The challenges of e-business transformation

Figure 10.1 shows key aspects or levers of change that need to be assessed in order to maxi­mize the benefits of e-business. The main change levers required are:

• Market and business model (described in Chapter 2).
• Business process (described in Chapter 4).
• Organizational structure, culture and staff responsibilities (described in this chapter).
• Technology infrastructure changes (described in Chapters 3, 9 and 11).

These are all major changes that are required in order for an organization to be agile enough to respond to marketplace changes and deliver competitive customer service. To help achieve these different aspects of change, a series of success factors seem to be required. These include:

• management buy-in and ownership;
• effective project management;
• action to attract and keep the right staff to achieve change;
• employee ownership of change.

This chapter focuses on how to best achieve these success factors. Activity 10.1 introduces some of the changes required by e-business.

1. The challenges of sell-side e-commerce implementation

A useful framework for reviewing an organization’s capabilities to manage e-business- related change is shown in Table 10.1. This 7S framework was developed by McKinsey consultants in the 1970s and summarized by Waterman etal. (1980).

Table 10.1 summarizes some of the main issues which need management, but what are the main challenges in implementing strategy? E-consultancy (2005) surveyed UK e-commerce managers to assess their views on the main challenges of managing e-commerce within an organization. In the context of the 7 Ss, we can summarize the main challenges as follows:

• Strategy – Limited capabilities to integrate Internet strategy into core marketing and busi­ness strategy as discussed in Chapter 5 is indicated by frustration on gaining appropriate budgets.
• Structure – Structural and process issues are indicated by the challenges of gaining resource and buy-in from traditional marketing and IT functions.
• Skills and staff – These issues were indicated by difficulties in finding specialist staff or agencies.

E-consultancy research I completed in 2005 highlighted some of the main challenges of implementing e-commerce. My initial sample for interviews were e-commerce managers for transactional sites – for example, mobile phones (Orange, The Carphone Warehouse), travel (Tui and MyTravel), financial services (Lloyds TSB and Bradford and Bingley) and direct marketers such as BCA.

One of the aims of the research was to gain a picture of the organizational processes and activities that need to be managed as part of sell-side e-commerce and the organizational structures that had been created to manage this. Figure 10.2 gives an indication of the number of operational e-CRM processes that need to be managed across the three core e-CRM areas (acquisition, conversion, retention) which we reviewed in Chapter 9. It also shows the management activities needed to support these. Some large organizations in the study had between 10 and 50 specialist staff managing these activities. For smaller com­panies, there is also the challenge that only 1 or 2 people are responsible for these activities, so they will need to work smart and outsource many of the activities!

As part of the research, respondents were asked what their main challenges were and these highlighted the issues of gaining sufficient resources for Internet marketing. Their key challenges included:

• Gaining buy-in and budget consistent with audience media consumption and value generated
• Conflicts of ownership and tensions between a digital marketing team, traditional marketing, IT, and finance and senior management
• Coordination with different channels in conjunction with teams managing marketing programmes elsewhere in the business
• Managing and integrating customer information about characteristics and behaviours collected online
• Achieving a unified reporting and performance improvement process throughout the busi­ness including reporting, analysis and actioning suggested changes
• Structuring the specialist digital team and integrating into the organization by changing responsibilities elsewhere in the organization
• Insourcing vs outsourcing online marketing tactics,e. search, affiliate, e-mail marketing, PR
• Staff recruitment and retention since there is a shortage of e-marketing skills given the rapid growth in demand for these skills, which gives great opportunities for everyone reading this book!

After initial qualitative interviews, identifying the type of challenges faced by an e-commerce manager, a wider survey identified how common these problems were. The responses of e-commerce managers are summarized in Figure 10.3.

The research showed that managing the interfaces between the e-commerce team and other parts of the organization was a major challenge for many organizations. Managing these interfaces is a key role of the head of e-commerce and managers within their team. Every respondent articulated the need for education of colleagues in the organization about the benefits of e-commerce and the changes in processes required to achieve these benefits. This need for education was mentioned with respect to three main parts of the organization:

• Senior management. Managing the senior management team interface was mainly an issue for less-evolved adopters of e-commerce. Leading adopters mentioned it had been a problem, but they now felt they had achieved understanding of the strategic importance of online channels and this was matched by financial resources and sufficient input into planning to achieve alignment between business objectives and e-commerce initiatives.

• Marketing, different brands, businesses or countries. Similarly, this was more of an issue for the less-evolved organizations. Others had created processes for collaboration between e-commerce and marketing teams and defined responsibilities for e-commerce within these marketing teams.
• Information technology. This interface was mentioned as a challenge by nearly every respondent – there was a belief that insufficient resource for applications development was limiting the potential of e-commerce to deliver value to customers and the organization. Where this was less of an issue, companies had either incorporated some development function within the e-commerce function, or had outsourced parts of development.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).