Our expert panel advises on the difficult task of setting out a
business case for IT investment for e-commerce.
Putting the case for e-businessHelp! I don't know how to put together a business case for
e-business. In order to ensure the buy-in of my organisation, I
need to be able to predict the return on IT investment not just in
terms of the efficiency, but also the effectiveness of a project.
How best can I do this? Are there any models that would help me,
and if so, where can I find them?
The business case needs to be put for all IT
investment
Professor Dan Remenyi
Brunel University
There is no doubt that even the sexiest looking e-business
projects need a convincing business case or value proposition to
get and keep effective management buy-in. In fact if e-business is
to be more than a short-term, flash-in-the-pan, disappointing
silver bullet for your organisation, it had better make sure that
all the important players buy into the business case. But, remember
that there is really no difference between e-business projects and
any other IT investment.
IT investment business cases are definitely strengthened by
being able to predict a specific return on investment. But this is
not the only dimension of a business case - improved business
processes, higher levels of user satisfaction, strategic alignments
and stakeholder commitment are just as important.
E-business will soon be the business
Roger Rawlinson
NCC
You cannot accurately predict or measure the return you will get
from the investment ploughed into an e-business project. Don't
forget the importance and growing influence of e-business within
your market.
Depending on your sector and position, e-business will enable
you to expand into new markets and ensure survival against your
competitors. Another important factor is that the City is now
seriously looking at whether companies have a robust e-business
strategy before investing in them.
On a more technical level, an e-business strategy will enable
your company to collect, store and manage customer information,
allowing it to meet the needs of your customers. However, before
launching into e-business, I recommend you hold a workshop with
senior management to identify the priorities. Define the business
benefits in terms of future strategic and business opportunities.
For example, your company will become more effective if it is able
to provide accurate customer data, has a well managed intranet and
an electronic link to a key supplier.
Cut through the hype and fear
David Taylor
Certus
The key question with e-business is to cut through the hype and
fear, and work out how to do it in your organisation. Forget the
stories, theories and off-the-shelf solutions. Organisations using
e-business to shape their futures are those that know where they
are, what they wish to achieve and how to get from one to the
other.
Three elements within this overall question are:
- Ensure that the existing investments and value in your systems,
people and organisation are not lost
- Implement a solution relevant to your vision, as opposed to an
off-the-shelf consultancy solution
- Ensure that you do not become over dependent on a consultancy
or supplier.
A business case for e-business is just like a business case for
any new product, approach or initiative. What are the financial,
customer and cultural benefits? There are many models around, all
claiming extraordinary results. When you look around at what
different solution providers have to offer, ignore the bluster and
e-sales garbage and treat it like any other business purchase.
Also, e-business is becoming a bit like the emperor's new
clothes - only smart people seem able to see it! That is garbage,
most people are as confused as everybody else, including chief
executives and financial directors. Approach it like you would any
other proposal, focusing on increasing revenue, customer
attraction/retention and internal morale and motivation.
Share best practice with peers
Keith Bellamy
Impact
Business-to-business applications are vastly different from
business-to-customer applications. B2B applications are more likely
to respond to traditional business logic when formulating the
business case, whilst B2C applications are going to require an
approach based on supposition, which can often feel uncomfortable
to rational minds. Detailed research by Impact suggests there is
very little best practice in this area as yet.
For some the game has changed: we heard of one IT director being
told by his CEO: "forget what IT is going to save us, tell me how
much your activities are going to add to our market capitalisation
over the next 12 months?" This IT professional is going to have to
be adventurous - even though this means getting it wrong probably
more times than getting it right. You are not alone in this
challenge. Working with colleagues and peers to share best practice
will help.
Establish criteria and give scores
Tim Yeomans
Arthur Andersen
In today's rapidly changing and often unsubstantiated e-business
environment, serious questions must be raised about whether
financial return on investment should be the primary driver for
project acceptance. Indeed, there is evidence that top performing
companies do not use financial methods for portfolio planning.
Rather, they use strategic portfolio management methods where
business strategy decides project selection.
Criteria should be established and the project scored against
each of the criteria in turn, these may include: strategic
positioning, probability of success, market size, customer needs,
future trends, market exploitation and availability within the
finite resource pool. Weighting should be assigned to the criteria
according to how important that factor is to the strategy of the
organisation. Exerting pressure on an individual project to produce
high financial returns may result in the cannibalisation of other
projects to the detriment of the overall business strategy. For
this reason, project return may be determined by more than
traditional criteria. By using criteria closely linked to business
strategy, the process may be duplicated for projects until it is
optimised.
Next week
Happy as I am in my current position, I do not intend to stay
here indefinitely. I am therefore becoming conscious of the need to
set in place a succession strategy. Doing so would seem to require
that I earmark a staff member for special mentoring and grooming,
but I am concerned this will get backs up across the department.
What tips can you offer me for setting in place an effective - and
diplomatic - succession policy?