Chapter 12. Deploying NE Solutions by hmoda


									Chapter 12. Deploying NE

  Foundations of Net-Enhanced
   Detmar Straub, 1st Edition
   Copyright © 2003 John Wiley & Sons, Inc.

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   Chapter 12. Learning Objectives
• To apply the core competencies of each of the atomic
  business models to NE implementation.
• To recite the stages of the implementation process and
  explain each of these.
• To argue for an order of priority in the implementation of
  these stages
• To apply the terms B2B, B2C, Intranets, Extranets to the
  context of NE deployment.
• To analyze Web site usability.
• To argue for the importance of content in B2B, B2C Web
• To describe how to move from strategy to deployment.
• To distinguish between centralization and
  decentralization in IT development and operations.
           Chapter 12. Outline
1.  Introduction
2.  Matching NE Applications to business processes and
    core competencies
3. Deploying Net–Enhanced Systems throughout the
    Value Chain
4. B2B Deployment
5. B2C Deployment
6. Content as King in B2C and B2B
7. Building and Maintaining NE Systems
8. Deploying Intranets and Extranets
9. Internet Time and Moving from Strategy to
10. Effective Implementation through NE Management
            12.1 Introduction
Careful strategizing about resources can
 create tremendous advantages for NEOs
 (RBV theory)
  – Provided these can be competently
    implemented (FC theory).
• The first step in deploying an NE strategy is
  to examine the intent of the systems.
• The next step is to align corporate goals,
  business processes, and core competencies
  with available technologies.
12.2 Matching NE Applications to Business
Processes and Core Competencies
   •   Implementation begins with a strategic
       planning phase aimed at selecting
       “tactics” to implement the system.
   •   These should be based on aligning the
       firm’s core competencies with its
       resource base.

12.2.1 Planning New Business Models: Emerging
       Technologies & Core Competencies
 •   Wheeler’s NEBIC model of strategic planning for
     technology adoption begins with choosing.
 •   Wheeler’s third phase, after a technology is chosen and
     matched to the core competencies of the firm, is the
     execution phase.
 •   In this phase, the firm identifies which core
     competencies can be used to implement the new
 •   The implementation plan then either decides to use
     corporate resources in areas of core competency or
     makes plans to outsource if it does not.

Figure 12.1 Wheeler Model for Planning NE Systems   8
12.2.2 Core Competencies and Capabilities
       Required for Atomic models
• The idea of a core competency is that a firm is
  able to use resources to competitively create value.
• Managers need to understand what these areas are
  so as to avoid executing strategies in ways that do
  not play to their strengths.
• Table 12.1 lists the core competencies associated
  with the eight atomic business models.
• Successfully deployed strategies require at least
  minimal corporate competence in each of the areas
  listed for each atomic business model.
1. Content Provider
   a) providing leadership in the content field
   b) handling content for multifarious forms of distribution
   c) marketing expertise about content
2. Direct-to-Customer
   a) forming supply chain strategic partnerships
   b) using customer data to understand customer needs
   c) marketing through allies
   d) integrating online and offline customer processes
   e) being a low cost provider
3. Full-Service Provider
   a) managing relationships with customers and other partners in the
      value network
   b) understanding customer segments and matching firm abilities to
      deliver new offerings to these segments
   c) managing business complexities through IT infrastructure
   d) developing brands

 Table 12.1a Atomic business models & core competencies 10
4. Intermediary
   a) collecting and analyzing information about products, prices and
   b) balancing service completeness with customer volumes
   c) analyzing customer data for positioning new services
5. Shared Infrastructure
   a) delivering IT infrastructure services to deploy model
   b) coordinating a coalition of competitors
   c) attracting new participants
6. Value Net Integrator
   a) managing relationships with customers and other players
   b) managing coordination of nodes by analyzing the information in
      the network
   c) developing and managing the brand
   d) utilizing levers of influence rather than control mechanisms

