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Chapter 12. Deploying NE Solutions

Foundations of the Net-Enabled Organization

Detmar Straub, 1st EditionCopyright © 2003 John Wiley & Sons, Inc.

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Copyright ©John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

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Chapter 12. Learning Objectives

• To apply the core competencies for each of the atomic business models to NE implementation.

• To recite the stages of the implementation process and explain each of these.

• To explain the terms B2B, B2C, Intranets, Extranets in the context of NE deployment.

• To analyze web usability.

• To argue for the importance of content in B2B, B2C web sites.

• To describe how to move from strategy to deployment.

• To distinguish between centralization and decentralization in IT development and operations.

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Chapter 12. Outline1. Introduction

2. Matching NE Applications to business processes and core competencies

3. Deploying Net –Enhanced Systems throughout the Value Chain

4. B2B Deployment

5. B2C Deployment

6. Content as King in B2C and B2B

7. Building and Maintaining NE Systems

8. Deploying Intranets and Extranets

9. Internet Time and Moving from Strategy to Deployment

10. Effective Implementation through NE Management

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12.1 Introduction

• Careful strategizing can create tremendous advantages for NEOs provided these can be competently implemented.

• Effective deployment of NE strategy requires first examining the intent of the systems.

• The next step is to match corporate goals, business processes and core competencies with available technologies.

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12.2 Matching NE Applications to Business Processes and Core Competencies

• Implementation begins with a strategic planning phase aimed at selecting “tactics” to implement the system.

• These should be based on aligning the firm’s core competencies with its resource base.

• This chapter focuses on deploying these capabilities and realizing their benefits.

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12.2.1 Planning New Business Models: Emerging Technologies & Core Competencies

• Once the decision is made by a firm to exploit an emerging technology, it moves to the execution phase of Wheeler’s NEBIC model of strategic planning for networked organizations.

• The firm needs to identify which of its core competencies can be used to implement its new technology-based initiative.

• The implementation plan for then draw on corporate resources in those areas where the firm has core competencies and plan to outsource in those areas in which it does not.

8Figure 12.1 Wheeler Model for Planning NE Systems

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12.2.2 Core Competencies and Capabilities Required for Atomic models

• Core competencies are based on the ability of a firm to utilize resources to create value.

• Firms must recognize where their intellectual capital lies so that they do not attempt to execute strategies in ways that do not play to their strengths.

• Table 12.1 lists the core competencies associated with the eight atomic business models.

• Successfully deployed strategies require at least minimal corporate competence in each of the areas listed for each atomic business model.

10Table 12.1a Atomic business models & core competencies

• 1. Content Provider– a) providing leadership in content field– b) handling content for multifarious forms of distribution– c) marketing expertise about content

• 2. Direct-to-Customer– a) forming supply chain strategic partnerships– b) using customer data to understand customer needs– c) marketing through allies– d) integrating online and offline customer processes– e) being a low cost provider

• 3. Full-service Provider– a) managing relationships with customers and other partners in the

value network– b) understanding customer segments and matching firm abilities to

deliver new offerings to these segments– c) managing business complexities through IT infrastructure– d) developing brands

11Table 12.1b Atomic business models & core competencies

• 4. Intermediary– a) collecting and analyzing information about products, prices and

markets

– b) balancing service completeness with customer volumes

– c) analyzing customer data for positioning new services

• 5. Shared Infrastructure– a) delivering IT infrastructure services to deploy model

– b) coordinating a coalition of competitors

– c) attracting new participants

• 6. Value Net Integrator– a) managing relationships with customers and other players

– b) managing coordination of nodes by analyzing the information in the network

– c) developing and managing the brand

– d) Utilizing levers of influence rather than control mechanisms

12Table 12.1c Atomic business models & core competencies

• 7. Virtual Community – a) building a sense of community

– b) sourcing or creating attractive content that is not expensive

– c) discovering member needs

• 8. Single point of contact– a) Understanding life events in customer and designing Web site

accordingly

– b) Providing leadership to move NEO to whole-of-enterprise viewpoint

– c) showing ability to manage complex IT environment

– d) Negotiating agreements among divisional and business unit (BU) senior managers

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12.3 Deploying Net-Enhanced Systems throughout the Value Chain

• The NE Value Chain, initially discussed in Chapter 6, presents the recommended priority for implementing stages in the value chain. These are (see Figure 12.2):

– Inquiry– After-Sales Support– Order/Sale– Deliver– Payment

• The following sections consider deployment problems faced in each stage.

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Figure 12.2 Recommended Order of Introduction of Stages in NE Value Chain

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12.3.1 Inquiry Stage

• A typical problem with the inquiry stage is the lack of alignment between the firm’s overall strategy and the presentation of its home page.

• Top mgmt. should also be involved in order to convey/support the strategic direction of the firm.

• Among the sub-elements that can satisfy customer inquiries are: an online inventory of goods and services, competitor price comparisons, locator services with hyperlinks or online maps for physical locations.

