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.
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."