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.
This was first published in November 2001