Making money from e-business is a top priority for many
companies.Liz warren reports on the areas you need to concentrate
on to build a successful e-strategy
The e-business hype has left some boards paralysed with fear.
Others are baying for their companies to become "e-enabled" in some
way, without any clear idea as to why that will help their
business.
The waters are muddied still further by the fact that, until
recently, e-success seemed to be measured purely in terms of hits
or eyeballs. Actually having a positive impact on traditional
business metrics such as profits or customer retention rates seemed
to be irrelevant. No wonder some boards are deeply suspicious of
e-business, while others know they ought to be doing something but
have no idea how to focus their efforts.
"Companies are seeing e-business as something different to what
they are doing at the moment, but if they treat it as a separate
thing, they will struggle," points out Andy Coote, a principal
consultant at Broadfoot Training and Consultancy. "If they realise
it is simply a different manifestation of what they are already
doing, they will feel more comfortable and should be able to see a
pathway for their own company."
Coote has been involved in the development of an e-commerce
scorecard which aims to help organisations understand what
e-business might mean for them. Backed by independent e-business
authority e-Centre UK, the scorecard can be used to diagnose the
state of an organisation's e-health and act as a starting point to
identify and prioritise areas for future e-developments.
Organisations can also submit their scorecard for benchmarking
against other businesses.
Starting point
Yet the true starting point for any e-business project should be
the business strategy and objectives of your own board. "You need
to identify at every point what an e-business project could do to
support that strategy and those objectives," explains Colin Ives,
chief operating officer of knowledge management specialist
ActiveIntranet.
"You need to translate e-business speak into business speak. For
example, if the board wants to improve customer service, you need
to point out that an e-business solution could allow customers
faster access to information, or give them the ability to track
orders themselves, or be a way for sales staff to gain greater
understanding of customers and their buying history. And, in some
cases, the best way to fix a problem may not involve using any
technology at all."
However, Ives admits that one of the difficulties of this
approach is that you can often only identify tangible project
benefits when tackling tactical headaches such as making a
particular business process more efficient. The board is usually
concerned with more nebulous concepts such as culture change or
brand value and it's much harder to identify tangible benefits and
metrics which could be used to demonstrate e-success in these
areas.
For instance, healthcare supplier Vernacare justified its Web
development project (see box on p64) primarily on the grounds that
it would help it establish a presence and identity for a new
division rather than because it would generate additional
revenue.
If you need to choose between several competing e-projects,
Martin Lockett, managing director of e-business consultancy Sapient
International, suggests you should look at where you can create
quick wins and which business managers are actually most motivated
to tackle projects which are potentially revolutionary and
undoubtedly unsettling.
However, Steve Johnson, a director of business solutions
provider Quantiv warns that it can be extremely dangerous to try
and impress the board with a quick e-project if it doesn't deliver
business benefit in the longer term. "The board's confidence will
not be won over by a Web solution that is not flexible or scalable,
gives the wrong messages and meets no business objectives apart
from simply having a Web site," he points out.
"Only pain will follow. Instead, the IT team should tell the
board to save its budget for now and develop a coherent strategy.
The IT team should make it clear that it's happy to lead and
moderate the discussion, but that the whole of the executive team
needs to participate, otherwise the initiative will fail."
This philosophy is reflected in the e-Centre's e-commerce
scorecard. Coote stresses that it's a tool for the whole board
rather than just the IT director and that contributions from every
part of the business will be needed to complete the scorecard,
which looks at several different areas where e-business could be
applied: selling and delivering products and services; sourcing and
procurement; internal use; working with government agencies and
reporting to regulatory authorities; and developing shareholder
value.
The scorecard results are also wide ranging, covering the impact
of e-business on financial performance, customer satisfaction,
employee motivation and behaviour, and business processes and
operational excellence. "Our aim was to provide measures which were
as simple and easy to understand, so that they can be used by all
the members of the decision-making team to relate e-business
initiatives to benefits and best practice," says Coote.
Finally, it's important not to overreach yourself with your
first e-business projects.Peter Nordstrom, chief operating officer
at e-business strategyconsultancyCell Strategy, suggests it's
betterto choose a relatively small area of the business - perhaps a
particular customer segment - and develop a deep
solution,ratherthan spread your efforts too thinly. AsHanson Quarry
Products has found, once you have piloted the concept with a small
number of customersand been able to demonstrate its worth in
practice, you will find it much easier to obtain the budget to roll
a similar solution out across the firm.
For details of the e-commerce scorecard, see www.e-commscore.com
Vernacare's six-day dash to e-commerce
With strong backing from its board, Bolton-based healthcare
supplier Vernacare was able to develop a Web site offering
commerce, content and community elements in just six days.
Group systems manager Martin Smith explains that the managing
director and other board members were keen to develop an improved
online presence for the company's various divisions, having seen
the Web-based offerings provided by rivals.
