IT Strategy for Business © Oxford University Press 2008 All rights reserved Chapter 3 E-Strategy

IT Strategy for Business© Oxford University Press 2008 All rights reserved

Chapter 3

E-Strategy


Chapter Objectives

Understand need of E-strategy Understand roles of e-strategy Study e-strategy and its mapping

with business strategy Study design and implementation

of e-strategy Study various steps in

development of e-strategy


Introduction

E-strategy is the strategic use of electronic capabilities to achieve business objectives .

E-strategy refers to the delivery of a powerful combination of strategy, issue advocacy, and cutting-edge web-technology services (including all services that can come under umbrella of ’E’) to empower, activate, educate, and mobilize/support business strategy, marketing strategy, IT and infrastructure strategy, and resources of a business to achieve business objectives.


Nine dimensions of E-strategy


Readiness for implementation of E-strategy

Business Objective

Org

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Tec

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and

IT

Man

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Tec

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y M

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Lea

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Un

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chn

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mp

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E Strategy Readiness

Dimension for Readiness for E-Strategy Implementation


Matrix for prioritization for implementation of e-strategy- Business impact: The impact of the initiative on business. This impact is generally determined on the basis of experience and inference. - Business urgency: There are some initiatives that are urgent for businesses. For online trading to control the traffic and management of connectivity may be more important than GUI (graphic user interface) enhancements.- Technical complexity: The technical complexity along with business impact is used to decide the priority.- Effort involved: To make use of resources optimally it is important to know the efforts involved to prioritize the initiative. - Change involved: The change involved with reference to an initiative and its organizational impact is used for prioritization. Further the roles of different parts of the organization should be considered for prioritization.


E-business Strengths from strategic perspective

•- Within the traditional sector the investments are low.

•- Reputation of traditional brands. •- E-commerce shops are expandable. •- E-commerce prices respond according to

demand (direct marketing). •- E-commerce lowers the cost of stocks and personnel. •- E-commerce is available 24 hours a day. •- E-commerce personnel are highly educated. •- The target group is reached.


Traditional and E-commerce infrastructure

Middle-men

Bu

ye

r/ Pro

po

sed

clien

t

E-Information, data Transfere

Database, Electronic access for data base

Industry- E-outletE-window for customer

to access data

CustomerWarehouse- Industry

Wa

reh

ou

se

Manufacturer Intermediaries Customer

Traditional Intractions

Web based Interactions

Actual deliveryInformation

FlowE-transactions- Financial and Information

Internet

Information, Pattern, Multiple

Information repositories


E-commerce and E-business An e-business system enables marketing,

buying, selling, delivering, servicing, and payment of products, services, and information primarily across non-priority networks, in order to link enterprise with its current and target customers, agents, suppliers, and business partners (i.e., extended organizations). Corporate Strategy

E-commerce is an important part of e-business.


E-business ModelMapping between E-business model

and IT Infrastructure

Service Provider

Whole Organization

Infrastructure and interface

Intermediary

Access control/Security

Information Management

Data Management and transfer

E-Value creation

Virtual Community

IT Awareness-Training

IT Research and Development

Architecture and Standards

Various Levels

Infrastructure Services


E-Strategy as target

• Here strategy merges with mission and vision in defining the future course of the firm. Here e-strategy identifies how it could enable the overall process to get to the desired target.

• E-Strategy as a support for decision-making• E-strategy acts as a technical enabler to get the

pattern that gives coherence to the decisions.• E-Strategy as a vehicle for coordination &

communication• Enabling consistency of decision making across

different departments and individuals.


E-strategy impact

• It changes industry structure and, in doing so, it alters the rules of competition.• It creates competitive advantage by giving companies new ways to out perform their rivals.•It spawns new businesses, often from within a company’s existing operations


Porter’s five force model extended for E-strategy

(1) Force One: Bargain power of buyer‘E’-Impact:- Increased due to choices- Increased because of increase in customer knowledge and

transparency- Increased because of availability of different channels- Increased because of availability of different sources

‘E’-Strategy to make business work:- Quality beyond technology- Service with apt technology- ‘E’ for extra


Force two

Force Two: Bargain power of supplier‘E’-Impact- Reduced due to choices- Commoditization of e-procurement and e-marketplaces- More price driven ‘E’ Strategy to make Business work- Limit commoditization by new measurement- Let business drive commerce- Value for money


Force Three

Force Three: Threats of substitute products and services‘E’ Impact- New product being introduced because of availability of knowledge and market place from different resources- Monitoring such entry became easier- Faster production of services ‘E’ Strategy to make business work- Proper tracking with technology- Strategy to build barriers- Innovation with ‘E’


Force Four

Force Four: Barrier to entry‘E’ Impact- Reduced for service organizations and retailers who need mobile sales force- Monitoring entrant became easier- Easy for followers due to internet ‘E’ Strategy to make business work- Build barrier with innovation and new techniques- Optimal use- Barrier with service


Force Five

Force Five: Rivalry among existing competitors‘E’ Impact- More intense because of shorter product life cycles- Commoditization ‘E’ Strategy to make business work- Capturing complete value chain- E-strategy to target niche market- Knowledge enabled business


E-strategy and E-economy – Ecommerce features

1. Ubiquity2. Global Reach3. Universal standards4. Richness of information5. Interactivity6. Information density7. Personalization


E-strategy bonds

• Leadership• Learning• Infrastructure


E-strategy to drive leadership

Market leadership Service leadership

Knowledge Leadership

Brand Leadership

Technology leadership

Integrated E-strategy

E-Strategy to drive leadership


E-strategy

Analysis of framework, conditions

Development of E-strategy

Evaluation of E-

infrastructure, readiness

Strategic options, decision making

- Analysis of internal and external factors- Existing activities

- Analysis of E-readiness- Analysis of dependancies

- Selection of Strategy- Learning options- Deciding roadmap

- Possible options- Scenarios and activities

Process analysis and E-strategy design

Process Study and analysis

ModelingProcess Design

- Analysis of various processes- Connectivity

- Planning of sub-projects- Modeling and impact analysis

- Planning- Design- Steps

E-Strategy Model


E-strategy barriers

•-- Traditional workers have less education and are not aware of the new technologies. •- The e-commerce target group is difficult to reach. Other channels are required along with the internet if the reach is to be comprehensive. •- Most of the e-commerce companies sell using only email (next to the other sales channels). Back-office is usually not integrated in the e-commerce application. •- The e-commerce logistical costs can be high.


Benefits of Implementing E-strategy

• (1) Time saving: One of the major driving forces behind implementation of e-commerce is that it saves time. The savings in time takes place on different fronts.

• (2) Improved communication with customers and suppliers: The communication and interactions with suppliers become easier. The financial transactions become efficient and that allows them to concentrate on other fronts. Electronic communication makes overall communication efficient


Summary E-strategy is about knowledge and technology and their

perfect balance with business objectives . The new innovative technologies, changes in the

marketplace, and economical transformation have embraced the need for more dynamic and knowledge driven strategies.

E-strategies are for e-business and for all the companies that are directly or indirectly using this ‘e’ component. There are different requirements in this environment and thus e-strategies have become important.


End of Chapter Three

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IT Strategy for Business © Oxford University Press 2008 All rights reserved Chapter 3 E-Strategy