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Chapter Four Chapter Four Thinking E-BusinessDesign: More ThanTechnology
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e-Business Strategies, Inc. www.ebstrategy.com- 2 -
IntroductionIntroduction
3 interlocking layers of e-businesse-Business Design
What business design can make your customers shoppingand service experiences unique and memorable?
What capabilities and competencies create rich customer experiences? In the quest for efficiency, how do you structure your
organization for efficiency?
e-Business App Infrastructure Supports design by providing s/w functionality Strong app infrastructure foundation necessary from which to
deploy e-business apps
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IntroductionIntroduction
e-Business Infrastructure structural foundation supporting the app layer is a balance of structure and flexibility harnesses, safeguards, manages, and permits use of
information in ways that are fast, safe and simple
comprises the tech, utilities, and services needed for uninterrupted flow of e-commerce
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3 interlocking layers of e3 interlocking layers of e- -businessbusiness
EE--BusinessBusinessInfoStructureInfoStructure
ScalabilityScalabilityReliabilityReliabilityHostingHostingStorageStorage
ServersServersDatabasesDatabasesMiddlewareMiddlewareRoutersRouters
Site SecuritySite SecurityData SecurityData SecurityTransaction SecurityTransaction Security
EE--BusinessBusinessDesignDesign
Business Model ScopeBusiness Model Scope
Customer SelectionCustomer SelectionValue CreationValue CreationStrategic ControlStrategic ControlOrganizational SystemsOrganizational Systems
EE--BusinessBusinessInfrastructureInfrastructure
CRMCRM ee--ProcurementProcurementERPERP Supply ChainSupply ChainFinancialsFinancials Selling ChainSelling ChainBusiness IntelligenceBusiness Intelligence PortalsPortals
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The Race to Create Novel eThe Race to Create Novel e- -BusinessBusinessDesignsDesigns
Getting it right the first time very important right strategy accelerates market penetration and
minimizes cost wrong strategy can cause years of repercussion
Truly great companies use state-of-the-art e-commerce processes to transform themselves
redefine value for customers build powerful e-business designs to outperform
competition understand customer priorities
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The Race to Create Novel eThe Race to Create Novel e- -BusinessBusinessDesignsDesigns
Focus no longer limited to processimprovement; focus of change initiatives shiftedto business redesign
Retail drug industry
Success depends on how quickly a companycan formulate novel business designs andadapt them to its markets
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Step 1: Self DiagnosisStep 1: Self Diagnosis
Assess impact of recent customer, business andtechnological trends Has the recent wave of tech innovation created new ways of
doing business and reorganizing priorities within your firm? Is your company responding to changing customer
expectations? Is your company willing to question and change countless
industry assumptions to take advantage of new opportunitieswhile also preserving investments in people, apps and data?
Is your company successful at lowering operating costs while
making complex business apps adaptive and flexible tochange under the relentless pressure of time to market?
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e-Business Strategies, Inc. www.ebstrategy.com- 8 -
Step 1: Self DiagnosisStep 1: Self Diagnosis
Innovator or market leader: All answers yesEarly adopter or visionary: Most answers yes
Charles Schwab
Silent majority: Few answers yes Pragmatists, Old-guard Conservatives, and Die-
hard Skeptics
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Step 2: Reverse the Value ChainStep 2: Reverse the Value Chain
Greatest challenge in e-business: linkingemerging tech to new business design
Managers find creating new business designsdifficult with emerging technologies andcustomer needs
trained to concentrate on improving products,increasing market share, and growing revenues
distinction between products and services blur ine-business world
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Step 2: Reverse the Value ChainStep 2: Reverse the Value Chain
Successful companies invent value, not justadd value outside in vs. inside out customer requirement important in outside in
approach Starbucks invented value where traditional
companies did not by creating business aroundgourmet coffee
Outside-in, customer centric approach essentialin times of great structural transition ineconomy
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Step 2: Reverse the Value ChainStep 2: Reverse the Value Chain
In-houseCore
Competencies
RigidInfrastructure/
Processes
Products/Services Channels Customers
Traditional Business Design
Outsourced/In-house CoreCompetencies
FlexibleInfrastructure/
ProcessesProducts/ServicesIntegratedChannelsCustomersNeeds
e-Business Design
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Service ExcellenceService Excellence
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Service ExcellenceService Excellence
Involves selecting a few high-value customer niches and then making a concerted effort toserve them well
Requires commitment to CRM
Operating principles of service excellence prepare for the unforeseen gather and maintain all up-to-date, accurate
business and economic information you need,where and when you need it
user customer contact mgmt develop corporate philosophy about customer
service
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Operational ExcellenceOperational Excellence
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Operational ExcellenceOperational Excellence
Involves providing lowest-cost goods andservices possible while simultaneouslyminimizing problems for customer
Key principles efficient leveraging of assets mgmt of efficient transactions mgmt of sales intelligence dedication to measurement systems mgmt of customer expectations
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ContinuousContinuous- -Innovation ExcellenceInnovation Excellence
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ContinuousContinuous- -Innovation ExcellenceInnovation Excellence
Involves not only providing best-possibleproducts and services but also offeringcustomer more exciting features and benefitsthan competitor
Microsoft, Sun Microsystems and Nike Downfall of AT&T, Eastman Kodak, Sears and GM
due to lack of technological innovation
Key principles risk-oriented mgmt style growth by mergers and acquisitions market-education style encouraging innovation
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Step 4: Execute FlawlesslyStep 4: Execute Flawlessly
How can you move from where you are todayto where you want to be?
