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KENNETH A. SABAN
INTRODUCTION
With all the hype surrounding ecommerce, a growing number of
‘brick-and-mortar’ companies are
rushing to capitalize on the forecasted
$7.29 trillion business-to-business
(B2B) Internet market. However, in
their haste to reap this beneŽt, many
companies have skipped forming an
e-commerce strategy in favour of Žrst
building their Web site. Evidence of
this surfaced in two studies. The Cutter
Consortium found that 65% of the
companies surveyed did not have an
e-commerce strategy in place, and
that another 25% lacked any type of
plan to implement basic e-commerce
initiatives (Booker 1999). Business
Communications Review also found
that while 33% of their subscribers had
an e-commerce plan in place, 45%
were still working on it, and 22% never
constructed a plan (Ritter and Walker
1999).
One repercussion of Žrst building
a Web site is that it has encouraged
the use of ‘tentative and fragmentary’
tactics, which have produced disappointing e-commerce results (Goldberg and Sifonis 1998, Hann 1999).
For example, the consulting Žrm
of Pittiglio Rabin Todd McGrath and
Sales Marketing & Management found
that 7% of executives surveyed indicated their e-commerce initiatives were
very successful, 61% judged their
outcomes as reasonably successful,
and 25% considered their e-commerce
results
disappointing
(Campbell
1999). Howard Rubin’s Worldwide
IT Trends and Benchmark Report
covering 16,000 information technology professionals at 6,000 companies in 28 countries also found that
85% of the companies did not see any
visible returns on their e-commerce
investments (Hoffman 1999). Another
survey by the META Group, a market
research organization, found that more
than 50% of 2,000 global companies
ranked themselves 3–4 on a scale of
1–5, with one being most ready to
launch an e-commerce strategy.
Additionally, most of these companies
were developing ‘reactive’ versus
‘proactive’
strategies
(E-business
Advisor 2000).
This paper suggests that the most
effective way to maximize the return
on
e-commerce
investments
is
through strategic preparedness. That
is, creating an integrated e-commerce
plan before launching a Web site.
The justiŽcation for this view surfaced
after studying the state of e-commerce
and exploring the current approaches
to e-commerce. To facilitate ‘strategic
preparedness,’ this paper proposes the
use of an Integrated E-Commerce
Planning Process© along with a list of
managerial implications to successfully
launch an integrated e-commerce plan
for ‘brick-and-mortar’ organizations.
A
b
s
t
r
a
c
t
As companies rush to capitalize on ecommerce, management often skips any
form of strategy development to first build
their Web site. While meeting short-term
needs, this approach has failed to deliver
the results expected by many ‘brick-andmortar’ companies. This paper proposes
that strategically prepared companies are
in a better position to maximize their ecommerce investments than companies who
are just tactically prepared. To support
this proposition, this paper: 1) defines the
state of e-commerce; 2) discusses current
e-commerce strategy; 3) proposes a new
approach to e-commerce strategy; and 4)
details the management implications of
advancing a company’s strategic preparedness. A review of 15 e-commerce surveys
established the fact that while most companies have e-commerce goals, the majority
failed to achieve them due to the lack of a
vision, strategy and plan. As practitioners
employ publications for information and
guidance, a content analysis was made of
the current e-commerce management and
marketing books. However, these publications were found to focus more on tactical
preparedness than strategic preparedness.
This led to the formation of a new approach
to e-commerce strategy that was built upon
an Integrated E-Commerce Planning Model,
as well as a series of planning implications.
A
u
t
h
o
Kenneth A. Saban ([email protected])
is Assistant Professor of Marketing at
Duquesne University of Pittsburgh, PA,
USA. His research focuses on leadingedge strategy formation in such areas as
e-commerce, data mining, knowledge
management, organizational learning,
and new product development.
r
Copyright © 2001 Electronic Markets
Volume 11 (1): 26–36. www.electronicmarkets.org
Strategic Preparedness: A Critical
Requirement to Maximize E-commerce
Investments
Keywords: e-commerce, planning, strategy, business models, outcome assessment
SPECIAL SECTION: BUSINESS MODELS
Table 1. Industry Surveys
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Electronic Markets Vol. 11 No 1
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14.
