Our company is successfully using IT for administrative and management functions but we are failing to use it to develop new business. What are the main technical and business considerations in establishing an e-commerce initiative?
Success depends on getting the fundamentals right
First, is an e-channel right for your business? What is it you want to achieve online? Sell more? Reduce costs? Improve customer satisfaction? All are valid, but the mix will affect the sort of presence you build. It is also important to consider whether the aim of the site is to drive business from existing or new customers, and how you will attract them to the site.
Explore the business case. It is important to examine the cost of building, running and marketing the site, versus the increased revenue or reduced sales support costs. These questions will help you identify the feasibility of an e-commerce presence, set out the requirements for functionality and integration with your current IT systems, and identify the likely budget available.
The next stage is to consider how you design, implement and manage your site. Developing the site from scratch may give you more control but requires significant skills and may take longer than tailoring something from packaged software. Alternatively, you could outsource. There are suppliers that can help develop, integrate, host or even manage your entire offering. If you outsource, ensure you have agreed service levels for your business and customers.
Great websites give great user experience and evolve with customer needs. Don't overlook the fact that customers must enjoy and value their journey through your site if it is to be successful. Design your navigation with this in mind.
As you develop your site, consider how you are going to go live. Test and pilot the site with customers and partners to gain early feedback. This should cover both the technology and the way your company manages customers and processes through its new channel.
Finally, bear in mind that a website is only as good as its content. Since non-technical people usually manage the content and reporting, consider a content management system to make this easy for them. Never lose sight of the fact that this is a channel to market and should be included in business reporting and review processes.
Mick Hegarty, ICT general manager, BT Business
Look at how your business model can be improved
It is important to understand how your business model can be improved. For example, if you are in a price-sensitive market, you may look at how e-commerce can support a unit cost reduction strategy. If you are operating in a niche market, you may look at how e-commerce can increase your competitive differentiation.
Given either option, you need to model the financial return to understand the range of budgets for an e-commerce spend, this helps decide whether you can afford to build your own system or buy a package.
Mike Lucas, regional technology manager, Compuware
Consider whether products are suitable for online sale
There are two aspects to e-commerce: marketing and selling. All businesses can create a presence on the web to explain their goods and services, however before moving to selling via the web, it is important to ensure that the goods and services are suitable for it.
Most successful websites have goods that are self explanatory, such as televisions and mobile phones, or if they are customised, they are made very simple to order, such as a taxi service.
Many businesses think that what they sell is so specialised that it cannot be packaged in this way. Usually, that is not the case. Think about how you process an order internally and you may find that this systemisation and standardisation is already happening. All you now need to do is convert this into a system or process for others to use.
This may require extra technology to handle payments or to generate the order internally, but this is relatively straightforward with packages that are available specifically for this purpose or by customisation of what you have already.
As with anything in business, you need to take account of the laws and regulations (see p21). This is even more important where your shop front is the web because your goods and services could be used in another country where the rules and regulations differ from those in the UK.
Trevor Lucas, managing director, TAL Computer Services
Balance the costs against potential savings and growth
Business is business, and e-commerce is just another channel to reach your customers. Some businesses lend themselves more readily to e-commerce than others. For example, if your business sells products that you could present in a catalogue to customers who own PCs, then e-commerce would be a logical extension to your business and could help increase sales.
It can also encourage more people to contact your business online than you can reach through normal marketing channels. But you do not have to think in terms of all of your products, it may be that a subset would make a compelling offering for e-commerce.
For many companies, setting up an online presence can help them sell more effectively and generate new business. You can reach new markets without even knowing they exist. A site with online payment capabilities can be set up easily, but you should get help from a qualified supplier.
Think about how you will deal with customer queries from the site and have a phone number or e-mail address customers can contact. It is important to make e-commerce a central part of the whole business - do not operate the website in isolation or customers will not come back.
Finally, make a realistic calculation about how much you can afford to spend. Think about how much you would need to grow the business without e-commerce - more direct sales people, for example - or how e-commerce might help reduce administration costs, and then budget appropriately. There are guides on how to get started and what products and suppliers are available at www.bcentral.co.uk.
John Coulthard, director of small business, Microsoft UK
Think future requirements when buying a system
You need to carefully assess the initial and ongoing costs and in particular the expected revenues from the initiative in the first three years. Ongoing costs such as the maintenance of the content of any e-commerce site need to be considered as it can involve a significant amount of staff time if it has to be updated regularly.
Consideration should be given to how the initiative can work for you in terms of generating new customers. Examples include promoting your firm through search engine marketing, e-mail marketing and offline marketing.
Technical considerations include the desired functionality of your website and how you may want to expand this in the future. Initially you may just want an online product catalogue that can handle simple orders, but in the future you may wish to expand this to integrate with your warehouse and include stock levels. Similarly, you may want to integrate with your distributors' systems so that customers can track their orders through to delivery, integrate with suppliers for automated reordering of products, or integrate with your accounts system.
You will also need to consider the implication of your supplier's preferred e-commerce platform. Can it handle your future requirements or high volumes of users? And can it handle multiple currencies and languages?
Justin Masters, senior developer, Netcel
Are you an SME with an IT challenge? E-mail your question to email@example.com
This was first published in February 2005