E-business strategy introduction

In the 3rd edition update to E-business and E-commerce Management, I have reviewed how best to explain E-business principles - how does an E-business strategy differ from other strategies? The post sets out what I see as the essence of an E-business strategy.

You may also find this definition of E-business and E-commerce useful.

E-business strategy can be created through following these established principles of business planning, but through careful consideration of how to best identify and exploit the differences introduced by new electronic channels. In a nutshell, E-business isn’t just about “how to do business online”, its about “how to do business differently online”. The E-business strategy defines how.

E-business strategy characteristics

E-business strategies share much in common with corporate, business and marketing strategies.

These typical quotes summarizing the essence of strategy could equally apply to each, strategy:

• “Is based on current performance in marketplace”
• “Defines how we will meet our objectives”
• “Sets allocation of resources to meet goals”
• “Selects preferred strategic options to compete within a market”
• “Provides a long-term plan for the development of the organisation”

The E-business strategy imperative

Many ask why a separate E-business strategy is required.

But, think about the implications if e-business strategy is not clearly defined. I have seen these in many organisations:

• Missed opportunities and from lack of evaluation of opportunities or insufficient resourcing of e-business initiatives. These will result in more savvy competitors gaining a competitive advantage;
• Inappropriate direction of e-business strategy (poorly defined objectives, for example with the wrong emphasis on buy-side, sell-side or internal process support);
• Limited integration of e-business at a technical level resulting in silos of information in different systems;
• Resource wastage through duplication of e-business development in different functions and limited sharing of best practice. For instance, each business unit or region may develop a separate web site with different suppliers without achieving economies of scale

E-business channel planning strategies

An important aspect of E-business strategies is that they should create new “e-channel strategies” for organizations.

An E-channel strategy defines how a company should set specific objectives and develop specific differential strategies for communicating with its customers and partners through electronic media such as the Internet, E-mail and wireless media.

E-channel strategies define specific goals and approaches for using electronic channels. This is to prevent simply replicating existing processes through e-channels, which will create efficiencies but will not exploit the full potential for making an organization more effective through e-business.

Without specific goals and strategies to communicate the benefit of E-channels for customers and partners, adoption of the new channels will be slow relative to a structured approach. We will see in the section on objective setting that key metrics about online contribution can be set which suggest the percentage and value of leads, sales, services and purchases that are facilitated through e-commerce transactions.

E-channel strategies also need to define how electronic channels are used in conjunction with other channels as part of a multi-channel e-business strategy.

This multi-channel e-business strategy defines how different marketing and supply chain channels should integrate and support each other in terms of their proposition development and communications based on their relative merits for the customer and the company. Finally, we also need to remember that e-business strategy also defines how an organization gains value internally from using electronic networks, such as sharing employee knowledge and improving process efficiencies through intranets.

To summarise;

• E-business strategy is a channel strategy
• Specific E-business objectives need to be set to benchmark adoption of e-channels.
• E-business strategy defines how we should:

1. Communicate the benefits of using e-channels 2. Prioritise audiences or partners targeted for e-channel adoption 3. Prioritise products sold or purchased through e-channel 4. Achieve our e-channel targets

• E-channel strategies thrives on creating differential value for all parties to a transaction
• BUT e-channels do not exist in isolation, so we still need to manage channel integration and acknowledge that the adoption of e-channels will not be appropriate for all products or services or generate sufficient value for all partners.

This selective adoption of e-channels by business according to product or stakeholder preference is sometimes referred to as “right-channelling”.

• E-business strategy also defines how an organization gains value internally from using electronic networks, such as through sharing employee knowledge and improving process efficiencies through intranets.

Please add your thoughts below - how do you see the best way of explaining e-business strategy.