Chapter 12: Planning for Electronic Commerce Electronic Commerce,MELJUN CORTES
ObjectivesIn this chapter, you will learn about:• Planning electronic commerce initiatives• Strategies for developing elec...
Planning Electronic Commerce             Initiatives• Objectives of electronic commerce    –   Increasing sales in existin...
Linking Objectives to Business             Strategies• Downstream strategies    – Used to improve the value that the busin...
Linking Objectives to Business       Strategies (continued)• Electronic commerce opportunities can  inspire businesses to ...
Measuring Benefits• Tangible benefits of electronic commerce  initiatives    – Increased sales    – Reduced costs• Intangi...
Measuring the Benefits of Electronic         Commerce InitiativesElectronic Commerce, Sixth Edition   7
Managing Costs• Total cost of ownership    – Includes costs of hardware, software, design work      outsourced, and salari...
Web Site Costs• International Data Corporation and Gartner,  Inc.    – Cost for large company to build and implement      ...
Starting a Web Business: Three              Price TagsElectronic Commerce, Sixth Edition   10
Web Site Costs (continued)• Experts agree that the annual cost to  maintain and improve a site will be    – 50 and 200 per...
Cost Estimates for Building andOperating Magazine Publisher Web             SitesElectronic Commerce, Sixth Edition   12
Cost Estimates for Building andOperating Magazine Publisher Web        Sites (continued)Electronic Commerce, Sixth Edition...
Comparing Benefits to Costs• Capital projects (capital investments)    – Major investments in equipment, personnel, and   ...
Cost/Benefit Evaluation of    Electronic Commerce Strategy               ElementsElectronic Commerce, Sixth Edition   15
Return on Investment (ROI)• Techniques provide a quantitative expression  of a comfortable benefit-to-cost margin• Built-i...
Strategies for Developing  Electronic Commerce Web Sites• Typical early Web site    – Static brochure not updated frequent...
Increasing Complexity of Web Site            FunctionsElectronic Commerce, Sixth Edition   18
Internal Development vs.                Outsourcing• Outsourcing    – Hiring another company to provide outside support   ...
Early Outsourcing• Outsource initial site design and development to  launch a project quickly• Outsourcing team trains com...
Late Outsourcing• Information systems professionals    – Do initial design and development work    – Implement system    –...
Partial Outsourcing• Company identifies specific portions of the  project that can be completely designed,  developed, imp...
Selecting a Hosting Service• Factors to evaluate when selecting a hosting  service    – Functionality    – Reliability    ...
New Methods for Implementing        Partial Outsourcing• Incubators    – Company that offers start-up companies a      phy...
New Methods for Implementing   Partial Outsourcing (continued)• Fast venturing    – Existing company that wants to launch ...
Elements of Fast VenturingElectronic Commerce, Sixth Edition   26
Managing Electronic Commerce          Implementations• Project management   – Formal techniques for planning and controlli...
Tracking Activities in Primavera           Project PlannerElectronic Commerce, Sixth Edition   28
Project Portfolio Management• Each project is monitored as if it were an  investment in a financial portfolio• Chief Infor...
Staffing for Electronic Commerce• General areas of staffing    –   Business managers    –   Project managers    –   Accoun...
General Areas of Staffing• Business manager    – Should be a member of the internal team that sets      objectives for a p...
General Areas of Staffing                (continued)• Applications specialists    – Maintain accounting, human resources, ...
General Areas of Staffing                (continued)• Customer service personnel    – Help design and implement customer r...
Postimplementation Audit• Formal review of a project after it is up and  running• Gives managers a chance to examine    – ...
Postimplementation Audit               (continued)• Allows internal team, business manager, and  project manager to    – R...
Summary• Plans for electronic commerce implementations    – Set objectives    – Benefit and cost objectives should be stat...
Summary (continued)• Project management    – Formal way to plan and control specific tasks and      resources used in a pr...
