Companies have fallen for one of the most dangerous pieces of hype surrounding the Internet: that they risk going out of business if they do not transform themselves into e-businesses overnight. Chris Greyling, business development executive at Commerce Centre, a company, says that companies who try to take a quantum leap into e-business expose themselves to high risks and high costs, with a long path to a return on investment.
"Conventional wisdom holds that the Internet is a winner-takes-all environment where the companies that are first to market reap all the rewards," says Greyling. "However, many businesses have found through bitter experience that rushed e-business initiatives can cause damage to their revenues and customer relationships that can be difficult, and often impossible, to reverse.
"Yes, it is true that e-business will change the way companies in most industries operate, but this is not going to happen in weeks or months from now. This is about the long-term survival of your business, so you should take the time out to plan and execute properly."
Greyling advises companies that wish to transform into e-businesses to take an incremental approach to systems implementation. "E-business will, eventually, transform your business, but that transformation process must keep risk to the company to a minimum.
"Many companies make fundamental mistakes in early e-business projects which are difficult to fix in later stages in the migration to e-business. A phased approach allows companies to learn from the mistakes they make in their first e-business projects.
"In addition, such an approach allows your business to reap the return on investment it gains from e-business projects at each stage and use it for subsequent phases and projects. Thus, the move to e-business funds itself," says Greyling.
He also believes that many companies have put the cart before the horse in e-business implementation, for the simple reason that they have not set out and followed an e-business roadmap that sets out the incremental steps needed to transform into complete e-businesses. For example, many companies have tried to implement customer relationship management systems when they do not have the integrated contact centres or corporate intranets needed to support them.
Greyling says a company`s move to e-business using an incremental approach will go through three stages: improving the business to survive; innovating the business to grow or defend revenues, and inventing new businesses, business models, or revenue streams to outdo the competition.
In the first stage, companies take their inefficient and error-prone paper-based processes and start to migrate them to the electronic world. At this point, they start to experiment with new initiatives, such as e-procurement, intranets, reseller extranets, and business-to-consumer portals and e-commerce sites. Here, companies are creating new channels for buying and selling, as well as making their existing processes more effective and efficient. Greyling recommends that, to reduce the risk still further, companies should consider outsourcing these systems. "During this initial phase, companies can look to an external service provider to help them migrate their processes to the Web and to maintain and operate their new applications, reducing their up-front investment pegging costs and allowing them to run new and traditional systems in parallel."
At the second stage, companies start to completely re-think their business processes and strive to integrate formerly isolated parts of their business into a more coherent structure. At this point, companies will want to pull their many channels to market into a single view by building an integrated contact centre, as well as integrate their businesses with those of their clients, suppliers, and business partners through supply chain management.
In this phase, companies can look towards service providers to help them create electronic catalogues that adhere to technology and formatting standards, and rent their e-business applications from the service provider in a per-transaction, ASP-type model. "This gives them the ability to use best-class applications without needing make huge software and infrastructure investments," says Greyling.
Once these two stages are complete, companies are in a strong position to start introducing the new systems that will allow them to completely re-invent their businesses. They start implementing enterprise relationship management and knowledge management systems, introduce collaborative value chains - the next step up from supply chain management - and participate in e-marketplaces. "Here again, external service providers have a critical role to play, serving as a bridge between the new e-business and its partners and customers. It acts as an intermediary, which shields the company from the complexities of integrating its systems with those of its suppliers, customers, and marketplaces, and ensures that the business environment is secure."
The arrival of the Internet has collapsed the cycle of change in the business environment. In the days of distributed computing, companies were dealing with a six to 18 month cycle of change; the arrival of the Internet has slashed that down to six to 18 weeks. Greyling believes that while this means companies have increasingly smaller windows to plan and build new systems, it does not necessarily mean that solid planning should go out the window.
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