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  1. 1. Chapter 12 Planning for Electronic Business: Resource and Implementation Issues
  2. 2. Learning Objectives <ul><li>In this chapter, you will learn about: </li></ul><ul><li>Identifying the value of electronic commerce initiatives </li></ul><ul><li>Aligning implementation plans with strategies </li></ul><ul><li>Deciding which electronic commerce project elements to outsource </li></ul>
  3. 3. Learning Objectives <ul><li>Selecting Web hosting services </li></ul><ul><li>Using incubators and fast venturing techniques to launch Internet business initiatives </li></ul><ul><li>Using formal project management techniques to plan and control electronic commerce activities </li></ul><ul><li>Staffing electronic commerce activities </li></ul>
  4. 4. Planning the Electronic Commerce Project <ul><li>A successful business plan for an electronic commerce initiative should include activities that will: </li></ul><ul><ul><li>Identify the initiative’s specific objectives </li></ul></ul><ul><ul><li>Link those objectives to business strategies </li></ul></ul><ul><ul><li>Manage the implementation of those business strategies </li></ul></ul><ul><ul><li>Oversee the continuing operations of the initiative once it is launched </li></ul></ul>
  5. 5. Identifying Objectives <ul><li>Common objectives include: </li></ul><ul><ul><li>Increasing sales in existing markets </li></ul></ul><ul><ul><li>Opening new markets </li></ul></ul><ul><ul><li>Serving existing customers better </li></ul></ul><ul><ul><li>Identifying new vendors </li></ul></ul><ul><ul><li>Coordinating more efficiently with existing vendors </li></ul></ul><ul><ul><li>Recruiting employees more effectively </li></ul></ul><ul><li>Resource decisions should consider the expected benefits and expected costs of meeting the objectives. </li></ul>
  6. 6. Linking Objectives to Business Strategies <ul><li>Businesses can use downstream strategies, which are tactics that improve the value that the business provides to its customers. </li></ul><ul><li>Businesses can pursue upstream strategies that focus on reducing costs or generating value by working with suppliers or inbound logistics. </li></ul>
  7. 7. Linking Objectives to Business Strategies <ul><li>Web is an attractive sale channel. </li></ul><ul><li>Web can be used to complement business strategies and improve competitive positions. </li></ul><ul><li>Electronic commerce opportunities can inspire businesses to undertake many activities. </li></ul>
  8. 8. Linking Objectives to Business Strategies <ul><li>More companies are taking a closer look a the benefits and costs of their electronic commerce projects. </li></ul><ul><li>A good business plan will set specific objectives for benefits to be achieved and costs to be incurred. </li></ul><ul><li>Companies use pilot Web site to test an electronic commerce idea, and then release a production version when it works well. </li></ul>
  9. 9. Measuring Benefit Objectives <ul><li>Many companies create Web sites to build their brands or enhance existing marketing programs. </li></ul><ul><li>These companies can set goals in terms of increased brand awareness, as measured by market research surveys. </li></ul><ul><li>Companies that sell goods or services on their sites can measure sales volumes in units or dollars. </li></ul>
  10. 10. Measuring Benefit Objectives <ul><li>Companies can use a variety of similar measurements to assess the benefits of other electronic commerce initiatives. </li></ul><ul><li>Supply chain managers can measure supply cost reductions, quality improvements, etc. </li></ul><ul><li>A summary of measuring the benefits of electronic commerce initiatives appears in Figure 12-1. </li></ul><ul><li>Click to see Figure 12-1: </li></ul>
  11. 12. Measuring Cost Objectives <ul><li>Many changes in the cost of hardware are downward. </li></ul><ul><li>The increasing sophistication of software provides an ever-increasing demand for newer hardware. </li></ul><ul><li>The project budget must include the cost of hiring, training, and personnel. </li></ul><ul><li>Annual cost to maintain and improve a site will be between 50% and 100% of its initial cost. </li></ul>
  12. 13. Comparing Benefits to Costs <ul><li>If the benefits exceed the cost of a project by a comfortable margin, the company invests in the project. </li></ul><ul><li>Companies should evaluate each element of their electronic commerce strategies using this cost/benefit approach. </li></ul><ul><li>Managers often use return on investment (ROI) to evaluate any capital investment. </li></ul>
  13. 14. Strategies for Web Site Development <ul><li>The evolution of Web site functions: </li></ul><ul><ul><li>The static brochures of the early day of electronic commerce </li></ul></ul><ul><ul><li>Transaction processing tools </li></ul></ul><ul><ul><li>Today’s automated homes for business processes of all kinds </li></ul></ul><ul><ul><li>Click to see Figure 12-5: </li></ul></ul>
  14. 16. Internal Development vs. Outsourcing <ul><li>The key to success is finding the right balance between outside and inside support for the project. </li></ul><ul><li>Hiring another company to provide the outside support for the project is called outsourcing. </li></ul>
  15. 17. The Internal Team <ul><li>The first step in determining which parts of an project to outsource is to create an internal team that is responsible for the project. </li></ul><ul><li>Business knowledge and creativity are much more important than technical expertise in establishing successful electronic commerce. </li></ul>
