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Building E-Enterprises
From: Cambridge University Press
| By:
Faisal Hoque |
EDITOR'S INTRODUCTION |
First, there was e-commerce: product information online with credit-card purchases. Then there was e-business, with personalized content and dynamic product information. The third phase, business-technology expert Faisal Hoque argues, is e-enterprise, where corporations recognize the Net as a strategic tool that touches every aspect of the enterprise--both on the Net and in the real world. In this essay, Hoque offers some signposts to this third age as he outlines the fundamentals of building an e-enterprise. |
 ecoming an e-Enterprise doesn't happen on its own. It's the result of following a methodical, objective, results-driven approach that reflects the experience of industry leaders. Furthermore, developing an e-Enterprise strategy can't simply be outsourced to consultants. It represents the core of the enterprise, and no consultant--no matter how much of an expert he professes to be--knows more about your business than you do. |
Making the transition from e-Commerce to e-Business to e-Enterprise means understanding and anticipating the changes that must occur in every aspect of the enterprise: culture, people, business model, organizational model, application model, management processes, and technology. |
Culture
Although corporate culture is largely an intangible asset, few would deny that it plays an essential role in shaping the character and effectiveness of the enterprise. In the earliest days of e-Commerce, the culture of most Web initiatives was marked by chaos (even when such initiatives popped up in stable old-line companies). Although most employees had heard the hype surrounding the World Wide Web and the Information Superhighway, few had any real concept of where or how it would affect them personally, let alone the enterprise as a whole. |
Early Net initiatives were led by individual visionaries who broke away (or sneaked away) from the pack and established the first corporate beachheads on the Web. Less farsighted pioneers quickly followed, playing catch-up the only way they knew how: imitation. |
This led to .com mania, where new Web businesses sprung up overnight, either fueled by radical vision or by fear. Hype ran wild. IPOs skyrocketed. Market capitalization went through the roof. On the whole however, the culture of e-Commerce was oddly reactive: People stood on the brink of a new age, knowing that change was coming but not really knowing what to do. |
In the e-Business era, .com mania has begun to settle. More new initiatives are led by corporations taking proactive measures to harness the Net to their everyday business activities. Their focus is less on becoming an Amazon.com or eBay and more on developing a sound business model where carefully created internal and external processes embrace the Net. |
In e-Enterprise, culture will come full circle back to the corporation as a whole. Instead of leading point projects that address one process at a time, managers will focus on the complete enterprise. Development of new architectures with supporting applications and processes will be iterative and ongoing. Special emphasis will be placed on processes that integrate internal and external business systems, thereby empowering business leaders to make strategic decisions based on the Net. |
People
During e-Commerce, the focus was on the whiz kids of technology. Fortune 500 corporations hired seventeen-year-olds to do HTML coding. Twenty-one-year-old Java programmers could command astronomical starting salaries with little if any experience. Because Web site initiatives in most corporations had virtually no strategic value at this stage, executives were less hesitant to hand such tasks to green newcomers. The Net brought new technical skill sets to the forefront of computing, and the supply of programmers well-versed in these disciplines was inadequate. |
Proving to be a perfect economics model, however, supply soon caught up with demand. Simultaneously, enterprise focus shifted from overcoming technology obstacles to process design. Suddenly, business knowledge and process engineering experience meant as much as programming knowledge. A new class of employee began to take charge: the enterprise developer whose core competency is modeling enterprise processes and developing e-Business applications. |
In e-Enterprises, individual employees will view the Net much as they do any other strategic business thrust. Instead of isolated specialists leading the charge, careful analysis and return-on-investment (ROI) projections will guide e-Enterprise initiatives. Applications will be strategically focused. The most valuable asset will be the knowledge worker who can integrate business and technology into a coherent strategy. |
Business model
Most early e-Commerce successes were startup companies with little if any presence in conventional markets. These pure Net plays built their reputations by aggregating content and wowing the market with numbers. Amazon.com rose to fame by becoming the world's biggest bookstore. eBay boasts millions of auctions every day. Content sites such as Time Warner's Pathfinder can post every story from every issue from every one of their magazines. |
e-Commerce was also the heyday of venture capital funding. Entrepreneurs with little experience could get access to working capital like never before as investors clamored to get in on the next big thing before its inevitable IPO. |
In the e-Business era, the startup craze has slowed and Fortune 1000 enterprises are leading the charge through business process aggregation. Still a bit unsure of where Net initiatives fit into their overall strategy, corporations will sometimes start new online commerce divisions only to spin them off. |
Alternately, many Fortune 1000 companies are signing long-term agreements with pure Net plays to leverage their own brand recognition with the startups' perceived technology and niche position. Finally, we are seeing dramatic consolidation among Net companies as traditional software companies spend exorbitant sums to round out their product lines with new Net offerings and position themselves as Web players. |
e-Enterprises, by contrast, will recognize that knowledge workers form the core for success on the Net. They will focus on aggregating the most talented and experienced personnel into process-oriented teams. These teams will then concentrate on integrating processes that flow between enterprises. The result will be co-operative networks of virtual corporations that are linked in cyberspace to share information for mutual strategic advantage. |
Organizational model
The role of the organizational model, or org model, in the e-Commerce phase depended on whether the enterprise considered itself primarily a player in conventional markets or a pure Net play. |
Traditional corporations had learned the lessons of horizontal integration and were primarily focused on internal functions for individual product lines and departments. Because developing an early Web-presence was typically inexpensive and wasn't considered much of a strategic move, corporations often delegated Web site design and maintenance to small internal IT teams. |