15.
27
Business Communications Review: survey of US businesses (Ritter & Walker 1999).
Cutter Consortium: survey of North American businesses (Booker 1999).
InformationWeek: survey of North American businesses (Wilder 1999).
InformationWeek & Business Week: survey of 375 IT & business executives (Dalton et al. 1999).
Industry Week: survey of CEOs (Business Wire 1999).
Meta Group: survey of U.S. insurance market (Hann 1999).
Pittiglio Raben Todd & McGrath: survey of North American businesses (Baljko 1999).
PriceWaterhouseCoopers: survey of CEOs in 19 nations (PriceWaterhouseCoopers 1998).
PriceWaterhouseCoopers & The Conference Board: survey of 83 businesses
(PriceWaterhouseCoopers 1999).
The Yankee Group: survey of 250 large and mid-sized US businesses (Economist 1999).
Prodigy Biz. Corporation: survey of companies with 100 or fewer employees that have not implemented
Web sites (Williams 1999).
Cambridge Information Network: survey of 170 senior IT executives (Stepaneck 1998).
Pittiglio Robin Todd & McGrath and Sales & Marketing Management: survey of US businesses (Campbell
1999).
InformationWeek: survey of IT executives (Weston 1999b).
Chief Information OfŽcer: survey of business executives (Chief Information OfŽcer 1999).
THE STATE OF E-COMMERCE
Factors Leading to the Adoption of E-commerce
Background
Table 2 presents the factors that prompted companies to
adopt e-commerce. A total of 31 responses were gathered
from eight of the 15 surveys. (The ‘survey’ numbers above
the columnar data in Tables 2–5 correspond to the actual
surveys in Table 1.) Because many of the responses could
be interpreted to mean the same thing, they were grouped
into four categories: marketplace, revenue generation,
cost containment, and process improvement.
‘Marketplace’ factors (32.3%) were noted most often,
followed by ‘revenue generation’ (25.8%), ‘process
improvement’ (22.5%), and ‘cost containment’ (19.4%).
Further consolidation showed that ‘internal’ corporate
factors (revenue generation, process improvement, and
cost containment) inuenced management more (67.7%)
than ‘external’ marketplace factors (32.3%). Finally, no
individual factor was found to be overly dominant. For
example, ‘cost reductions’ only represented 16% of the total
responses.
The data show that while a variety of factors were
operative, ‘internal’ corporate factors most inuenced the
adoption of e-commerce. It also supports the movement
of ‘brick-and-mortar’ companies to cash-in on the Netdriven productivity revolution. For example, General
Electric is using project collaboration technology with its
power systems customers. Besides watching the assembly
of turbines from anywhere in the world, customers can
also make last minute design changes, catch design errors,
and compare the performance of the new turbine to other
operational GE units around the world. As a result, GE
hopes to reduce production time by some 20% to 30%,
and increase productivity an estimated 1% to 2% annually
To evaluate the state of e-commerce, 14 U.S. and one
global e-commerce surveys representing hundreds of
‘brick-and-mortar’ businesses were analysed. These broadbased surveys generated opinions from business owners,
general managers and information technology executives
(Table 1). The surveys were conducted by a variety of
research organizations, consulting Žrms, and industry
publications.
It is important to highlight several shortcomings of the
data. As a composite of opinions/attitudes, the raw data
represent simple percentage scores. Having access to only
the Žnal percentages, it was impossible to judge the accuracy
of these surveys in relation to a) the source of the data,
b) the purpose of the study, c) how the data were collected,
and d) the design and sampling procedures employed.
These shortcomings also made it difŽcult to assign weights
to the individual responses. As a result, each response
only received single mention value, which opens the possibility that one response could have been more important
than another response but was counted evenly. The
number of surveys also did not permit the segmentation of
national and global responses. Based on these limitations,
the Žndings should be viewed as descriptive and not
conclusive.
