Subject: Apr2001 ECMgt.com: A New Internet-Enabled World
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April 1, 2001 *4,100 subscribers* Volume 3, Issue 4
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E-Commerce Strategy
by Michael Drapkin
Principal, Drapkin Technology

"Strategy" is a much-abused term. It is often used in juxtaposition with "tactic", or in its place. ("What's our strategy for killing this email backlog in the tech support inbox?") Another vague business term is "approach": not quite a strategy, not quite a tactic, not even a plan. If you are ever given an "approach document," run, or at least dismiss the management consultant who billed your firm for producing it. Let's outline our definitions of these terms.

Strategy involves orchestrating a unique combination of core business factors. To use a musical metaphor, a strategy is the conductor's concept for the performance of a piece of music. It normally begins with an interpretation of the composer's work, but must then take into consideration the musicians, the venue, the audience, and the management of the orchestra. A strategist analyzes a business's unique internal and external assets and liabilities, defines the firm's goals, and plots a course to achieve them by altering and harmonizing these factors. In any industry, this type of thinking requires a special understanding of the business and its supporting technology.

Ecommerce strategy is not the old corporate strategy that has long been the domain of market analysts and management consultants. We have seen millions of dollars literally thrown away by old-guard strategists who were arrogant enough to think that their (debatable) analytic techniques would translate successfully to ecommerce. In general, they don't translate. In the current global business environment, if you take the time to develop a strategy "the old-fashioned" way, the world will have changed enough to invalidate the premises on which your conclusions rely.

In a mature industry, analysts and strategists have a list of statistics and formulas that can be counted on to inform them of status and to project quantitative and qualitative outcomes. For example, in a retail business, a bricks-and-mortar equation can be developed based on readily-analyzed factors, including the site itself (floor space, volume, climate control, displays, interior design) geographic location (average income, other demographics, population density, city infrastructure, economic growth/decline), supply chain, shipping, staffing levels, current retail consumption, competitor presence, point of sale, accounting systems, advertising costs and more.

With an ecommerce business, you still have to consider many of the traditional factors, as well as new technologies and market forces that resist quantitative analysis because of the rapid pace of change. The other enormous difficulty, of course, is that there is so little historical precedent to guide your path. The short history of the online business world is, in many ways, not likely to be predictive of the future. It is still involved in an erratic, "noisy" beginning; it has not yet developed the patterns of a mature system. Because of this lack of history, many entrepreneurs got caught in the second quarter of 2000. They assumed that the market would continue to absorb endless overvalued IPOs (initial public offerings). The ebusiness world will eventually rationalize and become more predictable, so learn the medium, learn from the past, adapt to the future and chances are - with a little luck - you will be successful.

Michael Drapkin adapted this article from "Three Clicks Away: Advice From The Trenches Of E-Commerce" (John Wiley & Sons), to be published this month. Reach him at http://www.drapkintechnology.com.

Harnessing the Velocity of Change in Business
Anthony L. Politano, CEO, MIS AG


Pose this question to your CEO: "Has our organization achieved any competitive advantage from data warehousing and business intelligence?" Unless your organization is the exception, the answer would be either "No" or "What is a data warehouse?"

The reality is that business intelligence (BI) has not had the impact on the bottom line that has been promised by the industry. It seems like there is a lot of movement from red squares to black squares, but nobody is really playing the game! If you are the CEO, or even a regular shareholder, you should be infuriated by the lack of business value from such large investments.

Digging deeper, some interesting conclusions can be drawn. Despite all the data-centric techniques in business intelligence, the key is really the process. There are three major building blocks of any system, even non-computerized systems: people, disciplines, and information. The people form the core of any organization, along with the organizational structure. Disciplines are the actions of the people; for example, a CFO may use the discipline of financial forecasting, while a research and development group may use the discipline of quality assurance. Information can be in automated or non-automated systems. It is the intersection of the people, information and discipline that defines the process. The process is the glue that holds this structure together.

Business practices of the past called for more of a mono-dimensional, symmetrical approach. The business could be managed around a known environment and predictable time frames. Predictability was high, processes were static and planning horizons were far-reaching.

Globalization and other external forces, though, have forced companies to move from a mono-dimensional approach to a multidimensional approach to managing the business. Consequently, the processes have become more asymmetrical.

Using e-business as an example, an organization may have a multi-process environment that they are trying to manage and contain through internal controls. Although there are many processes, they are able to contain the processes with some form of controlling mechanism (such as a financial reporting system or a consolidated budget). E-business is then introduced and changes everything, including the rules of the game. The velocity of change is greatly accelerated. Decisions need to be made in Internet time, while business models become more disparate.

These two changes act as a centrifugal force that diminishes control over the core processes of the business. The higher the velocity or greater the disparity, the greater the force. Organizations that can not harness the power of this trend will be crushed by it!

E-business is used here as an example. Just as easily, a down-turning economic environment or changing regulation or competitive pressures can have the same effect.

Caught in this whirlwind of change, many organizations try the traditional BI approach, turning to their stand-alone systems, such as a sales reporting system, or a budgeting application, or a data warehouse. They might even turn to a transactional reporting system, but these are limited in their effectiveness and scope due to their stovepipe nature.

Many organizations have built specific applications and business intelligence systems to support these pockets of process, yet they have not been able to harness the power of change. Faster stovepipes, though, are not the solution. The systems are not able to react at the speed which business demands, rendering the stovepipe systems useless.

The velocity of change and disparate business environments are pushing the need for an environment which can enable all critical business processes to be supported together. Savvy businesses (and e-businesses alike) rely on Collaborative Analytical Processing (CAP) to centrally manage BI functions. The linear approach is no longer sufficient. Key cross-functional areas are critical, including:

End user modeling allowing users to make changes to business models in real time directly out of the same environment used for browsing and entering data.

Collaborative modeling allowing teams to work on one application together on a role- based model without sacrificing security or control.

Waterfall modeling allows structured modeling workflows in the company, giving each department the freedom to extend centrally defined structures by their individual business needs.

Perpetually changing applications are capable of handling dynamic changes from day to day, department to department, and process to process - just like real business!

Integration of content and workflow enriches analytical applications with any type of content that helps to increase understanding of the business.

Without each of the components of CAP, organizations will be crushed by the velocity of change, while organizations that embrace CAP will harness the velocity of change. Continuous business planning and shared access to information (and its analysis) makes CAP a smart, cost-effective tool when used correctly. Having open standards is critical to its success.

BI has matured as a technology practice. No longer should it be acceptable to start with a blank screen. How many ways can a company do budgeting or clickstream analysis, really? The key though is what to do beyond the common functions. By utilizing templates and applications, organizations can concentrate on the value-add instead of the 'me too'.

CAP represents a unique approach here compared to the traditional 'brute force' method of so many failed data warehouse projects. Interestingly, though, the European market has seen great success with this process-centric, finessed approach. It's now up to the U.S. to repeat this success!


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