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

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