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The Business Case
'Online technology is the key for small enterprises to become efficient,
effective, productive and profitable' (Delaney, 2001).
E-Business is now seen as a key determinant of competitiveness and
a significant driver of economic growth. Small service providers
need to embrace E-Business to stay competitive.
In this section we will deal with the Business reasons for implementing
E-Business.
The topics covered include:
- Reasons for going online
- Setting achievable objectives
- Return on Investment
- Disintermediation
- Reintermediation
- Cost savings
- Bigger market
- E-Business Strategy
- Automate, Informate, Transformate, Innovate
Reasons for going online
'The two best reasons for having an on-line presence are to save
money and to make money. A third reason for going on-line could
be to increase brand and company awareness, but this is more difficult
to quantify' (Small Firms Association, 2001). The Internet offers
business a broad range of benefits including access to new markets,
potential cost savings and a new marketing channel. In some cases,
market forces or commercial pressures may dictate that your business
goes on-line in order to retain a competitive edge.
Many SMEs have Internet access - 87% according to 3Com's data networking
report (November 1999) - but only 41% have their own website. Over
50% had no plans to initiate any form of E-Business (SFA, 2001).
An OECD survey has shown that the most significant barriers to adoption
of E-Commerce include a lack of awareness of E-Commerce and uncertainty
about its benefits. The Internet has three big benefits for business:
- Speed
Sending business correspondence by email and delivering services
via the web has an advantage over normal business in that they
are much faster delivery methods
- Effective Marketing
Global markets may be entered at minimal extra cost. E-Commerce
also allows a company to react quickly to market changes, and
this can be pivotal to success in a competitive environment. New
services may be easily added to the website and those that are
not popular can be removed, if necessary. Different services may
be showcased depending on the time of the year and other factors
and all at a fraction of the cost it would take to do this using
the traditional marketing media of television, radio and print.
Through the use of portal sites and affiliation marketing, communication
between your site and relevant businesses is also easily achieved.
- Cost-efficiency
E-Commerce can lower costs for the business in a number of
ways. These include
- The role of the intermediary can be reduced or eliminated. This
allows for cost savings to be passed to the customer.
- Allows for more direct interaction with the customer. The transaction
cost of processing an order electronically is lower than using
either of the more traditional methods (In person or by telephone)
- Allows the business to appear to be larger and more efficient
than it is and all at a lower cost than in the physical business
world.
- If the Pure Play paradigm is adopted, the paperless office becomes
a reality. In theory, all the business processes including procurement,
sales, marketing and order fulfilment could all be done from a
single computer in the office.
Setting achievable objectives
'Firms who initially identified at the pre-planning stage of their
Internet site that their products or services were suitable for
sale over the web are currently generating more direct sales over
the internet' (Golden and Griffen, 1999). This implies that it is
essential that the business carefully plan its E-Business strategy
and not rush things just to catch up with competitors who are already
online. The speed of the Web is an advantage to business but it
is important that the website is not launched before it is ready.
By proceeding sequentially through the 3 Stage Model, the business
should gradually evolve into an E-Business and discover the extent
to which it's services can be provided online.
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