How do you integrate and tailor your legacyinfrastructure to meet new e-businessrequirements?
Execs must be willing to cut losses andabandon important current projects that do
not support the goals of the e-business design
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Service Excellence at American ExpressService Excellence at American Express
Business transformation of the mid 1990s resulted innew e-business design concentrating on mgmt of customer relationships
In era of limited personal time, customers concerned aboutquality service, esp. its simplicity, flexibility and consistency
Combine detailed customer knowledge with serviceflexibility
CustomExtras enables custom discounts and other dealsdirectly on card members bills
Investing $1 billion annually in the construction of asophisticated service infrastructure
Within financial services industry, this can provide means todevelop competitive advantage and raise barriers to entry
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Service Excellence at American ExpressService Excellence at American Express
TravelServices
CreditCards
Banking
FinancialPlanning
OnlineTravel
Services
MembershipRewards
PrivateBanking
Life PathPlanning
IntegratedFinancialServices
The Way It Was The New Way
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Operational Excellence at DellOperational Excellence at Dell
Build-to-order e-business design low-cost manufacturing and fast-cycle product
development
Integration of customer demand from the direct-sales channel with back-end supply chain
enables cost-effective selling directly to customers,bypassing resellers and their markups
Computer distributors that once controlled PCbusiness went bankrupt because of Dells directsales model
CHS Electronics, MicroAge, InaCom
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November
$3 Million/day
36 countries
200+ Premier Pgs.
400k users/wk
JanuaryJanuary$1 Million/day$1 Million/day
MarchMarchAsian/EuropeanAsian/EuropeanInternet siteInternet sitelaunchedlaunched225,000 online225,000 onlineuser sessions per user sessions per
weekweek
October October Configurator Configurator
generating onlinegenerating onlinequotes isquotes islaunchedlaunched
JulyJulyDell startsDell startsselling systemsselling systemsonlineonline80,000 online80,000 onlineuser sessionsuser sessionsper weekper week
JuneJunewww.dell.comwww.dell.comsite launchedsite launchedwith technicalwith technical
support contentsupport contentand eand e- -mailmailgatewaygateway
Dell launchesDell launchesan FTP site for an FTP site for customers tocustomers to
download filesdownload files
Late 1980sLate 1980s 19941994 19951995 19961996 19971997
FebruaryFebruaryMarketingMarketing
contentcontent
addedaddedto siteto site
19981998
Focus effortsFocus effortson Corporateon Corporate
customer customer $4 M/day$4 M/dayFocus onFocus onvaluevalue-- addedaddedservicesservices
Dell Online HistoryDell Online History
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The Dell eCommerce SystemThe Dell eCommerce System
Integrated customer experienceIntegrated customer experience
ValueValuepropositionproposition
ShoppingShoppingand buyingand buying
ServiceServiceand supportand support
Loyalty/Loyalty/relationshiprelationship
ProductProductservicesservices
PricePriceDirect modelDirect model
DellDell
ConfigurationConfigurationand shoppingand shopping
ElectronicElectronicordersorders
Order Order statusstatus
TroubleTrouble- -
shootingshooting
ValueValue- -addedaddedservicesservices
Premier Premier servicesservices
PersonalizedPersonalizedexperienceexperience
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Continuous Innovation at Cisco SystemsContinuous Innovation at Cisco SystemsAt Cisco, business design centers on the core belief in what
continuous innovation demands from organizationsattempting it build on change, not stability organize around networks, not a rigid hierarchy based on
interdependencies of partners - not self-sufficiency construct operations on tech advantage, not old-fashioned bricks n
mortar Continuous innovation via acquisitions
Acquisitions cornerstone of its business strategy, to survive larger competitors
Identify companies that help enhance product line and keep up withchanging marketplace
Make sure the acquisition is assimilated quickly
Extended Enterprise model to support the innovation-excellence model
Focus on core competencies and form partnerships with suppliersthat provide other key capabilities
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Problem Detection:CiscoWorks
Problem Notification: Bug Alerts
Problem Identification:Bug Navigator
Operation SupportSoftware Library
Problem Resolution: OpenForum, Troubleshooting Engine
Installation and Configuration
Documentation
Reseller CareReseller Care Cisco Connection OnlineCisco Connection Online
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Customer Care ResultsCustomer Care Results
TotalLogins/Month
0100,000200,000300,000
400,000500,000600,000700,000800,000900,000
1,000,0001,100,0001,200,000
Jan Apr May Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jun
19971995 1996 1998
Satisfaction3.4Satisfaction
3.4
Satisfaction4.1
Satisfaction4.17
June 1998
Over 70% questions handled on lineDramatic growthover 1.1millionlogins per month25% higher customer satisfaction98% accurate, on-time repair shipmentsAnnual savings of $365 m
Headcount $75 mSoftware download $250 mDocument publication $40 m
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Lessons from eLessons from e- -Business DesignBusiness Design
Be customer focused
Value creation a continuous process
Transform business processes into digital form
Decentralize management but centralized coordinationCreate an e-business app architecture addressing threecritical requirements
interface integration innovation
Integrate but plan for continuous growth and change start small build on success
build, launch, learn
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EE--BusinessBusinessStrategies, Inc.Strategies, Inc.
www.ebstrategy.comwww.ebstrategy.com
[email protected]@ebstrategy.com
678678--339339--1236 x2011236 x201
FaxFax -- 678678--339339--97939793