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Chapter 13. Challenges to Implementation

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					Chapter 13. Challenges to
    Implementation

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

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Copyright 2003John Wiley & Sons, Inc. All rights reserved.
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contained herein.

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                  Chapter 13. Learning Objectives
•   To explain why security is the key issue in Internet commerce adoption.
•   To describe security barriers to use, both from a consumer and an org. perspective,
    and to briefly describe workarounds to the problem.
•   To explicate why download delay is a major factor in online purchasing, even while
    bandwidths are increasing.
•   To explain how to deal with the security issue.
•   To make the case for why search problems are a major issue & what can be done to
    resolve them.
•   To describe the value of metrics, need for better metrics, & how to acquire them.
•   To overview interface limitations and what is poss. to deal with these.
•   To discuss how mgrs. can overcome the varying standards emerging on the ‘Net”.
•   To describe social issues, such as:
     1.   Consumers’ fears in buying or transacting business over the Web
     2.   Lack of brand awareness
     3.   Management/cultural problems
     4.   Lack of firm experience in doing e-business
     5.   Organizational fear doing business over the Internet
     6.   Migrating to Internet computer-computer linkages from more familiar EDI
     7.   Lack of well-accepted/understood e-cash by consumers or organizations
     8.   Ambiguous/hostile legal or regulatory environment                         3
                    Chapter 13. Outline
1.       Introduction
2.       Technical and Social Challenges to Implementation
3.       Technological Challenges
     –     Security Weaknesses
     –     Download Delays
     –     Search Problems
     –     Inadequate Measurement of Web-site Success
     –     Interface Limitations
     –     Lack of Internet Standards
4.       Social (Organizational & Environmental) Challenges
     –     Consumer Fear
     –     Lack of Brand Awareness
     –     Management/Cultural Problems
     –     Organizational Fear
     –     Migrating from Computer/Computer Linkages
     –     Lack of acceptance of e-Cash
     –     Ambiguous/Hostile Legal/Regulatory Environment
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        13.1 Introduction

• While NE creates opportunities on a
  vast scale, there are a number of
  technical and social challenges
  facing the growth of e-Commerce.
• This chapter deals with these
  challenges.


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    13.2 Technical and Social Challenges to
               Implementation
•     Best practices based on real-world research offer
      a fresh, relatively objective perspective for
      change in a world of vested interests,
      salesmanship, and entrenched positions.
•     Organizational and environmental challenges
      have been less extensively researched, but can
      also effect adoption of Net-enhanced business
      practices.
•     While some of these challenges are within a
      firm’s domain, others are beyond its control.
                                                      6
Tech-1 Security weaknesses

Tech-2 Download delays

Tech-3 Search problems

Tech-4 Inadequate measurements of Website success

Tech-5 Limitations to the interface

Tech-6 Lack of Internet standards

Table 13.1a Technical Challenges to Implementation
                                                     7
Social-1 Consumer fear of Web-based business
Social-2 Lack of brand awareness
Social-3 Management/cultural problems in instituting e-
business practices
Social-4 Lack of firm experience in doing e-business
Social-5 Org. fear of doing Internet-based business
Social-6 Resistance to migration from more familiar EDI
to Internet-based linkages
Social-7 E-cash not well accepted by consumers or
organizations
Social-8 Ambiguous or hostile legal/regulatory
environment for NE
 Table 13.1b Social Challenges to Implementation          8
What Makes Obstacles to Internet
Adoption so Different?
• Unlike past technologies, sellers do not exercise
  control over the points of access to the Internet.
• Instead, half are owned by end-users, either
  individuals or businesses,
• Internet content is typically provided free-of
  charge.
• Consequently, the Internet is based on a highly
  distributed and decentralized operating model.
• This dramatically changes things for firms
  wishing to do business via the Internet, as well as
  offering some thorny technological challenges.
                                                        9
Medium                  Ownership of access
Telephone               Public telephone and
                        telegraph (PT&T) services
Cinema                  Distributor-owned movie
                        houses
Electric/Gas            Infrastructure provided by
                        monopolies
Cable                   Coax and fiber owned by
                        the residence/business
Retail                  Retailer storefronts

