Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P51 pptx

434
SMEs ECT Reality
Well we’ve had some sort of Web presence for quite
a long time, about three years but we had made
progress over that period and redesigned the site
a number of times but we’d not taken it seriously
enough, I don’t think until probably this year when
we put a little bit more money into it and really
looked to it as something which would support
the value of the brand of magazine itself which
is [magazine name]. It’s the only magazine (…)
publishers and the Web site was designed around
two themes in terms of supplementing the brand
itself, one was to provide additional information
on the product to the consumer and the second
was to provide information to other businesses for
example, potential advertisers in the magazine,
that sort of thing, contact details, up and coming
events, readers holidays and so on, some of which
they get through the magazine. We deliberately
don’t put magazine content online, the idea is that
people pay for it and we see the site at the moment
as being free access. (NP SME case 11).
Quayle (2002) argues that SMEs that devel-
oped e-commerce capabilities have not done so
VWUDWHJLFDOO\DQGKDYH\HWWRHQMR\VLJQL¿FDQWFRVW
and time savings. This is evident from NP SME
(case 5) who owns two Web sites; a catalogue and
an e-commerce site which is not fully functional.
The owner-manager is in continuous discussions
with the change agent to provide a technical so-

lution for the e-commerce site. It can be argued
that developing e-commerce capabilities does
not depend only on internal factors, but equally
depends on the availability of external support
and type of ECT solutions provided and acces-
sible to SMEs.
We have two Web sites, we have a catalogue, a
magazine if you like … and we have an email,
e-commerce thing. The e-commerce site is SQL
server-based which means that if you actually
click it, you call up a database, a pick list if you
like and it is slow and we are talking just now to
[Consultant at Connect] he can improve potential
customer access to it in terms of speed of delivery.
So we get sales from it [site] but most of them are
from the magazine where we get email contact
with enquiries….so we have had business through
the catalogue but not through the e-commerce
site …it is enquiries that lead to business but
not directly, there is always a second stage in it,
we are not directly selling from the e-commerce
site at all hence our continued discussions with
Connect about its effectiveness… It’s still too
slow but as I say that’s since last October, we’ve
been trying to get that speeded up… [Consultant
at Connect] is aware of it, he himself has in the
SDVWEHHQWU\LQJWR¿QGVRPHRWKHUPHWKRGIRU
speeding up the server but although I ask him on
a regular basis, it’s never there next month and
probably the month after, it’s not happening yet.

(NP SME case 5)
Contrary, passive adopters are companies that
mostly outsource update, management and rede-
sign phases. Some, passive adopters have gained
Web authoring skills and manage minor content
update. Their Web sites are in a sporadic state of
content update depending on circumstances and
resources. While other passive adopters update
their site yearly; their Web sites are in a static state
where limited or no content update is evident.
These companies have not established a clear
business objective for their Web presence, and
they are not aware of the need for any strategic
planning to incorporate into Web site develop-
ment and redesign. These SMEs depend mostly
on the change agent or perceived change agent
efforts, and they invest limited resources in the
development and management processes. These
TP SMEs had limited involvement in Web site
development and testing, and they continue to have
limited impact in update and management.
We just had the pictures and told them [Connect]
what we wanted and they designed it…we could
have done anything we wanted to but we just left
it to them because we had no knowledge on it…We
435
SMEs ECT Reality
KDYHRQO\GRQHRQHFKDQJHZH¿QGLWYHU\GLI¿FXOW
to make the changes ourselves…we tried to get in
to change a price and we lost a picture and there

