6
Part 1 Introduction
During the same period managers at established businesses have had to determine how to apply new electronic communications technologies to transform their organisations. As we
will see later in this chapter, existing businesses have evolved their approaches to e-business through a series of stages. Innovation in e-business is relentless, with the continuous intro-
duction of new technologies, new business models and new communications approaches. So all organizations have to review new electronic and Internet-based communications
approaches for their potential to make their business more competitive and also manage ongoing risks such as security and performance . For example, current opportunities which
many businesses are reviewing the benefits, costs and risks of implementing include:
the growth in popularity of
social networks
such as Bebo, Facebook Case Study 1.1 and MySpace,
virtual worlds
such as Habbo Hotel and Second Life, and
blogs
created by many individuals and businesses;
rich media
such as online video and interactive applications into their web sites; selection of
mobile commerce
services which exploit the usage of mobile phones and other portable wireless devices such as laptops around the world. The potential of mobile
commerce is evident from research by Wireless Intelligence 2008 which found that at the end of 2007, globally there were 3 billion subscriber connections representing half the
planet’s population with penetration rates in developing countries such as India 21 and China 41 showing the potential for future growth;
using location-based tracking of goods and inventory as they are manufactured and transported.
You can see that an organization’s capability to manage technology-enabled change is the essence of successfully managing e-business. The pace of change and the opportunities for
new communications approaches make e-business and e-commerce an exciting area of busi- ness to be involved in.
In E-Business and E-Commerce Management we will explore approaches managers can use to assess the relevance of different e-business opportunities and then devise and implement
strategies to exploit these opportunities. We will also study how to manage more practical risks such as delivering a satisfactory service quality, maintaining customer privacy and
managing security. We introduce some of the opportunities and risks later in this chapter.
In this chapter we start by introducing the scope of e-business and e-commerce. Then we review the the main opportunities and risks of e-business together with the drivers and bar-
riers to adoption of e-business services. Finally, we will look at some of the organizational challenges of managing e-business using the classic McKinsey 7S strategy framework.
The impact of the electronic communications on traditional businesses
2
We talk about these businesses being ‘successful’, but what is success for a new e-business?
3
What do these sites have in common that you think has made them successful? Answers to activities can be found at www.pearsoned.co.ukchaffey
Social network
A site that facilitates peer- to-peer communication
within a group or between individuals through
providing facilities to develop user-generated
content UGC and to exchange messages and
comments between different users.
Virtual worlds
An electronic environment which simulates
interactions between online characters known
as avatars. Also known as Massively Multiplayer
Online Roleplaying Games MMORPG.
Blog
Personal online diary, journal or news source
compiled by one person, an internal team or
external guest authors. Postings are usually in
different categories. Typically comments can
be added to each blog posting to help create
interactivity and feedback.
Rich media
Digital assets such as ads are not static images, but
provide animation, audio or interactivity as a game
or form to be completed.
Mobile commerce m-commerce
Electronic transactions and communications
conducted using mobile devices such as laptops,
PDAs and mobile phones, and typically with a
wireless connection.
7
Chapter 1 Introduction to e-business and e-commerce
Real-world E-Business experiences
The Econsultancy interview Ted Speroni, Director, EMEA Europe, Middle East and Asia, HP.com
Overview and main concepts covered
Ted Speroni heads the European operations of HP.com, as well as the tech giant’s regional preferred online partner programme. This practitioner interview highlights some of the
challenges and opportunities for a traditional organization in managing e-commerce. It also introduces some of the important online marketing communications techniques such
as search engine marketing, affiliate marketing, social media and widget marketing which are described in Chapter 9.
The interview
Q. Can you briefly summarise your role at HP.com? Ted Speroni, HP.com:
I look after HP.com for the EMEA region. We have around 40 country websites throughout the region in something like 28 languages, so that’s my
responsibility. I’m also responsible for all of our electronic content management across Europe, which is where we intersect with the online retail community.