 Table 13.2 Underlying changes in ownership of access
                                                        10
        13.3 Technological Challenges
•   The highly decentralized nature of the Internet is
    both responsible for its success and for its
    limitations.
•   This is mainly a product of its historical origins:
    –    It was originally used for information sharing.
    –    Its original charter was non-profit.
•   This section discusses the current technical
    challenges to using the Internet for e-Commerce,
    prioritized according to their importance.


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      Tech-1: Security Weaknesses
• Currently, the most serious problem for firms
  doing business on the Internet.
  – Well-publicized security break-ins and
    orchestrated denial of service attacks by hackers
    show how vulnerable e-Firms can be.
• Security must therefore be taken as a high
  priority management goal.
• Encryption of transmissions, digital
  signatures, etc, are amongst the currently
  available countermeasures that can be
  implemented.
                                                    12
      Tech-1: Security Weaknesses
• End points of the transmission are
  extremely vulnerable, but if managers are
  serious about it, they can institute security
  controls and own a relatively secure site.
• Often managers do not recognize the
  solutions available to them, nor do they
  apply them.
• Technologies on the horizon will solve
  some of the current security problems, such
  as improved firewalls and virus software,
  and deeper insights into hacker psychology.
                                              13
        Tech-2: Download Delays
• Download time is primarily a function of:
  – The size of the data files being transmitted
  – The technological configuration of nodes, the
    network infrastructure, and the connection
    speed between nodes and infrastructure
• Firms cannot assume that their customers
  are operating at either high or low speeds.
• At low speeds, many interactive Internet
  applications like “click-to-talk” or
  multimedia advertisements work poorly and
  turn off customers.
                                                    14
         Tech-2: Download Delays
• Many traditional desktop application data files are
  larger than 1 Mb and thus impractical to use over
  the Web.
• When considering the combination of multiple
  data files for use in one hyper-document,
  compromises between optimal communication and
  reasonable download time need to be considered.
• Table 13.4 presents download delay data obtained
  from loading a 10.5 KB file and a 6.3 MB file
  under different conditions.

                                                   15
  Data rate          10.5 KB file   6.3 MB file
  14.4 kbps          7.83 seconds
  56 kbps line       3.84 seconds   23 min., 13 sec.
  128 kbps           2.66 seconds   16 min., 17 sec.
  (ISDN)
  1.5 Mbps (T1)      2.06 seconds
  500 kbps (cable)                  1 min., 34 sec.
  1.5 Mbps (DSL)                    45 seconds

Table 13.4 Download delays at different speeds 16
        Tech-2: Download Delays
• Download delays can occur on the server
  side, during transmission, or on the client
  side. The potential for bottlenecks in each
  of these areas is shown in Figure 13.1.
• Three factors in server configuration that
  can result in increased download time:
   – Server and Internet connection
   – Processing capacity of the server
   – Security related delays between the
     Internet gateway and the server
                                                17
Figure 13.1 Elements of download delay   18
        Tech-2: Download Delays
• Transmission download delays are partly due to
  delays in the infrastructure of the Internet itself,
  especially between certain cities and at certain
  times of the year.
• On the client-side, the low connection speed due
  to the use of dial-up modems is likely to persist.
• Client performance is another factor.
   – The slower the processor, the lower its memory
     capacity, and the larger the number of concurrent
     applications being run, the longer the download time
     will be.

