1. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
"e-Business" can be defined as the conduct of business on the Internet, not only buying and selling but also providing additional services to customers, and especially collaborating with business partners.
Definitions and Concepts
"e-Business" can be defined as the conduct of business on the Internet, not only buying and selling but also providing additional services to customers, and especially collaborating with business partners.
An alternative definition is: “Marketing, buying, selling, delivering, servicing, and paying fort products, services, and information across networks linking an enterprise and its prospects, customers, agents, suppliers, competitors, allies…”
In response to this major organisations are restructuring their business processes in terms of the Internet and its culture and capabilities. They are participating in business to business (B2B) activities using the Web to perform such tasks as buying parts, supplies and other raw materials, collaborating on sales promotions, and to performing joint research.
In an e-business world, small businesses can act like large organisations. They have the potential to be able to reach many customer. Large organisations can act like small business and personalise the customer experience through better use of value-added information. E-business will continue to significantly reduce the transaction costs of vendors, and offers the opportunity to increase the dissemination of the vendors’ message into the markets.

2. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
Many people will ask the question,
"What is the difference between e-Business and e-commerce?"
E-commerce is the purchase of goods, services or other financial transactions in which the interactive process is achieved by information technology (the internet) at both ends of the interchange.
Considering this definition, many people will then ask the question,
"What is the difference between e-Business and e-commerce?"
So, another definition ...

3. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
There are a number of types e-commerce:
Business to business (B2B).
Business to customer (B2C).
Business to administration (B2A).
Consumer to administration (C2A).
There are a number of types e-commerce:
Business to business (B2B) - buying from known suppliers, or selling to known customers.
Business to customer (B2C) - selling products and services to the mass market.
Business to administration (B2A) - businesses making payments, sales and other interactions with government.
Consumer to administration (C2A) - for example online self-assessed tax returns, and other consumer-government transactions.

4. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
In particular, B2B e-commerce cuts business costs in three ways.
It reduces procurement costs,
It allows better supply-chain management.
It makes possible tighter inventory control,
B2B e-commerce cuts business costs in three ways.
First, it reduces procurement costs, making it easier to find the cheapest supplier and cutting the cost of processing transactions.
Second, it allows better supply-chain management.
And third, it makes possible tighter inventory control, so that firms can reduce their stocks or even eliminate them.
Through these three channels B2B e-commerce reduces firms’ production costs, by increasing efficiency or by squeezing suppliers’ profit margins.

5. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
A typical B2C e-commerce business provides:
A "catalogue”.
A "shopping cart”.
A "check out”.
Credit card operations.
Shipping and tracking options.
A typical B2C e-commerce business enables provides customers with a fully functional web stores that:
Lets visitors browse through a "catalogue”.
Loads purchasing decisions in a "shopping cart”.
Displays totals for "check out”.
Leads buyers through credit card operations.
Provides shipping and tracking options.

6. RISK MANAGEMENT AND E-BUSINESS
The above model illustrates how e-commerce spans the operations of a typical organisation, from supply-chain management through manufacturing to the customer.

7. THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Concepts & Technology of e-Business
However, there are other important aspects or functions of e-Business that should be considered:
Market Research
Collaboration
e-Marketing
Banking and Financial services
Online trading
Therefore, it is reasonable to define e-Business as including e-commerce as one of its important processes or functions. However, there are other important aspects or functions of e-Business that should be considered.

8. THE CHALLENGE OF E-BUSINESS Market Research
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Market Research
Many companies have recognised that if they want to succeed in today's "wired world", their organisations must harness knowledge -internally and externally - in developing products, improving processes, getting closer to customers and ultimately staying ahead of competitors.
Market Research and Collaboration - With the rise of the Internet knowledge systems within organisations have become much more focused strategically. These systems are now being used to facilitate collaboration globally and help institutionalise a company's sources of competitive advantage.
Many companies have recognised that if they want to succeed in today's "wired world", their organisations must harness knowledge - internally and externally - in developing products, improving processes, getting closer to customers and ultimately staying ahead of competitors.

