| E-business:
The Outside is now In
Not Business as Usual
E-business is at the epicenter of the largest
transformation in business and society since the Industrial Revolution.
Complete markets as well as industries and economies will become
E-business enabled. The
simple, transactional mode of E-commerce is electronic data interchange
(EDI) in a new disguise. E-business
is much broader in scope. It
focuses on relationships as the driving force behind economic results.
E-business promises long-term customer retention,
broader customer relations for sustainable price premiums, measurable
customer value and profitability, new channel opportunities, and superior
time to market capitalization. Relationships
with suppliers, channels, partners, and customers facilitated by seamless
"any-to-any" computing mean E-business occurs anywhere with
anything at anytime by anyone.
E-business fundamentally changes how business is
done. Its impact includes:
·
More informed, powerful customers
·
Attacks on established brands
·
Product/service differentiation problems
·
Altered cost relationships
·
Emergence of non-traditional competitors
The perspectives of large, "regular"
enterprises and leaders in E-business reveal
·
"Regular" companies have E-business pilot
programs. E-business is an
add-on product viewed with certainty.
It receives scrutiny from a "technology only" viewpoint
using traditional return on investment (ROI) analysis. Its focus is product oriented.
It suffers with security, growth, and incompatibility computing
issues.
·
E-business leaders consider E-business a core part of their
business and not a necessary evil. It
is customer-centric and driven. Business
and technology are integrated for frictionless
computing/interaction/exchange. Speed
creates a new bottom line and is critical and fast.
E-business is built to scale from the start.
It anticipates and prepares for attack and competitors.
The
E-business Opportunity
In E-business, first mover is often most
successful. There is more
money than time in E-business. Success
and failure are binary occurences – either a one or a zero.
The E-business opportunity consists of
·
E-business strategy – Determine what your enterprise’s
E-business model. This
normally occurs in a two-to-eight week timeframe.
·
Rapid technology deployment – This typically takes six
months or less. Instant
gratification is not soon enough.
·
Continuous innovation – Lifelong improvement is a given.
The champ-to-chump cycle is shrinking.
There is no version of the system, only the current state of the
business.
Make this opportunity your top corporate agenda.
Innovative
Strategies
E-business is a "Go Big or Go Home"
market. Innovative strategies
that capitalize on that notion are
·
Be the first mover – Seize the advantage of breaking
through first where risk is low but the return value is high.
·
Be the smart mover – Quickly follow the lead of successful
first movers and bask in the leadership aura.
·
Be the big mover – Dominate a particular niche.
·
Cultivate relationships
·
Drive market capitalization
·
Create the new bottom line
·
Build "any-to-any" computing
E-business is evaluated by the value of its
established customer relationships. Such
relationships can be newly cultivated; leveraged from existing ones; and
purchased from mergers, acquisition, or other sources.
Currently, barriers to entry into E-business are low, but this is
changing with escalating competition.
Today, the greatest risk is not being at the cutting edge of
E-business. E-business is
paradigm violence not merely a paradigm shift because it annihilates and
forever changes "business as usual" practices. For example, Egghead.com eliminated its brick-and-mortar
presence and is now strictly an E-business.
It is staking its economic livelihood and survival on its
well-known name and reputation. Another
example is the electronic auction forum spawned by e-Bay that competes
with Sotherby's, the venerable traditional auction house.
Strategies
that Work
System innovators are IT professionals who assist
in an enterprise’s determination of E-strategy, build E-business systems
for dot.com’s or existing enterprises trying to be dot.com’s, and
remain on the edge of innovation. They
are currently using the following E-business strategies:
·
Informational marketing and transaction content – Use
content to build context and interest.
Content can be free or purchased.
Intellectual capital can have both internal and external value
especially if its external availability creates a larger footprint for
your enterprise.
·
Category killer – Move into the market with a lot of
variety and sell by volume. Home
Depot, Wal-Mart, and Amazon.com offer virtually unlimited variety and are
high volume sellers.
·
Channel reconfiguration – Reevaluate channel roles and how
they apply to a multiple layered value chain. Eliminate unnecessary channel intermediaries.
The role of the channel is changing, but not disappearing.
Adapt accordingly.
·
Transaction processing – Examine if E-business enhances
your enterprise's core value propositions.
As examples, E*TRADE eliminates the cost of brokers while
priceline.com cuts costs with its electronic reverse auction service.
·
Event aggregation – Determine what event in the life of a
business or individual would cause them to purchase your enterprise's
services/products. Take steps
to be a total solution provider for it.
For example, the individual is buying a home.
Your enterprise could supply referrals to real estate agents and
listings, property appraisers, title/lien search services, home
inspectors, banking institutions, home loans, and moving specialists thus
expediting the purchase.
·
Market segment aggregation – Study the similarities and
preferences of groups of people and create services/products that address
their needs. Generation X and
Generation Y differ from babyboomers.