was no way we could get that picture back, so I
went to Connect for some support and they said,
we’ll put it on for you this time but after this we’ll
need to charge you further … [When asked if they
would approach another Web design bureau]…
Not really, it would be too much, we are paying
about two hundred and something to stay with
them a year to host the site, so we wouldn’t like
to change. (TP case 1)
SUMMARY OF FINDINGS
Findings presented in this chapter have shown
that NP SMEs and TP SMEs differ to a large
ex t e nt i n t he i r i m ple me nt a t io n p ro c es s. N P SM E s
are mostly internally motivated in their adoption
decisions. Management enthusiasm and perceived
EHQH¿WVIURPDGRSWLRQHQFRXUDJHGPDQ\RZQHU
managers to gain awareness of the technology and
improve their Web authoring skills, either through
their personal efforts or through the change agent
training. NP SMEs have a favourable opinion of
the technology, initiate the development of their
Web presence, and have more authority and
autonomy in their adoption and implementation
decisions. However, these decisions are limited
by owner-manager Web authoring skills, techni-
cal knowhow, and knowledge of ECT solutions.
Contrarily, TP SMEs are mostly externally moti-
vated by the change agent efforts and support. TP
SMEs adopted a Web presence without forming a
favourable opinion of ECT. They mainly wanted

to experiment with the new technology without
any objective evaluation of their business needs
and resource constraints. Their Web presence was
developed by the change agent, and was mostly
L Q À XH Q FH G  JRY HU Q HG  D QGO L P LW H GE\ W K HV RO XW L RQ V 
provided by the change agent.
SMEs implementation process can be grouped
into four main categories: strategic planning, ad
hoc decisions, sporadic state, and static state. This
categorisation is based on whether the company
depends on internal resources or out-sources the
development and management stages, and whether
WKHFRPSDQ\LVDSDVVLYHRUDFWLYHPRGL¿HUStra-
tegic Planning is evident in NP SMEs that had
the initiative to develop their Web presence, and
overtime developed a systematic approach to the
Web site development and management. These
SMEs outsource the redesign of the Web site,
regard the Web presence as a strategic business
tool, and intend to gradually incorporate ECT
functionalities that meet their business needs.
These SMEs have the chance of encompassing
e-business. These companies are larger in size and
outsourced the redesign and development of the
s u c c e s s i v e We b s i t e s . T h e y h a v e b o t h t e c h n i c a l a n d
¿QDQFLDOUHVRXUFHVWRPDQDJHWKHLU:HESUHVHQFH
in-house. Furthermore, the owner-manager and
staff are better trained in managing their ECT
adoption. However, at the time of interview only
one SME (NP case 11) falls in this category.

Generally, most NP SMEs have a tendency
towards strategic planning, as they have clear
business objectives that govern their maintenance
process. However, their implementation process
is primarily based on ad hoc decision. Most NP
SMEs fall within the ad hoc decision category.
7KH\DUHDFWLYHPRGL¿HUVDQGDUHLQWHUQDOO\
motivated in developing and updating their Web
presence. These companies have reached a stage
of self-reliance, either through their personal inter-
est in Web authoring and/or change agent efforts.
These companies are actively and constantly
FKDQJLQJDQGXSGDWLQJWKHLUVLWHWRUHÀHFWWKH
company’s image and attract customer. Web site
changes and updates are driven by owner-manager
enthusiasm, knowledge of Web authoring skills,
and relative advantage gained. These companies
tend to take a pragmatic ad hoc approach to the
development process. The choices of ECT solution
adopted are based on the owner-manager’s indi-
vidual judgment and experience. Although, these
SMEs tend to outsource major redesign, however,
436
SMEs ECT Reality
they lack the resources to access professional
advice and encompass strategic planning.
Most TP SMEs fall within the sporadic state
or static state. These are companies that are
VWURQJO\LQÀXHQFHGE\H[WHUQDOIRUFHVQDPHO\
the change agent or any perceived change agent,