9. THE CHALLENGE OF E-BUSINESS Collaboration
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Collaboration
Companies working together can use Internet technology to exploit their collective learning and knowledge.
This allows managers to share knowledge, collaborate more effectively and ultimately to embed organisational intelligence within processes, products and services.
Companies can use Internet technology to exploit their collective learning and knowledge, allowing managers to share knowledge, collaborate more effectively and ultimately to embed organisational intelligence within processes, products and services.
However, capturing intelligence is useful only if the knowledge can be leveraged - and leading companies are learning how to do this.

10. THE CHALLENGE OF E-BUSINESS e-Marketing
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS e-Marketing
e-Marketing aims to provide accurate information to a audiences that include:
Buyers trying to find products they need.
Businesses investigating potential partners or suppliers.
Workers searching for new employment opportunities.
Sales offices seeking the latest product literature.
e-Marketing has the ability to provide accurate, up-to-date product and business information to a broad range of audiences that include:
Buyers trying to find products they need.
Businesses investigating potential partners or suppliers.
Workers searching for new employment opportunities.
Sales offices looking for the latest product literature.

11. THE CHALLENGE OF E-BUSINESS Banking & Financial Services
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Banking & Financial Services
Online banking allows customers to use the internet to:
Check their balances,
Print statements,
Pay bills, and
Transfer funds,
usually for a fraction of the cost of in-branch services.
Banking and Financial services -
Online banking allows customers to use the internet to check their balances, print statements, pay bills and transfer funds, usually for a fraction of the cost of in-branch services.

12. THE CHALLENGE OF E-BUSINESS Banking & Financial Services
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Banking & Financial Services
Banks are developing sophisticated web-based information management capabilities that:
Gain insights into customer behaviour;
Support database marketing and modelling;
Deepen relationships with the most profitable customers;
Link and leverage disparate databases
A central theme is virtual customer intimacy.
In addition, many banks are building and installing sophisticated web-based information management capabilities that will help them do the following:
Gain insights into customer or prospect behaviour, needs and profitability so that segments can be defined with precision;
Sharpen database marketing skills and predictive modelling techniques to enhance promotions of specific products to specific customer segments;
Deepen relationships with the most profitable customers;
Link and leverage disparate customer databases so that up-to-date customer profiles can be delivered seamlessly to all service 'touch points'; and
Use new technology platforms to facilitate customer-centric channel management and product/service delivery.
A central theme of online banking is virtual customer intimacy, a concept that would have sounded odd to bankers a decade ago. It is the key to satisfying and even surpassing the demands now put on banks by both customers and shareholders.

13. THE CHALLENGE OF E-BUSINESS Online Trading
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Online Trading
The emergence of direct stockbroking via automated Internet services is bringing about a significant transformation in the Australian equity market.
Online trading - The emergence of direct stockbroking via automated Internet services is bringing about a significant transformation in the Australian equity market.
There are now more than a dozen online discount brokers, with a collective client base of around 100,000 people. Trading through online brokers made up 12% of all trading activity on the Australian Stock Exchange (ASX) in January

14. THE CHALLENGE OF E-BUSINESS Online Trading
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Online Trading
A typical online broker will support the following activities:
The purchase and sale of shares.
Access to share prices.
Investment in overseas shares.
Investment in the Money Market.
Stock market news and research.
A typical online broker will support the following activities:
The purchase and sale of shares.
Access to share prices, including:
Live share prices and volume for all shares and warrants.
Live indices, plus price and volume data for the top industrial and resource stocks.
Live watchlists that you can customise with the stocks you like to follow.
Historical price graphs for each stock and index.
You can also download price data to use in other software applications or to keep for your records. Meaning you can conduct your research when you have the time – and place your orders later, either over the Internet or over the telephone.
Investment in overseas (usually USA) shares.
Investment in the Money Market.
Stock market news and research.

15. THE CHALLENGE OF E-BUSINESS
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS
Issues to be addressed include:
Security.
Protecting transactions
Currently, the major barrier to e-Business is the consumer’s lack of confidence in Internet security.
For e-Business to be trustworthy, it must be secure and reliable.
Security refers to the need to protect data, equipment, and processing time. Organisations endeavour to restrict access to certain data and protect data and applications from manipulation or contamination.
Furthermore, in any e-business the ownership of transactions is an important issue.