At HP, we have a clear strategy of making our products available wherever our customers want to buy them – through high street shops, proximity resellers, online
retailers, e-resellers and direct through HP. We only sell direct through HP.com in five countries in Europe – the UK, France,
Germany, Switzerland and Spain. So in most countries, we connect in with the leading etailers. We get daily feeds from all of them on their product availability and
pricing, and we display them on HP.com. We then deep link into the shopping basket on each etailer, so we’re generating leads for them.
It’s just like an affiliate programme [a commission-based sales arrangement covered in Chapter 9], but we don’t get a commission because it’s for our own prod-
ucts. We track the number and quality of leads we are sending each retailer and their conversion rates. We have all the data on which products sell and which cross-sell.
It’s a pretty big programme – we have about 150 partners in Europe that are part of it and we generate quite a considerable amount of leads and traffic for them. You have
to qualify to be part of it – there are certain criteria you have to meet.
Q. What are you doing at the moment to drive more traffic to these etailers? Ted Speroni, HP.com:
The first thing is the integrated marketing approach we have. Search engine marketing SEM and search engine optimisation SEO are probably the
two biggest areas we are working on. The fundamental principle is that we want to drive all that traffic to pages where we
give the customer choice. All the marketing traffic drives people to landing pages that give people a choice about where to purchase the product.
Our investment in SEM is probably in line with the growth we see overall in the industry. We’re also making quite heavy investments internally in SEO, because a much
higher percentage of our traffic comes from natural search and the conversion rate is not that dissimilar to SEM.
Natural search is a big area of focus for us at the moment. With SEM, we always get people to the right page, to specific landing pages. With natural search, we’re not
as convinced we’re always getting people to the correct page.
8
Part 1 Introduction
For that, we’re analysing where the traffic is going from natural search results so that we can give the customer choice on those pages, and also looking at how to make
sure people go to the pages they want to go to.
Q. Do you have any challenges in terms of funnelling search traffic – whether natural or paid – through your site, rather than straight to etailers? Do you allow
brand bidding, for example?
Ted Speroni, HP.com:
We are currently assessing what we will do in this area from both a technical perspective and from a commercial perspective as part of our co-op
marketing programme with the channel. I would anticipate that we will do some limited pilots as part of this assessment.
Q. How difficult is it to maintain communication with partners across multiple channels?
Ted Speroni, HP.com:
We’re pretty happy with the multi-channel approach we have taken. Encompassing all the different ways customers want to buy products is the
most important thing. We’ve struggled with that for a long time and we’re just trying to make each channel
as efficient as possible. We still have a way to go – I’m still working on a number of projects to optimise the different channels.
One thing is the question of high street retailers and the question of integration of inventory. When a customer wants to buy a specific camera they want to know whether
it is in stock today, and I don’t want the site to send them to the wrong place.
Q. How are you managing the syndication of your product content to your part- ners in the programme? How challenging is that?
Ted Speroni, HP.com: My team syndicates out [electronically distributes] all the
content to our resellers. What this is all about is we want to control the HP brand in relation to our products. We produce electronic content feeds in 28 languages of all the
product information – pictures, marketing messaging, specifications, everything. Whenever a customer anywhere in Europe is seeing information about an HP
product, there’s a very high probability that that will be content we have created. The picture is the picture we want people to see. We feel it’s been very successful for us –
not only in terms of controlling our brand, but also in terms of cutting costs for our part- ners. They don’t need to do content acquisition.
We’ll either syndicate the content via XML feeds, or sometimes the resellers are buying the content through content aggregators. And this extends beyond simple
product information – we also syndicate out our recommended cross-sell products. If you buy an HP printer, we have a list of recommended accessories.
This is a key thing – similar to what Dell have talked about in terms of increasing average shopping basket. Our top priority partners are partners that sell complete HP
solutions, so this tool helps them sell complete HP solutions. Resellers can’t say they don’t know which products sell well with others, because we are telling them.
I should also mention another component – we’re not just syndicating content, we also syndicate a configurator for configuring PCs.
We feed all the data into the configurator about the different configurations you can build. You as a customer configure the PC and the information goes into the shopping
basket of the retailer, as well as coming through to the HP factory so we can build the configuration. We then match up the order when the retailer passes the order through
to us, and we ship it.
It goes beyond syndicating content – you’re syndicating widgets, real web apps that can be integrated into websites.
