Deployment of e-commerce: Meeting the needs of the cyberconsumer. (Special Focus on E-Business Strategies).

There are three key elements in launching a successful e-commerce strategy: determining Internet usage profiles, effectively deploying online activities, and updating your e-commerce positioning

Once a company analyzes its business context and identifies the specific dynamics of the sector in which it operates, it can focus on deployment of electronic commerce activities. In undertaking this exercise, three key activities must be meticulously managed: determining proper positioning, implementing targeted deployment, and following up on online activities.

PROPER POSITIONING IN CYBERSPACE

To quote Seneca, "If one does not know to which port one is sailing, no wind is favourable."

Similarly, there can be no proper positioning in cyberspace for a company that does not have clear electronic commerce objectives. To determine appropriate positioning, a company must set realistic strategic objectives in line with the resources at its disposal and with the potential use of the Internet in its particular business context. Effective deployment reflects coherence between the business context, the strategic objectives, and internal processes affected by the adoption of the Internet and related information technologies.

The first success factor is linked to the company's capability of understanding the dynamics of its business context and to plan Internet deployment that is coherent with this context. As Figure 1 illustrates, several Internet usage profiles are possible. A company must determine which profile suits it best, or which combination of profiles is best adapted to its e-commerce objectives. Following is an examination of each of the five typical user profiles identified in the study undertaken by the CMAIC.

Profiles of typical Internet use

Promoter is the profile most frequently adopted by companies. It entails using the Internet to market and promote products and services. Specifically, promoters invite Internet users to contact or visit the company to carry out a purchase. The Web site is consequently an advertising channel that serves to describe products and services, in addition to supplying comprehensive information on product safety, storage, use, applications, etc. The site may also advertise new items, promotions and the list of distributors.

In addition, Promoters use the Internet to better understand a company's clientele. This is done, for example, through surveys, questionnaire games, free samples, or contests. If it is highly developed, the Web site can also indicate inventory availability, prices and conditions related to the sales contract, such as the currency used for billing, shipping costs, applicable taxes, conditions related to delivery, payment mode, financing and guarantees, together with cancellation of the sale and the exchange policy. These features enable Internet users to perform comparison shopping. (2) Evidently, the Promoter profile is concentrated on marketing activities, while sales and distribution continue to take place through the traditional network of offline sales.

Companies with a Developer profile use transactional Internet capacities to develop new markets, design new products, improve existing products, and provide technical support. Companies in this profile -- software designers or specialized industrial equipment manufacturers are two examples -- target a global market because they occupy a narrow niche. The products of companies with a Developer profile are often at the beginning of their life cycle, so a special effort must be made to publicize the characteristics of these products along with possible applications. As a result, the company's Web site is often supplemented by generic information on the products or industry, and often includes a portfolio of achievements. Referral to a virtual community of customers, or to a network of authorized distributors, can provide support to new consumers of a product.

A Web site of the Vendor profile type, when fully developed, lets users carry out online sales, from placing orders to payment. It corresponds to a virtual store, and can even generate revenues equivalent to those of a physical store. The site acts as a substitute store by offering all connected services online, including customer service and technical support for products. A Vendor site can include the same functions as Promoter and Developer sites, but differs in that all the other activated components are secondary to the ultimate goal of online sales.

Although fairly rare owing to prohibitive costs, the Integrator usage profile specializes in integration of a company's management systems with Internet technologies. The processes associated with "internal logistics" are reconfigured and automated with online functions to enhance their efficiency and effectiveness. This allows for elimination of duplication, reduction of processing times, and real-time management of orders, purchases, deliveries, etc.

Lastly, a company that opts for a PR Officer profile sees its Internet presence as a preferred means of communicating with various stakeholders, even if it does not wish to engage in online sales. Consequently, its Web site is designed to support its relationships not only with customers, but with suppliers, members of the company's board of directors, shareholders, investors, employees, government, lobby groups, and the general public. By integrating Internet technology into these public relations activities, the company can personalize its interfaces with each type of stakeholder, and transmit targeted content adapted to particular interests. It can also solicit requests or comments online and in real time, more quickly and efficiently than through traditional means.

The Web site of the PR Officer profile is often characterized by the presence of an intranet, extranet, or sections dedicated to members, shareholders or partners. This profile may be appropriate for companies in sectors where products are not adaptable to online sales, but must nonetheless maintain rich and sustained relationships with business partners. Construction, mining, industrial equipment, and specialized professional services are a few examples.

Even if companies pick and choose among Internet functions associated with several profiles, the principal objectives of their Web sites correspond by and large to a typical profile. This is because the site is harmonized with a predetermined strategic positioning. In contrast, companies that simply post a virtual business card cannot claim to harness the full potential of the Internet, and would benefit from reviewing their e-commerce positioning.

