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Chapter Four Thinking E-Business Design: More Than Technology
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com interlocking layers of e-business E-BusinessInfoStructure ScalabilityReliabilityHostingStorage ServersDatabasesMiddlewareRouters Site Security Data Security Transaction Security E-Business Design Business Model Scope Customer Selection Value Creation Strategic Control Organizational Systems E-Business Infrastructure CRMe-Procurement ERPSupply Chain FinancialsSelling Chain Business IntelligencePortals
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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?
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com Step 2: Reverse the Value Chain In-house Core Competencies Rigid Infrastructure/ Processes Products/ Services ChannelsCustomers Traditional Business Design Outsourced/ In-house Core Competencies Flexible Infrastructure/ Processes Products/ Services Integrated Channels Customers Needs e-Business Design
© e-Business Strategies, Inc.www.ebstrategy.com Step 3: Choose a Focus Service 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
© e-Business Strategies, Inc.www.ebstrategy.com Service Excellence
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com Operational Excellence
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com Continuous-Innovation Excellence
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com Service Excellence at American Express Travel Services Credit Cards Banking Financial Planning Online Travel Services Membership Rewards Private Banking Life Path Planning Integrated Financial Services The Way It WasThe New Way
© e-Business Strategies, Inc.www.ebstrategy.com 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 Dells direct sales model –CHS Electronics, MicroAge, InaCom
© e-Business Strategies, Inc.www.ebstrategy.com November $3 Million/day 36 countries 200+ Premier Pgs. 400k users/wk January $1 Million/day March Asian/European Internet site launched Asian/European Internet site launched 225,000 online user sessions per week 225,000 online user sessions per week October Configurator generating online quotes is launched July Dell starts selling systems online Dell starts selling systems online 80,000 online user sessions per week 80,000 online user sessions per week June site launched with technical support content and gateway Dell launches an FTP site for customers to download files Late 1980s February Marketing content added to site 1998 Focus efforts on Corporate customer Focus efforts on Corporate customer $4 M/day $4 M/day Focus on value- added services Focus on value- added services Dell Online History
© e-Business Strategies, Inc.www.ebstrategy.com The Dell eCommerce System The Dell eCommerce System Integrated customer experience Integrated customer experience ValuepropositionShopping and buying Service and support Loyalty/relationship ProductservicesPrice Direct model DellConfiguration and shopping Electronicorders Orderstatus Trouble-shooting Value-addedservices Premierservices Personalizedexperience
© e-Business Strategies, Inc.www.ebstrategy.com 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
© e-Business Strategies, Inc.www.ebstrategy.com Configuration Service Order Order Status Order Placement Pricing Invoice Full Service Internet Commerce on CCO
© e-Business Strategies, Inc.www.ebstrategy.com 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 Reseller Care Cisco Connection Online
© e-Business Strategies, Inc.www.ebstrategy.com Customer Care Results Total Logins/Month Satisfaction 3.4 Satisfaction 3.4 Satisfaction 4.1 Satisfaction 4.17 June 1998 Over 70% questions handled on line Dramatic growthover 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
© e-Business Strategies, Inc.www.ebstrategy.com 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
E-Business Strategies, Inc x201 Fax
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