Three questions served to deŽne the state of ecommerce. First, what factors prompted companies to
adopt e-commerce? Second, what types of e-commerce
goals were established? Third, what barriers stood in the
way of accomplishing these e-commerce goals?
Table 2. Factors Prompting Companies to Adopt E-commerce
Surveys
1
Marketplace Category
New competition due to the Internet
Impact of European Community
Impact of channel systems
Keep pace with competitors
Technology change
3
4
5
6
x
8
9
x
10
Total
x
3
1
2
2
2
x
x
x
x
x
x
x
(Sub-total = 10/32.3%)
Revenue Generation Category
New product development
Increase sales
Servicing customer needs
x
x
x
x
x
x
x
x
3
2
3
Process Improvement Category
Supply chain management
Structural change
Employee productivity
Building knowledge management
x
x
x
x
x
3
1
2
1
x
x
(Sub-total = 7/22.5%)
Cost Containment Category
Manufacturing outsourcing
Costs reduction
x
x
x
x
x
x
1
5
(Sub-total = 6/19.4%)
31/100%
(Business Week 2000). It can also be inferred that because
no individual factor was dominant across the eight surveys,
e-commerce decisions were highly personalized due to the
type of business, its competitive environment, and stage
of e-commerce development.
Most Common Types of E-commerce Goals
Table 3 presents the most noted e-commerce goals. A total
of 41 responses were gathered from 11 of the 15 surveys.
Due to the commonality of the responses, they were
grouped into three categories: revenue generation; cost
containment; and process improvement. The goals noted
most often were ‘process improvement’ (68.3%), ‘cost
containment’ (17.1%), and ‘revenue generation’ (14.6%).
This data supports the previous Žndings, which highlighted
the importance of ‘internal’ corporate factors in adopting
e-commerce.
The data underscore the propensity of ‘brick-andmortar’ companies to establish ‘productivity’ goals, as
they were selected nearly six times as often as ‘revenue
generation’ goals. Ford Motor Company is a good example
of a company focusing on productivity improvements via
the Internet. In November 1999, Ford Motor introduced a
massive online bazaar called ‘AutoXchange’ to help save as
much as $8.0 million from lower prices, and boost supplier
productivity by 10% (Business Week 2000). The data also
suggest that the companies were in the early stages of
e-commerce development. That is, companies normally
start by setting e-commerce goals directed at improving
a business function. Once these goals are mastered and
more conŽdence is gained, companies migrate by increasing
customer interactivity, establishing transactional commerce
and creating virtual businesses (Kosiur 1997).
Barriers to Achieving E-commerce Goals
Table 4 presents the barriers to achieving e-commerce
goals. A total of 22 responses were gathered from eight of
the 15 surveys. The common themes enabled the responses
to be grouped into four categories: leadership, strategy,
organization and the marketplace. Surprisingly, ‘strategy’
(55%) barriers were noted most often, followed by ‘leadership’ (18%), ‘marketplace’ (18%), and ‘organizational’ (9%).
Strategic Preparedness
Total individual responses
Kenneth A. Saban
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(Sub-total = 8/25.8%)
28
Table 3. Formation of E-commerce Goals
Surveys:
2
Process Improvement Category
• Competitive edge
• Internal news delivery
• Work collaboration
• Streamlining processes
• Research
• Improve customer service
• Increase customer access
• Keep pace w/competition
• Maintain competitive edge
• Increase brand awareness
• Supplier interface
• Employee recruitment
3
4
6
7
8
9
10
11
13
14
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Total
1
4
1
2
1
7
2
2
4
4
1
1
(Sub-total = 30/68.3%)
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Cost-Containment Category
• Lower operating costs
• Lower promotion costs
x
x
x
x
x
x
x
x
x
x
x
x
8
2
(Sub-total = 10/17.1%)
Revenue Generation Category
• Increase sales
• Enter new markets
x
x
x
x
x
6
1
(Sub-total = 7/14.6%)
Total Individual Responses
47/100%
Electronic Markets Vol. 11 No 1
These results differ from the current belief that the key to
e-commerce resides in selecting the right hardware and
software package (Schneider and Perry 2000). Finally, the
most noted individual barriers were the lack of ‘vision and
strategy’ (23%) and ‘a business plan’ (9%).
