So you've decided the electronic frontier is the place for your company to be. You understand that communications technology is changing the business landscape, opening new territory to settlement, and you want to haul up and join the e-business wagon train. Malcolm Hutchinson suggests how you might go about it.
To tackle this new frontier, you'll need a plan, an e-business road map, and unless your company is a technology consultancy, you'll probably need to look at recruiting someone with skills and experience in electronic business. What is an e-business strategy? "With e-anything the goal is to have a strategy in place to ensure you remain at the cutting edge of e-business development, ensuring you remain competitive with others in your market sector," says the business unit manager for IT@Manpower in Wellington, Brian Powell. The e-business team leader at Unisys in Auckland, Andrew McNicholl, believes that far from simply opening an Internet store-front, building an e-business strategy offers opportunities for improving business performance through connectivity. Freer information flows within the organisation, between customers and the organisation, and with suppliers can enable costs to be cut, opportunities to be identified and new sources of revenue to be created. McNicholl says all business should have some form of e-business strategy. "Everyone needs this, right from the one man builder to huge the corporation. The Internet will affect business and you have to understand what the potential impact will be, and have strategies for reacting." As an example, McNicholl gives a building trade supply chain. The chain has its own Internet store-front, and provides links to a list of accredited builders on its site. "If you're a builder, and you're not aware of the opportunity offered here, you could be losing out on potential revenue," he says. Although having an Internet presence is important, the Web is not everything that e-business entails. "It's about increasing efficiency through better information flows across the organisation," says McNicholl; "looking across all business processes throughout the organisation. Most of the predicted benefits of an e-commerce-enabled organisation are not from selling on the Net." To develop an e-business strategy you should be looking across your company's entire value chain for opportunities for business process improvement. Developing an e-business strategy is a matter of understanding how each business is different. The impact of electronic commerce will therefore be different for each organisation. McNicholl says there are three fields of examination his team uses when building an e-business strategy: what industry the business is in and what opportunities that presents; then they look at the value chain for ways to reduce cost or improve efficiency; then they list the business' core activities and look for ways those skills can help move the business into other industries. "What industry are they in? If it's an industry like banking or finance the impact from electronic commerce is likely to be substantial whereas, with something like coal mining, the impact is less so, or it will be different," says McNicholl. "What are the core process skills? See how these can potentially be applied to different industries. Often an organisation will have skills they can use to enter other industries," says McNicholl. "With the Internet, barriers to entry are potentially a lot smaller. What are the opportunities to leverage those core competencies into other markets which the Internet now permits access to?" All companies sell something, and McNicholl says you should be looking at some kind of Internet channel. "Reach out to your customers through the Internet because typically the costs of contact per customer are low compared with contact by a sales team or call centre," he says. The accuracy of information generated by electronic commerce is also very high when compared with customer surveys and word of mouth. However, you still have to take care. Is the Internet store going to be cannibalising your existing customer base, or attracting new customers? And remember that along with the benefits, e-business can bring potential threats, and sometimes these can sneak up on you. "Five years ago, if you were a major book chain, would you have seen Amazon.com as a threat," asks McNicholl. Building the team About 80% of New Zealand businesses are small and medium enterprises (SMEs) employing fewer than 100 people. Although every one of these businesses should be looking at ways to use information and communication technologies to improve their business practices, cut costs and exploit opportunities, it is only really the largest organisations which will be looking to build a dedicated team of professionals to run their e-commerce strategies. Every business can have someone on staff whose job it is to consider e-business. A small business may have a non-dedicated team of people who fill other roles within the organisation as well. At Unisys there is a nine person team comprising consultants who prepare e-business strategies for client companies. These people come from primarily business backgrounds, but share an interest in technology and its applications in the business world. "I find particularly useful Unisys's deep technical competency," says McNicholl. "Because of that, we are able to take any given strategy and assess whether it is doable in a technological sense." McNicholl believes the right mix of skills on an e-business team is important. Tech-savvy is necessary, but it is more beneficial to make sure the people on your team have solid business skills and understand how your organisation works, and what its goals are. He thinks someone with senior experience in sales and marketing is a requirement, and someone who understands finance is also an asset. In one Unisys