Chp04 Thingking E Business Design

Chapter FourChapter FourThinking E-Business Design: More Than Technology

© e-Business Strategies, Inc.

www.ebstrategy.com- 2 -

IntroductionIntroduction

3 interlocking layers of e-business

e-Business Design– What business design can make your customers’ shopping

and 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



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



3 interlocking layers of e-business 3 interlocking layers of e-business

E-Business E-Business InfoStructureInfoStructure

ScalabilityScalabilityReliabilityReliabilityHostingHostingStorageStorage

ServersServersDatabasesDatabasesMiddlewareMiddlewareRoutersRouters

Site SecuritySite SecurityData SecurityData SecurityTransaction SecurityTransaction Security

E-Business E-Business DesignDesign

Business Model ScopeBusiness Model ScopeCustomer SelectionCustomer SelectionValue CreationValue CreationStrategic ControlStrategic ControlOrganizational SystemsOrganizational Systems

E-Business E-Business InfrastructureInfrastructure

CRMCRM e-Procuremente-ProcurementERPERP Supply ChainSupply ChainFinancialsFinancials Selling ChainSelling ChainBusiness IntelligenceBusiness Intelligence PortalsPortals



The Race to Create Novel e-Business The Race to Create Novel e-Business DesignsDesigns

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



The Race to Create Novel e-Business The Race to Create Novel e-Business DesignsDesigns

Focus no longer limited to process improvement; focus of change initiatives shifted to business redesign

– Retail drug industry

Success depends on how quickly a company can formulate novel business designs and adapt them to its markets



Step 1: Self DiagnosisStep 1: Self Diagnosis

Assess impact of recent customer, business and technological 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 opportunities while also preserving investments in people, apps and data?

– Is your company successful at lowering operating costs while making complex business apps adaptive and flexible to change under the relentless pressure of time to market?



Step 1: Self DiagnosisStep 1: Self Diagnosis

Innovator or market leader: All answers yes

Early adopter or visionary: Most answers yes– Charles Schwab

Silent majority: Few answers yes– Pragmatists, Old-guard Conservatives, and Die-

hard Skeptics



Step 2: Reverse the Value ChainStep 2: Reverse the Value Chain

Greatest challenge in e-business: linking emerging tech to new business design

Managers find creating new business designs difficult with emerging technologies and customer needs

– trained to concentrate on improving products, increasing market share, and growing revenues

– distinction between products and services blur in e-business world




Successful companies invent value, not just add value

– outside in vs. inside out– customer requirement important in outside in

approach– Starbucks invented value where traditional

companies did not by creating business around gourmet coffee

Outside-in, customer centric approach essential in times of great structural transition in economy




In-house Core

Competencies

Rigid Infrastructure/

Processes

Products/Services

Channels Customers

Traditional Business Design

Outsourced/In-house Core Competencies

Flexible Infrastructure/

Processes

Products/Services

IntegratedChannels

CustomersNeeds

e-Business Design



Step 3: Choose a FocusStep 3: Choose a Focus

Service excellence– Delivering what customers want with hassle-free

service and superior value

Operational excellence– Delivering high-quality products quickly, error free,

and for reasonable price

Continuous-innovation excellence– Delivering products and services that push

performance boundaries and delight customers



Service ExcellenceService Excellence



Service ExcellenceService Excellence

Involves selecting a few high-value customer niches and then making a concerted effort to serve 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



Operational ExcellenceOperational Excellence



Operational ExcellenceOperational Excellence

Involves providing lowest-cost goods and services possible while simultaneously minimizing 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



Continuous-Innovation ExcellenceContinuous-Innovation Excellence



Continuous-Innovation ExcellenceContinuous-Innovation Excellence

Involves not only providing best-possible products and services but also offering customer more exciting features and benefits than 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



Step 4: Execute FlawlesslyStep 4: Execute Flawlessly

• How can you move from where you are today to where you want to be?

• How do you integrate and tailor your legacy infrastructure to meet new e-business requirements?