The data highlight the importance of forming an
e-commerce vision and strategy before launching any ecommerce initiative. IBM employed this approach
when transforming their business model. The company
established an independent division called Enterprise Web
Management, which had four goals:
29
• to lead IBM’s strategy to transform itself;
• to help IBM’s business units become more effective in
their use of the Internet;
• to establish a strategy for the company’s Internet site;
and
• to leverage the wealth of e-business transformational
accumulated case studies to highlight the potential of
e-business to customers (Turban et al. 2000).
A second example involves the transition OfŽceMax has
made from a ‘brick-and-mortar’ to a ‘clicks-and-bricks’
company (Kalakota and Robinson 1999). The company is
one of the world’s largest high-volume, deep-discount
ofŽce product superstores that serve more than 300
markets. With the launch of OfŽceMax Online in 1995, the
company became the Žrst ofŽce product retailer to sell
products over the Internet. OfŽceMax had invested over
$50.0 million to upgrade its systems and controls, and
plans to invest even more in its Future Max programme
that will provide integrated, state-of-the-art application
and technology in years to come. All of this came about
from the company building and executing an integrated
e-commerce strategy.
The purpose of this review was to deŽne the state of ecommerce – particularly, the factors that inuence, the goals
that drive, and the barriers that hinder e-commerce success.
Broadly speaking, the adoption of e-commerce was most
inuenced by ‘internal’ corporate factors. This, in turn,
inuenced the number of e-commerce goals directed at
improving ‘corporate productivity.’ Finally, the major barrier to achieving these goals was not having an e-commerce
strategy in place. As the central gating factor, the next
section will explore the current approaches to e-commerce.
CURRENT APPROACHES TO E-COMMERCE
Because many companies are driven by an ‘act now and
plan later’ mindset, management has focused more on
Table 4. Barriers to E-business Success
Surveys:
1
Leadership
• Management expertise
• Chain of command
• Management desision-making
x
x
x
2
6
9
10
13
14
x
15
Total
2
1
1
(Sub-total = 4/18.0%)
x
x
x
x
x
x
5
2
1
1
1
1
1
x
x
x
x
x
x
(Sub-total = 12/55.0%)
Organization
• Organizational resistance to change
x
x
2
x
x
x
x
1
2
1
(Sub-total = 2/9.0%)
Marketplace
• Disintermediation threats
• Technology evolution
• Vendor support
(Sub-total = 4/18.0%)
22/100%
tactical preparedness than strategic preparedness. Several
forces have promulgated this mindset. Fear that if the company does not quickly enter the Internet race, it will lose
customers to competitors and not capture the trillions of
dollars projected for the Internet (Wilder 1999). Threats
from such corporate pundits as Intel’s chairman Andy
Grove, who suggested, ‘all companies will be Internet
companies or they won’t be companies at all’ (Economist
1999). Changes to several basic economic assumptions: 1)
no
longer
are
interaction
and
collaboration
costs high; 2) no longer do physical assets play the central
role in value propositions; 3) no longer does size limit
returns; 4) no longer is access to information restricted and
expensive for organizations, their customers or trading
partners; and 5) no longer does it take several years and
deep pockets to build a business with global presence
(Anderson Consulting 1999).
Another force was the inuence of textbooks and
business publications. As these sources provide management guidance and direction, a content analysis of current
e-commerce management and marketing books was conducted (Amor 2000, Bickerston et al. 1996, Emerick
et al. 2000, Greenlaw and Happ 1999, Hanson 2000,
Kleindl 2001, Komenar 1997, Kosiur 1997, Maddox
and Blankenhorn 1998, Reedy et al. 2000, Seybold 1998,
Turban et al. 2000, Ware et al. 1998, Watson et al. 2000).