16. THE CHALLENGE OF E-BUSINESS Security
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Security
Firewalls are a combination of software and hardware, which manage access between a company’s internal system and the Internet.
They are necessary where a web server has continuous access to the Internet.
Firewalls are a combination of software and hardware, which manage access between a company’s internal system and the Internet. A firewall allows a network administrator to determine which services and types of information are accessible through your Internet connection. They are only necessary if you have your own web server with continuous access to the Internet.
If an Internet Service Provider (ISP) is hosting your website ask them about their firewall and access policies. Firewalls have to be used in conjunction with an overall security policy to be most effective.

17. THE CHALLENGE OF E-BUSINESS Security
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Security
Encryption can be used after your data has left your internal system.
Secure payment systems that people trust are pivotal to the continued growth of e- Business.
Credit cards are still the most common form of payment.
Encryption can be used after your data has left your internal system. Encryption renders your data unreadable using a mathematical formulae known as a key. Your data is turned back into readable form, i.e. deciphered, by applying the correct key.
Secure payment systems that people trust are pivotal to the continued growth of e-Business. New payment systems like digital checks and electronic wallets are currently being developed, but credit cards are still the most common form of payment. To set up a credit card payment system on your website you need:
An acquiring bank that will establish an Internet merchant account
Payment processing software to transfer the credit card details between your bank and website
A secure certificate for data encryption
You will have to talk to your bank and ISP to see which particular products they favour. The most common encryption protocol in current use is SSL (Secure Sockets Layer) which was developed by Netscape. SET (Secure Electronic Transactions) sponsored by Visa and MasterCard is another emerging encryption technology, which is becoming popular.

18. THE CHALLENGE OF E-BUSINESS Security
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Security
However, Internet security requires policy as well as technology. A good security policy will ensure:
1. Safety
2. Trust
3. Privacy
Developing good security means combining the right technology with the appropriate security policy.
However, Internet security requires policy as well as technology. A good security policy will ensure:
Safety - that sensitive information sent across the Internet is protected during transit
Trust - that information reaches its destination without tampering
Privacy - that personal information stored is available only to authorised personnel
Points to note when developing your strategy include:
Who needs to have Internet and access? Have all staff been trained in the security procedures? Do staff check and fax numbers before sending confidential information?
Are sensitive documents encrypted before being transmitted?
Are parts of your internal computer system restricted? How are they protected?
What do you do when employees leave?
Do you have a password policy? Is one person in your company responsible for data security?
Security is about an approach to information management. Protection of confidential client information is going to become more important as companies gather more information about clients through the Internet.

19. THE CHALLENGE OF E-BUSINESS Protecting Transactions
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Protecting Transactions
In any e-business an important question is:
“Who owns the transaction?”
Organisations owning the customer transaction are able to set a fee or collect a profit margin for the service provided. Therefore, owning the customer transaction has the potential to generate customer revenue for the service.
In any e-business an important question is “Who owns the transaction?”
Organisations owning the customer transaction are able to set a fee or collect a profit margin for the service provided. The service could be for the the sale of products, the provision of information or advice, or the provision of a professional service. Owning the transaction implies that the firm also owns the customer data related to that transaction, but perhaps no other customer data is owned, unless the firm also owns the customer relationship.
Therefore, owning the customer transaction has the potential to generate customer revenue for the service.

20. THE CHALLENGE OF E-BUSINESS Customer Relationships
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Customer Relationships
Owning the customer relationship provides influence where the customer looks to the relationship holder for trust, recommendations, and specialist advice.
The strength of the relationship with the customer will often determine the success of the business.
Owning the transaction implies that the organisation also owns the customer data related to those transactions. However, perhaps no other customer data will be owned unless the organisation also owns the customer relationship.
Owning the customer relationship provides influence where the customer looks to the relationship holder for trust, recommendations, and specialist advice.
The strength of the relationship with the customer will often determine the success of the business. The relationship will be determined by the strength the value of the service to the customer and the ability to deliver. This strength of will involve the brand, the breadth of offerings, the price-value equation, and the completeness of the consolidation into a single point of contact.

