Overview

An overview of managing the implementation of online business initiatives for both new and established businesses is provided in this section of the module. Specific objectives, which include anticipated benefits and expenditures, are generated from overarching goals after they have been established. The cost and benefit objectives should be related to the organization’s business plans and should be expressed in quantifiable measures, such as money or quantities. The business should assess the expected expenses and advantages of the program before launching it. Opportunity costs, for example, might be challenging to detect and evaluate.

Midsize or large businesses may use internal funds to finance the establishment of an online business. Small new businesses can be financed through personal savings, family and friend loans, and investments. As the firm grows, it may turn to venture capitalists and then angel investors before launching a stock offering to the public.

ROI is the most used method of evaluating internet business initiatives. Managers should exercise caution when using quantitative measurements like ROI to evaluate electronic commerce projects since the benefits of these projects can be more difficult to identify and measure in monetary terms than the benefits anticipated from many other IT investments.

Established businesses can create their internal online business initiatives, outsource some or all of them, or use an internal business incubator. These businesses want to put together an internal team of experienced personnel to determine the project’s precise goals and oversee achieving them. The internal team should oversee the staffing of any portion of the project that is to be created internally. The internal team can choose from specific tactics, such as leveraging incubators or outsourcing various project components. Smaller businesses or startups can create their own internet business ventures, but some hire a development center or accelerator run by another company to speed up the process. To use either strategy, the owners will typically have to forfeit some of their equity stake in the new project.

The formal planning and control of specific tasks and resources employed in a project is known as project management. It gives project managers a tool to utilize when deciding how to tradeoff between the project’s schedule, cost, and performance. Project portfolio management strategies are starting to be used by large organizations to keep track of and balance a variety of ongoing projects. Initiatives in electronic commerce are typically finished quickly, which makes them less likely to spiral out of control than other information systems development projects.

Regardless matter whether some of the project is outsourced, the firm must staff the execution of the internet business. Business management, application specialists, customer service representatives, systems administrators, network operations personnel, social network marketing personnel, and database administrators are critical staffing areas.

Conducting a post-implementation audit to compare project goals with actual outcomes is a useful approach for all parties to learn from project experiences. This comparison can offer insights gained from the situation that can enhance subsequent efforts.

Implementing an online business always involves change, and people do not like change. Using change management approaches can make it easier for staff members to adapt to the changes and cooperate in their implementation.

Benefits and Costs of Online Business Initiatives

Cohesive online business strategies can mean the difference between success and failure for businesses depending on how well they can plan, design, and implement them. Top executives and investors across a variety of industries are taking notice of the significant leverage that businesses can achieve by being the first to conduct business in a novel way online. Planning and execution are the two pillars of any information technology project’s success. This chapter offers some recommendations to support readers who will oversee organizing, carrying out, and maintaining electronic commerce activities. An effective business plan for an online business effort should include tasks that define the initiative’s particular goals and establish connections between those goals and the business strategies covered in earlier modules.

Choosing Objectives

Electronic commerce initiatives are implemented by businesses for a variety of reasons. Businesses use electronic commerce to achieve the following goals: raising sales in existing markets, opening new markets, improving customer service, finding new vendors, working more effectively with existing vendors, or hiring more effectively. The goals of different-sized organizations’ electronic commerce projects will vary. The predicted benefits and expenses of achieving the objectives should be considered when making decisions about how to allocate resources for electronic commerce efforts. These choices should also weigh the risks of the electronic commerce project against the dangers of doing nothing, as doing nothing could provide competitors a tactical edge.

Connecting Goals to Business Strategies

Businesses use tactics called pull strategies to improve the value that the business provides to its customers. Alternatively, businesses can pursue pull strategies that focus on reducing costs or generating value by working with suppliers or inbound shipping and freight service providers.

Many businesses find the Web to be an appealing sales channel, but businesses employ electronic commerce for much more than just selling. They may use the Web to strengthen their competitive positions and support their business strategies. Opportunities for online businesses include things like: Developing brands improving current marketing initiatives promoting goods and services marketing services improving comprehension of customer requirements enhancing support and after-sale services the acquisition of goods and services In charge of supply chains carrying out auctions Building or utilizing online communities to uphold connections with clients and suppliers It can be challenging to assess these activities’ level of success.

Businesses are going past the idea of an online store communicating with customers who are using Web browser software on their computers. The power of a Web browser is now in the hands of many more people in many more places because to the widespread use of smartphones and tablets. Additionally, it alters the character of online conversation. Messaging is a form of two-way communication between a Web client operating on a fixed-location computer and a Web browser, much like a landline phone. The methods of communication and engagement are more varied and may be utilized to complete a greater range of tasks thanks to web clients running on numerous devices, some of which may be used simultaneously by a single user. The benefits of a technology are becoming easier to obtain as well. For instance, a business may never need to create its own Twitter-like microblogging social media tool since it can use the features Twitter offers to engage in online communities in ways that strengthen its connections with clients, partners, and even its own staff.

The biggest change going forward will be the rise in internet activity by smaller enterprises. These businesses may successfully reach potential clients by using the existing communication infrastructure of Facebooks, Twitters, and other social media platforms without spending a lot of money on their own web infrastructures. Some analysts go so far as to say that small businesses might benefit more from spending their advertising budgets on social media platforms rather than traditional websites.

What is the benefit

Initiatives in electronic commerce can have some clear, observable, and quantifiable advantages. These include things like higher sales or lower costs. Other advantages, like higher customer satisfaction, are intangible and may be harder to pinpoint and quantify. Even if the goals are for intangible advantages, managers should endeavor to define quantitative targets when determining benefits.