Specializing/customizing capabilities for college students and high
school students might mean easy, online credit card qualification for the
twentysomething and electronic "cash" for the teenager.
·
Value chain innovation – Develop deep business-to-business
(B2B) relationships that fulfill the back end and improve supplier
interactions. Streamline
activities for faster delivery and a closer understanding with customers.
Piggyback your suppliers into E-business systems by sharing
revolutionary technologies and business methodologies with them.
·
Efficiency – Look for ways to eliminate time and costs
internally. Leverage the
efficiency plans and practices of others by applying them to yours.
“Own”
the Customer Experience
These strategies are played out against a backdrop
of customer buying behaviors and the basic market categories.
The three categories of customer buying behavior are:
·
Open bidding – the buyer names the price
·
Trading community – the electronic marketplace brings
buyer and seller together for pricing
·
Relationship – the established rapport and understanding
between buyer and seller determines commerce decisions
The basic market categories are B2B,
business-to-customer (B2C), and internal value network (your business’
technology encourages leveraged interaction with partners and suppliers).
The customer experience is the brand and the
reason customers return. Electronic
customer relations management (ECRM) means communicating and collaborating
with the customer to ensure a unified, consistent experience that
thoroughly and completely meets the customer's needs.
Enterprises that "own" the customer experience will be
the winners.
How to
Build E-business
The steps for building E-business involve:
·
Attracting the customer
·
Knowing how they buy
·
Making transactions
·
Statusing orders
·
Giving effective customer service
·
Offering customers recourse for problems such as breakage or
returns
·
Providing a rapid conclusion such as electronic payment
Internet-based, E-business core applications are
what the customer uses the most. The
definition of customer includes a broad range of people such as retail
customers, distribution partners, creditors, investors, and joint venture
partners. Customers directly
connect with an enterprise’s E-business applications for primary sales
and service. E-business needs
to convey the message that it knows its customers, recognizes their
individual history, can satisfy their customers’ needs/wants, and
possesses an information system that delivers satisfaction.
This electronic front end, even if provided by an ASP, is invisible
and looks identical to employees or customers.
There is no differentiation between the inside or outside.
“E-enabled” infrastructure makes for a seamless experience of
satisfying requirements ranging from internal payroll to external order
fulfillment.
Core applications provide new capabilities that
make your business unique. They
become what distinguish your enterprise from the rest.
These applications can be bought, built, or a combination of both.
Internet-based architecture permits scalability, and less
technological and operational risk. A
balance needs to be struck when it comes to accommodating network
redundancy, load balancing, connectivity, security, and architecture
issues. Legacy systems must
evolve to fit with E-business.
What is
E-marketing?
E-marketing consists of buzz, category creation or
re-creation, category domination, or megatrend establishment.
Buzz is the function of public relations.
New products and brands are made by telling your story loud and
often. Target analysts and
investors in the financial community, industry pundits, and the business
press for coverage. Currently,
the media wants to talk about E-business and the Internet, so now is an
opportune time to extol the virtues of your enterprise.
Remember, competitive advantage on the Internet shrinks rapidly.
Customer acquisition is a viral marketing
exercise. The objective is
spreading your business like a virus and finding a way to do that for
free. Determine what you are willing to give away to drive more
traffic to your site and build a footprint bigger and faster. For example, Microsoft purchased Hotmail.
This was an inexpensive way to acquire customers and immediately
get into business category of free E-mail.
What to
Remember about E-business
A compelling Web experience should:
·
Give value not available in the physical world
·
Provide a functional/clean user interface
·
Be fast and easy
·
Make a purchase 3-to-5 clicks away
·
Be a personalized experience
·
Accommodate navigation for those who know what they want and
those who search for information.
Some strategic steps for customer retention
are:
·
Become embedded in your customers’ life
·
Focus on wallet share
·
Empower customer self-service
·
Stay in touch regularly via E-communication and direct
E-marketing
Sources of E-business revenue generation
are:
·
Transactions
·
Advertising
·
User fees
·
Listing fees
·
Merchandising fees
·
Licensing fees
Become
“Legendary.com”
Accelerated innovation occurs when there is
pattern optimization or pattern breaking.
Do both, think like a venture capitalist, and see what bears out
over time. Consider the
opposite of what everyone else is doing and do something outside the box
that is radical and nontraditional. Implement
something innovative and then integrate public relations, advertising, and
the Internet to capture attention and customers.
E-business represents new content, context, and
functionality for enterprises. The
“Legendary.com” company is a huge market opportunity for a value
proposition that does not yet exist.
Barriers to entry are minimal, so act as if you are 25 years old
and fearless because the competition is.
Prepare the 15-slide PowerPoint presentation, go to the venture
capitalists on Sand Hill Road, and raise more than just money.
Do not worry about profit since there is a 3-to-4 year grace period
before it appears.
|