IMPLEMENTING TARGETED DEPLOYMENT OF ONLINE ACTIVITIES

Regardless of the Internet usage profile adopted, effective implementation of online activities is crucial. Processes affected by online activities must be examined and, if necessary, reorganized to adhere to technological parameters. Effective deployment reflects the coherence between business processes and technological parameters. Therefore, efficient deployment involves "systematic planning of online and offline activities and the association of technological parameters with business processes.

For example, the management of a company that manufactures steel beams realizes their product does not lend itself to Internet sales. As well, online promotion is not worthwhile because prices are negotiated per item as a function of the customer's purchase volume. There would be no point in investing in development of transactional functions via the Internet because transactions cannot be completed online.

However, the company can maximize the potential of the Internet by reducing its communication costs with shareholders, by disclosing technical specifications that enable potential purchasers to obtain product information, or by recruiting online. Replacing offline activities with online activities can improve the profitability of the company and enhance its value. Management therefore decides that the PR Officer Internet usage profile is best suited to its needs and focuses on implementation of public relations components.

Conversely, a micro-company (less than five employees) can position itself in a highly specialized niche through Internet sales. It therefore adopts a Vendor profile. Having very limited financial means, this company would probably not exist without the Internet. Its virtual store enables it to avoid the costs of investing in expensive physical facilities. In contrast to the company that manufactures steel beams, it would not be appropriate for the micro-company to adopt a PR Officer profile. It does not need to develop relationships with a board of directors, shareholders, investors, employees, lobby groups, etc. The Integrator profile is also not suitable, owing to a low sales volume that does not justify establishing a sophisticated inventory management system.

In summary, effective deployment of e-commerce entails reconsideration of each of the activities of a company's internal value chain to determine whether it can be replaced by an online activity. At the same time, each activity must be reviewed by weighing the merits of outsourcing externalization to Internet users (for example, having users complete an order form), or continuation of traditional value-chain processes in parallel with online activities.

FOLLOWING UP ON ONLINE ACTIVITIES

Deployment of online activities merely marks the start of the adventure. Cyberspace is constantly evolving. Changes take place at a hectic pace and the winners of yesterday may be the losers of tomorrow. Just because a Web site is in place, it doesn't mean a company can rest on its laurels! Sound management of e-commerce activities includes not only evaluation of the performance of reconfigured processes, but also periodic review of the company's positioning and systematic updating of its Web site.

Connection to the Internet is constantly accelerating, and statistics show that electronic commerce is growing sharply. However, most small businesses do not formally plan their activities in this area. At the majority of companies, executives are advancing prudently, by intuition, one step at a time, often by trial and error. When the results appear poor or insufficient, they either add new applications, revamp the design of their site, or lose interest entirely.

Companies that do not integrate e-commerce into their business strategy tend to forget to follow up on online activities in their strategy watch. Without clear e-commerce objectives, performance indicators will be lacking, leading to a waste of resources and mitigated results.

In contrast, successful companies know where they are going. They adopt an Internet usage profile appropriate for their business context. Coherence between the business context, strategic objectives and internal processes dictates the practices these companies choose to implement and their use of technology. Above all, they follow the day-to-day evolution of cyberspace, constantly verifying the relevance of their positioning. Their sights are reset based on a rigorous evaluation of results, not merely on the number of visitors to their Web site.

Yet this exercise is not easy to perform. In effect, how can one measure the dollar value of developing better relationships with a board of directors, shareholders, investors, customers, suppliers, lobby groups and society as a whole? How does one quantify the benefits of developing new products and improving existing products? How does one evaluate the return on investment to ensure 24/7 technical support? How does one evaluate the profitability of a promotional Web site? Companies must respond to each of these questions, because the success of Internet deploymnent in business processes will depend on the answers.

Hugues Boisvert, PhD, CMA, FCMA ([e-mail]) specializes in benchmarking, accounting, and activity-based management. He is head of the CMA International Centre for Studies of Business Processes, and a full professor at Ecole des HEC.

Lucie Begin, PhD, is a researcher at the CMA International Centre, and is currently focusing her efforts on e-commerce. The CMA International Centre (www.hec.ca/cicma) is an applied research centre dedicated to benchmarking. It is Located at Ecole des HEC, which is affiliated with the University of Montreal.

(1.) The typical profiles are situated on the periphery because it is rare that a company chooses only one profile. It probably will opt for a fairly elaborate combination of activities associated with different profiles.

(2.) Ekos Research found that in 2001, 45% of Canadian Internet users used the Internet to perform comparison shopping, whereas only 34% of survey respondents used the Internet to make online purchases.

(3.) See article on brakes and accelerators, on page 16 in this issue.