ma t2.1.1 planning for electronic commerce

7/31/2019 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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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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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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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

ma t2.1.1 planning for electronic commerce

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