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Thinking E-Business Design: More Than Technology

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1 Thinking E-Business Design: More Than Technology
Chapter Four Thinking E-Business Design: More Than Technology

2 Introduction 3 interlocking layers of e-business e-Business Design
What business design can make your customers’ shopping and service experiences unique and memorable? What capabilities and competencies create rich customer experiences? In the quest for efficiency, how do you structure your organization for efficiency? e-Business App Infrastructure Supports design by providing s/w functionality Strong app infrastructure foundation necessary from which to deploy e-business apps

3 Introduction e-Business Infrastructure
structural foundation supporting the app layer is a balance of structure and flexibility harnesses, safeguards, manages, and permits use of information in ways that are fast, safe and simple comprises the tech, utilities, and services needed for uninterrupted flow of e-commerce

4 3 interlocking layers of e-business
InfoStructure Scalability Reliability Hosting Storage Servers Databases Middleware Routers Site Security Data Security Transaction Security E-Business Design Business Model Scope Customer Selection Value Creation Strategic Control Organizational Systems E-Business Infrastructure CRM e-Procurement ERP Supply Chain Financials Selling Chain Business Intelligence Portals

5 The Race to Create Novel e-Business Designs
Getting it right the first time very important right strategy accelerates market penetration and minimizes cost wrong strategy can cause years of repercussion Truly great companies use state-of-the-art e- commerce processes to transform themselves redefine value for customers build powerful e-business designs to outperform competition understand customer priorities

6 The Race to Create Novel e-Business Designs
Focus no longer limited to process improvement; focus of change initiatives shifted to business redesign Retail drug industry Success depends on how quickly a company can formulate novel business designs and adapt them to its markets

7 Step 1: Self Diagnosis Assess impact of recent customer, business and technological trends Has the recent wave of tech innovation created new ways of doing business and reorganizing priorities within your firm? Is your company responding to changing customer expectations? Is your company willing to question and change countless industry assumptions to take advantage of new opportunities while also preserving investments in people, apps and data? Is your company successful at lowering operating costs while making complex business apps adaptive and flexible to change under the relentless pressure of time to market?

8 Step 1: Self Diagnosis Innovator or market leader: All answers yes
Early adopter or visionary: Most answers yes Charles Schwab Silent majority: Few answers yes Pragmatists, Old-guard Conservatives, and Die-hard Skeptics

9 Step 2: Reverse the Value Chain
Greatest challenge in e-business: linking emerging tech to new business design Managers find creating new business designs difficult with emerging technologies and customer needs trained to concentrate on improving products, increasing market share, and growing revenues distinction between products and services blur in e-business world

10 Step 2: Reverse the Value Chain
Successful companies invent value, not just add value outside in vs. inside out customer requirement important in outside in approach Starbucks invented value where traditional companies did not by creating business around gourmet coffee Outside-in, customer centric approach essential in times of great structural transition in economy

11 Step 2: Reverse the Value Chain
Traditional Business Design In-house Core Competencies Rigid Infrastructure/ Processes Products/ Services Channels Customers e-Business Design Flexible Infrastructure/ Processes Outsourced/ In-house Core Competencies Customers Needs Integrated Channels Products/ Services

12 Step 3: Choose a Focus Service excellence Operational excellence
Delivering what customers want with hassle-free service and superior value Operational excellence Delivering high-quality products quickly, error free, and for reasonable price Continuous-innovation excellence Delivering products and services that push performance boundaries and delight customers

13 Service Excellence

14 Service Excellence Involves selecting a few high-value customer niches and then making a concerted effort to serve them well Requires commitment to CRM Operating principles of service excellence prepare for the unforeseen gather and maintain all up-to-date, accurate business and economic information you need, where and when you need it user customer contact mgmt develop corporate philosophy about customer service

15 Operational Excellence

16 Operational Excellence
Involves providing lowest-cost goods and services possible while simultaneously minimizing problems for customer Key principles efficient leveraging of assets mgmt of efficient transactions mgmt of sales intelligence dedication to measurement systems mgmt of customer expectations