client company the e-business team consists of four people: two work full-time on the issue while the other are part time. All are members of senior management. "Senior managers have a broad view of the organisation," says McNicholl. "They can see what's going on all over the company, and have an understanding of the historical context of the organisation. They should be open to exploring new ways of producing their products and services." Resource challenges There is a world-wide shortage of skilled IT people, and all indications are that this is going to get worse in the coming years. New Zealand suffers from the brain drain in this industry, making attracting and retaining good people even more difficult. Graduates in technology are looking at the higher rates of remuneration on offer overseas, and huge student loans are a powerful incentive to emigrate. All of which represents a problem for New Zealand companies looking to build expertise in e-business and compete in an international electronic economy. Building an e-business team, if that is what you and your company have decided to do, is going to cost. "If it's a position you are creating [as opposed to moving someone within the organisation into the e-business team] you are unlikely to get anybody for less than $100,000," says McNicholl. Having decided that you want to build up your e-business people resources, the next thing to do is to start cultivating relationships with reputable IT recruitment agencies. IT@Manpower's Powell says you should examine the accomplishments of the recruitment company as closely as you would the CV of a prospective employee. "Look for a company which has a strong, proven track record in recruiting people from overseas markets, and in attracting back those New Zealand expatriates," he says. When it comes to recruiting people to fill spaces on your e-business team Powell stresses the need to be proactive. Don't just sit around waiting for that perfectly talented, skilled, highly educated e-business guru to show up on your doorstep. "Recruit by being competitive and flexible in remuneration," says Powell. "These skilled people are out there, but they are in short supply, and there is a continual drain of the New Zealand market to overseas. Be proactive when such a person happens by, even if you don't need them right away. As soon as you are presented with the details of a person you think might be suitable, get onto them and get them into an interview. Try to seal a deal with them there and then; these people tend not to stick around." It's a sellers market in the IT recruitment industry, so you have to be aware of what pushes their buttons. Be prepared to offer not only money, but ongoing training, flexible working conditions and career development opportunities. And make an effort to understand the motivation of the person involved. "You have to be flexible as to what the hot buttons for these people are," says Powell. "What are the key needs of the person involved? Training, conditions, career advancement? Money is not the be-all and end-all." Real-world experience is the best way to judge the competence of people when selecting for your e-business team. Powell says you should be doing behaviour and competency-based interviewing to ascertain whether this person really does have the experience you need. Ask for examples of their previous work: where have they developed an e-business strategy? What methodologies did they use and what was the outcome of their time at the last organisation? "There is nothing that will beat a successful track record in developing e-business," he says. "Ask for real-world examples of how they have developed e-business strategies, what methodologies they used." It is better to choose people who have strong business skills than arcane technical knowledge. "It's more important to have an understanding of general business strategies," says Powell. "If someone has implemented successful business strategies in the past they can probably adapt to a new environment. E-business is an extension of normal business. You can implement an e-business strategy in any number of ways."
Convincing the boss Most company bosses are not technical people; they are business people with hard-headed outlooks on business expenditure. McNicholl argues that research and presenting arguments to senior management is just as important as technical knowledge. "For all of our e-business clients, I assign a graduate working three hours a week just researching articles on e-business within their industries," says McNicholl. "It's important to get hold of the right articles for presenting to the chief executive explaining just why they need to be examining e-business impact and opportunities. There is a lot of appropriate reading, challenging the status quo and able to present arguments very well in business terms like return on investment and net present value, or arguing those figures are unimportant. "You need to have good business skills on the team, and to be quite articulate, because unless you can present your arguments clearly to the board or chief executive, you're not doing your organisation justice," says McNicholl. "The needed skills are an understanding of business strategy and an open mind, a willingness to critically examine impacts and opportunities."
The last word Don't think this issue is a passing fad. Telecommunications technology has the effect of reducing distances to zero. New Zealand has for most of its history been isolated from the rest of the world by vast stretches of ocean, and we have often been slow to react to changes in overseas markets. This has all changed. "It is imperative for any organisation to remain competitive, that they do everything in their power to remain at the leading edge of electronic business," says Powell. "Those companies that lag behind in this area will simply disappear."