21. THE CHALLENGE OF E-BUSINESS Protecting Data Ownership
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Protecting Data Ownership
The key questions about data ownership is:
“Who owns the data, and who has access to it for marketing?”
Information is the lifeblood of e-business. The organisations ability to identify, capture, share, and exploit the key information strongly influences business profitability.
The key questions about data ownership is: Who owns the data, and who has access to it for marketing?
Information is the lifeblood of e-business. The viability of many businesses will depend on access to information about customers products, markets, and costs. The organisations ability to identify, capture, share, and exploit the key information strongly influences business profitability.
Different types of information are critical in a variety of ways. The information critical to success includes, detail on business process, performance, operating costs, and prospects for increased growth.
The owner of customer data has the potential to develop powerful insight into the customers’ needs and desires. However, many organisations own customer data, but they do not use the data effectively.
Owning the customer data implies the firm captures the data electronically and has the potential to analyse them at both the customer and the segment level, The firm may own only the data, own the data and the relationship, own the data and the transaction, or own all three (as in the direct to customer).

22. THE CHALLENGE OF E-BUSINESS Content Providers
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Content Providers
A content provider is a organisation that creates and provides content (information products or services) in digital form that is “served” to customers via third parties.
In general the content provider owns none of the end-customer relationship, transaction, or data. Therefore, to be successful the content provider must be highly desirable and in demand as a supplier of content.
Content provider as a firm that creates and provides content (information products or services) in digital form to be used by customers via third parties.
In general the content provider owns none of the end-customer relationship, transaction, or data. Therefore, to be successful the content provider must be highly desirable and in demand as a supplier of content. For this reason content providers often employ large numbers of specialist professionals.
Furthermore, not owning any of the customer assets - relationship, data, or transaction - makes the content provider very reliant on third parties. On the other hand, content providers typically have a relatively small number of direct customers, and therefore they do not incur the costs of managing relationships with a large number of customers.

23. THE CHALLENGE OF E-BUSINESS Difficulties faced ...
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Difficulties faced ...
Many traditional and profitable businesses are struggling to respond to the threats and opportunities of e-business in terms of:
Leadership
Channel Conflict
Cost Reduction
Skills & Expertise
Infrastructure
Many traditional and profitable businesses are struggling to respond to the threats and opportunities of e-business. The threats are played out not only in stock market valuations, but also in the marketspace, where dot-coms without the heavy investment in physical infrastructure can selectively pick the profitable niches in which to compete.
Most large traditional firms are successful and profitable, and they achieved their success via strong leadership and cultures suited to their industry. E-business threatens this status quo in traditional firms.
Potential channel conflicts exist between the new e-business channels and traditional channels, often including intermediaries.
Many traditional firms trudge to capitalise on the lower costs available via e-business.
The skills necessary for e-business initiatives are in short supply and high demand.
The information technology infrastructure requirements for e-business is stretching the capabilities of many organisations. This is especially the case where enterprise resource planning systems (ERPs) are to be integrated into e-business web-sites.

24. THE CHALLENGE OF E-BUSINESS Leadership
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Leadership
“E-business threatens the status quo in traditional (successful) organisations.”
The leaders are often poorly prepared to make major strategic commitments necessary for e-business. Such manager are reluctant to take the initiative, preferring to wait and see.
Most large traditional businesses are successful and profitable, and have achieved this success via strong leadership and the development of cultures that are suited to the specific industry.
E-business threatens this status quo in these traditional organisations. The leaders are often poorly prepared to make major strategic commitments necessary for e-business. Such manager are reluctant to take the initiative, preferring to wait and see.
This conservative culture actively works against new initiatives that threaten the status quo. The challenge is that senior management must actively work to shape the e-business vision, their employees, and the organisational culture into a new model for the way business is undertaken.

25. THE CHALLENGE OF E-BUSINESS Channel Conflict
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Channel Conflict
“Channel conflict is a real risk with e-business.”
The Internet offers a new channel to the customer, and businesses can choose to bypass existing channel partners, leading to channel conflict.
Channel conflict is a real risk with e-business. The Internet offers a new channel to the customer, and businesses can choose to bypass existing channel partners, leading to channel conflict.
Particularly difficult to handle is channel conflict where the customer is offered very similar value propositions directly, and alternatively by an intermediary, but at different prices.