This analysis required three steps. The Žrst step was to
review the content of each publication. The second
step was to categorize the chapters by the barriers to ecommerce (strategy, leadership, and organizational) noted
in Table 4. A fourth barrier (operational) was added due
to the large number of chapters dedicated to e-commerce
tactics. The third step involved assigning indicators to rate
the degree of coverage given each subject: F meant that the
subject received featured coverage; L meant that the subject
received minimal coverage, and # meant that the subject
received marginal coverage. This analysis produced three
Žndings (Table 5):
• Operational issues relating to the building and/or
management of Web sites received featured coverage
in all 13 publications. While this was not a surprise, it
does raise the question as to why ‘operational’ issues did
not surface as a major barrier to e-commerce? It can only
Strategic Preparedness
Total
Kenneth A. Saban
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Strategy
• Lack of vision and strategy
• Lack of business plan
• Resources to build plan
• Non-E-business priorities
• Lack clear benefits
• Few models to follow
• Lack of measurement
30
Table 5. E-commerce/E-business Publication Content Analysis
Strategy
Bickerston et al. (1996)
Kosier (1997)
Komenar (1997)
Maddox and Blakenhorn (1998)
Ware et al. (1998)
Seybold (1998)
Amor (2000)
Watson et al. (2000)
Hanson (2000)
Reedy et al. (2000)
Turban et al. (2000)
Kleindl (2001)
Emerick et al. (2000)
Electronic Markets Vol. 11 No 1
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F = Featured coverage. L = Minimal coverage. #
31
Leadership
L
L
Organizational
Marketplace
Operational
L
F
L
F
F
F
F
F
F
F
F
F
F
F
F
F
F
L
L
L
L
F
F
L
F
L
L
= Marginal/no coverage.
be assumed that the avoidance was due to the lack of
experience implementing e-commerce initiatives or from
not knowing that the company has implementation
problems.
• Only two publications provided featured coverage
on strategy formation while the other six publications
provided minimal coverage. There was also marginal
reference to the value of strategy integration. Conversely,
a growing number of business articles (Bartholomew
1999, Cunningham 1998, Dalton 1999, Emigh 1999,
Gallaugher 1999, GoldBerg and Sifonis 1998, Kalakota
et al. 1999, Mayo and Brown 1999, Ritter and Walker
1999, Rushlo 2000, Saaven et al. 1999, Schlesinger 1996,
Stuart 1999, Useem 1999, Waggoner 1999, and Weston
1999a) have underscored the importance of ‘strategic
preparedness’ and integration.
• ‘Leadership,’ ‘organizational,’ and ‘marketplace’ factors also received marginal coverage. This Žnding
was particularly surprising considering the recognition given the leadership, organizational designs, and
market-centric focus of such e-commerce pioneers as
IBM, GE, Cisco Systems, and Dell Computer (Turban
et al. 2000).
AN INTEGRATED E-COMMERCE PLANNING PROCESS ©
The heavy emphasis on tactical preparedness in textbooks
and business publications sends three misleading messages
to ‘brick-and-mortar’ companies: 1) that e-commerce only
requires a mastery of tactics; 2) that it is acceptable ‘to act
now and plan later;’ and 3) that integration is not a critical
component to e-commerce strategy. While no one can
argue against the importance of tactical execution, this
review suggests that the next generation ‘click-and-brick’
organizations will have to master both strategy and tactics.
To help companies improve their strategic preparedness
while Žlling an important void in the literature, the next
section will propose an Integrated E-Commerce Planning
Process©.
Selecting the Right E-commerce Business Model
To maintain the right level of competitive intensity requires
that management periodically review and reengineer the
company’s value chain. Over the past decade, the focus has
been on shoring-up the company’s supply side as these
beneŽts drop quickly to the bottom-line. More recently,
companies are beginning to explore ways to raise their
demand-side effectiveness, which involves identifying,
acquiring and retaining proŽtable customers. E-commerce
meets both requirements by reducing cycle time and
time to market, decentralizing decision-making, sharing
knowledge across operations, raising customer retention
levels, and building proŽtable up-stream and down-stream
alliances (Turban et al. 2000).
This review suggests that the most effective way to
maximize e-commerce investments is by adopting a
comprehensive, yet exible planning process. In fact, an
Integrated E-Commerce Planning Process© (Figure 1).