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12.3.2 After-Sales Support Stage

• Since retaining customers is a critical aspect of marketing, after sales support is given the 2nd highest priority.

• A firm can differentiate itself from rivals in the area of customer service by gaining more information about customers via the Web and then exploiting it.

• Examples of after-sales support techniques include, Web-based service upgrades via pop-ups.

• E-mail answering services and live chat can also have considerable advantages.

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12.3.3 Order/Sales Stage

• B2C sales often involves “placing” a selected item into an online “shopping basket”.

• B2B takes different forms purchasing from the firm’s Web page is one option, others are using an ETNS (B2B exchange hub) or Web-EDI.

• Dell’s B2B site can be accessed by Dell agents, or bus. users’ clients can be configured to interact with the Dell site without human interaction.

• Another major implementation issue is the difficult issue of integration with backend, legacy systems.

• Some companies are resolving this by establishing wholly-owned subsidiaries to build newer systems, also permitting the creation of virtual organizations.

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12.3.4 Delivery Stage

• The major issues for delivery implementation center around intellectual property rights and protection of the firms assets.

• Piracy represents a major threat, as shown by the P2P file-sharing example of Napster.

• Digital watermarks plus other technological and legal measures can provide a partial solution to this problem.

• Value-added services based on incremental revenues may prove a more sustainable business model for digital products delivered over the Internet.

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12.3.5 Payment Stage

• Few firms have e-payment core competencies, so this function is usually outsourced.

• Which options are favored, depend on the conditions in a particular country. In N. American, credit cards are the most common payment form, in Europe debit cards are more prevalent.

• Many countries hold card owners users responsible for credit card misuse, keeping card use to a minimum.

• For this reason, e-Cash or other payment options may be popular in locations were plastic cards are used less frequently.

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12.4 B2B Deployment

• B2B deployment differs from the typical problems confronted by B2C e-vendor Web sites.

• Many B2B exchanges are based on shared infrastructure, such as Omnexus and Covisint.

• Core competencies in IT infrastructure and managing information are needed to build and maintain the ETNs.

• Another core competency is marketing.

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12.4 Open Buying Internet (OBI)-EDI, and XML-EDI (Web-EDI) vs. traditional EDI

• EDI began ~20 years ago as a transaction-based offering using proprietary networks.

• With the Web, these were slowly replaced w/ Extranet-based EDI and then ETNs.

• The latest form is Web-EDI, using XML and “EDI-integrated” transactions in which the rigid EDI protocols have been replaced by flexible ones that allow a series of exchanges to take place. Figure 12.5 Bringing B2B

applications online

22Figure 12.6 NE B2B Deployments

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12.4.2 Alternative B2B Deployment

• Another option for B2b exchanges is by using applications formats that allow firms to exchange information across networks between similar software packages.

• Compatibility is an issue both between different versions of the same commercial program, and between different vendor products.

• The B2B environment will include ETNs, 3rd party intermediaries, Web EDI, applications formats and other approaches.

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12.5 B2C Deployment

• Putting B2C Web systems in place involves a detailed understanding of consumer behavior.

• Web design is the critical success factor for sites that work.

• If users find a site attractive, it demonstrates its “stickiness” meaning visits to the site will be long and frequent because the site has something that draws consumers to it.

25Table 12.2 Web site usability features that managers

need to be aware of

Palmer’s Validated Features

Agarwal & Ventakesh’s Validated features

Download delay Content

Productivity/ organization

Ease of Use

Interactivity Promotion

Responsiveness Made for the medium

Information/ content Emotion

12.5.1 Web-site Usability

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12.5.1.1 Promotion• The ability to “promote”

products and services is critical as the Web-site serves partly to advertise and is a primary vehicle for inducing sales.

• “Emotion” is another key characteristic.

• “Push” technologies, such as the “pop up” in Figure 12.8, can be sent as an unsolicited window with special offers, or sold as advertising to other firms.

Figure 12.8 Special Mortgage offers in pop-up window at realestate.com

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12.5.1.2 Navigation and Ease of Use• The way a site, or even a single Web page,

is organized can make it easy or hard for a user to find what he/she needs.

• Web designers need an understanding of simple, clean pages and an intuitive appreciation of what the site has to offer and what the hyperlinks mean.

• The creation of a Web-site needs to be a team effort, and is best done as the product of the input of numerous specialists.

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12.5.1.3 Download Delay

• There is a strong casual connection between users being frustrated by long download times and their attitudes towards brands and their inclination to purchase.

• Managers need to articulate guidelines to the Web designers about how to reduce download delay under prescribed circumstances.

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12.5.1.4 Interactivity and Responsiveness

• Web pages are best if they give the user the impression of a social or human presence at the other end – the more consumers sense this, the more they are inclined to buy online.

• The site should respond to their human needs, even though it may well be the programmed response from a computer system, and not a “real” response from a person.

• A key threshold is the ability to pass the “Turing” test, in which the user is unable to differentiate the programmed response from that of a person.