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Figure 13.2 Slow average data rates in the US
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          Tech-2: Download Delay
• As impediments to improved server delay are
  basically economic, firms can make decisions on
  how to overcome these delays by estimating the
  increase in business that faster response times
  will bring.
• Because customers will experiences in download
  times…
   – retailers need to be careful Web page design to ensure
     the right balance of content and file sizes so as to
     communicate effectively to all customers
   – as well as giving them choices that don’t result in
     excessive delays.
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Figure 13.3 Cutting content to speed downloads
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         Tech-3: Search Problems
• Users need to be able to quickly find out where
  and how to shop online, or they will not do so.
• Hyperlinks to URLs, for example, can become
  outdated and the technology for locating these
  outdated links is not currently available.
• There is a critical need for search engines to
  become more sophisticated to the point where
  users get exactly the information they need,
  rather than more than they need or can process.
• False hits are currently a major problem in this
  are, as the example in Figure 13.4 illustrates.
                                                     23
Figure 13.4 Likely and false hits on a search for “Shoes in Tokyo” 24
          Tech-3: Search Problems
• One way to reduce difficulty with search engines
  is to acquire an intuitive URL.
• Students were asked to find Fortune 500 firms
  without the usual “www” + company name +
  “com.” nomenclature, but with industrial type for
  both search and verification purposes.
• The results showed that, of the 130 total pages
  searched (10 pages/ 13 subjects), 31 pages were
  not found after 5 minutes, while the average
  search time for the remaining 99 was 1 min. 37
  sec – a significantly negative result.
                                                      25
Company               Industry               URL
Owens-Illinois        Glass and Plastics     www.o-i.com
Procter and Gamble    Consumer goods         www.pg.com
H.F. Ahmanson         Banking                www.homesavings.com/
                                             home.shtml
Omnicom Group         Advertising            www.omnicommny.com
Dayton Hudson         Retail                 www.dhc.com
Johnson and Johnson   Health Care Products   www.jnj.com
AMR Corp.             Airlines               www.amrcorp.com
Fed. Dept. Stores     Retail                 www.federated-fds.com
Minnesota Mining &    Consumer and industrial www.mmm.com
Manufacturing         goods

United Technologies   Technology             www.utc.com

Table 13.5 Forms searched for on Web in simple experiment      26
           Tech-3: Search Problems
• The inability of clients to readily locate an
  appropriate URL is a difficult challenge for NEOs
  – consumers usually stop looking for alternatives quickly.
• Among possible solutions are:
   – Buying intuitively clear/ related domain names
   – Spiral branding (advertising in alternate/mass media)
   – Portal links
• Alta Vista’s Prisma feature (Figure 13.5) is
  intended to result in fewer false hits by offering
  lists of related search categories that can be used
  to narrow down the number of false hits.
                                                             27
Figure 13.5 “Redefined” Alta Vista search for “Italian Shoes in Tokyo”28
Tech-4: Inadequate Measurement of
Web-site Success
• e-Commerce sites require the use of metrics to
  measure their effectiveness.
• Commonly used measures, such as the number of
  “hits” can be misleading since there is no way to
  determine how long a client has viewed a page.
• “Cookies” can help overcome some limitations,
  but they are increasingly viewed as a security
  problem with browsers being configured to block
  them.
• Buying metrics from organizations such as
  MediaMetrix (Fig. 13.6), which combine off-line
  and online sampling, may be another option.
                                                      29
Figure 13.6 Media Matrix and other Web
                                         30
measurement products
       Tech-5: Interface Limitations
• Sensory limitations of the interface constrain the
  levels at which customers can be reached, but these
  are not terribly different from other common media.
• Most media lose richness in one dimension or
  another.
   – Some believe that for e-Commerce to replace face-to-face
     commerce will require creating 3 dimensional displays.
• Eventually, advanced forms of virtual reality, using
  VRML, such as that being explored by the
  consortium shown in Figure 13.7, is expected to be
  a vibrant area for future development.

                                                           31
Figure 13.7 Web 3-D consortium home page
                                           32
             (www.vrml.com)
   Tech-6: Lack of Internet Standards
• A lack of standards can impede progress, since it
  prevents developers from knowing how to
  implement a solution.
• Standardization on the browser interface is just an
  example of an area where complete standards have
  not yet emerged.
• Because many solutions to a single problem may
  exist simultaneously, making a Web-site readable
  by all customers can be a challenge.
• Most clients can read frames, but may not accept
  XML, so firms would be advised to seek out lower
  common denominators to be able to reach the
  majority of its customers.
                                                   33
   13.4 Social (Organizational and
    Environmental) Challenges:
• The organizational and environmental
  difficulties confronting the
  implementation of e-Commerce have
  so far been much less rigorously
  analyzed than the technological
  hurdles, but are no less significant.

