Relevance and importance
Genuine and radical transformations have been shaping the economy
and business environment in recent years. Information and communication
technology have fundamentally altered many of the requirements for
building and managing a successful business. In many cases, the
internet has enabled the SME to not only compete with much larger
competitors, but to build radically different and more successful
business models. The emergence and growth of the internet demand
that every organisation develops a strategy and decides to what
extent it intends to use the web for commercial transactions or
promotion.
Overview
A company may benefit from using the web on three dimensions -
internally, externally and in the market. In addition to achieving
lower costs in all three areas, business processes or transactions
can be transferred to electronic means.
Internally:
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Streamlined processes and decision making. |
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More efficient administration, better information, faster
response. |
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Support of core competencies. |
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Reduced need for physical infrastructure with online presence.
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Can reduce the need to hold stock. |
Externally:
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Support and enable supplier and collaboration management.
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Facilitate and enable outsourcing arrangements. |
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Build forums and web communities. |
Market:
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Empowers marketing. New forms of promotion and reaching customers. |
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Access many more customers cost efficiently. |
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Support and enhance customer service. |
Top
Recommendations and practical tips
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Consider the prevailing and traditional business models in
your industry and what can be learnt from them. |
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Map the current business landscape, bringing out the assumptions
behind the existing business model. |
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What features and benefits from existing business models can
be transferred into the new system? |
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Understand if and why a change is needed. What trends and
issues are forcing a rethink of the current business model?
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Learn lessons from examples of dot.com and e-commerce failures.
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Recognise the importance of partnerships in achieving a successful
business model, e.g. technology partners. |
Top
Warnings and potential pitfalls
Despite the many potential advantages, embracing e-commerce may
present a number of difficulties:
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Moving the business to a web-based platform is not the solution
for everything. A business model still needs to have a sound
concept, a significant differentiator and be executed successfully.
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New business models using the web are more than just a means
to reduce costs. |
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Consider how your existing competitors might react. |
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As the internet can extend the reach of your business to
new customers it may also expose the company to foreign competitors. |
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Consider the complexities a new business model may introduce
to the company and the management implications. |
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Web-based trading may present significant and costly security
problems. |
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Understand the full extent of the technology and the other
associated costs of the new model. |
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Some customers may be more comfortable with tangible aspects
of the business. |
Top
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Identify alternative approaches
Has
your business model changed radically over the past few years to take
advantage of the transformations that have shaped the economy and business
environment? (Use the list under 'Overview' below as a checklist.)