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MELJUN CORTES Chapter12 E_Commerce

  1. 1. Chapter 12: Planning for Electronic Commerce Electronic Commerce,MELJUN CORTES
  2. 2. ObjectivesIn this chapter, you will learn about:• Planning electronic commerce initiatives• Strategies for developing electronic commerce Web sites• Managing electronic commerce implementationsElectronic Commerce, Sixth Edition 2
  3. 3. Planning Electronic Commerce Initiatives• Objectives of electronic commerce – Increasing sales in existing markets – Opening new markets – Serving existing customers better – Identifying new vendors – Coordinating more efficiently with existing vendors – Recruiting employees more effectivelyElectronic Commerce, Sixth Edition 3
  4. 4. Linking Objectives to Business Strategies• Downstream strategies – Used to improve the value that the business provides to its customers• Upstream strategies – Focus on reducing costs or generating value • Work with suppliers or inbound shipping and freight service providersElectronic Commerce, Sixth Edition 4
  5. 5. Linking Objectives to Business Strategies (continued)• Electronic commerce opportunities can inspire businesses to undertake activities such as – Building brands – Enhancing existing marketing programs – Selling products and services – Selling advertising – Developing a better understanding of customer needsElectronic Commerce, Sixth Edition 5
  6. 6. Measuring Benefits• Tangible benefits of electronic commerce initiatives – Increased sales – Reduced costs• Intangible benefits of electronic commerce initiatives – Increased customer satisfactionElectronic Commerce, Sixth Edition 6
  7. 7. Measuring the Benefits of Electronic Commerce InitiativesElectronic Commerce, Sixth Edition 7
  8. 8. Managing Costs• Total cost of ownership – Includes costs of hardware, software, design work outsourced, and salaries• Change management – Process of helping employees cope with changes• Opportunity costs – Lost benefits from an action not takenElectronic Commerce, Sixth Edition 8
  9. 9. Web Site Costs• International Data Corporation and Gartner, Inc. – Cost for large company to build and implement entry-level electronic commerce site is about $1 million • 79 percent of cost is labor related • 10 percent is the cost of software • 11 percent is the cost of hardwareElectronic Commerce, Sixth Edition 9
  10. 10. Starting a Web Business: Three Price TagsElectronic Commerce, Sixth Edition 10
  11. 11. Web Site Costs (continued)• Experts agree that the annual cost to maintain and improve a site will be – 50 and 200 percent of the initial cost• McKinsey & Company study – Full portal site cost estimate was $2.4 million to build and $4.3 million per year to maintain – Companion site cost estimate was $150,000 to build and $270,000 per year to maintainElectronic Commerce, Sixth Edition 11
  12. 12. Cost Estimates for Building andOperating Magazine Publisher Web SitesElectronic Commerce, Sixth Edition 12
  13. 13. Cost Estimates for Building andOperating Magazine Publisher Web Sites (continued)Electronic Commerce, Sixth Edition 13
  14. 14. Comparing Benefits to Costs• Capital projects (capital investments) – Major investments in equipment, personnel, and other assets• Key part of creating a business plan for electronic commerce initiatives – Identifying potential benefits – Identifying costs required to generate benefits – Evaluating whether benefits exceed costsElectronic Commerce, Sixth Edition 14
  15. 15. Cost/Benefit Evaluation of Electronic Commerce Strategy ElementsElectronic Commerce, Sixth Edition 15
  16. 16. Return on Investment (ROI)• Techniques provide a quantitative expression of a comfortable benefit-to-cost margin• Built-in biases that can lead managers to make poor decisions – ROI requires that all costs and benefits be stated in dollars – Focus is on benefits that can be predicted – Tends to emphasize short-run benefits over long- run benefitsElectronic Commerce, Sixth Edition 16
  17. 17. Strategies for Developing Electronic Commerce Web Sites• Typical early Web site – Static brochure not updated frequently – Seldom had any capabilities for helping the company’s customers• Today’s Web site includes – Transaction-processing tools – Automated homes for business processes of all kindsElectronic Commerce, Sixth Edition 17
  18. 18. Increasing Complexity of Web Site FunctionsElectronic Commerce, Sixth Edition 18
  19. 19. Internal Development vs. Outsourcing• Outsourcing – Hiring another company to provide outside support for all or part of a project• Internal team – Should include people with enough knowledge about the Internet and its technologies – Should be creative thinkers• Measuring achievements of internal team is very importantElectronic Commerce, Sixth Edition 19
  20. 20. Early Outsourcing• Outsource initial site design and development to launch a project quickly• Outsourcing team trains company’s information systems professionals in the new technology• It is best to have a company’s own information systems people working closely with the outsourcing team Electronic Commerce, Sixth Edition 20