A process that focuses on selecting the right e-commerce
business model, building an effective e-commerce strategy,
and creating an integrated e-commerce plan.
Goodstein et al. (1993) suggest that answers to four
questions can assist management in selecting the right
business model. First, ‘How competitive is the company?’ It
is critical for management to ascertain how e-commerce
will raise the company’s competitive intensity. Once a consensus is reached, management can then determine ‘How
receptive is the company to risk?’ For example, a recent
nationwide poll of American industrial Žrms found that
seven out of 10 companies only offer an information
storefront due to the complexity and costs associated with
conducting online transactions (Vijayan 2000). Citibank is
Building an Effective E-commerce Strategy
Three steps are required to build an effective e-commerce
strategy. First, incorporating the strategic business modelling input described above. Second, administering a
comprehensive, yet exible strategic planning process.
Third, creating an integrated e-commerce plan by aligning
e-commerce strategy with conventional business strategy.
This discussion will focus on the second and third steps.
To address the absence of an integrated ‘brick-and-mortar’
e-commerce planning model, a review was made of the
authors (Amor 2000, Kalakota and Robinson 1999, Kleindl
2001, Turban et al. 2000 and Ware et al. 1998) who
studied the planning behaviour of successful e-commerce
companies. Four common planning components surfaced
(Goal Formation, Strategy Development, Resource
Deployment and Outcome Metrics) which were integrated
into Figure 1.
Goal Formation involves the development of a plan
for the effective management of a new business activity.
Goals not only crystallize the importance of a new business
activity, but also provide a basis for determining what it is
going to contribute (Ware et al. 2000). E-commerce goals
can take one of three forms: 1) transformational goals,
which focus on altering the way the company does business;
2) productivity goals, which focus on process improvement
or cost cutting; and 3) effectiveness goals, which focus on
revenue generation (Goldberg and Sifonis 1998, Useem
1999). As was noted earlier, the primary emphasis of the
surveyed ‘brick-and-mortar’ companies was to improve
productivity.
Strategy Development is the means to achieve a company’s goals, and can take one of two forms. Competitive
strategy may include: a direct frontal assault of a competitor
such as Barnes and Noble’s reaction to the entrance of
Amazon.com; a anking manoeuvre where a company
seizes marketshare by attacking a competitor’s weak spot
like E*TRADE, Ameritrade and e-Schwab; a structural
barrier such as providing the fullest-range of services;
or a reduction in inducements to enter the market by
operating at minimum proŽt levels. This form of strategy
may also be used to provide new services, expand market
research, strengthen channel relationships, or increase the
Strategic Preparedness
a good example of a company that had to discard its legacy
business model to remain competitive with such Žrms as
E*TRADE and Charles Schwab (Kalakota and Robinson
1999). Therefore, ‘What is the strategic orientation of the
company?’ To maximize e-commerce involves changing
more than one facet of the business. For example, Charles
Schwab won because it was willing to risk cannibalizing its
old ways of doing business. Cisco Systems won because
every person in the company recognized and endorsed its
transformation to e-business (KPMG 2000a). Finally,
‘What competitive advantages currently exist in the
company?’ To strengthen the company’s competitive position, management needs to revisit each business process
e.g., inbound logistics, operations, outbound logistics,
marketing and sales, and service (Porter 1985).
Answers to these questions will help management select
the right e-commerce business model – whether it be to:
1) lower costs and increase the speed in obtaining raw
materials/Žnished components with Extranets; 2) lower
costs while streamlining production processes through with
ERP software; 3) improve communications and advance
new product development with Intranets; 4) identify
new markets, products and service opportunities with
e-commerce; or 5) provide better pre and post-sale service
with the Internet (Kleindl 2001).
