In-Depth

Rubber Meets Road: A Map for Successful E-Business Implementation

• 08/01/2000

The path to unsuccessful e-business implementations, like the proverbial road to Hades, is often strewn with good intentions. Implementations are derailed for a number of reasons, surprisingly few of which have to do with the failure of the technology to perform. A successful e-business implementation uses technology to positively impact the corporation’s bottom line, and is timely, cost-effective and efficient. This article details an approach and some protective measures, which, if judiciously applied, will go a long way to ensure the success of e-business projects.

An enterprise implementing e-business solutions is typically looking to use current hardware, software, communications, Internet technology and standards to enhance the business in any one of the following broad functional areas:

Demand – The area of the business generating revenue. Here the intentions of the implementations are to drive up revenue or improve customer retention through better customer service. The possibilities for revenue enhancement through e-business are endless, but some strategies are more popular than others. Some companies increase sales by selling online to a new customer base, selling internationally or selling directly to end users. In this age of Internet speed where time is money, aggregating complementary businesses to yours into a single portal for one-stop service, or enabling salespeople to quote and place orders directly online from customer locations, can increase revenues dramatically.

There are also a number of Customer Relationship Management (CRM) issues that could drive the e-business initiative. Some of these include creating customer self-service sites, servicing channel partners, creating an extranet for distributors and creating Web interfaces to internal systems for trading partners.

Return on Investment (ROI) for these implementations is measured in terms of new revenue by attracting more customers, maintaining market share by customer retention, and/or reducing the cost of taking a customer’s order.

Supply – Procuring the materials needed for revenue generation. Implementations in this area tend to focus on Supply Chain Management (SCM) and/or better communication with the business’ suppliers. Some examples include implementing an extranet for suppliers, extranet-to-extranet integration, just-in-time procurement, EDI integration and XML data interchange.

ROI for these implementations could be measured in terms of reduced inventory cost and reduced procurement costs.

Operations – All Systems that are used to transact business, such as MIS, ERP, etc. These implementations focus on reducing the cost of doing business or enabling greater efficiencies and accuracy of information. Intranets used for company human resources applications, internal e-mail and internal knowledge dissemination fall into this category. Other typical examples are workflow systems, thin client implementations to reduce total cost of ownership of the desktop, and Web integration of legacy systems to improve user interface, gain efficiency and integrate diverse systems to one interface. Developing Web-based applications to reduce the cost of deploying and maintaining applications would also fall into this implementation area.

ROI for operations is measured in terms of efficiencies gained by quicker, faster access to more accurate data, or in terms of actual monetary value gained by reducing operational costs. For example, the company realizes savings if an IS professional doesn’t have to physically install and support an application at a user’s terminal.

Business Intelligence – Cross-system data collection and analysis. Here the focus is on integration of relevant historic and operational data from all systems to derive knowledge relating to the health of the business. This data is critical to providing management with the information it needs to develop strategies for change in the three previous areas. Examples of business intelligence implementations are creating data marts and data warehouses, implementing OLAP and data mining tools, EIS systems and end user reporting systems.

ROI is difficult to quantify here, but companies can gain a competitive edge and value from the ability to identify and take advantage of trends. They can also better manage customer relations with detailed, up-to-the-minute customer demographics and buying profiles. In some cases, using data mining technologies to detect fraud has resulted in millions of dollars in actual savings.

If implementations are being considered outside these areas, then management must ask itself either the value question (will the implementation enhance the value proposition), or the ROI question, to determine why the particular implementation is being considered.

It is evident that an e-business implementation, regardless of functional area, will impact the business in the following major impact dimensions: Business, Policy, Resources, Procedure, Technology and Structure.

To ensure that the implementation is successful, management must recognize and consider all the dimensions of the implementation, and be prepared to deal with the changes that will arise.

What needs to be done and what will it take? To answer this question, management must first assess the impact of the Internet and Internet-based technology on the business. This assessment is carried out with an eye to the impact of these technologies on the corporation’s fundamental value proposition.

A good starting point is asking: Where and how will the Internet and Internet technology – my e-business implementation – change or enhance the value I deliver to my customers?

A company has customers because it offers them value, so you must be certain that your e-business implementation has a significant impact on the value your company offers or it is not worth doing. It’s worth noting that simply keeping up with the competition is value worthy of strong consideration. From a business perspective, this question must have been answered in order to:

• Set the correct expectations for implementation results

• Determine the appropriate budget outlay given the proposed benefits (assigning monetary value to the benefits is key)

• Determine the effect of the implementation on the business in terms of the impact dimensions of strategy, technology, resources, procedure, structure and policy

• Determine periods for the implementation, to synchronize with the business calendar

• Identify risks (business, technological) associated with the implementation and work through a risk mitigation strategy

• Identify the (budgetary) costs associated with the implementation. These can be lumped together in the resource impact statement, but are explicitly called out here to make the point

This analysis may yield surprising results. You may find that no technology implementation is required, or that the implementation is either too expensive, or too inexpensive, compared to the benefits. It may cause potential resource issues, or have unacceptable impacts on policy and procedure. The rest of the business may not be able to support the implementation from the perspective of the primary dimensions, such as strategy, technology, policy, procedure and resources. The time frame for implementation may have already passed, or management decides it would be better to defer the implementation to a later period for budgetary or calendar considerations.

It is obvious that heading these issues off at the planning stage can avoid an unsuccessful implementation later.

This stage designs the implementation to satisfy the dual imperatives of business requirements including strategy, timetable, urgency and benefit, and business constraints including resources, budget, technology and timetable. Depending on the capabilities of the corporation, this is done internally, on a contract basis out or as a combination of the two.

