Although commerce on the Internet is
barely six years old, it’s already been the driving force behind generation of new businesses.
Companies like Amazon.com, e-Trade and e-Bay are now household names, in the US at least, and more ?dot.coms’ appear every day.
Not all newcomers are successful; as with businesses in the ?old economy’, more fail than survive. But many pose massive threat to established ?pre-e’ businesses.
Traditional high-street shops, banks, share-brokers, travel agents and enterprises in many other industries are facing life-and-death issues.
It’s fair bet that many won’t survive and will only realise that new ?e-competitors’ are destroying their business when it’s too late to do anything about it.
Given that successful e-business requires completely different approach to business processes, marketing and selling, supply chain management Ñ everything, in fact Ñ it’s hard to see how any organisation can feel secure unless it has an e-business strategy. However, even in the US, which leads the rest of the world in e-business by good margin, around 60 percent of the corporations we talk to still don’t have an ?e-strategy’.
The need for an e-strategy becomes more pressing when you realise that, despite the widely-trumpeted ?e-successes’, many retailers have found that their online selling ventures do little more than increase costs. That brand-new ?virtual store’, for example, isn’t likely to make fortune without major expenditure on advertising, brand development and the various processes involved in fulfilling customers’ orders.
?Speed to market’ is an e-business mantra for good reason Ñ but speed to market without strategy simply means that you’ll lose money faster.
The clamour for attention
At the same time as many CEOs are wondering what they need to do to develop e-business capabilities, they’re on the receiving end of advice and demands from every quarter. Business partners may be requesting e-procurement solutions. Staff members will offer many bright ideas. Meanwhile, shareholders will be wanting reassurances that their investment is protected.
Where are we going?
So, if you’re CEO wondering what you should be doing about e-business, where should you start? This article is concerned with the first question CEO should ask: where are we going?
What’s our ?e-vision’?
Your business vision will need to be translated into an ?e-vision’ and may change in the process. This could happen even if you have simple, low-tech organisation and even if you don’t sell products or services. Today, people will expect to find you online and will mentally ?downgrade’ your organisation if you’re not.
Revolution or e-volution?
Most likely, you’ll be in an industry where others use e-business, whether it’s to reach new customers, cut costs or to provide better customer service. So where should your organisation be positioned?
This issue goes beyond thinking, for example, about using e-business as new channel to the market or simply aligning e-business initiatives to your business vision.
When you start asking the ?where are we going’ questions, you may end up changing the very fabric of your organisation. Your ?e-vision’ may end up sending you in whole new direction.
This is particularly true, for example, in manufacturing industries. Most manufacturers are now considering selling online.
After all, there is nothing retailer can do that can’t be done Ñ with bit of imagination Ñ by the manufacturer themselves.
In the US, for example, car makers like Ford and General Motors are investing billions of dollars in e-business. Much of this investment has been going into improving supply chain processes, but increasingly the car makers are looking at the retail market.
Not only are they using the Internet to display their wares but they are also letting customers configure their own cars and obtain prices. Soon they’ll be selling their cars directly, bypassing traditional distribution channels.
This is powerful illustration of the Internet creating new ways of doing business. In the US, SeraNova helped Volkswagen to launch the new ?Beetle’ with an online ?configurator’.
One of the things we found quickly was that many customers preferred to ?negotiate’ with computer rather than deal with human salesperson.
However, it’s one thing for customer to decide what colour their car is to be, what kind of stereo they want, whether they want turbo and ABS and air-bags.
Customers will still want to test-drive before they buy.
So, will manufacturers have to store test cars in every town? It seems more likely that they will simply pay Hertz or Avis to lend Mrs Smith new Beetle for the day. And if customers need finance the manufacturers will work with finance companies in order to provide direct service.
Similarly, they will provide after-sales service through partnerships with garages to form chain of authorised service centres throughout the country.
In other words, we can expect to see car makers transforming themselves from manufacturers into manufacturing and retail enterprises that form alliances with wide range of customer service organisations.
The transformation faced by car makers is considerable but the benefits will be greater than the costs. And it will redefine each company’s business vision, which will now have to encompass the retail business and readiness to work with new breed of partners.
To B2B or not to B2B?
The answer to this final vision question settles whether your business is in the B2C (business to consumer) business or the B2B (business to business) business.
For example, another of our US clients is in the general insurance business. As B2C business, they are focused on end consumers. In the last several years, pure e-business insurance players have suddenly appeared. Esurance and eCoverage, for example, now offer customers the opportunity to configure policies and obtain quotes online.
A handful of companies in the US and Britain are going further and allowing customers to purchase insurance online Ñ more will surely follow. The big American players like Allstate and State Farm are now assigning billion-dollar-plus budgets to online insurance.
For these organisations, B2C is everything. While the use of intranets and e-procurement can make their business more efficient, the core business of insurance companies is all about selling to consumers.
But consider another kind of company, in the same general line of business. Financial outsourcers make their livings by providing ?back office’ services to insurance and pension fund companies.
These outsourcers typically sell small number of new deals each year and the sales process can take many months of face-to-face discussions. Selling online is of little interest.
The out-sourcers are interested instead in ways in which they can use e-business to interface with their clients.
In the new world, for example, clients will no longer have to send messages to tell the outsourcer to add new employees to the pension fund (or delete subscribers, or change details). Instead, in this ?business-to-business’, or ?B2B’, paradigm, the client will use the outsourcer’s e-business system and make the changes themselves.
The result is happier clients (people actually like doing things themselves if they can get immediate confirmation that everything worked correctly) and, for the outsourcer, an immediate reduction in work-load and costs.
Once you’ve got visionÉ
These sorts of ?e-vision’ questions are just the first of many that, as CEO, you need to be asking. However, if you think you’ve addressed the ?where are we going’ issues, you’ve really only just started on the road.
Many more questions follow. How are you going to make your ?e-vi