The incontinence division - which provides information and
advice for healthcare professionals and sufferers as well as a
range products through the Verna Continence Care catalogue - was
chosen to pilot the approach. "It's a new division and we wanted it
to become established quickly, while the product portfolio isn't
that large, so it would keep our initial costs down," Smith points
out.
With a number of board members remaining heavily involved
throughout the project, Vernacare worked with its long-standing
technical partner DCS eIntegration to select Digital Union's Lotus
Domino-based ezMerchant to handle the commerce aspects of the site.
The choice was partly driven by the fact that ezMerchant
complements Vernacare's existing Lotus Notes infrastructure,
allowing the firm to maintain the Web site in-house. However,
ezMerchant also allowed Vernacare to keep initial development costs
down and implement a solution quickly, because it has not been tied
into its Tetra-based back-office systems. Instead, it sends orders
by e-mail for manual re-keying through Vernacare's existing
telesales channel.
Another vital aspect of the project was to provide added-value
community elements. Alongside the catalogue, Vernacare has used its
Lotus skills to develop a discussion forum for continence advisers
and other care-givers, a library of relevant technical papers from
the British Journal of Nursing and links to helplines and support
groups.
The Web site has only just been publicised to customers, so
Vernacare hasn't yet been able to assess the impact on its
business, although it has been pleasantly surprised by the number
of continence advisers who have registered on the discussion
forum.
Smith points out that, in any case, the company didn't set
targets prior to development for increased turnover or cost
savings, but was aiming for softer benefits. "The board was
convinced it was the right thing to do, and by making sure the
right people were involved at each level of the business, they knew
what we were getting into and what the costs would be," he
says.
Hanson Construction builds on e-billing system
Hanson Quarry Products Europe, part of the international
buildings materials company Hanson, has improved the service it
offers to customers while cutting its own costs by developing an
e-billing solution.
The system, which is being piloted with a small number of users,
allows customers to view their invoices, statements,
proof-of-delivery notes and credit notes over a secure
extranet.
These first users are already reporting time and cost savings as
a result of being able to accessdocuments online."Customers aren't
going to adopt these solutions unless they see value being
generated or costs driven out," points out Colin Richardson, head
of customer relationship management at Hanson Quarry Products
Europe. "But we have a lot of information in our databases that has
a use and value to our customers and we need to find a way to make
it more accessible to customers in a form that's useful to
them."
The e-billing system has its roots in a deal between Pioneer
International - a building materials company acquired by Hanson
earlier this year - and document management specialist Microgen to
outsource printing and management of Pioneer's documents.
Initially, staff at Pioneer were able to access copies of documents
held by Microgen through a dial-up link. In many cases, those
copies were being requested on behalf of customers, so Pioneer
decided to reduce the time its own staff spent on providing this
information by offering selected customers access to the dial-up
service.
The major drawback of the dial-up service was that it was
laborious and not user friendly. The advent of the Web allowed
Microgen and Pioneer to provide a much improved interface to the
same information. Pioneer Online was born, initially offering
online retrieval of proof-of-delivery notes for all of Pioneer's
customers. It currently handles more than 6,000 requests for copy
documents each month.
"The beauty of the Web is that you can have test areas that
allow one customer to get a real experience, but it's not
accessible to other people," Richardson points out. "You should
learn how to do things on the Web with two or three customers at a
time rather than launch internationally from the start." He adds
that having made the initial decision to outsource its document
management to Microgen, the cost of offering customers the
significant benefits of online access has been relatively
small.
RAC sees Red in just eight weeks
The RAC has been able to launch a breakdown service based on a
completely new charging model in just eight weeks and with an
investment of only £100,000, thanks to Internet technology. Known
as Red, it has been set up to target the estimated six million UK
motorists who traditionally do not take out breakdown cover and are
averse to buying insurance of any kind.
Research by the RAC discovered that this group would be amenable
to a pricing model closely based on pay-as-you-go mobile phones. A
£49 assistance fee is payable only in the event of a breakdown -
and is collected the following day. To cover basic administration
costs, a subscription fee of just £12 - much lower than the
subscription for a traditional breakdown service - was set and, to
ease the pain still further, this is collected on a monthly
basis.
The only way to make this low-cost service financially viable
was to develop Red as an Internet-only business. "There were
certain cost parameters we could control to keep costs down, such
as the maximum length of tow offered with the basic package, but
many of the other costs were fixed," explains Red project director
Stephen Roche. For instance, processing cheques and direct debits
is expensive. By offering Red on the Web, the company could use
automated credit and debit card payments to collect both elements
of the service charge.
Operating on the Web also promised to reduce other costs such as
customer acquisition, administration and renewal. On top of that,
speed to market was important because the RAC had the chance to
exploit a limited window while its main rivals were distracted with
other issues. That meant that, after the business plan was approved
by the board, a launch date was set just eight weeks away. A Web
design agency was appointed to do the creative work at the front
end, while e-business developer iE was chosen to handle the bulk of
the underlying technical work, using its iE Integrator tool.
