Firms should not forget the corporate culture changes a successful
e-business demands.
Now the heady days of e-business hype are over it's time for a
reality check. Today, e-business is about realising the promises
that have been made and measuring the real impact on business.
Important steps have been taken towards placing IT firmly in the
boardroom, but e-business is still a long way from truly becoming
the business.
IT and particularly "e" have certainly increased in priority at
board-level. Recent research conducted by Compass Management
Consulting shows that 75% of CEOs are now involved in formulating
IS strategy. This must offer some hope to IT managers, who have
been trying to gain board buy-in for e-business systems.
Yet following the elevation of IT to board-level, many CEOs now
think e-business means business as usual, but with bigger revenues
and faster processing. What they're looking for now is a return on
investment (ROI) to materialise.
No one can deny the benefits that e-business should bring in
theory.
E-business can bring organisations closer to their customers,
improve time to market and even tackle the issues such as increased
customer satisfaction levels and greater personalisation of
services. But when it comes to measuring ROI there is still very
little evidence that the vast sums invested have had any impact on
the bottom line.
Yet companies can ill afford to overlook the fact that e-business
is still in its developmental stage both in terms of supporting
strategies and technology. At the time of the dotcom boom
e-business was constantly discussed in the business pages of the
press.
The interest in e-business led to a me-too rush of companies who
wanted to be seen to implement e-enabled software. Too often this
came at the cost of appropriate business planning. Expectations
have been running high ever since. The result is that some
companies may now be experiencing a mismatch between expectations
and reality, as back-office systems and infrastructures struggle to
adapt to new ways of working.
At its heart, e-business affects embedded and established business
processes. E-business can turn the whole company upside down. With
change comes a certain degree of risk. Research by Compass and the
London Business School shows there is a danger of some
organisations settling into comfort zones by trying to force old
world frameworks onto developing e-business strategies. Two-thirds
of companies surveyed had adopted an e-business plan. But over half
of these companies were operating on timeframes of one to three
years, with 52% carrying out annual reviews at best.
E-business has the ability to revolutionise business but this can
only happen once appropriate business planning and technical
infrastructure is in place to support it. Without regular reviews
of business plans, companies may be unable to deal with rapidly
changing market conditions. Equally, e-business systems that are
supported by older legacy systems will not have the same degree of
flexibility needed to increase the speed and efficiency of
day-to-day business processes. For example, online retail
operations will not meet customer expectations of next-day delivery
if they are still working on the basis of a 28-day supply chain
cycle.
Issues such as security and the Data Protection Act further
complicate the question of how to achieve the return expected from
e-business. Both will require more investment simply to sustain the
same amount of business. There is a danger that firms will begin to
feel that e-business is simply an expensive renewal process,
increasing the gap between expectation and reality.
Overcoming these challenges depends on establishing why a company
has adopted e-business in the first place. Companies should ask
themselves how much they want to achieve from it and how relevant
the customer is to this business plan. The success of the business
case for e-business depends on the level of planning and analysis
conducted at the beginning of the programme, to ascertain where you
are now and where you want to go.
For companies that want to make the successful transition from
theory to practice it is important to aim for achievable objectives
throughout the implementation phase of an e-business project.
One way is to begin to implement e-business within a non-core
department that can demonstrate some level of ROI within a short
timeframe. The lessons learned will serve as a guide without
affecting the core business. E-business projects should also be
broken into manageable parts so that some ROI is achieved at the
end of each.
These kinds of approaches will increase the chances of a successful
roll-out across the organisation and may help to dispel any fears
that e-business is simply the modern equivalent of the Emperor's
New Clothes!
Bob Wild is a senior consultant at Compass Management
Consulting.