Conventional wisdom holds that the Internet is a winner-takes-all environment where the companies that are first to market reap all the rewards. 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.
That`s according to Chris Greyling, (please insert title) at Commerce Centre of Southern Africa, who 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 return on investment.
Says Greyling: "Many 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.
"Yes, it is true that e-business will change the way that 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 businesses, 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.
"Taking a phased approach to e-business implementation reduces the risks your company is exposed to dramatically. For example, 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 in an incremental approach will be composed of three stages: improving the business to survive; innovating the business to grow or defend revenues; and finally, 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 Web. At this point, they start to experiment with 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.
Says Greyling: "During this initial phase, companies can look towards 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 and exposure to risk."
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 strive 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.
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. Here, they can look to implement 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.
Greyling says: "We advocate that companies be cautious and careful during the planning of their e-business initiatives, and fast and ruthless in execution.
"Take at least three weeks or a month to plan an e-business project. It is more time- and cost-effective than trying to fix major problems when a project has been rolled out."
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