Changes to Traditional Business Going Electronic

1
Changes to Traditional Business Going Electronic

2
Overview of Change

• Traditional Businesses (TB) require drastic
  transformation to become Electronic Businesses
  (EB)
• Their business processes need re-evaluation (New
  Tech Frame is radical catalyst) and
  re-engineering (BPR)
• And new systems need to be developed

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Business Process Re-engineering and EB

• BPR is the creation of a new business from the
  old
• It is more revolution than evolution
• blowing up the old business model and
  rebuilding to meet current needs
• Most important when business processes no longer
  fit current needs
• The introduction of EB is just such an occasion

4
Business Process Re-engineering and EB

• Is the heart of EB consultancy
• Represents the first, and in many shops, the
  primary step in what EB consultant firms do
• Answers the questions, why and how are we
  building this system
• Is the Analysis Phase of the SDLC

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Business Process Re-engineering and EB

• BPR is Radical
• Evaluates current goal for firm
• Eliminate and replace, not modify, existing
  processes, rules, and structures
• Goal is to increase revenues by factors (say
  100) not increments (like 5)

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Business Process Re-engineering and EB

• BPR is Fundamental
• The very reasons for doing business are
  questioned
• Why are things done in a certain way?
• What are the reasons for using a certain
  process?
• Do you need this product or service?
• The focus is to reorganize firms to fit the new
  processes identified (and in EB, to build systems
  to assist or codify those changes)

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Business Process Re-engineering and EB

• Take a holistic view of the firm instead of
  individual processes
• Individuals may be very efficient but the sum of
  the tasks may be inefficient in meeting end goals
• Especially true if the goals have changed
• Also true if interfacing processes have changed
  (and associated inputs/outputs)

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Business Process Re-engineering and EB

• Two methods of change are required
• Champions need to be created
• Get key people in the firm on board
• Decision makers
• Leaders
• Exemplars
• Work goals, structure, and processes need to
  change (supported and codified by IT)

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Primary Changes Driving BPR

• Question outsource or insource? A combination?
• Many of the existing problems with going into the
  direct sales business still pertain to the Web
• Not core business
• Threats to existing channel partners can lead to
  boycotts via that channel!
• This is a problem (e.g., many Walmart shoppers
  dont own computers or credit cards)

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Primary Changes Driving BPR

• But insourcing when going online does have
  advantages
• Eliminating intermediary costs while retaining
  retail prices increases margins (e.g., airlines
  and travel agents)
• Not insourcing when going online has
  disadvantages
• Competition might do it first and drive down
  retail prices (e.g., Dell) thus making it a
  requirement

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Primary Changes Driving BPR

• A combination of insourcing/outsourcing can also
  be used
• Many companies provide IT for direct contact with
  consumers but then provide hyperlinks to licensed
  retailers for the final purchase
• Many also offer sales but only at suggested
  retail prices
• Standardized content can also be provided as the
  backend to a interface located on retailers Web
  sites (e-franchising, etc.)

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Building the New System

• What are the steps for implementing the IT to
  meet these new needs?
• Same old but with new twists
• Analysis Design
• Development
• Deployment
• Amor has some suggested steps that you might
  consider telling your future clients

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Building the New System

• Identifying the Online Business
• What type of business are they currently in and
  where would they like to be?
• Best for those with products/services that can be
  digitized (music, software, banking)
• Can mass customize easily, eliminate
  intermediaries, and have free instant delivery
• Those w/ physical goods can still implement B2B
  to improve fulfillment and reduce costs
• All can reduce media breaks, generate ad
  revenues, and provide new services for customer
  loyalty

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Building the New System

• Developing a Business Plan
• Suggest seriously that they consider their whole
  business to be an EB and work from there. Look
  at the big picture and plan L.T. milestones
• Make sure they are adding value w/ the digital
  channel or else they shouldnt bother
• As with any system interview end users. In EB,
  this includes consumers, business partners, and
  employees. Identify the target audience.
• Remember to base plan on needs and not
  technologies (Tech part of plan should be 6-18
  months long at most)
• Avoid channel conflicts

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Building the New System

• Preparing for the Electronic Revolution
• Get members of each impacted department committed
• Suggest
• They start with Intranet first as proof in
  concept and education tool
• That everyone in company be intimately involved
  in Internet and have a personal Web page so they
  can appreciate what is about to happen
• Life-long learning on Web technologies for all
  employees
• They acquire/train/maintain IT experts in house
  to act as intermediaries to consulting group

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Building the New System

• Design and Development
• Your clients should
• Choose appropriate technologies to meet the needs
  identified in the earlier phases
• Make sure the data is distributed appropriately,
  will be real-time, and secured from the wrong
  people
• Design the visual art of the site and pages to be
  consistent and purposeful
• Make sure that the art people understand the
  particulars of Web media and its impact on
  attitudes and use

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Building the New System

• Building a Pilot
• Going live all at once has advantage of time to
  market
• Has disadvantage of being very public place to
  run an experiment that could fail badly
• Pilots can pretest scale, integration, code, and
  logical design

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Building the New System

• Going into Production
• IT people need to understand the business and
  business people the IT so each can monitor and
  maintain
• Systems need to be promoted to have users
• Verifying the Results
• IT can monitor in detail automatically once
  metrics are identified. Dynamic business
  requires diligent maintenance.