There are several advantages to contracting the design phase separately. The completed design specifications can form the basis of an RFP to seek competitive bids for the implementation. Since the organization has not yet committed to a full implementation, the outlay at this point is relatively small compared to the overall scope. By obtaining greater definition and granularity in this phase, the impact dimensions can be revisited, and a more informed business decision taken.

There are two critical dimensions to the design phase: implementation design and implementation strategy. The implementation design should assure that the proposed implementation addresses the business requirements articulated in the strategy section. It should successfully address the impact dimensions within the constraints specified. It should define how the technology – including hardware, software and applications – supports and optimizes the implementation design. And it should evaluate the impact of the technology selection on the impact dimensions.

The implementation strategy is a crucial dimension, as the best-designed implementation will fail if the execution strategy is flawed. Some of the considerations that must be defined are buy vs. build, implement in-house or outsource, and determining if specific pieces of the implementation should be subcontracted. Decisions about timing and phasing, risk mitigation approaches, development/staging/production environments, training and deployment timetables also must be defined and detailed.

A number of items should be addressed in the implementation plan. The effect of the implementation on the impact dimensions should be analyzed and documented. The design principles and management’s reasons for choosing a particular design should be specified. Sections describing the implementation strategy, detailed costs and the project plan should also be included.

The implementation design and strategy must have the support of senior management, departmental heads/divisions affected and line managers. Getting this support is often the most difficult piece of the implementation. The best way to successfully obtain this level of assent is to have representation from all constituents at all phases of the planning process (excluding strategy, which should be the purview of senior management). This is especially critical in evaluating the impact dimensions, as divisional heads and line managers are the most severely impacted by changes in technology and procedure. It also ensures that there is foreknowledge of the implementation, communicated in a clear and rational fashion to affected areas of the enterprise.

Implementation focuses on the actual execution of the implementation design via the implementation strategy. Companies can mitigate risk by implementing a proof-of concept, or by gathering the data required to identify and resolve risks related to the implementation. Obviously, if this cannot be done, then risks should be addressed via a staged implementation, incremental construction or other means.

The procurement and preparation stage focuses on pre-implementation activities, like vendor selection, employee training, procurement of development and staging or test environments, installation and setup of the environments, and issuing work orders for long lead time items, such as communications lines. An often overlooked element of preparation is the contracts element, which should define service level agreements, performance clauses, liability and other details from the third-party vendors providing services. Contracts are very useful, particularly when vendors do not live up to their promises and need some encouragement to fulfill their contractual obligations. The trend of software licensing agreements unfortunately falls into the realm of caveat emptor; hence thorough evaluation prior to implementation is the only way to avoid expensive surprises later.

Functional and technical specifications defining the systems to be implemented should be built in parallel with the procurement activities, where possible. The primary focus is to define the system specifications as completely as possible in terms of covering all areas, and as detailed as possible. Test plans and acceptance test procedures are also developed in this phase. The advantage of going to a granular level of detail is that potential issues are uncovered and addressed in this early stage, avoiding expensive rework later.

In the development and testing phase, attention must be given at a strategic level to project management, scope creep, team and vendor performance. At a tactical level, source code and documentation version control, software configuration management, development environment control, defect tracking and resolution, and adherence to standards need to be ensured. Code walkthroughs, visual inspections, test results, regular project status reports, and verification and audit are the only way to ensure that work is proceeding as per the requisite quality and schedule. The advantages of methodologies like incremental construction, phased construction, successive elaboration phases, component based development, etc., must be judiciously applied to minimize development effort and rework while ensuring transparency, risk mitigation and early warning of schedule slippages.

Parallel to the development activity, setting up production systems for the deployment phase should commence. Activities, such as backup, disaster recovery and performance tuning of system level parameters, should be performed without application software installed. The procedures and policies thus developed should be tested with the final application software before the systems are live. Performance tuning of the application will benefit from the baseline data gathered in the prior phase, as will testing of the staging process from development to production. Management must also be careful to coordinate tasks and departments to ensure a smooth transition from current systems to the proposed implementation, communicate new policies and procedures with appropriate documentation to all concerned, monitor the development effort and revise the deployment plans, if necessary.

Parallel to procurement, development and deployment efforts, maintenance policies and procedures must be identified and documented, along with the roles and resources assigned to those roles. System, programming, user and maintenance manuals must be generated as part of the implementation project and turned over to the appropriate departments or managers. Work products and deliverables should be archived or maintained online as appropriate. The contracts elements of the preparation phase may be used to enter into the appropriate maintenance agreements, as substantial leverage exists with vendors pre-implementation as opposed to post-implementation.

An essential condition for a successful implementation is truth in reporting progress, both to upper management and among project team members.

Possibly the most critical portion of the implementation is post-rollout. Here is where insidious bugs are discovered, support calls are made frequently for silly reasons, the new procedures don’t work, the new policies haven’t gone into effect yet, the rest of the business hasn’t changed, people want to move on to other things after all the development stress … all too familiar scenarios.

The only way to handle this is to plan for it. Include post-implementation support, maintenance, bug-fixing, project management, vendor management and anything management believes is important as part of the implementation project plan. When the rollout is complete, people are moved into their pre-defined support roles as quickly as possible. Budget for at least a couple of maintenance releases to accommodate new features and functions. Requests for a new function are a good sign because it indicates that the systems are being used and people are uncovering limitations.

About the Authors: Sudipta Singh is Vice President of E-Business Solutions for Specialized Software (Worcester, Mass.).

Dr. James Ambrose is Founder and Managing Partner of Harrington & James Associates.