CONSULTING IN E-BUSINESS

E-business consulting is a broad subject covering everything from advice on strategy to building an Internet site, to implementation interventions in business activities. It includes strategy formulation, marketing, IT infrastructure development, financial management, human resources developments – in short, every part of business activity. It also includes services provided to public administration, where the term “e-government” is increasingly used (see section 26.5).

This chapter focuses on some areas that are specific to e-business consulting. It aims to convey an appreciation of where the “e-part” within management consulting can add real value. It should be noted that the speed of development of e-business is extremely fast and the landscape is changing continuously.

16.1 The scope of e-business consulting

The key aspect of e-business is its focus on digitization of business processes. The universal connectivity permitted by the growth of the Internet and a standardized way of communicating across different computing platforms is shifting the balance of importance from the physical world to the digital world. While in the past physical assets, such as production capacity, transport capacity and labour, were strategic assets, today information, digital network channels and knowledge are considered of higher value.

Figure 16.1 illustrates the types of e-commerce relationship between buyer and seller, according to whether the relationship is a business-to-business (B2B) or business-to-consumer (B2C) interaction. The upper two quadrants are traditional business interactions; however, the lower two quadrants are worth some attention. The C2C quadrant is not new in that the second-hand goods pages in newspapers have long offered a channel for matching buyer and seller. What is different is the enormous reach and volume that trading sites, such as

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Figure 16.1 Classification of the connected relationship

eBay.com, have achieved in a relatively short time. The C2B box may not be strictly correctly labelled as consumers rarely sell to business. The quadrant is however relevant as it reflects the phenomenon of consumers creating virtual and short-term cooperatives via the Internet, turning the tables on business by inviting “tenders” for supply of goods and services. A good example of this type of cooperation is letsbuyit.com.

In this chapter we will use the now popular term “dot.com” to refer to a primarily Internet-based business which uses the Internet to transform or significantly reshape a market or business process. A good example of a dot.com is Amazon.com, which has reshaped the book retailing market. Companies such as Yahoo, which have created new markets on the Internet, are also dot.coms. The term “bricks-and-clicks” refers to businesses in existing markets that use IT technology to transform business processes and that communicate with customers and partners via the Internet. An example is ThomasCook.com, which transferred a good part of its business of selling holidays and travel to the Internet. Cisco Systems, with its end-to-end Internetconnected business processes, provides another example of how companies can achieve competitive advantage in a traditional market. In fact, the bricks-and- clicks approach is as much about organizational speed, flexibility and an ability to make things happen as it is about Internet technology.

This approach has to be compared with that of the vast majority of companies, which at best have a static Web site with no commercial transactions, and use email only for internal communication. These companies will be referred to as “bricks-and-mortar” companies; some of these aspire to move their business to a bricks-and-clicks set-up.

The focus on digitization of business processes creates a technology-based overlay on functional and interdisciplinary management consulting. The

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consultant working on an e-business consulting assignment therefore needs additional expertise in this area.

To give guidance on where e-business consulting is often used, we first segment the market into different types of organizations with differing consulting requirements. Figure 16.2 sets out the structure that will be used in this chapter.

Much of the e-business consulting for bricks-and-mortar and bricks-and- clicks companies builds on existing processes. In addition to business firms, this group also embraces government (public administration) organizations. The main differences between this group and the dot.coms are:

●The dot.com entrepreneur or team often lacks the skills required to get the business off the ground.

●The perceived need for fast launch and business development makes outsourcing and buy-ins by dot.coms a large part of the IT infrastructure and business processes.

This contrasts with a bricks-and-mortar company, which has an existing organizational structure and IT infrastructure structure and is generally well established in a mature and slow-moving market.

A hybrid of the two types is a bricks-and-mortar organization that sets up a separate dot.com, fully funded, in partnership with other companies or through venture-capital providers. These hybrids are often connected to traditional (legacy) systems and company cultures with the added challenge of competing in a new, fast-moving, entrepreneurial and risk-taking business environment.

It could be argued that the biggest shortfall in management expertise is in bricks-and-mortar companies, whose managers lack e-business understanding and IT knowledge. Indeed, much e-business management consulting is about filling this gap. The consultant must therefore (a) possess adequate expertise in both business and technology, and (b) ensure that the organization has internalized the new business requirements before closing the assignment.

The e-business consulting field can be viewed from either a functional perspective or a market perspective. The functional view would divide the field into four disciplines:

●strategy development,

●creative interface design,

●technology deployment,

●organizational implementation support.

The market perspective, whether it is a B2C or B2B proposition, changes the balance of importance between the four disciplines above. A B2C proposition requires first-class skills in Web site design, so that the look, feel and ease of navigation of the site encourage purchases and repeat visits. For instance, the content and design of a Web site for the travel industry needs to

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respond to the customers’ holiday dreams and aspirations. In a B2B proposition, although it is important that the Web site is attractive and easy to navigate, the crucial factor is its integration with back-office systems and realtime information from various sources. The technology integration in B2B either extends directly into the customers’ enterprise resource planning (ERP) systems or connects with customers via online marketplaces and portals.

In migrating to a bricks-and-clicks environment, the degree of success will depend on the strategy, the Web site design, and choice of technology, but also critically on how well the organization is able to implement the resulting organizational changes. The historical record of technology-led change should teach us this; however, it is fascinating to observe how often the organizational implications are neglected.

E-business consulting in bricks-and-mortar and bricks-and-clicks organizations, both in business and government organizations, can be divided into the external perspective (value-chain connectivity) and the internal perspective

(internal processes). In some areas the issues are the same but the viewpoint is different. In particular, the internal perspective often has a strong element of organizational impact.

16.2Bricks-and-mortar and bricks-and-clicks: value-chain connectivity

Strategy formulation

Much has been written about the demise of the traditional strategy analysis tools, such as PEST (political, economic, sociocultural, technological) analysis of the external environment, industry analysis such as Michael Porter’s five forces analysis, value-chain analysis, generic strategies such as differentiation and achieving lowest-cost positions, and core competencies. The reality is that these tools and techniques are still valid for use in highly uncertain business environments such as the Internet. In fact, they provide frameworks for analysing business strategy in competitive environments (see also Chapter 12). It can therefore be concluded that the traditional strategy consulting firms, such as McKinsey and Boston Consulting Group, will continue to offer value and thrive in the Internet era.1

What is also clear, however, is that the strategic intent must be evaluated substantially more frequently in the new environment. The traditional 3-5 year planning horizon no longer holds and organizations must be prepared to change direction immediately in the face of new developments in the business environment. The question of potential new competitors must be taken very seriously and asked much more broadly than in the past. Analysis of the core competencies required to compete in a market is increasingly important as more and more of the organization’s value is based on its intellectual capital. New competitors may find the barriers to entering a market relatively low if they

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