Startups often struggled to maintain an efficient org model through periods of dramatic growth and change. Many startups were entirely driven by the core founders, and maintained the loose models typical of young companies, even as they hired thousands of new employees and diversified into new and varied markets. |
In the e-Business phase, corporations have taken the first steps toward a cross-organizational approach to Net initiatives. To manage these hybrid installations involving stakeholders from multiple departments and even multiple enterprises, some companies have taken a federated approach to ownership, maintenance, and upgrading. |
Simultaneously, many organizations are recognizing the strategic value of e-Business and creating new internal divisions to lead their forays onto the Net. Directed by the CIO, an executive VP of e-Business, or a newly created e-Business czar, these divisions often report directly to the senior executive team while integrating their activities with multiple other entities inside and outside the enterprise. |
As e-Enterprises complete this extension of the traditional org model, distinct lines between individual corporations will blur as processes become more entwined. Partner organizations will evaluate strategic opportunities in a collaborative fashion, responding to market demands and delivering complete solutions to customers. New e-Enterprise initiatives will reflect the shared ownership of multiple corporations through integrated partner sourcing and joint responsibility for design and development. |
Because this kind of activity will represent the most critical strategic advantage for the enterprise, the CEO will take direct responsibility for overseeing e-Enterprise platforms and application design. |
Application model
Early e-Commerce plays were primarily B-to-C commerce initiatives focused on building online marketplaces populated with consumer hard goods. Once again, Amazon.com and eBay come to mind. Both sought to aggregate customers and build community by selling a wide range of products and delivering personalized content. |
In e-Business, the models for Net business have begun to diversify. A few focused application types such as B-to-B procurement and virtual marketplaces are getting most of the attention. However, other non-traditional models such as B-to-B online communities, software sales, multimedia, knowledge content areas, and excess inventory auctioning are also carving out presences on the Web. |
e-Enterprises will complete this diversification by supporting a broad variety of mission-critical inter-organizational applications. Even the most unique enterprises in niche industries will use visual modeling tools and repositories of open software components to build applications for their particular needs. |
Management processes
Because it was propelled by reactive rather than proactive forces, e-Commerce management was largely situation-driven. Managers were usually middle level employees with very little strategic responsibility. They focused on day-to-day projects that were designed, implemented, and rolled out one at a time. This led to a disjointed management view of e-Commerce initiatives. |
e-Business, on the other hand, is business process-driven. Executive managers--typically from a distinct e-Business division--focus on uniting single-point applications into large e-Business platforms that share information and data in real-time. Simultaneously, they maintain a long-term view of the business that envisions not only the next revision of an application, but also the overall goal and direction of Net initiatives. |
e-Enterprises won't be able to afford qualitative, hunch-based decision making for their strategy and application development. Instead, corporations will employ a methodology designed by industry experts. This process will be driven by methods, the creation and support of new business models, and continuously forecasting and measuring ROI on Net investments. |
The goal will be complete solutions on an enterprise-wide scale. These platforms will be completely integrated with existing processes and systems. They will be flexible enough to support add-ons, reengineered procedures, and new business models as they come about. Most importantly, development and modification of the e-Enterprise platform will be an ongoing effort intimately related to every part of the corporation. |
Technology
Lastly, technology must undergo a massive change en route from e-Commerce to e-Enterprise. In early e-Commerce, technology advances provided the catalyst for business opportunity. Consider the revolution brought about by the release of the commercial Web browser. Before Netscape released its Navigator product in 1995, public Internet access was limited to proprietary online services such as AOL, Prodigy, and CompuServe. Would-be online merchants had to strike deals with these gatekeepers before gaining access to individual surfers. Innovation was mostly limited to large firms signing long-term agreements to be featured on a particular online service. |
The ubiquitous Web browser smashed barriers to entry on the Net and new .coms sprung up left and right. Simultaneously, an ever-widening audience moved online and became prospective customers. |
In e-Business, technology is a driver that lets corporations automate and improve core business processes. In direct contrast to e-Commerce, which relied primarily on client-side technology advances to enable new features, e-Business innovation is driven by server-side technology advances such as Java servlets, full-featured application servers, and dynamic content generation through integration with corporate data systems. |
Technology has begun to be accepted as the norm rather than a dangerous new resource by most organizations. Companies are less hesitant to support new industry standards and develop new tools and architectures. In e-Enterprises, however, technology will play the role of a passive enabler. True change and innovation will come directly from strategic business leaders. |
This technology environment will depend on a ubiquitous network supported by open, published standards. Enterprise technology resources will be distributed across this network. These resources will be an even mix of new, cutting-edge products and standards, existing safe choices, and left-over legacy systems surrounded by new wrapper code to make them Net savvy. |
The changes in each of these seven areas are dramatic. Corporate leaders should not underestimate the preparation and resources that will be needed for a smooth transition to e-Enterprise. Systems vendors may offer guidance, but they have an ax to grind. Objective outside experts, with experience leading other corporations through the transformation, can offer proven methodology and independent verification and validation. But to be really successful, you must recognize that your own intensive knowledge of your business is the most critical success factor. |
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