in both their awareness and adoption of ECT.
Companies within the sporadic state have gained
ECT awareness, Web authoring, and knowhow,
primarily due to the change agent efforts. Simi-
ODUO\WKH ¿UVW :HE VLWHDGRSWHGZDV WKHGLUHFW
result of the change agent services, in particular
the free Web authoring and hosting services. These
companies can be described as passive adopters,
as they have limited technical skill to update Web
site content and actively change Web presence
functionality. They update their Web presence on
a quarterly or yearly basis and tend to outsource
any major redesign. Thus, their Web presence is
in a sporadic state of content update. Companies
within the static state, share similar implemen-
tation background as companies in the sporadic
state. In addition, these companies have limited
knowledge of Web presence development and
management. They depend mostly on the change
agent efforts in the initial Web site developed,
Web site update and management, and subsequent
redesign Web sites. These SMEs depend entirely
on external support and Web site in a static state
with minimum or no update.
$QXPEHURIIDFWRUVLQÀXHQFH60(VFRQWLQX-
ous adoption of a Web presence. Both NP and TP
SMEs are encouraged to continue their adoption
due to the perceived and experienced relative
advantage gained, mostly from using the Web
presence as a promotional and communicational

means. NP SMEs are internally motivated by the
owner-manager enthusiasm. The owner-manager
is the main person developing and managing ECT.
Peer pressure is motivating NP SMEs to adopt
ECT, but does not encourage further investment of
resources to develop a more competitive Web pres-
ence. Lack of time and lack of technical resources
are among the common factors hindering both NP
and TP SMEs’ continuous adoption. Moreover,
7360(VDUHPRVWO\H[WHUQDOO\LQÀXHQFHGGXH
to their dependence on outsourcing of Web site
development and management rather than in-
house expertise. TP SME continuous adoption
is affected by cost of Web presence maintenance
and subsequent redesign, trust in change agent
services, lack of trust in independent service
providers, and lack of awareness of alternative
ECT solutions, and their dependence on change
agent support for further awareness.
7KH ¿QGLQJVSUHVHQWHGLQWKLV FKDSWHUKDYH
some limitations. Mainly, the data was collected
IURP60(VWKDWKDYHEHHQLQÀXHQFHGE\WKH
change agent efforts in the diffusion of ECT; either
directly as in the case of TP SMEs or indirectly
as evident in NP SMEs. The presence of external
F KD Q JH DJH QW V LQ ÀX H QF L QJ W KH D GR S W LR QG H FL VL RQ V 
and implementation process, might limit the
conclusions only to similar scenarios where the
involvement of a change agent, or any perceived
change agent, is paramount. Nonetheless, the

¿QGLQJVSUHVHQWHGDUHFRQVLVWHQWZLWKOLWHUDWXUH
First, the factors that encourage implementation
(e.g., management enthusiasm and relative advan-
tage) and barriers to implementation (e.g., lack of
resources, awareness, and trust) are in line with
l i t e r a t u r e ( W i n d r u m & D e B e r r a n g e r, 2 0 0 3) , e ve n
in the presence of a change agent that provides
LQFHQWLYHVWRHQFRXUDJHDGRSWLRQ6HFRQG¿QG-
ings are in agreement with the argument that
SMEs underestimate the need for planning prior
to adopting e-commerce and that e-commerce
strategy is missing from SME business plans
(Quayle, 2002).
Finally, it is argued that in absence of a stra-
tegic vision from within the company, external
support can not always have the ability and desire
WRSURYLGH³NQRZKRZ´NQRZOHGJHDQGDLGLQWKH
formation of strategic planning (Jones, Hecker,
& Holland, 2003). This is clearly evident in the
¿QGLQJVSUHVHQWHG7KHFKDQJHDJHQWSURYLGHG
knowhow knowledge and aided in creating aware-
ness, but did not aid in developing ECT strategic
437
SMEs ECT Reality
planning, even in companies that host their Web
presence at the change agent’s Web directory and
are in continuous contact with the change agent.
However, contrary to literature, where implemen-
tation is presented as a linear stage-based process,
the chapter presented a new dimension in SMEs