26. THE CHALLENGE OF E-BUSINESS Avoiding Channel Conflict
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Avoiding Channel Conflict
How to avoid Channel Conflict.
Segment the channels by customer.
Segment the channels by product.
Refine the dealers’ role.
Develop a new brand
Redirect all leads to distributors
Retreat
How to avoid Channel Conflict.
Segment the channels by customer by targetting the customers for online selling. Continue using intermediaries for other segments.
Segment the channels by product by distributing some products online, and other products via traditional channels.
Refine the dealers’ role by defining the role of the retailer as one of display, testdrive, and configure the product or service. The producer retains the role of taking all orders directly.
Develop a new brand or rebadge the existing product to sell directly, giving these items a different value proposition to the products sold by the retailers.
Direct all leads to distributors by establishing an information Web site with product description, and perhaps a virtual community, and pass all leads to the retail channel (the distributors).
Retreat from selling similar products. Avoid an unwinnable price war. Move to value-added services or higher-value, higher-margin offerings.

27. THE CHALLENGE OF E-BUSINESS Cost Reduction
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Cost Reduction
An attractive feature of e-business to the potential for cost leadership offered by being able to sell goods or provide the service over the Internet at a price that is lower than that of the competition.
However, many traditional organisations struggle to take advantage of, and capitalise on the lower costs available via e-business.
An attractive feature of e-business to the potential for cost leadership offered by being able to sell goods or provide the service at a price that is lower than that of the competition.
However, many traditional organisations struggle to take advantage of, and capitalise on the lower costs available via e-business.
For example, while the economics of e-business are compelling for a bank, many customer segments have a strong preference for a branch or a call centre with a human voice. Furthermore, the public and media are strongly critical of the major Australian banks who have undertake widespread closures of bank branches, particularly in country towns.

28. THE CHALLENGE OF E-BUSINESS Shortage of Skills & Expertise
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Shortage of Skills & Expertise
The skills necessary for e-business initiatives are in short supply and high demand.
Traditional firms struggle to offer compensation packages that compete with the extremely attractive offers of stock options for employees of dot-coms.
The skills necessary for e-business initiatives are in short supply and high demand.
Traditional firms struggle to offer compensation packages that compete with the extremely attractive offers of stock options for employees of dot-coms.
Managers commonly complain that their young people often leave potentially successful career paths in traditional firms for the learning experience, excitement, and stock options found at dot-coms,

29. THE CHALLENGE OF E-BUSINESS Infrastructure Requirements
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Infrastructure Requirements
Infrastructure requirements for e-business are stretching the capabilities of many organisations’ IT portfolios.
Traditional organisations are struggling with B2B e-business implementations that may require integrating their recently installed and expensive enterprise resource planning systems (ERPs) with their Web sites and the Web-sites of of partner firms.
Infrastructure requirements for e-business are stretching the capabilities of many organisations’ IT portfolios.
Traditional organisations are struggling with B2B e-business implementations that may require integrating their recently installed and expensive enterprise resource planning systems (ERPs) with their Web sites and the Web-sites of of partner firms. Difficulties include incompatible technical platforms, security, data reliability, and accessibility.
The compressed time frames of the e-business world compound these challenges by creating pressure to deliver IT applications in weeks rather than months or years. Organisations wishing to compete via e-business must invest in IT infrastructure, which accounts for more of the average organisation’s IT budget year after year.
The promise of “less infrastructure investment after this big investment” never seems to eventuates.

30. THE CHALLENGE OF E-BUSINESS Delivery Problems
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Delivery Problems
One of the major challenges for the direct-to-customer organisation selling a physical product is getting the right product to the right address, reliably and economically.
Many innovative businesses have developed attractive Web sites, but have not developed a clear understanding of the complex logistics involved in e-business.
One of the major challenges for the direct-to-customer organisation selling a physical product is getting the right product to the right address, reliably and economically. Many innovative businesses have developed attractive Web sites, but have not developed a clear understanding of the complex logistics involved in e-business.
For many traditional retailers, the challenge of home delivery of an assortment of Items, each in lot sizes of one, is new and not well suited to distribution centres designed to move goods to stores and supermarkets by the truck load.
A number of organisations are building extensive networks of distribution centres and delivery mechanisms, including Amazon and the online grocer Webvan, that are specifically designed for the e-business market. For
Direct-to-customer organisations can also outsource logistics. Many service providers offer full-service logistics support to direct-to-customer firms. Some logistics companies see delivery of goods ordered via e-business as an opportunity to expand their influence (FedEx).

