Wednesday, March 5, 2008

Ch.12: planning for e-commerce

Planning electronic commerce initiatives
- keys to successful implementation of info technology projects: planning and execution.
-when setting objectives consider the role of the project, intended scope, and resources available
Identifying objectives
-Common objectives: increasing sales in existing markets, opening new markets, serving existing customers better, identifying new vendors, coordinating more efficiently with existing vendors, or recruiting employees more effectively. Linking Objectives to business strategies
-Can use tactics called downstream strategies to improve the value that the business provides to its customers. Pursuing upstream strategies is when focusing on reducing costs or generating value by working with suppliers.
First wave- firms conducted e-commerce without setting specific and measurable goals. Second wave- closer look at the benefits and costs
Measuring benefits
Complication occur when trying to measure things such as brand awareness or sales because the increases can be caused by other things that the company is doing at the same time or by a general improvement in the economy. Some sites use online surveys to gather this data; most settle for estimates based on the length of time each visitor remains on the site and how often visitors return.
Total cost of ownership
Many sites track costs by activity and calculate a total cost for each activity. Total cost of ownership (TCO)-include a wide variety of costs related to the activity-hardware, software, design work outsourced, salaries.
Opportunity costs
One of the largest and most significant costs -the cost of not undertaking an initiative-opportunity cost (lost benefits)
Web site costs
Large portion of the costs is from labor (79%). Estimates for the cost of creating a web business at three different levels: a basic entry level, a level comparable to most existing web competitors and a level that makes the website stand out-true differentiator. Annual cost to maintain and improve a site once it is up and running-whether it is a small site or a large site-will be between 50% and 200% of its initial cost. Smaller organizations can control their costs by using a combination of a third party hosting service and packaged electronic commerce software.
Return on Investment (ROI)
Payback method, net present value method, internal rate of return method-return on investment (ROI)-measure the amount of income (return) that will be provided by a specific current expenditure. ROI has some built in biases that can lead managers to make poor decisions. First, ROI requires that all costs and benefits be stated in dollars. Because it is usually easier to quantify costs than benefits, ROI measurements can be biased in a way that gives undue weight to costs. Second, ROI focuses on benefits that can be predicted. It also tends to emphasize short run benefits over long run benefits. This biases ROI calculations to weigh short term costs and benefits more heavily than long term costs and benefits.

Strategies for developing electronic commerce web sites
When companies began establishing their presences on the web, the typical web site was a static brochure that wasn’t updated frequently with new information
1994-1996 -STATIC BROCHURE (contact info, logo and other branding, some product information, financial statements
1996-1999-TRANSACTION PROCESSING (static brochure, plus: complete product catalog, shopping cart, secure payment processing, order info inquiries, shipment tracking
1999-Present-FULL RANGE OF AUTOMATED BUSIENSS PROCESSES (transaction processing, plus: personalization, interactive capabilities, frequently updated content, customer relationship management tools).
Internal development vs. outsourcing
-Using internal people to lead projects helps to ensure that the company’s specific needs are addressed and that the initiative is congruent with the goals and the culture of the organization. However, few companies are large enough or have in house expertise. OPTIONS:
The internal team: the first step is determining which parts of an electronic commerce project to outsource is to create an internal team that is responsible for the project. Members should be recognized by their peers as successful individuals so the project doesn’t suffer from lack of credibility. The internal team should hold ultimate and complete responsibility for the electronic commerce initiative, from the setting of objectives to the final implementation and operation of the site.
Early outsourcing: outsource the initial site design and development to launch the project quickly. The outsourcing team then trains the company’s info systems professionals in the new technology before handing the operation of the site to them-early outsourcing.
Late outsourcing: more traditional approaches, the company’s info systems professionals do the initial design and development work, implement the system, and operate the system until it becomes a stable part of the business operation. Once the company has gained all the competitive advantage provided by the system, the maintenance of the electronic commerce system can be outsourced so that the company’s info systems professionals can turn their attention and talents to developing new technologies that will provide further competitive advantage.
Partial outsourcing: In partial outsourcing, which is also called component outsourcing, the company identifies specific portions of the project that can be completely designed, developed, implemented, and operated by another firm that specializes in a particular function. One of the most common elements of electronic commerce initiatives that companies outsource using this approach is the web hosting activity. Providers of internet connectivity, applications, and business services (including ISPs, CSPs, MSPs, and ASPs) offer web hosting services to companies that want to operate electronic commerce sites, but that do not want to invest in the hardware and staff needed to create their own web servers.
Selecting a hosting service
The internal team should be responsible for selecting the ISP that will provide the site’s hosting service. It can consult an ISP directory. The team should obtain the advice of consultants that rate service providers (ISPs, ASPs, and CSPs); the most important factors to evaluate: functionality, reliability, bandwidth and server scalability, security, backup and disaster recovery, cost
New Methods for Implementing Partial Outsourcing
Incubators: an incubator is a company that offers start up companies a physical location with offices, accounting and legal assistance, computers, and Internet connections at a very low monthly cost. Receives an ownership interest in the company-10% and 50%. When the company grows to the point that it can obtain venture capital financing or launch a public offering of its stock, the incubator sells all or part of its interest and reinvests the money in new incubator candidates.
Fast Venturing: In fast venturing an existing company that wants to launch an electronic commerce initiative joins external equity partners and operational partners that can offer the experience and skills needed to develop and scale up the project very rapidly. Venture Sponsor: develops idea, staffs internal team, creates prototype, provides all or most of the start up funds (is the existing company that wants to launch the electronic commerce initiative) Equity partners: review and refine ideas, provide advice, evaluate prototype, provide contacts (including operational partners) (entities that have provided start up money to new ventures in the past and have developed knowledge about operating new ventures) Operational partners: turn ideas into a business plan, provide financial, technical, and operations expertise, provide industry best practices knowledge, scale up prototype to an operating model (people and companies that previously have built web business sites)