Although Red was conceived from the outset as an autonomous
business, the key to keeping costs down was to "buy in" the RAC's
existing systems and infrastructure where possible. So links had to
be developed to the RAC's existing breakdown management system,
fulfilment operations and accounting systems, as well as to
external systems for validation of credit cards and postcodes and
to the CardNet system for payments. In addition, a partnership
programme with organisations such as Virgin Mobile has been used to
drive traffic to the Red site while keeping marketing costs
down.
With Red launched in autumn 1999, Roche is not yet prepared to
release figures for its success so far. However, he points out, the
service will need only a few hundred thousand customers to break
even and he is confident that it will comfortably exceed this
target.
Carlton broadcasts its message to investors
Most Web sites are aimed at consumers and customers, but equally
important audiences for companies listed on public stock exchanges
are their shareholders and the wider investment community.
Yet many companies find it a huge struggle to update the
corporate news, announcements about products and services, details
of management changes and other information which could have a
bearing on the share price, especially against a background of
operational e-business activities.
That was the situation faced by media group Carlton. The new
media division of subsidiary Carlton TV is primarily responsible
for developing e-business activities such as the popcorn film site
and found itself struggling with the different focus needed to
provide investor relations' support and housekeeping for the
Carlton site.
"If the operational side of the business has to take on this
housekeeping role, it's not conducive to allowing it to do what
it's supposed to be doing," points out Dominic Graveson, head of
new media for Carlton TV.
Carlton's solution was to outsource its Web-based investor
relations activities to Investis, a dedicated content management
company. Now, visitors to the corporate site are invisibly directed
to an investor information section which uses the same branding and
design as the rest of Carlton's corporate site but which is hosted
and maintained by Investis.
"Investor relations is still mission-critical stuff and it's
very important to people in the upper levels of management,"
Graveson points out. "Investis allows them to get their information
onto the site without having to go through the interactive division
or the IT department."
Investis manages the content for each client using
Mediasurface's content management application. This allows it to
draw in and re-present information from other content sources, such
as the news service Reuters, as well as providing a simple
interface for corporate communications teams at blue-chip clients
like Carlton to add new material such as press releases quickly and
easily.
On top of that, because Mediasurface separates content from site
design and implementation, Investis can reuse standard templates
for different clients, allowing it to develop customised Web sites
in as little as five to 10 days.
Holiday Autos drives into online booking
Holiday Autos leads the UK market in leisure car rental with a
business philosophy based on making car hire straightforward for
its customers. Sara Zimmerman, group marketing and communications
director for Holiday Autos, saw the potential of Internet-based
booking and was confident that the company could steal a march on
its competitors by delivering the benefits of its traditional
approach online.
"There were already online car hire sites in Europe but they
were very US-focused, complicated and unfriendly," she points out.
"We knew we had the edge with a user-friendly service and a fully
inclusive pricing structure with no hidden extras. There was an
obvious business opportunity for an easy-to-use global car rental
site, but we had to hurry to stay ahead of the market."
So Holiday Autos Online was launched at the beginning of this
year and according to Zimmerman, the company experienced "a
phenomenal public reception to the site. Business came through
thick and fast, even before the publicity campaign in April. In
fact we are having to change our internal processes to manage the
volume of business."
For instance, the site has opened up a new and very effective
marketing channel for lastminute deals and special promotions which
were previously impossible to communicate.
Anticipating this positive response, another key aspect of the
original design involved protecting the company's main Oracle
booking system from peaks of activity on the Web site. To do this,
Holiday Autos used development and database tools from Progress
Software to replicate the database and associated business logic in
a separate system dedicated to serving the Web site. It is also
using Progress Webspeed to manage the process flow between
customers and the database.
However, it took Holiday Autos a long time to identify a
suitable development tool because it found that many
Web-development products didn't offer the performance, scalability
and support for back-end processing it was looking for. This left
the Holiday Autos with just nine weeks to rewrite the core booking
systems and design and develop the e-commerce front end, but it met
that deadline with two days to spare, thanks to support from the
professional services division of Progress Software.
This first phase now allows customers to make car rental
bookings online, either directly through the Holiday Autos site or
through other online travel operators - such as Expedia.co.uk, BargainHolidays.com, Go and Buzz - which have
teamed up with Holiday Autos. A second phase, launched in Spring
2000, provides an online booking facility for travel agents,
with modified functionality to replace credit card sales with
the credit facilities provided to travel agents.
These first two phases are currently operating in the UK and the
next step will be to localise the system for the various countries
in which Holiday Autos operates and to integrate it with locally
maintained static Web sites.
The impact on the business so far has certainly been
significant. "Getting the online service up and running effectively
and so quickly has definitely given us a valuable lead in the
market," says Zimmerman.
"We have the first user-friendly online car rental site in the
UK, which is exceptionally well received by customers and press
alike," she says.
"It is enabling us to extend our market opportunities through
third parties and, while web business currently accounts for only a
tiny proportion of the 800,000 bookings we take annually, we
envisage it will account for as much as 20% of our business by the
end of the year."