ma t2.1.1 planning for electronic commerce
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Chapter 12:Planning for Electronic
Commerce
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ObjectivesIn this chapter, you will learn about:
Planning electronic commerce initiatives
Strategies for developing electronic commerce Web sites
Managing electronic commerce implementations
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Planning Electronic CommerceInitiatives
Objectives of electronic commerce:
Increasing sales in existing markets
Opening new markets
Serving existing customers better
Identifying new vendors
Coordinating more efficiently with existing vendors
Recruiting employees more effectively
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Linking Objectives to BusinessStrategies
Downstream strategies
Used to improve the value that the business providesto its customers
Upstream strategies Focus on reducing costs or generating value
Work with suppliers or inbound shipping and freight serviceproviders
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Linking Objectives toBusiness Strategies
Electronic commerce opportunities can inspire
businesses to undertake activities such as: Building brands
Enhancing existing marketing programs
Selling products and services
Selling advertising
Developing a better understanding of customer needs
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Measuring Benefits Tangible benefits of electronic commerce initiatives include:
Increased sales Reduced costs
3-Rs (reach, richness, range)
Intangible benefits of electronic commerce initiatives include:
Increased customer satisfaction
Improved customer service
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Managing Costs
Total cost of ownership (TCO)
Includes costs of hardware, software, design workoutsourced, and salaries
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Web Site Costs International Data Corporation and Gartner, Inc. estimate
that the cost for a large company to build and implement
an entry-level electronic commerce site is about $1million
79 percent of cost is labor related
10 percent is the cost of software
11 percent is the cost of hardware
The annual cost to maintain and improve a site will bebetween 50 and 200 percent of the initial cost
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Comparing Benefits to Costs Key part of creating a business plan for
electronic commerce initiatives includes: Identifying potential benefits
Identifying costs required to generate benefits
Evaluating whether benefits exceed costs
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Return on Investment (ROI) Return on investment techniques provide a
quantitative expression of a comfortable benefit-to-cost margin
Built-in biases that can lead managers to makepoor decisions:
ROI requires that all costs and benefits be stated indollars
Focus is on benefits that can be predicted
Tends to emphasize short-run benefits over long-runbenefits
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Strategies for DevelopingElectronic Commerce Web Sites Typical early Web site
Static brochure not updated frequently
Seldom had any capabilities for helping thecompanys customers
Current SOA for Web sites include:
Transaction-processing tools
Automated homes for business processes of all kinds
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Early Outsourcing Outsource the initial site design and
development to launch a project quickly
Outsourcing team trains the companys
information systems professionals in the newtechnology
It is best to have the companys own information
systems people working closely with theoutsourcing team
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Late Outsourcing Information systems professionals
Do initial design and development work
Implement the system
Operate the system until it becomes a stable part ofthe business operation
Once a company has gained a competitiveadvantage, maintenance of the electroniccommerce system can be outsourced
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Partial Outsourcing
Company identifies specific portions of the
project that can be completely designed,developed, implemented, and operated byanother firm
Many smaller Web sites outsource their e-mailhandling and response functions
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Selecting a Hosting Service Factors to evaluate when selecting a hosting
service include: Functionality
Reliability
Bandwidth and server scalability
Security
Backup and disaster recovery
Cost
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New Methods for ImplementingPartial Outsourcing
Incubators
Company that offers start-up companies a physicallocation with:
Offices, accounting, and legal assistance
Computers and Internet connections
Often negotiate an ownership interest in thecompany
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New Methods for ImplementingPartial Outsourcing
Fast venturing
Existing company that wants to launch an electroniccommerce initiative joins external equity partners andoperational partners
Equity partners
Banks or venture capitalists
Operational partners
Firms that have experience in moving projects along
and scaling up prototypes
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Managing Electronic CommerceImplementations
Project management
Formal techniques for planning and controllingactivities undertaken to achieve a specific goal
Project plan
Includes criteria for cost, schedule, and performance
Project management software products Microsoft Project
Primavera Project Planner
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Project Portfolio Management Each project is monitored as if it were an
investment in a financial portfolio Chief Information Officer
Records projects in a list
Updates the list with current information about eachprojects status
Assigns a ranking for each project based onimportance and level of risk
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Staffing for ElectronicCommerce
General areas of staffing include:
Business managers
Project managers
Account managers
Applications specialists
Web programmers
Web graphics designers
Customer service
Systems administration
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Staffing for ElectronicCommerce
Business manager
Should be a member of the internal team that setsobjectives for a project
Project manager
Person with specific training or skills in tracking costs
and accomplishment of specific objectives
Account manager
Keeps track of multiple Web sites in use by a project
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Staffing for ElectronicCommerce
Applications specialists
Maintain accounting, human resources, and logisticssoftware
Web programmers
Design and write underlying code for dynamicdatabase-driven Web pages
Web graphics designer
Person trained in art, layout, and composition
Understands how Web pages are constructed
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Staffing for ElectronicCommerce
Customer service personnel
Help design and implement customer relationshipmanagement activities
Call center
Company that handles incoming customer telephonecalls and e-mails for other companies
Systems administrator
Responsible for the systems reliable and secure
operation
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Postimplementation Audit Formal review of a project after it is up and running
Gives managers a chance to examine: Objectives
Performance specifications
Cost estimates
Scheduled delivery dates
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Postimplementation Audit
Allows internal team, business manager, and project
manager to: Raise questions about the projects objectives
Provide feedback on strategies
Final report should analyze:
Projects overall performance
How well the project was administered
Specific performance of the project team(s)
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Summary Plans for electronic commerce implementations include:
Setting objectives
Determining benefit and cost objectives which should be statedin measurable terms
Project evaluation technique
Return on investment
Determining an outsourcing strategy Form an internal team that includes knowledgeable individuals
from within the company
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Summary Project management
Formal way to plan and control specific tasks and resources
used in a project
Project portfolio management techniques Used to track and make trade-offs among multiple ongoing
projects
Critical staffing areas: Business management
Application specialists
Systems administration
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