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12.5.1.5 Made-for-the-Medium

• “Made-for-the-medium” measures the extent to which the unique capabilities of the Internet have been built into the Web-site.

• Incorporating a virtual community and thereby helping to reinforce user’s connection to a B2C site or installing a web cam are examples of this.

• Tech user groups can be valuable in developing this ability by enthusiastically promoting a product as well as helping the firm determine desirable features for new products and services.

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12.5.1.6 Content

• Consumers come to a site with the expectation that they will find information on goods and services they are looking for.

• Good content with hyperlinks to further information will bind users to the firm while poor content will drive users away.

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• Web sites and e-mail messages that have been individually tailored to a customer are another important innovation known as “markets-of-one” and can also be used as effective marketing tools.

12.5.2 Personalization Systems & Systems for Markets-of-One

Figure 12.10 personalized message from amazon.com

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12.6 Content as King In B2C and B2B

• Good content can overcome a lot of other drawbacks to a Web-site, including a less-than-stellar interface.

• Content should be up-to-date, complete, and take advantage of multi-media capabilities.

• Most importantly, content should provide something of value to the consumer.

• The more relevant the information to the customer, the more likely customers will buy.

• While hosting services, network connections, and maintenance may be outsourced, the provision of content is a core competency of the firm.

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12.6. Content as King

• Consider an example of an amazon.com customer who asks for books on traveling in Nepal.

• The database of all books from both amazon’s and its associates’ inventories, is searched for these key words.

• Amazon manages the relationship with these associates, and the core competence exercised in this area through its Website confers a competitive advantage to the firm.

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12.7 Building and Maintaining NE Systems

• Does a firm need to have web design skills?• Amazon, as a cybermediary, views its site as the

source of its competitive advantage.• Competitors, like Borders, may want to outsource

Web design and development to others, to help “bring them up to speed”, but may ultimately decide to insource if they come to view their site as critical for their future.

• Similarly, Amazon may be willing to outsource Web design if it doesn’t view this as a threat to its competitive advantage choosing instead to focus on capitalizing on its other core skills.

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12.7.1 Maintenance of NE Systems

This comes in two forms:

Repairs can be: Systems-life threatening Cosmetic.– Who should do this maintenance: the

firm that built the system (and therefore knows it best) or should it be done in-house?

Enhancement: users will tell what major or minor changes need to be made to improve the functioning of the system and keep it “alive”.

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12.7.1 Maintenance of NE Systems

• Maintenance falls into two categories:• Repairs which can deal with systems-life

threatening problems or more cosmetic issues.• Enhancement which users tell what major or

minor changes need to be made to improve the functioning of the system and keep it “alive”.

• Who should do this maintenance?• The firm that built the system (and therefore

knows it best) or should it be done in-house?

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12.8 Deploying Intranets & Extranets

• Much of the information and features provided by an Intranet could, at some point, be extended to an Extranet (as shown in Table 12.3) that includes strategic partners and customers.

• This results in the blurring, for competitive reasons, of the boundaries between the firm itself and its environment.

Feature Extensible to Extranet?

Firm telephone directory

Yes

Sales reports

Product/service information

Yes

Logo repository

Public financial statements

Yes

Table 12.3 Features typically available on Intranets and Extensibility to Extranets

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12.9 Internet Time and Moving from Strategy to Deployment

• Cycle-times may becoming shorter but the value-added of well-designed B2B and B2C web-sites come from the quality of content used to represent a firm’s new products and services, rather than change for change’s sake.

• Of primary importance are systems that lead to fluid and accurate content provision combined with efficient operation.

• The creation of NE systems to capitalize on rapid changes in new technologies should be part of a larger strategy.

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12.10 Effective Implementation through NE Management

• If Internet time is truly different, the emerging rapid application environments that are component and prototype based, such as CORBA, J2EE and .Net, are indications of the need to rapidly develop and deploy these systems.

• However, the overall management of the web-site - its goals, objectives, construction, enhancement and ongoing updating and operation – is still the key to success.

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12.10.1 Business Unit Participation in IT Development and Operations

• As non-technologists, NE content providers within the firm today are in a similar position to end-users over the last two decades.

• What we have learned about end-user computing (EUC), such as in roles, responsibilities, and the division of management control, should be applicable to NESs.

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12.10.1.1 Application Characteristics of End-User Computing

• These end-users included:

– 1. Non-programming, application, and programming level end-users

– 2. End-user programmers.

• While end-users controlled the inputs, processing and timing of outputs, it was found that a balance of managerial activities was needed to promote and, at the same time, contain EUC.

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12.10.1.2 Managing NE Implementation

• As with End User Computing, the goal of effective NE management is to promote NE as a dynamic force for change in the organization without smothering it or permitting it to grow in an uncontrolled fashion.

• Ineffectual management occurs far too often with the result that critical innovation is lost as managers struggle with strategic positioning or fail to recognize the need to change strategy over time.

• It is important to strike the right balance in this.

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End of Chapter 12