 Table 12.1b Atomic business models & core competencies                 11
7. Virtual Community
   a) building a sense of community
   b) sourcing or creating attractive content that is not expensive
   c) discovering member needs
8. Single-point-of-contact
   a) understanding life events in customer and designing Web site
   b) providing leadership to move NEO to whole-of-enterprise
   c) showing ability to manage complex IT environment
   d) negotiating agreements among divisional and business unit (BU)
      senior managers

 Table 12.1c Atomic business models & core competencies                12
        12.3 Deploying Net-Enhanced Systems throughout
        the Value Chain
•       The NE Value Chain, (see
        Chapter 7) presents the
        recommended priority for
        implementing electronic
        versions of the stages in the
        value chain. These are:
    –      Inquiry
    –      After-Sales Support
    –      Order/Sale
    –      Delivery
    –      Payment
                                        Figure 12.2 Recommended
•       The following sections           Order of Introduction of
        consider deployment problems    Stages in NE Value Chain
        faced in each stage.
                12.3.1 Inquiry Stage
• A typical problem with the inquiry stage is the
  lack of alignment between the firm’s overall
  strategy and the presentation of its home page.
• Top management should also be involved so as to
  support the strategic direction of the firm.
• Among the sub-elements that can satisfy customer
  inquiries are:
   –   an online inventory of goods and services,
   –   competitor price comparisons,
   –   locator services with hyperlinks or
   –   online maps for physical locations.

     12.3.2 After-Sales Support Stage
• Since retaining customers is a critical aspect of
  marketing, after sales support is given the 2nd
  highest priority.
• A firm can differentiate itself from rivals in the area
  of customer service by gaining more information
  about customers via the Web and then exploiting it.
• Examples of advantageous after-sales support
  techniques include:
   – Web-based service upgrades via pop-ups (and pop-
   – E-mail answering services, and
   – Live chat.

           12.3.3 Order/Sales Stage
• B2C sales often involves “placing” a selected item
  into an online “shopping basket”.
• B2B takes different forms such as purchasing from
  the firm’s Web page, using an ETN (B2B exchange
  hub) or Web-EDI.
• Dell’s B2B site can be accessed by Dell agents, or
  business users’ client computers can be configured
  to interact with the Dell site w/o human interaction.
• Another difficult challenge is integrating the new
  system with backend, legacy systems.
   – Some companies are resolving this by establishing
     wholly-owned subsidiaries to build newer systems, also
     permitting the creation of virtual organizations.
              12.3.4 Delivery Stage
• The major issues for delivery implementation
  center around intellectual property rights and
  protection of the firm’s assets.
• Piracy represents a major threat, as shown by the
  peer-to-peer file-sharing example of Napster.
   – Digital watermarks plus other technological and legal
     measures can provide a partial solution to this problem.
• Value-added services based on incremental
  revenues may prove a more sustainable business
  model for digital products delivered over the

             12.3.5 Payment Stage
• Few firms have e-payment core competencies, so
  this function is usually outsourced.
• Which options are favored, depend on the
  conditions in a particular country.
   – In North America, credit cards are the most common
     payment form, while in Europe debit cards are more
• Many countries hold card owners users
  responsible for credit card misuse, keeping card
  use to a minimum.
• For this reason, e-Cash or other payment options
  may be popular in locations where plastic cards
  are used less frequently.
        12.4 B2B Deployment
• B2B deployment differs from the typical
  problems confronted by B2C e-vendor Web
• Many B2B exchanges are based on shared
  infrastructure, such as Omnexus and
• Core competencies in IT infrastructure and
  managing information are needed to build
  and maintain the ETNs.
• Another core competency is marketing.
12.4 Open Buying Internet (OBI)-EDI, and XML-EDI
(Web-EDI) vs. traditional EDI
• EDI began ~20 years ago as a
  transaction-based offering
  using proprietary networks.
• With the Web, these were
  slowly replaced w/ Extranet-
  based EDI and then ETNs.
• The latest form is Web-EDI,
  using XML and “EDI-
  integrated” transactions in
  which the rigid EDI protocols
  have been replaced by flexible
  ones that allow a series of
  exchanges to take place.         Figure 12.5 Bringing B2B
                                       applications online20
Figure 12.6 NE B2B Deployments   21
   12.4.2 Alternative B2B Deployment
• Another option for B2B exchanges is using
  applications formats that allow firms to exchange
  information across networks between similar or
  compatible software packages.
   – MySAP is an example
• Compatibility is an issue both between different
  versions of the same commercial program, and
  between different vendor products.
• The B2B environment will include ETNs, 3rd party
  intermediaries, Web EDI, applications formats and
  other approaches.

