Chapter Four

Thinking E-Business
Design: More Than
Technology
Introduction
3 interlocking layers of e-business
e-Business Design
– What business design can make your customers’ shopping
and service experiences unique and memorable?
– What capabilities and competencies create rich customer
experiences?
– In the quest for efficiency, how do you structure your
organization for efficiency?

e-Business App Infrastructure

– Supports design by providing s/w functionality
– Strong app infrastructure foundation necessary from which
to deploy e-business apps

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Introduction
e-Business Infrastructure
– structural foundation supporting the app layer
– is a balance of structure and flexibility
– harnesses, safeguards, manages, and permits use of
information in ways that are fast, safe and simple
– comprises the tech, utilities, and services needed for
uninterrupted flow of e-commerce

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3 interlocking layers of e-business
Business Model Scope
E-Business Customer Selection
Value Creation
Design Strategic Control
Organizational Systems

CRM e-Procurement
E-Business ERP Supply Chain
Financials Selling Chain
Infrastructure Business Intelligence Portals

Scalability Servers Site Security

E-Business Reliability
Hosting
Databases
Middleware
Data Security
Transaction Security
InfoStructure Storage Routers

© e-Business Strategies, - 4- www.ebstrategy.com

The Race to Create Novel e-Business
Designs
Getting it right the first time very important
– right strategy accelerates market penetration and
minimizes cost
– wrong strategy can cause years of repercussion

Truly great companies use state-of-the-art e-

commerce processes to transform themselves
– redefine value for customers
– build powerful e-business designs to outperform
competition
– understand customer priorities

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The Race to Create Novel e-Business
Designs
Focus no longer limited to process
improvement; focus of change initiatives shifted
to business redesign
– Retail drug industry

Success depends on how quickly a company

can formulate novel business designs and
adapt them to its markets

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Step 1: Self Diagnosis
Assess impact of recent customer, business and
technological trends
– Has the recent wave of tech innovation created new ways of
doing business and reorganizing priorities within your firm?
– Is your company responding to changing customer
expectations?
– Is your company willing to question and change countless
industry assumptions to take advantage of new opportunities
while also preserving investments in people, apps and data?
– Is your company successful at lowering operating costs
while making complex business apps adaptive and flexible to
change under the relentless pressure of time to market?

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Step 1: Self Diagnosis
Innovator or market leader: All answers yes

Early adopter or visionary: Most answers yes

– Charles Schwab

Silent majority: Few answers yes

– Pragmatists, Old-guard Conservatives, and Die-
hard Skeptics

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Step 2: Reverse the Value Chain
Greatest challenge in e-business: linking
emerging tech to new business design

Managers find creating new business designs

difficult with emerging technologies and
customer needs
– trained to concentrate on improving products,
increasing market share, and growing revenues
– distinction between products and services blur in
e-business world

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Step 2: Reverse the Value Chain
Successful companies invent value, not just
add value
– outside in vs. inside out
– customer requirement important in outside in
approach
– Starbucks invented value where traditional
companies did not by creating business around
gourmet coffee

Outside-in, customer centric approach essential

in times of great structural transition in
economy

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Step 2: Reverse the Value Chain

Traditional Business Design

In-house Rigid
Products/
Core Infrastructure/ Channels Customers
Services
Competencies Processes

e-Business Design

Flexible Outsourced/
Customers Integrated Products/
Infrastructure/ In-house Core
Needs Channels Services
Processes Competencies

© e-Business Strategies, - 11 - www.ebstrategy.com

Step 3: Choose a Focus
Service excellence
– Delivering what customers want with hassle-free
service and superior value

Operational excellence
– Delivering high-quality products quickly, error free,
and for reasonable price

Continuous-innovation excellence
– Delivering products and services that push
performance boundaries and delight customers

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Service Excellence

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Service Excellence
Involves selecting a few high-value customer
niches and then making a concerted effort to
serve them well
– Requires commitment to CRM

Operating principles of service excellence

– prepare for the unforeseen
– gather and maintain all up-to-date, accurate
business and economic information you need,
where and when you need it
– user customer contact mgmt
– develop corporate philosophy about customer
service

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Operational Excellence

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Operational Excellence
Involves providing lowest-cost goods and
services possible while simultaneously
minimizing problems for customer

Key principles
– efficient leveraging of assets
– mgmt of efficient transactions
– mgmt of sales intelligence
– dedication to measurement systems
– mgmt of customer expectations

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Continuous-Innovation Excellence

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Continuous-Innovation Excellence
Involves not only providing best-possible
products and services but also offering
customer more exciting features and benefits
than competitor
– Microsoft, Sun Microsystems and Nike
– Downfall of AT&T, Eastman Kodak, Sears and GM
due to lack of technological innovation

Key principles
– risk-oriented mgmt style
– growth by mergers and acquisitions
– market-education style
– encouraging innovation

