e-Business

Roadmap for success

Ravi Kalakota and Marcia Robinson

e-Business framework
ERP

SCM

Selling Chain
Management
CRM

E-procurement

e-business

Knowledge
Management

e-Business framework
e-business

and e-commerce are not the same

e-business affects to the core of the enterprise
moving to e-business changes the structure
and processes of a firm radically
the stakes are high

From e-commerce to e-business

Some

pioneer firms in US have already moved

from e-commerce to e-business (Dell,
Amazon.com, UPS, Cisco)
streamlined processes
integrated technology
new business model
-> competitive advantage

rules of e-business
Technology

is no longer an aftertought in
forming business strategy, but the actual cause
and driver

IT

is not part of the business, it is the business

Firms are forced to use new technology or get
out of the business

rules of e-business
Streamlining

the structure and information

flows is much more powerful than moving and
manufacturing physical products

More

flexible organization structure

Accelerated flow of information
Continuing transformation

rules of e-business
Inability

to overthrow the outdated business

design often leads to business failure

New

business design must give the ability to

react quickly on customer demands
Core competence
Outsourcing

rules of e-business
New

business design must create flexible

outsourcing alliances

Compatible

technology between outsourcing

partners
Customers want more speed, better service,
personalization, and lower price

rules of e-business
Company

can be the cheapest the most

familiar or the best to its customers

The

cheapest by being value oriented

The most familiar with strong branding
The best with outstanding service and strong
customer relationship

rules of e-business
The

tough task is to align business strategies,

processes and technology at the same time
and correctly

Strong

leadership is important
Similarities to managing a company in crisis

e-business trends
Speed

of service time is money

Self service easy and quick via WWW
Integrated solutions all under one roof
Integration

of sales and service

Consistent and reliable service

e-business trends
Contract

manufacturing and strong branding

Outsourcing and core competence
Process visibility for customers and allies
Employee

retention learning, innovating,

motivating knowledge workers
Multichannel integration optimize information
flows from telephone, fax, www
Mobile computing and wireless applications

e-business design
Important
Things

part of the strategy of the firm

to analyze when creating e-business

strategy:
Use of new technology
Responsing to new customer expectations
Ability to make large changes

e-business design
Careful

planning of e-business design makes

its execution more likely succesful
E-commerce technology must be embedded in
e-business design effectively
Management must have vision how to answer
to offering excellence in service, operations or
continuous innovation

e-business application architecture

Enterprise

applications form the backbone for

architecture
Best possible integration of applications is
critical but hard to achieve
IT-infrastructure and business processes must
fit together

e-business application architecture

Clusters

of enterprise applications

Customer

Relationship Management (CRM)

Enterprise Resource Planning (ERP)
Supply Chain Management (SCM)
Selling-chain management
Operating Resource Management
Enterprise Application Integration
Business Analytics, Knowledge management

Customer Relationship
Management
Why
Old

CRM?

customers are more profitable

Dissatisfied customers become expensive
New customers are hard to get
CRM integrates sales and service for the
needs of e-commerce

Customer Relationship
Management
Using

CRM, three phases

1) Acquiring new customers
2) Enhancing the profitability of customers
3) Retaining profitable customers
All phases are related, but company usually
has to choose one to be its primary focus

Customer Relationship
Management
CRM

processes must be organized around

customer not marketing, sales or other
internal function
Organizational structures must fit CRM
Customer information should be able to flow
through organization and be available easily

Customer Relationship
Management
Types

of integration in CRM infrastructure

Customer

content
Customer contact information
Extended enterprise
Front-office and back-office systems

Customer Relationship
Management

Organizational challenges in implementing CRM

CRM cuts across business units

From silo-centric infrastructure to customercentric infrastructure
Issues with global operations

Selling-chain Management
Definition:

Integrated order acquisition strategy

Selling-chain management tries to answer to
problems like:
Better

support the work of sales people

Solution to fragmented order support
Integrated systems, get rid of rekeying orders
Connect different sales functions

Selling-chain Management
Goals

in moving from functional sales to

process-oriented selling-chain management:

Easier

ordering for the customer

Add value for the customer
Possibility to order custom products
More effective sales process

Selling-chain Management
Case:
Order

Cisco and selling chain management

taking was integrated into operational

planning process
B-to-B commerce via Web
Faster delivery of customizable products
24h a day service and support

