A common sense approach to eCommerce Governance
By Scott Wilkinson
There is a lot of noise in business circles about eCommerce execution and decision
control – or governance. It is clear that companies that made choices in the early web
days to create stand-alone web platforms are dealing with the effects some short-sighted
choices. Almost 10 years after the popularization of the browser, eCommerce
technologies are now core to business operations but the eCommerce organizations are
Not surprisingly there is mounting frustration with eCommerce businesses and the teams
in the businesses running them by business leaders and other internal stakeholders.
Business leaders want to see the results and not just the costs and excuses. Stakeholders
want to get more done in what increasingly seems to be a growing list of priority projects.
There are two answers to address this mounting frustration: evaluate your eCommerce
technology and infrastructure investments and ask yourself whether your platform is
really designed to meet the strategies of your company; and, evaluate the role of
eCommerce decisions and ask yourself whether the organization and decisions are
making the best choices. They go hand in hand.
Best-in-class companies are upgrading both the eCommerce infrastructure and
organization models to take advantage of second generation web technologies. These
companies are making strategic efforts to service their customers seamlessly across all
their channels. To accomplish this they are de-siloing their companies, looking for
synergies between channel shopping behaviors and uprooting traditional success criteria
like unit-driven P&L reporting which hamper corporate strategic goals.
These are not over night strategies. Best-in-class companies are rigorous in aligning
business, technology and eCommerce decisions to the key objectives. This requires
patience and diligence by business leaders. It also requires a framework to make sure the
strategies are understood and acted on across all levels of an organization. This
framework is vital to allow all stakeholders to understand their place in decision making
processes and their responsibilities.
Governance Business Performance
What are the customer How do we ensure that the right How do we measure our success at
strategies and competitive decision makers make the right achieving business goals?
differentiation plays that we need decisions?
to do to succeed on the web? How do we ensure that the whole
company understands and can align
to strategic goals?
eCommerce Unit eCommerce eCommerce Success
Behavior Organization Metrics
What are the desired outcomes What is required by the eCommerce What metrics, analytics and
and behaviors desired by the team in order to execute desired subjective measures of
eCommerce team to support behaviors (roles, reporting structures, eCommerce offer support
business strategies? competencies, etc)? eCommerce and corporate
Figure 1 - Governance Alignment Model
While every company is different there are five areas where companies fail in
• Decision Making Structures: Companies struggling with eCommerce
governance do not actively think about who needs to be involved in eCommerce
decisions within the company in order to create alignment to corporate, business
unit and market strategies. These companies tend to keep decision making
informal, narrow and involve only a small group of decision makers. They tend to
not look to decision making as a process of alignment, communication and of
natural tensions to support important checks-and-balances but of a result.
• Alignment Processes: Some companies fail by eschewing important alignment
processes like annual planning, formal or stage-gated change management
processes, business cases, service level agreements and budgeting chargebacks.
These companies avoid process because it appears to complex, bureaucratic,
expensive or unnecessary.
• Communications: Other companies fail in understanding the vital and ongoing
role of communication mechanisms in executing eCommerce objectives. These
companies execute communications in silos or in one-way exchanges. As a result,
there is lack of understanding across the organization on core strategies,
objectives and success criteria associated with the websites.
• Requisite Resources: A number of struggling companies try and execute
eCommerce strategies without giving clear thought to the required skills,
competencies and staffing levels. These decisions are often driven by cost
measures or desire for efficiencies. As a result key roles are not being filled or at
the very list are filled by other internal stakeholders who do not have the skills or
bandwidth. Then of course there are those companies that outsource functions
• Measurement: The last area for failure is lack of measurement. There are three
areas where failure occurs. Many companies do not define success objectives for
their eCommerce properties and initiatives. Others do not validate results with
metrics. For those that do measure and validate, some do not evaluate whether
the metrics are actually contributing to the behaviors and outcomes desired by
These companies face the sum of many small decisions that have amounted to significant
issues effecting the eCommerce team effectiveness and customer experience. It is not
surprising that many companies are asking questions. Why are our customers still
trapped in silos? Why is there internal confusion about our web strategies, objectives and
priorities? Why do we seem to have not only spend more on web technology but
increasingly get less apparent value from it? Where is the promised breakout growth from
our eCommerce investments?
Let’s face it. Web 1.0 has gotten us as far as we can go. The companies that will succeed
in the next phase are the ones already making strategic investments in their eCommerce
So how do companies become best of breed? We observe that best-of-breed companies
have gotten out of their early web silos by doing 5 things:
• Fix governance structures as you fix web technologies – the technology
is a tool. How the tool is used and optimized is a people issue. Best-in-
class companies are focusing as much on reengineering how they work as
on new technologies. If you think a new web site alone will help you,
• View governance and behaviors in the same light – governance is a
formal framework to encourage desired behaviors between key decision
makers. Behavior is the doing of strategy – it’s the how to results. You
want communication, checks and balances, collaboration and executive
involvement. Build the processes, oversight committees and structured
communication tools to facilitate and hold teams accountable for results.
• Make cross-corporate bets – you can’t afford to make narrow technology
decisions anymore. The complexity of mounting technology is the most
important challenge facing companies over the next 5 years. Winning
companies are recognizing that the customer does not care how a company
is organized or what the restraints of the system are. And the excuses we
use to tell them why are running thin. Technology investment is key to
retaining and delighting a customer going forward. We cannot think it
terms of channels, business units or segments any longer. The plays we
make must be integrated. This also places demands on decision making
and alignment. Governance must be cross corporate.
• Accept complexity to manage complexity – It is counter intuitive but
complexity is a requirement. Simple solutions may be easier to sell but are
usually false. The quicker companies accept and embrace the complexity
of matrix organizations, alignment processes, consensus decision making
and the systemic tensions of checks-and-balances the sooner they can
move from process discussions to satisfying the customer. There aren’t
any short cuts.
• Emphasize results and measurement – while obvious, our research
indicates that measurement is key to outstanding success. Every decision
and deliverable should have a measure attached to it. Site data, customer
satisfaction data, and financials all need to be considered. Active
discussion between all stakeholders needs to be encouraged to ensure that
the measures support not only the objectives defined for measurement but
the underlying business needs of smart revenue growth, customer
satisfaction and long-term strategic alignment.
Getting a handle on eCommerce governance is vital if a company really wants to come to
grips with their eCommerce strategy and results. A simple framework for thinking about
eCommerce governance is illustrated below. Critical to the thinking is the linking of
strategy, desired behaviors and measurement to the mechanisms of governance and
Scott Wilkinson is Managing Director of Idea Associates Ltd, a Toronto based
management consultancy with a focus on financial services product and channel
Is Governance a problem in your company?
Here is a simple exercise. Answer it yourself then ask your peers in your company the
same questions. Compare the answers.
Do you hear this said about your eCommerce offer? Rarely Sometimes Often
“We can’t identify a customer who comes in through the
door versus telephone versus online… our systems don’t
talk to each other”
“We want to do the strategic projects but once we
complete our maintenance we have no more IT resources”
“I’ve given up on IT, why don’t we just outsource our
“I don’t know who to talk to and I have given up trying
“Our business can’t get on the priority list … we’re just
not that important to the eCommerce group”
“We’re moving from one problem to the next … we can’t
seem to get ahead to focus on the big questions”
“Our executives don’t understand eCommerce, we always
seem to be going back and telling them about what we do
and what we need from them”
“We seem to spend most of our time dealing with internal
issues and strategies not customer strategies”
“We told them that it wouldn’t work that way … but they
did it anyway and now we have a bigger mess”
Because we have 3 web sites everything we do has to be
done three times