31. THE CHALLENGE OF E-BUSINESS Multiple Business Models
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Multiple Business Models
The use of multiple business models across an organisation can cause confusion for customers, especially if the customer needs to adopt a variety of different business practices within the organisation.
Also, implementing more than one model can lead to other problems, including channel conflict, competency conflict, infrastructure conflict, and information conflict.
The use of multiple business models across an organisation can cause confusion for customers, especially if the customer needs to adopt a variety of different business practices within the organisation.
Where different models are used by various business units within the organisation, confusion can arise if the customer is treated as a different entity by each business unit. This can also require the customer to be asked to carry out repetiitive and redundant transactions with the same organisation.
Furthermore, implementing more than one model can lead to further problems, including channel conflict, competency conflict, infrastructure conflict, and information conflict.

32. THE CHALLENGE OF E-BUSINESS Threats from e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Threats from e-Business
How large is the potential for competitors to undermine the loyalty of the organisation’s customers?
Loyalty has two important components:
Brand identification, and
Switching costs.
How large is the potential for competitors to undermine the loyalty of the organisation’s customers?
Loyalty has two important components:
Brand identification, and
Switching costs.
If customers have high brand identification, based on lifestyles, personality, product features, or emotional benefits, they will be more loyal. If the switching costs for a customer to move from a firm to its competitor are high, then the customer will also be more loyal. The higher the potential to undermine customer loyalty, the greater the threat and opportunity created by e-business.

33. THE CHALLENGE OF E-BUSINESS Threats from e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Threats from e-Business
“How large is the gap between your current and the potential customer self-service?”
Customer self-service is defined as providing an attractive value proposition to customers who can help themselves when they want the service.
How large is the gap between your current and the potential customer self-service?
Customer self-service is defined as providing an attractive value proposition to customers who can help themselves when they want the service. For example, if there are segments with an unfulfilled desire to self-serve without queuing, then the gap is large and the potential for e-business is greater. If the Internet offers a new opportunity for customers to help themselves (e.g.~ retail brokerage or travel bookings) the threat or opportunity is larger.
An important question to consider is: “How much does your customer dislike dealing with your organisation in person.”

34. THE CHALLENGE OF E-BUSINESS Threats from e-Business
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Threats from e-Business
“What is the difference between your organisations current geographical reach and its potential reach win the Internet?”
The larger the gap, the greater the threat or opportunity from e-business.
What is the difference between your organisations current geographical reach and its potential reach win the Internet?
The larger the gap, the greater the threat or opportunity from e-business. If the potential and practical reach is much larger than the current reach, then there is significant opportunity for revenue growth without a proportional increase in selling expenses. However, many organisation’s geographical reach is limited by external constraints, including other countries’ regulations, tariffs and the cost of transportation.

35. THE CHALLENGE OF E-BUSINESS Questions for the IT Manager…
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Questions for the IT Manager…
Who is paying for the e-Business capability? Who pays for the on-going cost?
What return on investment (ROI) is expected?
Who is driving the project? Is there intra-organisational involvement – especially from IT, marketing and sales?
Is a Customer Relationship Management (CRM) package part of the initiative, or will it be added later?
What level of security is needed, now and in the future?

36. THE CHALLENGE OF E-BUSINESS Conclusion
RISK MANAGEMENT AND E-BUSINESS
THE CHALLENGE OF E-BUSINESS Conclusion
The key to the development and successful operation of an e-Business initiative is involvement and cooperation within the organisation. The expertise of departments such as marketing and sales must be involved in the development. This will better ensure the project meets the strategic needs of the organisation, that it serves the business as a whole, rather than being a “special project” for the IT department.