Enterprise Resource Planning

ERP

forms the backbone of E-business

ERP is a combination of compatible software
applications
Top providers: SAP, Baan, Peoplesoft, Oracle
Enhances the internal information flows of the
organization
From legacy systems to ERP

Enterprise Resource Planning

Sales
Distribution
(Order Entry)

Production
Planning

Human
Resources

Integrated
Logistics
Accounting &
Financials

Basic elements of a standard ERP-suite

Enterprise Resource Planning

Major

reasons for popularity of ERP-systems

Replacing

legacy systems
Greater control
Managing globalization
Handling new regulations easier
Integration of functions across the enterprise

Enterprise resource planning

3

implementation strategies of ERP:

Step

by step
Big bang
Modified big bang

Enterprise Resource Planning

Stakes

are high. ERP implementation may lead

to huge savings or a bankruptcy
Does not offer competetive advantage for a
long time
ERP can help to move resources from
supportive functions to core competence
Are firms becoming similar because of ERP ?

Supply Chain Management

What is causing the SCM boom?

e-commerce value
proposition
Give the customers what they
want,when and how they
want,at the lowest cost

e-business structural
migration
Rapid Demand Fulfillment
Internet-Enabled Supply
Chain Planning and
execution

Supply Chain Management

SCM

is process umbrella

SCM

is coordination of material, information

and financial flows between and among all the
participating enterprises

Goals

of SCM is interenterprise integration

Supply Chain Investment Trends

Worldwide

dispersion of manufacturing and

distribution facilities
Channel unpredictability is the norm
Responsiveness over effiency
Accept lower margins to maintain and increase
market share

Supply Chain Management

SCM

is where the action will be in the next

decade
company vs. company
supply chain vs.
supply chain
enterprise focus partner focus direct focus
Service via SCM has become the Holy Grail for
competitive advantage

Applications for SCM

Two

categories :

planning and execution

Planning

modules

Order Commitment
Advanced Scheduling
Demand planning
Distribution Planning

Applications for SCM

Execution

Modules

Order Planning
Production
Replenishment
Distribution

These

apps only partial functional solutions

Need to have Integrated SC Application

Supply Chain Management

SCM

is a prerequisite to doing business

SCM is business strategy issues
Opportunity to differentiate through supply
chain
SCM solutions market is in its infancy.

E-Procurement
Procurement

is not purchasing
Close-loop process

requisition payment

Becoming

top-managemnet issue
Case: M$ Market

Intranet based desktop ordering system for selected

partners

E-procurement chain management

Next

Gen procurement apps:

Buy-side desktop
Buy-side centralized
Sell-side apps

e-procurement

solutions

automate selection
end-to-end solution
control of preferred suppliers

E-procurement chain management

Verical

Procurement Portals
Professional Buyers
-Control
-Effiency and cost reduction
-Supplier managemnet

Employees
-Convenience
-Ease of Use
-Consistency

Integration
Sweet
Spot

Supplier
-Cost reduction
-Clean orders

Knowledge-Tone Apps next gen of

Decision Support Systems
From

compiling data to identifying key

customer trends and preferences
Employees expect high quality information, 24h
access and fast performance
Business

of information sorting, extraction,

packaging and dissemination

Classes of Knowledge-Tone Apps

Customer

Personalization

Supply

Chain DSS

Visibility and certainty

Remote

Relationship DSS

Performance Monitoring

Monitoring system, KPIs

SAP Strategic Enterprise Management

Classes of Knowledge-Tone Apps

Knowledge

Management

Problems:
Can

we define it?
Software vendors are distancing themselves from it
Low returns on investments

Simulation:

What-if Scenario Analysis

E-business Strategy Creation

top-down

analytical planning

The never-seen-again plan

The no-goals plan
The no-feedback plan

bottom-up

just do it tactical planning

misinformed decisions

E-business Strategy Creation

Continuous

planning with feedback

Knowledge building and capability evaluation

E-business desing
E-business blueprint
Application development and deployment

E-business design
Category

killer
Channel reconfiguration
Transaction intermediary
Infomediary
Self-service innovator
Supply chain innovator
Channel mastery

E-business Strategy into Action

Biggest

problem still top level management

commitment
Types of e-business projects

incremental
breakthrough
platform