implementation of ECT, based on the allocation
of resources (in-house/outsourced), develop-
ment process (passive/active), and management
practices (strategic planning, ad-hoc decisions,
sporadic state, and static state). Further research
ZLOO EHQH¿W IURP LQYHVWLJDWLQJ ZKHWKHU WKHVH
implementation patterns exist in the absence of
change agent involvement in the implementation
process.
CONCLUSION
This chapter unravelled a different dimension to
SMEs implementation of electronic commerce
technologies. The chapter focused on Web site
development and management practices and
explored the different Web presence implementa-
tion patterns among SMEs. Two distinct groups
RI60(VDUHLGHQWL¿HG7KHPRUHDEOH1HHG3XOO
SMEs, who are aware of their business needs and
internal resources in developing and maintaining
their Web presence. These companies update
and manage their Web presence based mostly
on owner-manager’s ad-hoc decisions and have
a tendency towards strategic planning. Contrary,
the less able Technology Push SMEs, who have
EHHQLQÀXHQFHGDQGHQFRXUDJHGWRDGRSWD:HE
presence by change agent efforts in the diffusion
of ECT. These companies gained ECT awareness
and some level of technical knowhow, due to
change agent training. However, these companies
lack the technical knowledge to maintain their

Web presence in-house and depend largely on
external support, particularly the change agent.
Their Web presence is either in a sporadic or a
static state of update and maintenance.
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Chapter 2.8
BSC-Based Framework for
E-Business Strategy
Fen Wang
University of Maryland, Baltimore County, USA
Guisseppi Forgionne
University of Maryland, Baltimore County, USA
INTRODUCTION
E-business is far more about strategy than technol-
ogy (Raisinghani & Schkade, 2001). An effective
e-business strategy is concerned with e-business
multidimensional characteristics associated with
different levels, parties, elements, and growth
pattern features (Bakry & Bakry, 2001). In the
process, the strategy must incorporate the effects
of the instant and global Internet communication
mechanism on the company’s business manage-

ment architecture. The global reach and intercon-
nectivity of the Internet have spawned new models
of e-business strategy and radically transformed
existing ones (Pant & Ravichandran, 2001). In-
deed, what distinguishes many of the dot-coms
is not their new technical power, but the radical
new business models (Hamel, 2000).
Aided by such innovative e-business models,
managers will be able to identify the major deci-
sion factors involved in their business strategies
and generate strategies that would improve their
RYHUDOO SHUIRUPDQFH DQG SUR¿WDELOLW\ ,Q WKH
current context, four essential perspectives are
LGHQWL¿HG WR EH DVVRFLDWHG ZLWK DQ HEXVLQHVV
VWUDWHJ\¿QDQFLDOFXVWRPHULQWHUQDOSURFHVVHV
and learning and growth. These four perspectives
ZHUH¿UVWLQWURGXFHGLQHDUO\VDVWKHbal-
anced scorecard concept (BSC) (Kaplan & Norton,
1992). Because the BSC methodology explicitly
focuses on links among business decisions and
outcomes, it is intended to guide strategy devel-
opment, implementation, and provide reliable
feedback for management control and perfor-
mance evaluation. This BSC rationale is thereby
appealing to managers who face new challenges
in the current turbulent e-business climate.
The real challenge is to determine how the
BSC can be successfully applied in the context
of e-business’s constantly changing environment
of interdependencies (Hasan & Tibbits, 2000).

E-business introduces new business objectives
441
BSC-Based Framework for E-Business Strategy
and strategies and the old measures of success
may no longer apply. It is anticipated that the
departure from the original BSC for a strategic e-
business management framework would be more
radical than the existing BSC adaptations (e.g.,
Martinson’s balanced IS scorecard; Martinsons,
Davison, & Tse, 1999).
BACKGROUND
Few, if any, precise and complete e-business
strategy models are available from the literature
(Dubosson-Torbay, Osterwalder, & Pigneur,
2001). There are a few theoretical academic stud-
ies with some empirical evidence on e-business
models success (Horsti, Tuunainen, & Tolonen,
2005). Generally, these e-business model studies
fall into two categories: subsystem research and
generic frameworks. Examples of the subsystem
research include modeling for price structures
(Liu, Wynter, & Xia, 2003), customer needs (Ols-
son & Karlsson, 2003), process synchronization
(Park, 2002), and knowledge sharing (Koh &
Kim, 2004). Since these subsystem models deal
with a particular aspect of e-business, they do
not offer a global and complete view of e-busi-
ness strategy.
There are several generic frameworks for the
development and analysis of e-business models.