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Step 4: Execute Flawlessly
• How can you move from where you are today
to where you want to be?
• How do you integrate and tailor your legacy
infrastructure to meet new e-business
requirements?
• Execs must be willing to cut losses and
abandon important current projects that do
not support the goals of the e-business design

© e-Business Strategies, - 19 - www.ebstrategy.com

Service Excellence at American Express
Business transformation of the mid 1990s resulted in
new e-business design concentrating on mgmt of
customer relationships
– In era of limited personal time, customers concerned about
quality service, esp. its simplicity, flexibility and consistency

Combine detailed customer knowledge with service

flexibility
– CustomExtras enables custom discounts and other deals
directly on card members’ bills

Investing $1 billion annually in the construction of a

sophisticated service infrastructure
– Within financial services industry, this can provide means to
develop competitive advantage and raise barriers to entry

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Service Excellence at American Express

The Way It Was The New Way

Travel Online
Services Travel
Services

Credit Membership
Integrated Cards Rewards
Financial
Services Financial Life Path
Planning Planning

Banking Private
Banking

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Operational Excellence at Dell
Build-to-order e-business design
– low-cost manufacturing and fast-cycle product
development

Integration of customer demand from the direct-

sales channel with back-end supply chain
– enables cost-effective selling directly to customers,
bypassing resellers and their markups

Computer distributors that once controlled PC

business went bankrupt because of Dell’s direct
sales model
– CHS Electronics, MicroAge, InaCom

© e-Business Strategies, - 22 - www.ebstrategy.com

 Dell Online History

Late 1980s 1994 1995 1996 1997 1998

January
Dell launches February $1 Million/day
an FTP site for Marketing
customers to content November
download files added $3 Million/day
to site
July 36 countries
June  Dell starts 200+ Premier Pgs.
www.dell.com selling systems 400k users/wk
site launched online
with technical  80,000 online
support content user sessions  Focus efforts
and e-mail per week
gateway on Corporate
October March
customer
Configurator  Asian/European
generating Internet site  $4 M/day
online quotes is launched  Focus on
launched  225,000 online value- added
user sessions per services
week
© e-Business Strategies, - 23 - www.ebstrategy.com
The Dell eCommerce System

Integrated customer experience

Value Shopping Service Loyalty/

proposition and buying and support relationship

Order Premier
Product Configuration status
services and shopping services
Price
Direct model Trouble-
Dell Electronic shooting Personalized
orders experience

Value-added
services

© e-Business Strategies, - 24 - www.ebstrategy.com

Continuous Innovation at Cisco Systems
At Cisco, business design centers on the core belief in what
continuous innovation demands from organizations
attempting it
– build on change, not stability
– organize around networks, not a rigid hierarchy based on
interdependencies of partners - not self-sufficiency
– construct operations on tech advantage, not old-fashioned bricks n
mortar

Continuous innovation via acquisitions

– Acquisitions cornerstone of its business strategy, to survive larger
competitors
– Identify companies that help enhance product line and keep up with
changing marketplace
– Make sure the acquisition is assimilated quickly

Extended Enterprise model to support the innovation-

excellence model
– Focus on core competencies and form partnerships with suppliers
that provide other key capabilities

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“Full Service” Internet Commerce on CCO

Pricing

Configuration

Order Placement

Order Status

Service Order

Invoice

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Reseller Care Cisco Connection Online

Installation and Configuration

Documentation

Operation Support
Software Library

Problem Detection:
CiscoWorks

Problem Identification:
Bug Navigator

Problem Notification: Bug Alerts

Problem Resolution: Open

Forum, Troubleshooting Engine

© e-Business Strategies, - 27 - www.ebstrategy.com

Customer Care Results
June 1998
Satisfaction
Satisfaction
Total • Over 70% questions handled on line
4.17
4.1
Logins/Month • Dramatic growth—over 1.1million
1,200,000 logins per month
• 25% higher customer satisfaction
1,100,000 • 98% accurate, on-time repair
1,000,000 shipments
• Annual savings of $365 m
900
Headcount $75 m
800 Software download $250 m
700 Document publication $40 m
600
500
400 Satisfaction
Satisfaction
300 3.4
3.4
200
100
0 Jan Apr May Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jun

1995 1996 1997 1998

© e-Business Strategies, - 28 - www.ebstrategy.com
Lessons from e-Business Design
Be customer focused
Value creation a continuous process
Transform business processes into digital form
Decentralize management but centralized coordination
Create an e-business app architecture addressing three
critical requirements
– interface
– integration
– innovation

Integrate but plan for continuous growth and change

– start small
– build on success
– build, launch, learn

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E-Business
Strategies, Inc.
www.ebstrategy.com
contact@ebstrategy.com
678-339-1236 x201
Fax - 678-339-9793