Presentation on theme: "Implementing EC Systems: From Justification to Successful Performance"— Presentation transcript:
1 Implementing EC Systems: From Justification to Successful Performance Chapter 14Implementing EC Systems:From Justification to Successful Performance
2 Learning ObjectivesDescribe the major components of EC implementation.Describe the need for justifying EC investments.Understand the difficulties in measuring and justifying EC investments.Recognize the difficulties in establishing intangible metrics.List and describe traditional and advanced methods of justifying EC investments.Describe some examples of EC justification.
3 Learning Objectives Describe the role of economics in EC evaluation. Discuss the steps in developing an EC system.Describe the major EC development strategies.List the various EC development methods along with their benefits and limitations.Discuss the major outsourcing strategies.Describe EC organizational structure and change management.Understand how product, industry, seller, and buyer characteristics influence the success of EC.
4 The Implementation Landscape The Major Implementation FactorsJustification/EconomicsAcquire or Self Develop Your E-Commerce SystemOrganizational Readiness and Impacts of E-CommerceHow to Succeed
6 Why Justify E-Commerce Investments? How Can They be Justified? Increased Pressure for Financial JustificationOther Reasons Why EC Justification Is NeededEC Investment Categories and BenefitsHow Is an EC Investment Justified?*Cost–benefit analysisCost–Benefit Analysis and the Business CaseWhat Needs to be Justified? When Should Justification Take Place?
7 Why Justify E-Commerce Investments? How Can They be Justified? Using Metrics in EC JustificationMetrics, Measurements, and Key Performance Indicators*Key performance indicators (KPIs)*Web Analytics
9 Difficulties in Measuring and Justifying E-Commerce Investments The EC Justification ProcessDifficulties in Measuring Productivity and Performance GainsData and Analysis IssuesRelating EC and ITS Expenditures to Organizational PerformanceOther DifficultiesIntangible Costs and BenefitsTangible Costs and BenefitsManaging Intangible Benefits
10 A Model for IT Project Justification Sources: Based on Gunasekaran et al. ( 2001 ) and Misra ( 2006 ); and the authors’ experience.
11 Difficulties in Measuring and Justifying E-Commerce Investments The Process of Justifying EC and IT ProjectsThe Use of Gartner’s Hype CycleWhat Is Gartner’s Hype Cycle?*Hype cycleThe five stages of the hype cycle are:Technology triggerPeak of inflated expectationsTrough of disillusionmentSlope of enlightenmentPlateau of productivityApplication of the Hype Cycle
12 Methods and Tools for Evaluating and Justifying E-Commerce Investments Opportunities and Revenue Generated by EC InvestmentsMethodological Aspects of Justifying EC InvestmentsTypes of CostsDistinguish between initial (up-front) costs and operating costsDirect and indirect shared costsIn-kind costs
13 Methods and Tools for Evaluating and Justifying E-Commerce Investments Traditional Methods for Evaluating EC InvestmentsThe ROI MethodPayback PeriodNPV AnalysisInternal Rate of Return (IRR)Break-Even AnalysesThe Total Costs and Benefits of Ownership*Total cost of ownership (TCO)*Total benefits of ownership (TBO)Economic Value AddedUsing Several Traditional Methods for One ProjectBusiness ROI Versus Technology ROI
14 Methods and Tools for Evaluating and Justifying E-Commerce Investments *ROI CalculatorsThe Offerings from Baseline MagazineOther CalculatorsAdvanced Methods for Evaluating IT and EC InvestmentsFinancial approachesMulticriteria approachesRatio approachesPortfolio approaches
15 Examples of E-Commerce Metrics and Project Justification Justifying E-ProcurementJustifying Social Networking and the Use of Web 2.0 ToolsJustifying an Investment in Mobile Computing and in RFIDJustifying Investing in RFIDJustifying Security ProjectsJustifying Buying Products or Services from Vendors
16 The Economics of E-Commerce Reducing Production CostsProduct Cost Curves*Production Function* Agency Costs* Transaction CostsSearch costsInformation costsNegotiation costsDecision costsMonitoring and policing costsLegal-related costs
17 Average Cost Curve of (a) Regular and (b) Digital Products
18 The Economic Effects of EC: The Production Function and Agency Costs
23 A Five-Step Approach to Developing an E-Commerce System The Essentials of the SDLC: An EC ApplicationThe Five Traditional StepsStep 1: Identifying, justifying, and planning EC systemsStep 2: Creating an EC architectureStep 3: Selecting a development optionStep 4: Installing, testing, integrating, and deploying EC applicationsStep 5: Operations, maintenance, and updatesManaging the Development Process
25 Development Strategies for E-Commerce Projects There are four popular options for developing an EC website:Develop the site in-houseBuy a packaged applicationOutsource the system developmentLease the application
26 Development Strategies for E-Commerce Projects In-House Development: Insourcing*InsourcingBuy the Applications (Off-the-Shelf Approach)* Turnkey approachAdvantages and Limitations of Ready Made PackagesOutsourcing EC Systems Development and ApplicationsTypes of Outsourcing Options
27 Development Strategies for E-Commerce Projects Leasing EC Applications: Cloud Computing and Software As A Service (Saas)* Cloud ComputingAdvantages of Cloud ApplicationsOther Development OptionsJoin an e-marketplaceJoin a consortiumJoin an auction or reverse auction third-party siteForm joint venturesUse a hybrid approach
28 Development Strategies for E-Commerce Projects Selecting a Development OptionBefore choosing an appropriate development option, you need to consider the following factors:CustomersMerchandisingSales servicePromotionTransaction processingMarketing data and analysisBranding
29 Organizational Impacts of E-Commerce Improving Direct Marketing and SalesTransforming Organizations and WorkTechnology and Organizational LearningThe Changing Nature of WorkDisintermediation and ReintermediationRestructuring Business ProcessesRedefining OrganizationsNew and Improved Products and Services*Mass Customization and *On-Demand ManufacturingThe On-Demand Revolution* 3D Printing
30 How Customization Is Done Online: The Case of Nike Shoes
31 Organizational Impacts of E-Commerce *Change ManagementHow to Organize an EC Unit in a CompanyOptions for Organizing the EC WorkforceReport to the Marketing DepartmentReport to the Finance DepartmentReport to the Chief Operating OfficerDistribute the EC Workforce in Several DepartmentsReport to the IT DepartmentCreate a New, Possibly Autonomous EC DepartmentNo Formal Structure for EC ExistsCreate an Autonomous Division or a Separate Online Company
32 Opportunities For Success In E-Commerce and Avoiding Failure Factors That Determine E-Commerce SuccessE-Commerce FailuresE-Commerce SuccessesStrategies for EC SuccessCultural Differences in EC Successes and FailuresCan EC Succeed in Developing Economies?
33 Managerial Issues How should the value of EC investments be justified? Which investment analysis method should we adopt for EC justification?Who should conduct the justification?Should we use the hype cycle?Should we embark on cloud computing products for our EC initiatives?Which strategy should we choose for vendor selection: the inside-out or outside-in approach?What kinds of organizational changes may be needed?Is it possible to predict EC success?
34 Summary The major components of EC implementation. The need for EC justification.The difficulties in justifying EC investment.Difficulties in establishing intangible metrics.Traditional methods for evaluating EC investments.Describe the justification of representative EC projects.
35 Summary EC economic evaluation. The major steps in developing an EC system.The major EC development strategies, along with their advantages and disadvantages.The variety of EC application development methods, along with their benefits and limitations.EC application outsourcing strategies.Organizational structure and change management.Reasons for EC success and failure.