Whelan and Maxelon (2001) proposed that an e-
business architecture requires product, channel,
customer management, resource management,
and information elements. Afuah and Tucci (2001)
presented a more detailed list of components in-
cluding scope, customer value, revenue sources,
connected activities, and so forth, but like Whelan
and Maxelon, they did not specify the interre-
ODWLRQVKLSV+DPHOVSHFL¿HGDFRPSOHWH
four-part framework with bridge components
that is geared toward guiding strategic choices
of management. Similarly, Dubosson-Torbay et
al. (2001) used a framework with four principal
components to analyze e-business: product in-
novation, customer relationship, infrastructure
PDQDJHPHQWDQG¿QDQFLDODVSHFWV*RLQJEH\RQG
the segment frameworks, De, Mathee, and Abra-
ham (2001) developed a pragmatic framework
that offers different perspectives for the analysis
of e-business including transaction costs, switch-
ing costs, infrastructure investment, and revenue
models and so on.
For the most part, the generic models offer
theoretical, not analytical, decision guidance for
practitioners. One exception is the BSC-based e-
business framework, with preliminary empirical
evidence, proposed by Hasan and Tibbits (2000).
Their empirical evidence, which was gathered
from a case study in an Australian state-govern-
ment utility, gave four high-level perspectives

EXWQRVSHFL¿FDQGH[SOLFLWPHDVXUHVZLWKHDFK
perspective. Currently, there is no comprehensive
and concrete investigation that applies the tradi-
tional BSC to e-business strategy.
EBBSC FRAMEWORK
SPECIFICATION
Considering a wide range of factors and relation-
ships in this fast-changing e-era, we adapt the
original BSC methodology into a comprehensive
e-business strategy framework (EBBSC) con-
sisting of four updated perspectives: business
model, analytical e-CRM, process structure,
and e-knowledge network (see Figure 1). The
EBBSC framework links business strategies
to a broad range of innovations and measures,
examines important business issues facing e-
business managers, and provides a complete view
of e-business strategies. The framework can be
better understood by examining the components
in detail.
Business Model Perspective
Although e-business models differ from the tra-
ditional brick and mortar models in various ways,
442
BSC-Based Framework for E-Business Strategy
the fundamental needs of consumers and busi-
nesses remain much the same. Consumers want
the best deal by price and service comparison,
while businesses want to grow sales by targeting
the right e-shoppers. On the other hand, traditional

rear-view and static planning and budgeting cycles
don’t measure up to the dynamic, competitive,
and compressed business cycles in the global
e-era. E-business managers need to focus on a
IXWXUHRULHQWHGSUR¿WPD[LPL]DWLRQVWUDWHJ\WKDW
will support on-the-spot decision making at the
turning points.
•
3UR¿W0D[LPL]DWLRQ3UR¿WLVHTXDOWRWKH
difference between the revenue and cost.
Many intangible and tangible factors may
DIIHFWSUR¿WE\LQÀXHQFLQJUHYHQXHDQG
cost directly or indirectly, creating risk or
uncertainty in achieving the company’s
SUR¿WDELOLW\3DOPHU:LVHPDQ
•
Revenue Increase: Revenue increase refers
to expanding and re-pricing product and
service offerings to achieve a higher value
added mix. According to economics theory,
revenue equals the product of the purchases
and price. Purchases equal the minimum of
the product quantity offered (quantity sup-
plied) and quantity customers are willing
and able to purchase (quantity demanded).
Quantity demanded is treated as a function
of the customer retention, marketing mix,
and competition. Customer retention mea-
sures the company’s customer stickiness
or loyalty. The marketing mix includes the