17 Continuous-Innovation Excellence

18 Continuous-Innovation Excellence
Involves not only providing best-possible products and services but also offering customer more exciting features and benefits than competitor Microsoft, Sun Microsystems and Nike Downfall of AT&T, Eastman Kodak, Sears and GM due to lack of technological innovation Key principles risk-oriented mgmt style growth by mergers and acquisitions market-education style encouraging innovation

19 Step 4: Execute Flawlessly
How can you move from where you are today to where you want to be? How do you integrate and tailor your legacy infrastructure to meet new e-business requirements? Execs must be willing to cut losses and abandon important current projects that do not support the goals of the e-business design

20 Service Excellence at American Express
Business transformation of the mid 1990s resulted in new e-business design concentrating on mgmt of customer relationships In era of limited personal time, customers concerned about quality service, esp. its simplicity, flexibility and consistency Combine detailed customer knowledge with service flexibility CustomExtras enables custom discounts and other deals directly on card members’ bills Investing $1 billion annually in the construction of a sophisticated service infrastructure Within financial services industry, this can provide means to develop competitive advantage and raise barriers to entry

21 Service Excellence at American Express
The Way It Was The New Way Online Travel Services Travel Services Credit Cards Membership Rewards Integrated Financial Services Financial Planning Life Path Planning Private Banking Banking

22 Operational Excellence at Dell
Build-to-order e-business design low-cost manufacturing and fast-cycle product development Integration of customer demand from the direct- sales channel with back-end supply chain enables cost-effective selling directly to customers, bypassing resellers and their markups Computer distributors that once controlled PC business went bankrupt because of Dell’s direct sales model CHS Electronics, MicroAge, InaCom

23 Dell launches an FTP site for customers to download files
Dell Online History Late 1980s 1994 1995 1996 1997 1998 Dell launches an FTP site for customers to download files June site launched with technical support content and gateway January $1 Million/day February Marketing content added to site November $3 Million/day 36 countries 200+ Premier Pgs. 400k users/wk July Dell starts selling systems online 80,000 online user sessions per week Focus efforts on Corporate customer $4 M/day Focus on value- added services October Configurator generating online quotes is launched March Asian/European Internet site launched 225,000 online user sessions per week

24 The Dell eCommerce System
Integrated customer experience Value proposition Shopping and buying Service and support Loyalty/ relationship Order status Premier services Product services Price Direct model Dell Configuration and shopping Trouble- shooting Electronic orders Personalized experience Value-added services

25 Continuous Innovation at Cisco Systems
At Cisco, business design centers on the core belief in what continuous innovation demands from organizations attempting it build on change, not stability organize around networks, not a rigid hierarchy based on interdependencies of partners - not self-sufficiency construct operations on tech advantage, not old-fashioned bricks n mortar Continuous innovation via acquisitions Acquisitions cornerstone of its business strategy, to survive larger competitors Identify companies that help enhance product line and keep up with changing marketplace Make sure the acquisition is assimilated quickly Extended Enterprise model to support the innovation- excellence model Focus on core competencies and form partnerships with suppliers that provide other key capabilities

26 “Full Service” Internet Commerce on CCO
Pricing Configuration Order Placement Order Status Service Order Invoice