  16. 18. The Internal Team <ul><li>Measuring the achievement of internal team is very important. </li></ul><ul><li>Customer satisfaction, number of sales leads generated, and reductions in order-processing time are examples of metrics that can provide the team’s level of accomplishment. </li></ul>
  17. 19. Early Outsourcing <ul><li>In many electronic commerce projects, the company outsources the initial site design and development to launch the project quickly. </li></ul><ul><li>The outsourcing team then trains the company’s employees in the new technology before handing the operation of the site over to them. </li></ul><ul><li>This approach is called early outsourcing. </li></ul>
  18. 20. Late Outsourcing <ul><li>The company do the initial design, development, implementation, and operate the system until it becomes stable. </li></ul><ul><li>Once the company has gained all the competitive advantage provided by the system, the maintenance of the electronic commerce system can be outsourced. </li></ul><ul><li>This approach is called late outsourcing. </li></ul>
  19. 21. Partial Outsourcing <ul><li>In partial outsourcing, the company identifies specific portions of the project that can be completely designed, developed, implemented, and operated by another firm that specialized in a particular function. </li></ul><ul><li>E-mail system, electronic payment system, and Web hosting are examples of partial outsourcing projects. </li></ul>
  20. 22. Selecting a Hosting Service <ul><li>The internal team should be responsible for selecting the ISP that will provide the site’s hosting service. </li></ul><ul><li>For smaller electronic commerce projects, teams can consult an ISP directory such as The List. </li></ul><ul><li>For larger Web sites, the team will want to obtain the advice of consultants or other firms that rates ISPs and CSPs, such as Keynote Systems. </li></ul><ul><li>Click to see Figure 12-6: </li></ul>
  21. 23. Selecting a Hosting Service <ul><li>The factors to evaluate when selecting a hosting service include: </li></ul><ul><ul><li>Functionality </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>Bandwidth and server scalability </li></ul></ul><ul><ul><li>Security </li></ul></ul><ul><ul><li>Backup and disaster recovery </li></ul></ul><ul><ul><li>Cost </li></ul></ul>
  22. 24. New Methods for Implementing Partial Outsourcing <ul><li>New ways of implementing the partial outsourcing strategy have evolved for Web businesses. </li></ul><ul><li>Two of the more popular methods are: </li></ul><ul><ul><li>Incubators </li></ul></ul><ul><ul><li>Fast venturing </li></ul></ul>
  23. 25. Incubators <ul><li>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. </li></ul><ul><li>The incubators may offer seed money, management advice, and marketing assistance. </li></ul><ul><li>In exchange, the incubator receive an ownership interest in the company. </li></ul>
  24. 26. Fast Venturing <ul><li>In fast venturing, an existing company that wants to launch an electronic commerce initiative joins external equity partners and operational partners to scale up the project rapidly. </li></ul><ul><li>Equity partners are usually banks or venture capitalists. </li></ul><ul><li>Operational partners are firms that have experience in moving projects along. </li></ul><ul><li>Click to see Figure 12-7: </li></ul>
  25. 28. Managing Electronic Commerce Implementations <ul><li>The best way to manage any complex business software implementation is to use formal project management techniques. </li></ul><ul><li>Individual projects were becoming large that it became impossible for managers to maintain control without some kind of assistance. </li></ul>
  26. 29. Project Management <ul><li>Project management is a collection of formal techniques for planning and controlling the activities undertaken to achieve a specific goal. </li></ul><ul><li>The project plan includes criteria for cost, schedule, and performance. </li></ul><ul><li>It helps project managers make intelligent trade-off decisions regarding these three criteria. </li></ul>
  27. 30. Project Management <ul><li>Project managers use specific application software called project management software to help them manage projects. </li></ul><ul><li>Microsoft Project and Primavera Project Planner are tools for managing resources and schedules. </li></ul>
  28. 31. Project Management <ul><li>Project management software can help the team manage the tasks assigned to consultants, technology partners, and outsourced service providers. </li></ul><ul><li>The Project Management Institute is a not-for-profit organization devoted to the promotion of professional project management practices. </li></ul>
  29. 32. Staffing the Operation <ul><li>Regardless of outsourcing, it must determine the staffing needs of the electronic commerce initiative. </li></ul><ul><li>The general areas of staffing include: </li></ul><ul><ul><li>Business management </li></ul></ul><ul><ul><li>Application specialists </li></ul></ul><ul><ul><li>Customer service staff </li></ul></ul><ul><ul><li>Systems administration </li></ul></ul><ul><ul><li>Network operations staff </li></ul></ul><ul><ul><li>Database administration </li></ul></ul>
  30. 33. Post-Implementation Audits <ul><li>A post-implementation audit is a formal review of a project after it is up and running. </li></ul><ul><li>The post-implementation audit gives managers a chance to examine the objectives, performance specifications, cost estimates, and schedule delivery dates that were established in its planning stage and compare them to what actually happened. </li></ul>