                                          34
   Social-1: Consumer Fear of Buying or
    Transacting Business over the Web
• Consumer perceptions and lack of trust in
  the security of the Web and NE systems
  undermines usage, particularly in regard to
  payment.
• While firms may have instituted state-of-
  the-art security measures, many consumers
  are unaware of these improvements.
• Customers also worry about the privacy of
  personal data that may be sold to 3rd
  parties.
                                                35
Social-2: Lack of Brand Awareness/ Significant
penetration of the Total Market for Specific
Products by Companies
• First mover advantages are formidable and
  difficult to overcome.
     • Brand awareness is proving just as important in
       cyberspace as in traditional commerce but, in fact,
       barriers to entry may be higher.
• As the Web is a “pull” medium, customers
  can easily resist inducements to buy by just
  moving pages or closing a “pop-up”.
     • Even spiral branding may be less effective.
                                                             36
Social-3: Management/Cultural Problems in
Instituting e-Business Practices & Ideas
• Resistance to change is a well known phenomenon
  in business.
• Many organizations change processes on only a
  superficial level so as not to “stress out” their
  culture or significantly alter their routines.
• While this may produce a conflict-free
  environment, the result is likely to be a firm that is
  less competitive.
• Workers at a firm may be aware of the need for
  change, but firms are often able to accomplish this
  only slowly at best.
                                                      37
Social-4: Lack of Firm Experience in Doing
e-Business

• Firms that have not developed experience
  from exploring the unique characteristics of
  the Web are at a considerable disadvantage.
• Recognizing the need to adapt to a
  dramatically changing competitive
  environment may be key to survival.
   – Bill Gates demonstrated this when he radically
     refocused Microsoft in the late 1990s to align
     the company with networked computing.

                                                  38
   Social-5: Organizational Fear of Doing
         Business Over the Internet
• In cases of either horizontal (complementor) or
  vertical (supplier) integration, the firm needs to
  be assured that the information it is sharing is not
  being shared with competitors.
• Fear that data is not being held confidentially is
  what keeps the advantages of networked
  connections from being realized as soon as
  possible.
   – Non-disclosure clauses and other contractual solutions
     at least provide legal recourse.

                                                          39
 Social-6: Migrating to Internet Computer-
Computer Linkages from More Familiar EDI

• Firms such as Ford have huge sunk costs in EDI,
  which may mean the movement to XML, etc., will
  take some time because firms are still trying to
  recoup the benefits of these past investments.
• Transferring over to ETNs means that virtually
  none of the legacy systems will interface well with
  the data from the ETN and new software and
  database schemas may be required.


                                                   40
Social-7: Lack of Well-Accepted or Understood e-
 Cash on the part of Consumers or Organizations

  • While e-Cash and other e-payment
    systems will facilitate business on the
    Internet by regularizing the payment
    process, their use is only just beginning to
    be accepted by NEOs and their customers.
  • Firms who are in the e-payment spectrum
    need to create an atmosphere of interest
    and trust in these innovations.
                                                   41
Figure 13.8 Architecture of typical e-Cash settlement

                                                    42
Social-8: Ambiguous or Hostile NE Legal or
          Regulatory Environment
• The full mechanism of global law and regulations
  will heighten confidence in transactions over the
  Internet.
• While over-regulation must be avoided, it is
  crucial that international regulations establish
  standards for digital signatures and for 3rd party
  certification authorities.
• Ambiguous attitudes to issues such as the
  enforcement of copyright on software in some
  countries may also impact the use of EDI and
  other network technologies.
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End of Chapter 13




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