         12.5 B2C Deployment

• Putting B2C Web systems in place
  involves a detailed understanding of
  consumer behavior.
• Web design is the critical success factor
  for sites that work.
• If users find a site attractive, it
  demonstrates its “stickiness”.
• This means visits to the site will be long
  and frequent because the site has
  something that draws consumers to it.
                12.5.1 Web-site Usability
Palmer’s Validated        Agarwal & Ventakesh’s
Features                  Validated features
Download delay            Content
Navigation/               Ease of Use
Interactivity             Promotion

Responsiveness            Made for the medium
Information/ content      Emotion

  Table 12.2 Web site usability features that managers
                 need to be aware of                  24
• The ability to “promote”
  products and services is
  critical as the Web-site
  serves partly to advertise and
  is a primary vehicle for
  inducing sales.
• “Emotion” is another key
• “Push” technologies, such as
  the “pop up” in Figure 12.8,
  can be sent as an unsolicited
  window with special offers,      Figure 12.8 Special Mortgage offers
  or sold as advertising to        in pop-up window at
  other firms.
                                                                25 Navigation and Ease of Use
• The way a Web site, or even a single Web
  page, is organized can make it easy or hard
  for a user to find what he/she needs.
• Web designers need to have an
  understanding of the value of simple, clean
  pages and be able to appreciate what the site
  has to offer and what the hyperlinks mean.
• The creation of a Web site generally needs
  to be a team effort, incorporating input from
  a number of specialists.
                                              26 Download Delay

• There is a strong connection between
  user frustration from long download
  times and their attitudes towards
  brands and inclination to purchase.
• Consequently, managers need to draw
  up guidelines for their Web designers
  on how to reduce download delay
  under prescribed circumstances.
                                          27 Interactivity and Responsiveness
 • The best Web pages give the user the impression of
   a social or human presence at the other end
    – the more consumers sense this, the more they are
      inclined to buy online.
 • The site should respond to their human needs, even
   though it may well be the programmed response
   from a computer system, and not a “real” response
   from a person.
 • A key threshold is passing the “Turing” test,
   meaning users are unable to differentiate the
   programmed response from that of a person.
                                                         28 Made-for-the-Medium
• “Made-for-the-medium” measures the extent to
  which the unique capabilities of the Internet have
  been built into the Web-site.
• Incorporating a virtual community and thereby
  helping to reinforce a user’s connection to a B2C
  site or installing a Web cam are examples of this.
• Tech user groups can be valuable in developing
  this ability by enthusiastically promoting a product
  as well as helping the firm determine desirable
  features for new products and services.

• Consumers come to a site with the
  expectation that they will find
  information on goods and services they
  are looking for.
• Good content with hyperlinks to
  further information will bind users to
  the firm.
• Poor content will drive users away.
12.5.2 Personalization
Systems & Systems
for Markets-of-One

