Transcript Chapter 12 - Department of Computer Science and Information

Chapter 13
Planning for Electronic Commerce
Learning Objectives
In this chapter, you will learn about:
• Planning electronic commerce initiatives
• Strategies for developing electronic commerce
Web sites
• Managing electronic commerce implementations
Planning the Electronic
Commerce Initiative
A successful business plan for an electronic
commerce initiative should include activities that
will:
– Identify the initiative’s specific objectives
– Link those objectives to business strategies
– Manage the implementation of those business
strategies
– Oversee the continuing operations of the initiative
after it is launched
Identifying Objectives
• Common objectives include:
– Increasing sales in existing markets
– Opening new markets
– Serving existing customers better
– Identifying new vendors
– Coordinating more efficiently with existing
vendors
– Recruiting employees more effectively
• Resource decisions should consider the expected benefits
and costs of meeting the objectives.
Linking Objectives to Business
Strategies
• Businesses can use downstream strategies,
which are tactics that improve the value that the
business provides to its customers.
• Businesses can pursue upstream strategies that
focus on reducing costs or generating value by
working with suppliers or inbound logistics.
Linking Objectives to Business
Strategies
• More companies are taking a closer look at the
benefits and costs of their electronic commerce
projects.
• A good business plan will set specific objectives
for the benefits to be achieved and costs to be
incurred.
• Companies use pilot Web sites to test an
electronic commerce idea, and then release a
production version when it works well.
Measuring Benefit Objectives
• Many companies create Web sites to build their
brands or enhance existing marketing programs.
• These companies can set goals in terms of
increased brand awareness, as measured by
market research surveys.
• Companies that sell goods or services on their
sites can measure sales volumes in units or
dollars.
Measuring Cost Objectives
• Based on data collected in separate recent
surveys, International Data Corporation and the
GartnerGroup both estimated that the cost for a
large company to build and implement an
adequate entry-level electronic commerce site
was about $1 million.
– About 79% of that cost was labour related
– 10% was the cost of software
– 11% was the cost of hardware
Measuring Cost Objectives
• The McKinsey study estimated costs for two types of
magazine sites: a full portal site that would serve as a
destination in itself and a more limited magazine
companion site.
• The full portal site cost estimate was $2.4 million to build
and $4.3 million per year to maintain, with a staff of 35
people.
• The companion site cost estimate was $150,000 to build
and $270,000 per year to maintain, with a staff of two
people.
Measuring Cost Objectives
• Kmart’s Web store, BlueLight.com, cost more
than $140 million to create.
• The site is certainly well-designed and highly
functional, but the typical visitor would never
guess how much this site cost.
Comparing Benefits to Costs
• If the benefits exceed the cost of a project by a
comfortable margin, the company invests in the
project.
• Companies should evaluate each element of their
electronic commerce strategies using this
cost/benefit approach.
• Managers often use return on investment (ROI) to
evaluate any capital investment.
Strategies for Web Site Development
• The transformation of Web site functions
occurred rapidly, taking only a year or two in
most companies.
• Few businesses have caught up with the changes
in terms of how they develop Web sites.
• The purposes and scope of Web sites have
increased greatly, but few businesses today
manage them as the dynamic business
applications they have become.
Internal Development vs. Outsourcing
• The key to success is finding the right balance
between outside and inside support for the
project.
• Hiring another company to provide the outside
support for the project is called outsourcing.
Managing Electronic Commerce
Implementations
• The best way to manage any complex business
software implementation is to use formal project
management techniques.
• Individual projects can become so large that it
becomes impossible for managers to maintain
control without some kind of assistance.
• Microsoft Project and Primavera Project Planner
are tools for managing resources and schedules.
Post-Implementation Audits
• A post-implementation audit is a formal review of
a project after it is up and running.
• The post-implementation audit gives managers a
chance to examine the objectives, performance
specifications, and cost estimates, to schedule
delivery dates that were established in its
planning stage, and to compare them to what
actually happened.
Summary
In this chapter, we have looked at:
• Planning electronic commerce initiatives
• Strategies for developing electronic commerce
Web sites
• Managing electronic commerce implementations