Kenneth A. Saban
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Figure 1. Integrated E-Commerce Planning Process ©
32
Electronic Markets Vol. 11 No 1
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33
responsiveness to customers and business partners (Amor
2000). For example, Ocean Spray Cranberries Inc.
established an extranet to help its growers make better
decisions about harvesting their cranberry crops. After
dropping off a load of berries, growers can click-on the
extranet for an analysis of their crop, pricing, and competitive information (Business Week 2000). Conversely,
cooperative strategy is geared to halting competitive entry
into a market through e-Ventures, e-Partnerships, and
e-Alliances (Turban et al. 2000).
The third component is Resource Deployment, which
includes the allocation of resources, the creation of crossfunctional teams, as well as the redesign of customer
interfacing processes. It is important to insure that the
appropriate resources are set aside (Stuart 1999). For
example, that all the hardware and software upgrades have
been made, that the technological architecture supports
e-commerce, and that a dedicated cross-functional team
(e.g., project leader, user manager, Web master, technical
employees, and related staff members from marketing,
sales, customer service, supply chain, etc) is in place.
Goldberg and Sifonis (1998) warn about the dangers of
assuming that the company’s current staff can carry the
full load of developing and managing a Web site. The reason, e-commerce requires a speciŽc skill set in such areas
as changing technologies, security, infrastructure and
programming, specialists will be required inside unless the
company decides to assign work to outside consultants.
When designing the front and back room processes, it is
also important to consider both corporate and customer
expectations. For example, Hallmark’s Web site was
revamped after the company learned that its customers
wanted to be informed about important dates through
follow-up e-mail messages (Seybold 1998).
The fourth component is Outcome Metrics, which
evaluate the impact of the company’s e-strategy on
the organization’s performance. While the evaluation of
Goals is perhaps the most crucial step in the planning process, practitioners often falter when developing outcome
metrics. The reason, they believe that once the Web Site is up
and running, all else will take care of itself (Ware et al. 1998).
Turban et al. (2000) suggests that there are three dimensions to Outcome Metrics: Standards, Measurements and
Adjustments. Standards represent the business requirements
and design documents that were used in forming the
company’s e-commerce strategy. They not only focus on
outcomes, but also on changing market conditions. The
selection of measurements (cost reductions, productivity
improvement, sales, brand awareness, etc) is the next
consideration. To insure that a company’s e-commerce
measurements and goals are in sync, outcome metrics
should be addressed early in the planning process. Finally,
due to the changing business landscape, the company will
more than likely have to make some adjustment along the
way ranging from product offerings to product pricing. It
is therefore important that exibility be designed into the
overall planning process.
Once the e-commerce strategy is developed, the next task
is to align it with the company’s conventional business
strategy. The need for integration was highlighted in
a PricewaterhouseCoopers study that showed 93% of corporate Web sites were not linked to back-ofŽce operations
(Fortune 1999). A recent study of some 331 executives by
KPMG (2000b) also showed that one of the most formable
barriers to implementing e-commerce strategy was the lack
of integration between front- and back-end systems. Such
evidence led Ware et al. (1998: 307) to conclude that:
‘We know of no company that has successfully launched a
Web-based business that was fundamentally inconsistent
with its existing strategy and current marketplace strengths.
Your business strategy reects your organization’s core
competencies, its credibility. Ignoring those powerful
resources when you launch a Web site is not only silly, but
it can also lead to outright disaster.’
E-commerce strategy integration provides three beneŽts:
1) it enables management to close any performance gaps
before an e-commerce strategy is applied; 2) it creates a
uniŽed plan of action which all operations, departments
and employees can endorse; and 3) it reinforces the fact
that e-commerce should be viewed as a means to improving
the value chain, and not an end unto itself. The last step to
strategic preparedness involves addressing the managerial
implications to launching an integrated e-commerce plan.
MANAGERIAL IMPLICATIONS TO LAUNCHING AN
INTEGRATED E-COMMERCE PLAN
Implementing an integrated e-commerce plan requires a
delicate balance between urgency and deliberation. ‘Going
too slow . . . may mean that you will miss a millennial
watershed in economic history. Going too fast – rushing
into the Želd without learning the rules (or being prepared) – can get you trampled in the ongoing stampede
of enthusiastic Netwits whose Web sites, all graphic bells
and whistles, have no strategic pull’ (Siebel and House
1999: 64–5).
