Successful E-business? Few Have Achieved It, But Everyone Can Staff

Updated · Mar 27, 2001

by Clive Couldwell

There's no doubt that being successful at e-business has become synonymous with a number of factors such as responding faster to customer needs, and reacting more effectively to market changes. Then there is reducing operating costs, increasing co-operation with key customers and trading partners, and exploiting internal knowledge-based systems to get the most out of a company's expertise.

At least, that's the theory.

Although their bubble has now burst, the dotcoms have also showed that to achieve ‘success' in the online retail world only two things really matter: managing customers properly and getting the branding right.

Says KPMG Consulting's director of strategy, Andy Tinlin: “When it came to managing customers, companies such as Amazon proved what customer service was really about – helping customers find what they want, then delivering those items to them on time and in good condition. And if you can do that, you can build the brand as you go.”

In the UK, the same thing has been proved in several traditional industries. In financial services Prudential's online bank Egg has built substantial market share without bank managers, high street branches or any of the traditional trappings of financial institutions. And in formerly nationalised industries like gas, utilities portals Servista and Virgin Energy have come in and proved that the customer relationship is what matters in the current energy supply war.

Adds Tinlin: “Although their market share is still small, these companies have already used their highly developed sense of client responsiveness to pick off some of the highest value customers.”

Now, the plcs are responding. Not only has British Gas grown into Centrica post de-merger, it has also learned how to exploit existing customer relationships by offering any number of home-support services, from financial management with Goldfish to car breakdown services via its new baby, the AA. And Tesco has moved from high street grocer to superstore to online retailer. At £250m-plus a year, is just about the largest online retailer in the country and bigger in its virtual manifestation than the entire operations of several of its traditional high street rivals.

But this is where the good news ends. By and large, e-business companies have struggled to demonstrate that they can convert a business opportunity into a successful business model. The current problem seems to be that as companies realise they have to create a viable e-business component in their operations to compete, they jump aboard e-business as if it were a moving train, without necessarily looking where it is heading.

One of the reasons is IT, which has become a considerably more complex beast to handle than even a few years ago. E-business applications are data intensive and need a flexible, scalable and highly available environment in which to breathe. Managing a mix of software, operating systems, and their associated data has become a major challenge for most bricks and mortar companies as they redesign their businesses to accommodate real-time connections between their customers, suppliers and partners, as well as cope with the growing problem of sourcing skilled development staff.

Another reason is that a business challenge is straightforward to articulate but far more difficult to realise. Success is a matter of putting together customers and an offer and supply chain that will be profitable.

But that success so far – according to research just out from research consultancy Business Intelligence – has been impeded by business initiatives that fail to integrate a sufficient range of components in an e-business ‘infrastructure' – not just a technology platform but also the people with the skills to make it work for the company, the suppliers who supply it, the processes by which it is managed, and the complementary components such as the content management that is today a necessary component of e-business.

While the report – ‘Building the e-Business Infrastructure' – does not argue that an organisation should be viewed or managed in terms of infrastructure alone, it does insist that in a world in which e-business is an important reality, no organisation should be managed without infrastructure being considered along other management levers.

In short then, there is no panacea for success, but it is important to look upon e-business as a dynamic process rather than a state to be achieved. Technology is merely the context for what is essentially an organisational and management issue.

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