Managing electronic commerce implementations
Use formal management techniques. Project management, project portfolio management, specific staffing, and postimplementation audits are methods businesses use to efficiently administer their e-commerce projects.
Project management is a collection of formal techniques for planning and controlling the activities undertaken to achieve a specific goal-developed by the US military in the 1950s and the 1960s to develop weapons and other large systems. The project plan includes criteria for cost, schedule, and performance-it helps project managers make intelligent trade off decisions regarding these three criteria. Information systems development projects are much more likely to fail than other types of projects. Causes-rapidly changing technologies, long development times, and changing customer expectations, many teams rely on project management software to help. E-commerce initiatives are more successful that other types of info system implementations in general.
Project portfolio management is a technique in which each project is monitored as if it were an investment in a financial portfolio. The CIO records the projects in a list and updates the list regularly with current information about each project’s status. Project management software tracks the details of how each project is accomplishing its specific goals. In project portfolio management, the CIO assigns a ranking for each project based on its importance to the strategic goals of the business and its level of risk.
Staffing
The business management function should include internal staff. The business manager should be a member of the internal team that sets the objectives for the project. The business managers is responsible for implementing the elements of the business plan and reaching the objectives set by the internal team.
A project manager is a person with specific training or skills in tracking costs and the accomplishment of specific objectives in a project. An account manager keeps track of multiple web sites in use by a project or keeps track of the projects that will combine to create a larger web site. Most larger projects will have a test version, a demonstration version, and a project version of the web site located on different servers. The test version is the under construction version of the web site. The demonstration version has features that have passed testing and must be demonstrated to an internal audience. The production version is the full operating version of the site that is available to customers and other visitors. The account manager supervises the location of specific web pages and related software installations as they are moved from test to demonstration to production.
Applications specialists maintain accounting, human resources, and logistics software. As web sites have become more complicated, the need for web programmers, who design and write the underlying code for dynamic database-driven web pages, has increased.
Content creators – write original content; content managers/editors-purchase existing materials and adapt it for use on the site.
Customer service personnel help design and implement customer relationship management activities in the electronic commerce operation. They can issue and administer passwords, design customer interface features, handle customer email and telephone requests for service of follow up action, and conduct telemarketing for the site.
The systems administrator is responsible for the system’s reliable and secure operation.
Network operations staff functions include load estimation and load monitoring, resolving network problems as they arise, designing and implementing fault resistant technologies, and managing any network operations that are outsourced to service providers or telephone companies.
Database administration-support activities such as transaction processing, order entry, inquiry management, or shipping logistics

Post implementation Audits
-formal review of a project after it is up and running. The audit should result in a comprehensive report that analyzes that project’s overall performance, how well the project was administered, whether the organizational structure was appropriate for the project, and the specific performance of the project team(s). Summaries of member performance can help managers decide which employees should be included in future projects.

1 comment:

willg said...

Many companies these days should switch over to a secure payment processing system. With the level of technical intelligence these days, it is never a bad idea to invest in the best security.