Based on the literature, there are six managerial implications to launching an integrated e-commerce plan:
leadership; innovation; organizational learning; structure;
support; and resources.
The Žrst implication involves the leadership of a company
as they set the vision, oversee the development of strategy,
and assign the resources to insure that any new business
process i.e., total quality management, continuous improvement or e-commerce is successfully implemented. This
requires a new style of leadership. One that creates an
innovative environment, is less structured, fosters organizational learning, promotes cross-functional teamwork, and
encourages risk-taking. The new style also demands that
CEOs have a conceptual understanding of the Internet and
the World Wide Web in order to help shape and direct the
company’s new business models. The last requirement
is demonstrating the company’s commitment to becoming
respectively (Diederich 1999). Resource commitment not
only involves short-term investment, but also contingency
plans to deal with changes in technology, competition
and the economy. E-commerce is best suited to companies
that have the time and resources to invest. If either is
missing, management may want to lower its e-commerce
expectations or delay adopting e-commerce altogether.
By addressing these implications, management will have a
better sense of the challenges associated with implementing
an integrated e-commerce plan, and by doing so will have
taken a major step to maximize the return of the company’s
e-commerce investments.
CONCLUSION
• What evidence is required to convince top-management
that strategic preparedness should preclude tactical
execution?
• Do the current incentive systems support strategic
preparedness?
• What is the relationship between tactical preparedness
and strategic preparedness?
• Can preparedness be correlated to outcomes? If so, what
combinations produce the best outcomes?
By gathering empirical evidence to these and other
questions, academics, practitioners and researchers will gain
further insight on the best ways to maximize e-commerce
returns.
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As competitive conditions rise, CEOs will continue to
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However, rushing to Žrst build a Web site has not shown
to produce desirable results. Using a combination of
descriptive research and case histories, this paper proposed
that strategically prepared companies are in a better
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the right e-commerce business model; building an effective
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While clarifying many strategy-related questions, this
paper has suggested many others. SpeciŽcally:
Kenneth A. Saban
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a ‘bricks-and-clicks’ organization. For example, Arthur
Ryan, CEO of Prudential Insurance, publicly stated that
his company will spend $1.0 billion over the next
several years to update its IT infrastructure (Kalakota and
Robinson 1999).
The second implication involves establishing the right
corporate culture. To create and manage an innovative culture requires a different rule set. For example, according
to Kalakota and Robinson (1999: 73), Cisco Systems
‘believes that continuous innovation demands that organizations build on change (not stability), organized around
networks (not a rigid hierarchy), based on interdependencies of partners (not self-sufŽciency), and constructed
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To advance a company’s business model and innovativeness also requires a more advanced learning style.
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learning style: 1) create a knowledge culture; 2) set a value
on the knowledge created; 3) democratize knowledge;
4) use knowledge tools e.g., email, intranets, databases, etc;
5) understand what the company knows and does not
know; 6) act on knowledge; and 7) train workers. Maritz, a
$2.0 billion sales incentive company, is a good example of
how management uses its Intranet to organize sales pitches.
Background on different product groups is merged with
frequently asked questions by the customer, which in turn
forms a customized sales presentation.
The fourth implication involves creating an organizational structure that enables employees to link with peers
throughout the company. The use of company Intranets
is allowing multinational companies to form teams of
individuals who may not have been able to work together
in the past. For example, Xerox is employing a community
approach to projects where the most suited employees for
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information (Kalakota and Robinson 1999).
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unparalleled support from across the company. Therefore,
it is important that e-commerce goals support each
operation, function and employee. By doing so, roadblocks
are removed before the process begins. For example, Sales
& Marketing Management found that because sales reps
relied on traditional technologies (telephone and cellular
phones) versus advanced technologies (notebooks and Web
sites); the payoff for e-commerce never materialized
(Cohen 1997).
The last implication involves resource deployment. The
cost of implementing e-commerce supercedes the purchase
of hardware and software. According to a recent poll 79%
of the cost was spent on labour and systems integration,
with software and hardware accounting for 10% and 11%,
34
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