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THE RIGHT STUFF: BEST PRACTICES FOR E-BUSINESS

Posted on July 23, 2002

      If you build it they will come. Or will they? According to research from the Standish Group, the answer is no. In a recent study published by the firm, it was reported that only 28 percent of IT projects across all industries succeed. And that failure is glaring when you consider that Boston Consulting Group predicts U.S. B2B e-commerce will reach $4.8 trillion in transaction value by 2004, and a quarter of the world's B2B purchases will be made online.

      So how does a company avoid becoming e-business road kill?

      Based on the work of numerous organizations to design and implement world-class e-business initiatives, five best practices have been gleaned that all successful e-business initiatives share.

      1 - Have the Right Leadership

      Not surprisingly, the e-business leadership team of any company sets the tone for the initiative. e-Business spans and impacts an entire enterprise, and the team driving the initiative must be comprised of managers from across the organization. This cross-departmental team will be responsible for creating the vision and rallying the organization behind it.

      Because e-business initiatives can sometimes rock the boat and challenge the status quo, team members must be willing to take a hard, honest look at their company and question all processes in order to separate the ones that work from the ones that are outdated and inefficient.

      Equally important, e-business leaders must be externally focused. These leaders must not lose sight of the fact that the primary reason they are in business is to meet the needs of their customers. Initiatives may fail if the team is too focused on automating internal processes instead of the needs of external partners and customers.

      2 - Thoroughly Understand Internal Processes

      Say "e-business," and most companies will direct you to their IT department. But, first and foremost, e-business is about business -- technology is only the vehicle that enables it. While this may seem obvious, many forays into e-business have failed because they were not focused on a business goal.

      So, before launching any e-business project, companies must first have a clearly-defined online business strategy with realistic goals. To create that strategy, companies must thoroughly understand their existing business processes -- what works, what could be better and where potential issues may exist. For example, a strategy designed to offload incoming inquiries from the call center to a self-service Web site should account for each step in the existing process, the flow of the new process, a stated goal and a way of measuring the results.

      Gaining this in-depth understanding requires that companies look deeply into their organizations. Every department will feel the impact of an e-business initiative and should be asked to contribute ideas and feedback. Input from employees will give the company a 360-degree view of internal processes and the customer.

      "Employees from every department -- sales, marketing, product development, customer service -- can offer a unique perspective on existing business processes," said Mark Mendelson, who leads the e-business vision and strategy for Basell North America. Basell, a joint venture between BASF and Shell, is a global manufacturer in the plastics industry specializing in polypropylene, polyethylene, polyolefin products. "Without visibility into the entire supply chain it is difficult to understand and impossible to successfully automate the business processes."

      3 - Thoroughly Understand the Customer's Needs

      "The customer is king" is the mantra that drives a business forward. Knowing exactly what your customers want and need from you is the key to e-business success -- assumptions are inadequate.

      Companies that involve customers in the process of designing an e-business system have a much better chance at success; those that create systems without customer input will fail -- it's that simple. But, involving customers shouldn't stop once an e-business system goes live.

      Successful companies find a way to keep their fingers on the pulse of the customer, and having a "continuous feedback loop" can help organizations ensure that the systems and processes they have in place are truly effective. It can also give organizations the insight necessary to continue to evolve their practices to meet customer needs.

      While many organizations claim to be customer-centric, many also fail to use information gleaned from customer dialogues to improve business processes. These dialogues must be chronicled and communicated throughout an organization because they can provide ideas on new features and functionality to the product group, a better understanding of customer needs to the marketing group and insight into business drivers that strengthen sales pitches.

      As an example, Dow Corning recently launched a new initiative called Xiameter, which provides a new way of doing business for customers who buy large volumes of commonly used silicon-based products. Customers who know what products they need and don't want value-added services from Dow Corning's B2B site can go to Xiameter for a no-frills buying experience and receive the lowest-based prices. "Customers want high-quality, reliable products at a low cost," said Mike Lanham, global commercial director of Xiameter. "We know this because we've spent the last several years understanding our customer needs. Xiameter is one of four new solutions that Dow Corning is offering to help zero in on what our customers are asking for."

      4 - Track the Right Metrics for Success

      It's an all-too-familiar scenario: You've planned well, implemented enterprise-wide processes and built a successful e-business; customer adoption rates are high and growing. So why is your revenue shrinking?

      Beware: Tracking the wrong metrics can lead to false results, which is detrimental if it prevents you from making necessary adjustments.

      Perhaps customers are buying fewer products per transaction due to the lack of product information online or poor customer service. Simply tracking the number of site visitors, for example, won't indicate the source of problems or trends. You may also need to measure the quantity of returned orders or unanswered inquiries to get a complete picture.

      Metrics that track return on investment (ROI) must be clearly defined, but should never be set in stone. Do your research; start with a list of common metrics and expand it; check examples from other successful e-businesses. Be creative and open-minded when deciding what to measure and how. The cost of tracking an additional metric is far less than the cost of an e-business failure.

      5 - Don't Stop Short

      e-Businesses either grow or shrink. Sitting still is not an option. Companies often experience success and customer satisfaction with one e-business project in one business area, and then consider the job to be complete. It's okay to start small, but by implementing one change you whet your customers' appetite for improvement, and they'll expect more.

      When you start asking customers what they want, you open the floodgates to improvement suggestions. This is actually a good thing, but you have to transform enough to implement the changes and manage the expectations of the customer for even more change. When one project is underway, use what you've learned from it, and start planning the next one.

      One big risk of changing the behavior toward e-business and customer-centricity is not changing it enough. Amazon.com is guilty of this behavior. It offered so much convenience and added value for those shopping for books, but stopped short of the customer's expectations for change. For example, they still can't tell a customer if a book is in stock, let alone when the book will actually ship. Once customers enjoy added conveniences, their expectations rise for even more of the same.

      Whether you're re-tooling your entire organization or just one department, e-business isn't as simple as just putting up a Web site with transaction capabilities. Focus on leadership, strategy, internal processes, customers and meaningful ROI in order to turn your good intentions into e-business success. e-Business is a constantly moving, cyclical process, so settle in for the long haul. The results will be worth it.

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