company’s major marketing decisions. Com-
petition represents the rivalry between the
company and other businesses in the target
market. Determinants of the quantity sup-
plied include price, capacity, supply chain
PDQDJHPHQWHI¿FDF\DQGVWDIISUR¿FLHQF\
E-business capacity measures not only the
limit imposed by the equipment and/or avail-
able personnel, but also the limit associated
with the network technology. Supply chain
PDQDJHPHQWHI¿FDF\UHIHUVWRWKHHIIRUWRI
the company in managing relationships with
its suppliers.
•
Cost Reduction: The Internet age enables
businesses to reduce unnecessary or redun-
dant buyer–seller costs. Generally, cost is
FRPSRVHGRI¿[HGFRVWZKLFKLQDQHEXVL-
ness context can include e-business system
development and maintenance expenses, and
variable cost, which equals the product of
unit cost and quantity supplied.
•
Marketing Mix: Marketing effort helps
in identifying market opportunities and
generating marketing strategies that support
Process Structure
Process intelligence &
-
business

-CRM
-
customer
e-Knowledge Network
E-business
Strategy
Business Model
Figure 1. Adapted four perspectives of e-business strategy
443
BSC-Based Framework for E-Business Strategy
attainment of e-business objectives. The
major factors involved in the marketing mix
include people, promotion, price, product,
presentation, and distribution effort. The
RULJLQDO³3ODFH´IDFWRULVGHFRPSRVHGLQWR
presentation and distribution effort to rep-
resent e-market reality. Presentation refers
to the effort involved in online product
presentation and distribution. Distribution
effort facilitates the connection of the prod-
uct with the target customer.
•
Sales Cycle Shortened: The sales cycle
consists of the time that elapses between
the customer interest and the purchase de-
cision. In e-business, a shorter sales cycle
enables management to respond promptly
to emerging opportunities or threats. The
major factors that impact the sales cycle
LQFOXGHWKHFXVWRPHUSUR¿OHSURGXFWSULFH

promotion, and presentation. A customer
SUR¿OHLVDFRPSRVLWHYDULDEOHWKDWUHÀHFWV
the customers’ demographic characteris-
tics, preferences and behavior patterns.
Generally, the more positive the customer
SUR¿OHLQGH[WKHORZHUWKHSURGXFWSULFH
the higher the product quality, the better
promotion methods and efforts, and the
more preferable presentation formats, the
shorter the sales cycle would be. Figure 2
summarizes the business model perspective
in the framework.
Analytic E-CRM Perspective
The Internet enables customers to conveniently
shop online, have a broader selection, get com-
petitive pricing and greater access to critical
business information (Chen et al., 2004). Online
retailing, however, is impeded by security and
privacy concerns, downloading time and other
technology barriers (Chen, Gillenson, & Sher-
rell, 2004). Furthermore, customers can switch to
other competitive URLs in seconds with minimal
¿QDQFLDOFRVWZKLFKPDNHVVXFFHVVIXOFXVWRPHU
management vital in e-business.
•
New Customer Acquisition: Customer
acquisition depends on precise and timely
targeting that delivers valuable offers to
prospects. The factors involved in customer
acquisition include the company’s marketing

mix, HVHUYLFHTXDOLW\WKHFXVWRPHUSUR¿OH
and competition. Competition represents the
company’s external relationship with the
supplier, availability of other distribution
channels, entry barriers, and product substi-
tutes. When addressing the factor, we have
converted the original customer perspective
from an external view (Kaplan & Norton,
1992) into a relationships perspective (Hasan
& Tibbits, 2000).
•
Customer Satisfaction: 6DWLVIDFWLRQLVLQÀX-
enced by lead time, product quality, service
quality and competitive pricing (Kaplan
& Norton, 1992). Lead time measures the
time required for the company to meet its
customers’ needs, sometimes referred to as
³RUGHUWRGHOLYHU\ F\FOH WLPH´ $ SURGXFW
with high quality and customization level
and relatively lower price may increase the
degree of the customers’ satisfaction. E-
service quality represents the level of the
service offered in e-business.
Figure 2. Business model perspective for e-busi-
ness strategy