thus achieving digital corporation status.
Basic Benefits of eBusiness
· Improved customer service gives customers tangible benefits, i.e. faster delivery times, and a better understanding of needs.
· An increase in business opportunities is another one of the greatest benefits of eBusiness; that can result in improved brand image and enhance a company's stock market valuation.
· Greater efficiency enables shorter product development cycles and enhanced inventory turnover, thus freeing up capital by receiving payment earlier in the purchase process.
· Greater profitability: as companies exist to make money, by utilizing the eBusiness methodologies explained, companies could improve overall effectiveness and directly increase profitability.
The question of readiness for second wave eBusiness depends on both organizational and technical factors. By using a fully integrated eBusiness as a yardstick, most companies are not ready to realize the potential of eBusiness. Customer-facing applications have been implemented independently of existing core business applications, and few companies have enabled their core applications for eBusiness to date.
eBusiness is more than just effective IT operations, it is about people and relationship building, it is changing many companies from being product-centric to customer-centric, focusing on satisfying customers as its key initiative, as well as maximising on partner and supplier relationships across the supply chain.
eCRM and eSCM integration and management are currently under-developed across most industries, as they requires complex collaboration, that usually take time to develop, with external partners.. Extreme care needs to be taken when choosing the right systems, partners and suppliers, as it is critical that their strategies complement your organization's strategy.
eBusiness Competitive Advantage
To gain fundamental competitive advantage over others, I believe that leaders need to develop business strategies that accurately identify their specific key business objectives and then implement eBusiness technologies and functions that support those objectives. Many leaders will need to decide whether to outsource business functions to best-of-breed solution providers instead of trying to do everything themselves, allowing them to focus on their individual strengths.
Business leaders must not make the mistake that second wave eBusiness is an optional extra to their current corporate strategy - eBusiness strategy is mandatory. To remain competitive on a global level, companies need to move away from a 'bricks and mortar' alone strategy, to a more 'bricks and clicks' strategy, in order to thrive. To do this it is essential for these leaders to partner with eBusiness visionaries who have the technology road map that supports their vision.
To be effective in the long term, eBusiness solutions need to ride on top of a high-performance, reliable, flexible, secure network that is constantly evolving to take advantage of the latest technology advances.
The future of eBusiness is about sharing ideas and information and using those ideas quickly to innovate and better serve customers' leading-edge unified networks, and integrated eBusiness solutions, that companies need to keep ahead of the competition.
As eBusiness continues to change the marketplace rapidly, so companies need to remain agile in order to succeed in the long run. Martin Lindstrom, author of 'Clicks, Bricks and Brands' points out five key elements to eBusiness agility that current market leaders must take into account if they are to survive in the years ahead. They are: customer experience, business models, market recognition, power of brand and lastly, ability to attract talent.
Inward differentiation strategies that focused heavily on product functionality are quickly being overtaken by customer-focused differentiation strategies, which look outward.
To be competitive in today's new business paradigm, clever strategies need to be developed to help in turning would-be, one-time purchases, into recurring revenue streams and reaching customers who cannot be reached by existing sales forces, and expanding an organization's supplier base, by letting more firms bid or tender online by means of online auctions and marketplaces.
E-enabling one's entire corporation allows one to reach beyond traditional geographical markets nationally, as well as internationally. It can also open up new opportunities to offer new services, whilst managing all customer interactions seamlessly and intelligently. One of the key drivers of better service comes from a quicker response time to requests by customers, especially if it is coupled with a higher standard of service offering, which is now possible with knowledge management and business intelligence tools, as explained earlier. This all becomes easier through internal working methods becoming easier for employees who were previously hampered by legacy systems.
As customers become more knowledgeable, they automatically demand more, so companies need to have effective systems in place to be able to respond to these market pressures. Companies need to look beyond the current concept of return on investment, to return on relationship. It is the ability to model, measure, and subsequently maximize a company's ROR with each individual customer that will offer the broadest competitive differentiation and, with it, market success.
Implementing effective eBusiness strategies requires more than business savvy and management skills: it requires a reliable and intelligent understanding of key Internet demographics, horizontal markets, such as market size and growth trends and vertical markets, such as a sub-section of eBusiness that your company is interested in. Organizations that effectively utilize the Internet to reach out and build relationships with consumers will have a competitive advantage.
As we have seen, eBusiness is not all about flashy websites and banner ads, it's more about transforming relationship management right across the value chain. Second wave eBusiness is a core activity at the heart of the organization, not a venture for a separate entity. The key technical premise of second wave eBusiness is to web-enable all information resources by marrying the correct dosage of clicks and bricks with creative differentiation strategies by strong leadership teams. Second wave eBusiness will speed up the process of making money by automating, and personalising by building stronger relationships with the ones that count.
eBusiness is an evolving process, a fundamental business transformation that is not easy. It affects everyone and it will take a great deal of education for all participants, from governments to corporations to customers, to become beneficial to all parties. Implementing advanced second wave eBusiness strategy requires not only a change in business strategy, but also an essential change in business paradigms, when it comes to customers, suppliers and employees. Accurately identifying business objectives, and implementing second wave eBusiness functions that support those objectives, is the most fundamental pillar of a successful eBusiness environment. Since we have already reached the point where eBusiness can affect almost every business function, it is safe to assume that total integration of all business functions will be the eBusiness standard in just a few years.
'Winner companies' will have to adapt to new environments faster than their competitors, making tomorrow's industry leaders those who exploit powerful communication technologies, have innovative applications that build the strongest ties to profitable customers, and establish the most efficient linkages to their suppliers and partners, thus enabling them to achieve the fastest response to changes in the market.
Picture how the world's general standard of living has improved since the revolution of electricity, cars and telephones: once mature eBusiness is embedded into our cultures we are again sure to see more improvements.
Leaders need to take a hands-on, holistic and practical approach to their second wave eBusiness strategies, whilst educating employees to drive towards the same vision, whilst companies and governments need to focus on retraining people to keep up with rapid change and redesigning business processes that integrate best-of-breed technological solutions.
Companies can no longer afford to wait to see what happens to others before embarking on true second wave eBusiness, they need to take action now and get their systems in place, or they will take a large risk of being gobbled by one that has.
Surf's up, it's time catch the next wave.
This article was provided by courtesy of Mr. Cameron Dart
Kalakota, Ravi and Robinson, Marcia: e-Business Roadmap 2.0
Gates, Bill - Business at the speed of thought
Lindstrom, Martin: Clicks, Bricks and Brands
Hamel, Gary: Leading the Revolution
Economist - Older, Webbier, Wisier (06/28/01)
- While Welch waited (05/19/01)
- A revolution of one: Michael Dell (14/04/01)
Fortune - Edison's Curse - Gary Hamel (12/03/01)
E-Commerce Times - What's next for E-Commerce? Keith Regan (08/07/01)
Bandwidth 'is holding us back' - Tony Boyd. Australian Financial Review (14/08/01)
Reports and White Papers:
The Quiet Revolution - A report on the state of eBusiness in the UK by CBI and KPMG
Globalization - Centre for Business Innovation Ernst & Young LLP
eBusiness: Trends, Strategies, and Technologies - Cutter Consortium Report
Electronic Supply Chain Management - PricewaterhouseCoopers LLP
The Cornerstone of the Next Generation e-business infrastructure - IBM 12/00
Competing in the Internet age - Challenges for incumbents - PricewaterhouseCoopers LLP