27 Reseller Care Cisco Connection Online
Problem Detection: CiscoWorks Problem Notification: Bug Alerts Problem Identification: Bug Navigator Operation Support Software Library Problem Resolution: Open Forum, Troubleshooting Engine Installation and Configuration Documentation Given Cisco’s rapid growth in the early 90s, and the lack of skilled engineers to provide technical assistance, the goal of automating Customer Care was to scale Cisco’s support operations to meet customer needs while improving customer satisfaction and reducing support costs. While there were several things Cisco could have automated, they started small by simply building a web site for technical information and upgrades. Over the last four years the company has deployed several additional tools: The Installation and Configuration tool eliminates hardcopy documentation with web based instructions and procedures. The Software Library electronically distributes Cisco network software, significantly lowering time required for network upgrades. On average, customers and partners download more than 50,000 pieces of software each week. This represents 90% of all software distributed by Cisco. CiscoWorks allows customers to walk through a problem detection routine and hone in on the likely cause of a problem. Through Bug Navigator, Cisco reveals all its bugs to customers and enables them to take measures to identify, prevent, and repair the bugs. The application proactively helps customers fix bugs thus saving valuable time for customers and partners and eliminates an enormous number of potential calls to Cisco’s Technical Assistance Center. The Problem Notification tool lets customers know when problems have been resolved. Finally, the Problem Resolution tools let customers get quick access to information and answers to technical problems. Open forum and the troubleshooting engine allow customers to quickly access information and answers to technical problems without waiting for someone from Cisco’s technical staff to do this for them. The trouble shooting engine uses a knowledge based tool to direct the user to answers which directly correlate to the question asked. Open forum allows customers to talk openly about Cisco products and assist each other with valuable information. If a search does not produce the correct answer, customers do have access to a live engineer. In addition to these tools, Cisco also allows customers to track case status online whenever they want to. Today, a majority of Cisco’s support is performed on line and we only have 1000 engineers in 4 TAC centers worldwide handling only the most difficult support issues. Cisco also allows Partners to grant access to end customers to see the Support site on the web. This includes the troubleshooting engine, bug alerts, open forum etc. They can also grant access to creating cases directly with Cisco through CASE Open/Update/Query. This allows Cisco to help the end customer directly if the partner can't solve the problem.PICA started in 5/95, and now has 9000 accounts enrolled in it. 21

28 Customer Care Results June 1998 1997 1995 1996 1998 Total Logins/Month
Satisfaction 3.4 4.1 4.17 June 1998 Over 70% questions handled on line Dramatic growth—over 1.1million logins per month 25% higher customer satisfaction 98% accurate, on-time repair shipments Annual savings of $365 m Headcount $75 m Software download $250 m Document publication $40 m Users say that over 70% of the time they use CCO -- 60% for technical support and 80% for general product and marketing questions -- their questions are answered on-line. Users have readily integrated this way of interacting and working with Cisco -- the system handles over one million log-ins per month by registered users and the typical user logs in eight out of twenty business days a month. The use of our support tools has resulted in 98% accurate, on-time repair shipments and an increase in customer satisfaction by 25% since 1995 Annual cost savings from online customer support amount to over 365 million dollars. These come from three main sources: Cisco ships less than 10% of its software on CDs or disks. The rest is all downloaded off the net. At $100 savings per download, that represents almost $250 Million in annual savings. Close to 500 engineers are avoided on account of Cisco’s online self help tools like Bug Navigator and Troubleshooting Engine. This leads to a savings of close to ~ $75 million annually. The elimination of paper based documentation has yielded ~$40 million in annual savings And Cisco's customer satisfaction rating has improved by almost 25%. 21

29 Lessons from e-Business Design
Be customer focused Value creation a continuous process Transform business processes into digital form Decentralize management but centralized coordination Create an e-business app architecture addressing three critical requirements interface integration innovation Integrate but plan for continuous growth and change start small build on success build, launch, learn

30 E-Business Strategies, Inc.
x201 Fax The E-Business material shall at all times remain the property of E-Business Strategies, Inc. No license under any trade secrets, copyrights, or other rights is granted by this Agreement or any disclosure of Confidential Information hereunder. Any such permitted copies will be considered Confidential Information. Confidential Information of E-Business Strategies, Inc. may not be copied or reproduced by the Recipient without E-Business Strategies, Inc. prior written consent. The E-Business material may not be re-sold. It is intended to be used solely for the purpose of accompaniment of the E-Business 2.0 Roadmap for Success book in an instructional manner.

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