  21. 21. Late Outsourcing• Information systems professionals – Do initial design and development work – Implement system – Operate system until it becomes a stable part of the business operation• Once a company has gained a competitive advantage maintenance of the electronic commerce system can be outsourcedElectronic Commerce, Sixth Edition 21
  22. 22. Partial Outsourcing• Company identifies specific portions of the project that can be completely designed, developed, implemented, and operated by another firm• Many smaller Web sites outsource their e- mail handling and response functionsElectronic Commerce, Sixth Edition 22
  23. 23. Selecting a Hosting Service• Factors to evaluate when selecting a hosting service – Functionality – Reliability – Bandwidth and server scalability – Security – Backup and disaster recovery – CostElectronic Commerce, Sixth Edition 23
  24. 24. New Methods for Implementing Partial Outsourcing• Incubators – Company that offers start-up companies a physical location with • Offices, accounting, and legal assistance • Computers and Internet connections – Receive ownership interest in the companyElectronic Commerce, Sixth Edition 24
  25. 25. New Methods for Implementing Partial Outsourcing (continued)• Fast venturing – Existing company that wants to launch an electronic commerce initiative joins external equity partners and operational partners• Equity partners – Banks or venture capitalists• Operational partners – Firms that have experience in moving projects along and scaling up prototypesElectronic Commerce, Sixth Edition 25
  26. 26. Elements of Fast VenturingElectronic Commerce, Sixth Edition 26
  27. 27. Managing Electronic Commerce Implementations• Project management – Formal techniques for planning and controlling activities undertaken to achieve a specific goal• Project plan – Includes criteria for cost, schedule, and performance• Project management software products – Microsoft Project – Primavera Project Planner Electronic Commerce, Sixth Edition 27
  28. 28. Tracking Activities in Primavera Project PlannerElectronic Commerce, Sixth Edition 28
  29. 29. Project Portfolio Management• Each project is monitored as if it were an investment in a financial portfolio• Chief Information Officer – Records projects in a list – Updates the list with current information about each project’s status – Assigns ranking for each project based on importance and level of riskElectronic Commerce, Sixth Edition 29
  30. 30. Staffing for Electronic Commerce• General areas of staffing – Business managers – Project managers – Account managers – Applications specialists – Web programmers – Web graphics designers – Customer service – Systems administrationElectronic Commerce, Sixth Edition 30
  31. 31. General Areas of Staffing• Business manager – Should be a member of the internal team that sets objectives for a project• Project manager – Person with specific training or skills in tracking costs and accomplishment of specific objectives• Account manager – Keeps track of multiple Web sites in use by a projectElectronic Commerce, Sixth Edition 31
  32. 32. General Areas of Staffing (continued)• Applications specialists – Maintain accounting, human resources, and logistics software• Web programmers – Design and write underlying code for dynamic database-driven Web pages• Web graphics designer – Person trained in art, layout, and composition – Understands how Web pages are constructedElectronic Commerce, Sixth Edition 32
  33. 33. General Areas of Staffing (continued)• Customer service personnel – Help design and implement customer relationship management activities• Call center – Company that handles incoming customer telephone calls and e-mails for other companies• Systems administrator – Responsible for the system’s reliable and secure operationElectronic Commerce, Sixth Edition 33
  34. 34. Postimplementation Audit• Formal review of a project after it is up and running• Gives managers a chance to examine – Objectives – Performance specifications – Cost estimates – Scheduled delivery datesElectronic Commerce, Sixth Edition 34
  35. 35. Postimplementation Audit (continued)• Allows internal team, business manager, and project manager to – Raise questions about the project’s objectives – Provide feedback on strategies• Final report should analyze – Project’s overall performance – How well the project was administered – Specific performance of the project team(s)Electronic Commerce, Sixth Edition 35
  36. 36. Summary• Plans for electronic commerce implementations – Set objectives – Benefit and cost objectives should be stated in measurable terms• Project evaluation technique – Return on investment• Determining an outsourcing strategy – Form an internal team that includes knowledgeable individuals from within the companyElectronic Commerce, Sixth Edition 36
  37. 37. Summary (continued)• Project management – Formal way to plan and control specific tasks and resources used in a project• Project portfolio management techniques – Used to track and make trade-offs among multiple ongoing projects• Critical staffing areas – Business management – Application specialists – Systems administrationElectronic Commerce, Sixth Edition 37

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