• Web sites and e-mail
  messages that have
  been individually
  tailored to a customer
  are another important
  innovation known as
  “markets-of-one” and
  can also be used as
  effective marketing
                           Figure 12.10 Personalized
                           message from     31
  12.6 Content as King In B2C and B2B
• Good content can overcome a lot of other
  drawbacks to a Web site, including a less-than-
  stellar interface.
• Content should be up-to-date, complete, and take
  advantage of multimedia capabilities.
• Most importantly, content should provide
  something of value to the consumer.
   – The more relevant the information is to the customer, the
     more likely the customer is to buy.
• While hosting services, network connections, and
  maintenance may be outsourced, the provision of
  content needs to be a core competency of the firm.
          12.6. Content as King
• Consider an example of an
  customer who is looking for books on
  traveling in Nepal.
• The customer first searches the database of
  all books from both Amazon’s and its
  associates’ inventories, using key words.
• Amazon manages the relationship with
  these associates
  – This is a core competency exercised through
    its Web site, that confers a competitive
    advantage to the firm.
12.7 Building and Maintaining NE Systems
 • Does a firm need to have Web design skills?
 •, as a cybermediary, views its site as
   the source of its competitive advantage.
 • Its competitors, like Borders, may outsource Web
   design and development to others, to help “bring
   them up to speed”, but may ultimately decide to
   insource if they come to view their site as critical
   for their future.
 • Similarly, Amazon may be willing to outsource
   Web design if it doesn’t view this as a threat to its
   competitive advantage
    – Choosing instead to focus on capitalizing on its other
      core skills.
   12.7.1 Maintenance of NE Systems

• Maintenance falls into two categories:
  – Repairs deal with serious threats to the
    information system or more cosmetic issues.
  – Enhancement tells what changes need to be
    made to improve the system functionality and
    keep it “up-to-date”.
• Who should do this maintenance?
• The firm that built the system (and therefore
  knows it best) or should it be done inhouse?
         12.8 Deploying Intranets & Extranets
• Much of the information     Feature                Extensible to
  and features provided by                           Extranet?
  an Intranet could, at       Firm telephone         Yes
  some point, be extended     directory
  to an Extranet (as shown    Sales reports
  in Table 12.3) that
                              Product/service        Yes
  includes strategic
  partners and customers.
• This results in the         Logo repository
  blurring, for competitive   Public financial       Yes
  reasons, of the boundary    statements
  between the firm and its
  environment.                 Table 12.3 Features typically available on
                               Intranets and extensibility to Extranets

   12.9 Internet Time and Moving from
          Strategy to Deployment
• Cycle-times are becoming shorter but the added value
  of well-designed B2B and B2C Web sites comes
  from the quality of content used to represent a firm’s
  new products and services, rather than change for
  change’s sake.
• Of primary importance are systems that lead to fluid
  and accurate content provision combined with
  efficient operation.
• The creation of NE systems to capitalize on rapid
  changes in new technologies should be part of a
  larger strategy.
12.10 Effective Implementation through
           NE Management
• If Internet time is truly different, the emerging
  rapid application environments that are component
  and prototype based, such as CORBA, J2EE and
  .Net, are indications of the need to rapidly develop
  and deploy these systems.
• However, the overall management of the Web site
  - its goals, objectives, construction, enhancement
  and ongoing updating and operation – is still the
  key to successful implementation.

12.10.1 Business Unit Participation in IT
Development and Operations
• As non-technologists, NE content providers
  within the firm today are in a similar
  position to end-users over the last two
• For this reason, what was learned about
  end-user computing (EUC), such as the
  roles, responsibilities, and the division of
  management control, should be applicable
  to NESs.
                                             39 Application Characteristics of
End User Computing
•   “End users” include:
     1. Non-programming, application, and
        programming level end users
     2. End user programmers.
•   While end users controlled the inputs,
    processing and timing of outputs, it was
    found that a balance of managerial
    activities was needed to promote and
    contain EUC.
                                               40 Managing NE Implementation
• As with End User Computing, the goal of
  effective NE management is to promote NE as a
  dynamic force for change in the organization
  without smothering it or permitting it to grow in
  an uncontrolled fashion.
• Ineffectual management occurs far too often with
  the result that critical innovation is lost as
  managers struggle with strategic positioning or
  fail to recognize the need to change strategy over
• It is important to strike the right balance in this.
End of Chapter 12


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