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Organizations in the electronic age:
We are living in a world of business in which almost all the companies are nowadays doing business electronically, such as banks, insurance companies etc. In 2005 UK decided to put all the suitable public services online. Simply e-Business is now a common stream part of most organizations. It doesn't mean that all the companies are moved to electronic business but still there are lot of companies who are using the same traditional ways. Computers become the most communication devices nowadays. But still paper work also exists. Clerks are busy in sending e-mails with remote suppliers, ordering goods via electronic catalogue and tracking those orders. Beyond the purchasing department, senior managers and marketing departments get a lot of updated information and using it to perform more effective analysis and decision making. E-Business makes life so easier now that even marketing persons don't have to visit the customers. They can communicate to their customers even sitting at home or in cafe. Slowly but surely the old approach is giving way to a new way of doing things. This electronic age give rise to good business but also create many challenges and dilemmas for the senior managers.
Harris (2002) discusses the difference between the e-Commerce and e-Business. According to him e-Commerce has more restrictive meaning and it is concerned with the buying and selling of goods online. Whereas e-Business has a broader concept and describes the arrangements where organizations have redesigned their business structures, processes and services to take advantage of internet capabilities. The essential features of e-business are:
- Make greater use of electronic devices in the processing and communicating of data.
- Allow increased integration of databases and hardware devices.
- Enables users to engage with systems and services- for instance, to purchase goods, check on orders or collaborate in virtual teams or communities.
Approaches to the integration of e-Business Strategies:
As IT plays an important role in every business, it ensures that focus of business improvement process is directly related to establishment of IT infrastructure that makes the achievement of business goals possible. Special budgets are decided for IT. Few organizations follow formal approaches/methodologies to assist in identifying and prioritizing projects, but those that do feel the process is beneficial in aligning resources to key project.
This approach developed by Porter (1985), examines the activities performed within an organization to establish how they interact, and where improvement can be the source of competitive advantage. The value chain model helps identify those areas where IT can make an additional contribution, by adding values to products/services, and eliminating those activities that add cost, but no value. The value chain approach is an important approach which has been successfully applied within the supply chain to make significant cost savings by the reduction and, in some instances, the elimination of inventories.
This approach by Earl(1989) is based upon the supposition that no single methodology to determine the strategic application portfolio will work and therefore several need to be applied in parallel to serve as counterchecks to each other. Earl suggests that such a complex approach is necessary because of the inherent complexity if organizations. It is necessary for an organization to perform:
- Top-Down Analysis( decision analysis) to clarify business needs in IT terms.
- Bottom-up analysis( process analysis) by evaluating current IT systems.
- Inside-out analysis to apply innovative thinking to identify new strategic opportunities made possible by IT.
It is developed by McFarlan (1984), the strategic grid considers the contribution made by IT to the business now and into the future by reference to categories of IT development, in which candidates for the strategic application portfolio are allocated. Those applications located in the strategic segment of the grid and the critical for future success should receive the highest priority for funding.
Originally described by Rackoff( 1985) and extended by Wiseman (1985) this approach is based upon the belief that organizations determine a focus or target for their strategic intentions, such as suppliers , customers or competitors. Having decided the target, it is necessary to decide upon the alternative strategic thrusts, either offensive or defensive, that can be used by the organization to achieve its business goals. Wiseman identifies five alternative thrusts, including differentiation, cost, innovation, growth, and alliance to form a matrix. This will result in an evaluation of current business processes supporting the strategic thrust to be adopted by the organization, and identify new areas of process improvement to be supported by IT.
IT induced Business configuration:
Work by Nolan (1974, revised 1979) provided the first framework to track the stage through which organization pass, as they apply IT in support of business. A major assertion of his work was simple, but obvious fact, that these stages represent an evolution for an organization, and to proceed implied having successfully completed the previous stage. Ten year later, following the personal computer revolution that heralded increased IT innovation and still greater organizational dependence upon IT, Venkatraman (1990) identified new stages in order for the organization to proceed. He suggests that focus for organizations in the 1990s is upon the recognition and exploitation of IT, and his model recognize the importance of business process re-design, the virtual or networked organization and potential for organizations to redefine the scope of their business.
e-Business Strategy Development:
There are number of key factors that an organization needs to consider when developing a strategy towards e-business, and these are identified as follows:
- Business Driven
- Customer Focus
- The Extended Organization:
- Remaining Flexible
- Enterprise Application Integration
- Information and Knowledge
e-Business initiatives are 'business' led activities, with an implicit acceptance of process change and often involving the use of high-energy change initiatives, such as business process redesign. It is important to be able to describe project outcomes in terms such as: the reduction of order to remittance time from 40 days to 7 days, stocks and work-in-progress slashed by 50 %, customer service improvement up 5 points on the index, etc. E-Business initiative cannot succeed by themselves, and are usually accompanied by fundamental changes in the way the business is run. Management must set the agenda, determine the goals, ensure they are aggressive but realistic, and navigate the organization through the resultant turmoil of change.
One thing is noticed that is the new e-Business ways of working make it easier for the organization to target its potential customers, so they know more about its products and services. While the need exists to provide more and more information to customers, the real urgency is to make it easier for buyers to do business with the chosen seller/supplier. Customers can easily be lost, despite satisfaction with the product or service supplied, due to inaccurate or cumbersome administration of the relationship between buyer and seller, such as inaccurate invoicing. Telephone companies, traditionally bad in providing meaningful usage details to support their invoices, have been exploiting this inadequacy to achieve competitive advantage and improve customer satisfaction. The web provides the foundation for e-commerce initiatives and, together with e-mail and chat, the means to develop innovative customer focused application that strengthen buyers and sellers relationship.
When looking to establish an e-Business environment, organizations should seek to be in a position to exert influence over their business partners making up the extended organization. To be successful this need to be undertaken in a supportive and collaborative manner such that an open boundless culture is created where the mutual inter-dependance of all parties is seen as a benefit, rather than a disadvantage. Most large and medium sized organizations and their trading partners are clustered in electronic trading communities of common interest , based upon the extended enterprise concept. However, already changes are underway within the supply chain with the growing use of private trade exchanges by major retailers to award contracts to suppliers and movement towards a form of open electronic trading.
The old saying,' the only constant thing in life is change', seems more relevant today than at any time in corporate history. The key to future success is not only creating that accepts and relishes change, but also in developing e-Business strategies that ensure the organization not ' locked-in' to specific information technologies or software products. One way to remain flexible is to adopt an open systems strategy for the acquisition of software or when deciding upon corporate IT standards. Failure to retain such future flexibility in being able to rapidly respond to new business requirements will be damaging.
Most organizations already have a heavy inverstment in legacy IT applications which cannot immediately be replaced and often have to exist alongside new business processes for some years. Care should be taken to integrate, as far as possible, legacy applications within new e-Business projects. After some years of neglect, management is now realizing the real benefits of enterprise application integration in removing obstacles causing internal inefficiency and indifferent customer response. This has become particularly evident as new web-based e-commerce initiatives have been introduced which significantly improve customers order processing, but which are not integrated with legacy back-office applications.
Data has a cost and information has value, providing the incentive to develop an information resourse/warehouse culture within the organization. It is important to establish ways in which information can be made available freely to those that can make the optimum use of it, in decision making and improving customer service. Knowledge is the most enduring asset of any organization, and the scarce and precious knowledge held by employees need to be incorporated into new applications. With the conflicting demands for improved customer service while at the same time reducing costs, organizations are deploying more knowledge database to provide customers with the assistance they seek. Web technology is particularly suited to this type of application, helping customers by means of problem resolution and providing access to frequently asked questions.