Companies can set targets for improved brand recognition, which they can quantify using market research surveys and opinion polls, while developing websites to strengthen their existing marketing strategies or construct brands. Increases in sales volume can be measured by businesses that offer products or services online. When assessing brand awareness or sales, it can be challenging because growth may be influenced by other activities the business is carrying out concurrently or by a broader upturn in the economy. A corporation can determine the precise results of its online marketing or sales operations with the aid of competent marketing research personnel or an outside consulting firm. A company can also develop and analyze its own objectives for online business activities with the aid of marketing research personnel or outside experts.

Companies that aim to use websites to enhance customer care or post-sale assistance may set objectives to boost customer satisfaction or lower the cost of doing so. Companies can evaluate the advantages of other electronic commerce efforts using a range of comparable metrics. Managers of supply chains can track lower supply costs, better quality, or quicker deliveries of desired commodities. Goals can be set by auction sites for the quantity of auctions, the number of bidders and sellers, the amount of money spent on products, the number of items sold, or the total number of participants. The software used by auction sites typically has the capacity to track such numbers. Both the quantity and the caliber of user experiences are tracked by virtual communities and web portals.

Some websites utilize online surveys to collect this information, but the majority settle for estimations based on how long visitors stay on each page and how frequently they come back. No matter how a corporation evaluates the advantages of implementing an online strategy, it typically tries to translate the unquantified activity metrics into monetary terms. The organization can compare benefits to costs and the net benefit (benefits minus costs) of a specific initiative to the net benefits offered by other projects when benefits are stated in monetary units. Although each action adds some value to the business, it can be challenging to quantify that value in monetary terms. Even the best attempts to convert these measurements typically only produce approximations.

Finding and Calculating Costs

Setting goals for benefits may initially appear to be considerably more difficult than identifying and evaluating expenses. However, many managers have discovered that the expenses of information technology projects can be just as challenging to anticipate and manage as their positive effects. Managers frequently discover that their experience is not very helpful when creating estimates for Web development since it involves hardware and software that change even more quickly than those used in previous information technology projects. Most changes in hardware prices are downward, yet the increasingly complex software frequently calls for more of the more recent, less expensive technology. This frequently results in an overall net increase in hardware prices. Additionally, more complex software frequently costs more than was originally budgeted. Despite the fact that electronic commerce projects are frequently finished more quickly than many other information technology projects, the Web’s rapid technological advancements can easily derail a manager’s best-laid plans.

Funding Online Business Startups

In general, starting online enterprises that are not ideas of already-existing businesses aren’t allowed to take out bank loans or sell bonds or stock to investors. Banks are hesitant to lend money based only on the merits of a clever idea, and only profitable companies with a long track record may access the stock and bond markets. Most new companies of all types are financed with the founders’ money, as well as investments or loans from friends and family.

Angel investors and venture capitalists may end up with the majority of the profits and may put great pressure on the business to grow quickly, which is costly for the founders of those businesses. This system of financing the startup and initial growth of online businesses has both benefits and costs for those businesses. In the early days of electronic commerce, business owners had few options due to the high costs of setting up online business websites. The number of creators who can bypass venture capitalists and even angel investors is growing as the expenses of starting an online firm have decreased. Online business owners can be more innovative and have the ability to learn from their mistakes by releasing the pressure to expand quickly. As the cost of starting an internet business continues to decrease, industry watchers anticipate that this trend toward more and smaller online businesses will continue.

Costs and Benefits Comparison

Most businesses have policies that require a review of any significant financial outlay. Capital projects or capital investments refer to these significant expenditures on resources including personnel, equipment, and other assets. Companies utilize a variety of methods to assess potential capital projects, from straightforward math to intricate computer simulation models. No matter how complicated the technique, it ultimately boils down to a balance of costs and advantages. The business invests in a project if the benefits outweigh the costs by a large amount.

The process of identifying potential benefits (including intangibles like employee satisfaction and company reputation), identifying the total costs necessary to generate those benefits, and determining whether the value of the benefits exceeds the total of the costs are key components of developing a business plan for electronic commerce initiatives. Using this cost/benefit analysis, businesses should assess each component of their electronic commerce initiatives. The corporation invests in the project with a comfortable profit margin.

What about ROI?

Because they quantify the amount of income (return) that will be generated by a particular current expenditure, return on investment (ROI) approaches (investment). When using ROI approaches, you may state quantitatively if the returns on a certain investment outweigh the expenditures (including opportunity costs). Additionally, they can use mathematics to account for the future investment’s reduced value of benefits (benefits received in future years are worth less than those received in the current year).

Some businesses consider these projects as a must-investment, even though most businesses assess the predicted benefit of electronic commerce initiatives in some way before authorizing them. As a result, companies may not scrutinize these initiatives as closely or with the same rigor as other capital projects out of fear of falling behind as rivals expand their online commercial operations.   Strategies for Creating Web Sites for Electronic Commerce The usual Web site when businesses first started to have online presences was a static brochure that was rarely updated and had any tools for transaction processing. The subsequent generation of websites added transaction processing and other automated business processing functions. Websites have developed into essential elements of the infrastructures supporting business information systems. These transaction-processing capabilities were eventually enhanced by customization (where sites modified the Web site’s display to each unique user) and the customer relationship management components you learned about in earlier chapters. Recent developments have seen the integration of websites with social media networks like Facebook and Twitter. Businesses have also created unique Web pages with a layout that offers specific functionality for the smaller screens of smartphones and tablet PCs.

Managing the implementation of electronic commerce

Finally, using formal management approaches is the best way to handle any complicated electronic commerce solution. Businesses employ a variety of techniques to effectively manage their electronic commerce projects, including project management, project portfolio management, targeted staffing, and postimplementation audits.