BBA IT 2009 E-Strategy

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    E-business Strategy

    BBA-IT: 2009-2012

    A.G. Kotwal

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    References

    1. Corporate Information Strategy andManagement Applegate, Austin and

    McFarlan; 7th Edition

    2. Get the Right Mix of Bricks & Clicks

    B Ran a Gulati and Jason Garino

    (HBR: May-June 2000)

    3. Strategy and the Internet by Michael

    Porter (HBR, March 2001)4. Strategic Mgment and Business Policy

    Wheelen, Hunger, Rangarajan (Pearson)

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    E- business Strategy

    Strategy defines the future directions and

    actions of an organization

    The direction and scope of an organizationover the long term which achieves its goals

    through deployment of resources in a

    changing environment to meet the needs ofmarkets and to fulfil stakeholder expectations

    E-business strategy looks at application of the

    Internet and other technologies to support

    Corporate, Business Unit or Functional level

    strategies

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    Why does a company need strategic

    planning for e-business?

    A company faces several options:

    Not go for E-commerce

    Stay with passive advertisement

    Open online stores in addition to existing Establish separate online division

    Dissolve regular business become a pure

    play company

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    How does a Company decide?

    E-strategy plan the purpose of preparing an

    e-business strategy plan is to decide whatcourse of action the company must take. i.e.,

    how to start e-business and sustain it

    Example: IBM (it was only a brick company

    till about 1990)

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    IBMs E-business Strategy

    Created an independent division

    Introduced EC as a corporate culture Leveraged existing strengths

    Re-en ineered rocesses

    Started seven new initiatives

    Decided to be an EC leader

    Used ROI as a criteria to select projects

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    IBMs Key EC Initiatives

    1. Sell more on web (EC)

    2. Online customer support (e-care)

    3. Support for business partners (PRM)

    4. Dedicated support for IT consultants /

    analysts (e-service)

    5. Support to employees (B2E)

    6. E-procurement (B2B)7. E-marketing communications

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    E-business Strategy

    Corp Strategy

    E-business Strategy

    SCM Strategy Mktg/CRM Strategy

    IS/IT Strategy

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    IT and Strategy Key Concepts Strategy vs. Bus Model

    Evolving Strategy Strategic Positioning

    ener c ra eg es Strategic Shifts

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    E-Strategy and Business Model A BM defines how an enterprise interacts

    with its environment to define a unique

    strategy, attract resources and build

    capabilities to execute it and in the process

    A successful BM aligns an organization

    with its environment

    The strategy defines the revenue and growthpotential of the organization

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    E-Strategy and Business Model

    Strategy => focuses on specific goals andprojects required to achieve them

    Capabilities => built to achieve those goals atleast cost while responding quickly to change also define the revenue model => profitmodel

    Profits => enables evolving strategy and newcapabilities this cycle is called the virtuouscycle

    Poorly aligned business model can createvicious cycle causing business to spin outof control and destroy value

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    Evolving Strategy

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    E-Strategy Planning Cycle

    1. Industry/Competitive Analysis: analyzeindustry environment and determinerelative/competitive positioning

    2. Strategy Formulation: strategic objectivesthat will drive the strategy initiatives

    Focus on customers, markets, competition andinternal operations

    Justify projects measure ROI

    3. Implementation

    4. Performance assessment and strategyreassessment feedback loop

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    1. Industry and Competitive Analysis

    Means monitoring, evaluating anddisseminating information from external and

    internal environments w.r.t. launching an

    eBusiness project

    Need to identify CSFs for the initiatives

    Start with SWOT analysis: Internal strengths and weaknesses : Structure,

    Culture, Resources

    External opportunities and threats : Social

    Environment- general forces, Task Environment-

    industry analysis

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    2. Strategy Formulation Develop long range/strategic plans for effective

    management of environmental opportunities and threats

    in the light of corporate strengths and weakness

    Redefine corporate Mission (purpose for the

    organization's existence)

    Specify Objectives (SMART: Specific, Measurable,

    , , -

    Develop specific activities and plans for the selected

    initiatives (Strategies)

    Prepare implementation guidelines and milestones(Policies)

    Examine Mission Statements and declared Strategies for

    various companies

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    2. E-Strategy Formulation

    Steps for E-commerce Programs

    1. Conduct education/training

    2. Review current processes simplify, BPR

    3. Determine what customers/partners expect4. Re-evaluate nature of products/services

    .

    6. Extend current systems to outside

    7. Track new competition/market share

    8. Develop web-centric marketing strategy

    9. Develop virtual marketplace

    10. Instill E-business management style

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    2. Methodologies for Strategy Formulation

    Critical Success Factor (Rockart)

    Indispensable technology, business and human

    factors that help achieve desired level of goals

    Involves asking a series of Qs

    a ue a ys s o e To assess desirability of a strategy/initiative,

    assess added value of a series of activities

    performed to achieve goals Value Analysis Qs

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    2. Strategy Formulation (contd)

    Amazon Strategy

    ?

    ?

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    2. Strategy Formulation (contd)

    Amazon Strategy:+ Stay on-line (pure play)

    + Product diversification

    + Personalization

    Dell Strate

    + Direct marketing

    + Efficient supply chain

    + Technology based innovation

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    3. Implementation of Strategy

    Build an implementation plan (Program)

    Get organized user teams, technical teams Pilot Project a risk mitigating strategy

    Content management (Procedures)

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    4. Performance Assessment

    Need for strategy and projects assessment:

    - Do the projects deliver what was aimed?- Projects still viable in changing environment?

    -

    - Determine reasons for failure

    - Reassess strategy- learn from mistakes

    Measuring Results

    Corporate Performance Measurement

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    4. Perf. Assessment: ROI and Risk Analysis

    Creating added value through EB initiatives

    requires resources

    ROI is benefits in relation to costs

    Costs are easier to uantif TCO

    For IT initiatives:

    Generic IT Values- Financial, strategic,

    stake holdersGeneric IT Risks- Competitive strategy,

    organizational strategy, uncertainty

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    Impact of the Internet

    The Internet is re-shaping the marketplace and

    has changed the way customer, suppliers interact

    It has changed the way cos work from internally Affects competition instead of just product

    ,

    traditional value chain. The new marketplaces:

    Trading exchanges (VerticalNet, TradeMatrix)

    Industry sponsored exchanges (Covisint) Net Market Makers (e-Steel) value chain based

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    Impact of the Internet

    Trends1. Changing business models bus

    transformation

    2. New channels changing access and branding

    3. Balance of ower shiftin to customer

    4. Competition is changing more innovative

    5. Pace of business is increasing drastically

    6. Traditional organization boundaries arechanging

    7. Knowledge is becoming a key asset

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    Conclusion:CSFs

    - u ne e

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    E-business Strategy: Seven Steps

    1. Align business strategy with Inet initiatives

    2. Communicate vision

    3. Identify core competence and key values

    4. Develo ortfolio of EB initiatives

    5. Evolve year by year objectives and plans

    6. Implement change and set up measurements

    7. Monitor overall plan, adjust and improve

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    CSFs for E-business Projects

    Top management support- internalcommunication

    Project team