• Execs must be willing to cut losses and abandon important current projects that do not support the goals of the e-business design



Service Excellence at American ExpressService Excellence at American Express

Business transformation of the mid 1990s resulted in new e-business design concentrating on mgmt of customer relationships

– In era of limited personal time, customers concerned about quality service, esp. its simplicity, flexibility and consistency

Combine detailed customer knowledge with service flexibility

– CustomExtras enables custom discounts and other deals directly on card members’ bills

Investing $1 billion annually in the construction of a sophisticated service infrastructure

– Within financial services industry, this can provide means to develop competitive advantage and raise barriers to entry



Service Excellence at American ExpressService Excellence at American Express

TravelServices

Credit Cards

Banking

Financial Planning

Online Travel

Services

Membership Rewards

Private Banking

Life PathPlanning

Integrated Financial Services

The Way It Was The New Way



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 PC business went bankrupt because of Dell’s direct sales model

– CHS Electronics, MicroAge, InaCom



November

$3 Million/day

36 countries

200+ Premier Pgs.

400k users/wk

JanuaryJanuary$1 Million/day$1 Million/day

MarchMarch Asian/European Asian/European

Internet site Internet site launchedlaunched

225,000 online 225,000 online user sessions per user sessions per weekweek

OctoberOctober

Configurator Configurator generating generating

online quotes is online quotes is launchedlaunched

JulyJuly Dell starts Dell starts

selling systems selling systems onlineonline

80,000 online 80,000 online user sessions user sessions per weekper week

June June www.dell.com www.dell.com site launched site launched with technical with technical

support content support content and e-mail and e-mail gatewaygateway

Dell launches Dell launches an FTP site for an FTP site for customers to customers to

download filesdownload files

Late 1980sLate 1980s 19941994 19951995 19961996 19971997

FebruaryFebruaryMarketing Marketing

content content added added to siteto site

19981998

Focus efforts Focus efforts

on Corporate on Corporate customercustomer

$4 M/day$4 M/day Focus on Focus on

value- added value- added servicesservices

Dell Online HistoryDell Online History



The Dell eCommerce SystemThe Dell eCommerce System

Integrated customer experience Integrated customer experience

ValueValuepropositionproposition

ShoppingShoppingand buyingand buying

ServiceServiceand supportand support

Loyalty/Loyalty/relationshiprelationship

ProductProductservicesservices

PricePriceDirect modelDirect model

DellDell

ConfigurationConfigurationand shoppingand shopping

ElectronicElectronicordersorders

OrderOrderstatusstatus

Trouble-Trouble-shootingshooting

Value-addedValue-addedservicesservices

PremierPremierservicesservices

PersonalizedPersonalizedexperienceexperience



Continuous Innovation at Cisco SystemsContinuous Innovation at Cisco SystemsAt Cisco, business design centers on the core belief in what continuous innovation demands from organizations attempting 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 with

changing 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 suppliers that provide other key capabilities



Configuration

Service Order

Order Status

Order Placement

Pricing

Invoice

““Full Service” Internet Commerce on CCOFull Service” Internet Commerce on CCO



Problem Detection:CiscoWorks

Problem Notification: Bug Alerts

Problem Identification: Bug Navigator

Operation Support Software Library

Problem Resolution: Open Forum, Troubleshooting Engine

Installation and Configuration Documentation

Reseller Care Reseller Care Cisco Connection OnlineCisco Connection Online



Customer Care ResultsCustomer Care Results

Total Logins/Month

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

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

Satisfaction3.4

Satisfaction3.4

Satisfaction4.1

Satisfaction4.17

June 1998

• Over 70% questions handled on line

• Dramatic growth—over 1.1million logins per month

• 25% higher customer satisfaction

• 98% accurate, on-time repair shipments

• Annual savings of $365 m

Headcount $75 m

Software download $250 m

Document publication $40 m



Lessons from e-Business DesignLessons from e-Business Design

Be customer focused

Value creation a continuous process

Transform business processes into digital form

Decentralize management but centralized coordination

Create an e-business app architecture addressing three critical requirements

– interface– integration– innovation

Integrate but plan for continuous growth and change– start small– build on success– build, launch, learn

E-Business E-Business Strategies, Inc.Strategies, Inc.

www.ebstrategy.comwww.ebstrategy.com

[email protected]@ebstrategy.com

678-339-1236 x201678-339-1236 x201

Fax - 678-339-9793Fax - 678-339-9793

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Chp04 Thingking E Business Design