On the 'e' in e-Business

Here I shall post things that I learned during our "e-business" course at the HFU, and some pieces on case-study of the company "SpeedSteel".

[victor-hfu]

Plans to work with SPEEDSTEEL

When working on improving SPEEDSTEEL's structure and processes, to use the best known approaches from the EDI  (or web-based) technologies, BPM methodologies, and ERP applications. Aiming to providing the SPEEDSTEEL's customers with high quality, reasonably priced solutions for their business requirements, in the area of exploiting, monitoring and maintaining escalators and elevators. To ensure that the company can effectively use new software and technologies to perform employee education. 

[victor-hfu]

Possible Marketing Strategies of 'to-be' Speed-Steel

Speed-Steel can use a mix of the primary Marketing Strategies: 

Product-based - since current and new customers are already looking for products in Speed-Steel's portfolio. SpeedStell can use undifferentiated marketing to let all potential customers know more on products the company offers. Thus, the company can simply have an entry about itself in various print- and web- catalogs of elevator system companies. It can innovate on novel/modern elevator systems products, thus positioning itself among competitors e.g. by systems for residential or offices, sky-scrappers, or escalators for shopping malls etc.

SpeedSteel can focus its product-based strategies using the SWOT analysis. Based on this analysis of the company's competitive strengths and weaknesses and the opportunities and threats presented by competitors, a company must either create products so distinctive that customers can't get them elsewhere, or it must position products with universal demand more favorably than its competitors do.

Customer-based marketing is all about customer's needs, perceptions and values.

Initially, the market of potential customers is divided into various segments based on criteria that are meaningful to the SpeedSteel's brand, such as partner companies, such as construction or building renovation/maintenance companies. The company then chooses one or more specific segments to target and crafts the "four P's" of the marketing mix -- product, price, promotion and place -- to position its product offerings favorably in the target customers' perception.SpeedSteel tailors all elements of the marketing mix to win specific customers. 

SpeedSteel can use 'branding'

Branded products convey quality, value, etc., and are easier to advertise/promote - often at great cost. Elements of Branding: The key elements of a brand are:

differentiation: the product must be clearly distinguished from others in the market

relevance: the degree to which the product is useful to a potential customer's lifestyle

perceived value: the key element in creating a brand with value

A brand is established only when all three conditions are met. However, history has shown that even well known brands can lose their status as the market changes and customers fail to see the presence of the three elements.

B. Emotional Branding vs. Rational Branding: While emotional branding is possible when potential customers are passively receptive to ads on TV, radio, billboards, magazines, etc., it does not work on the Web where people are in an active state and will close emotional appeals if they are busy.

Additionally, the new Web-based SPEEDSTEEL can use Rational branding to create/maintain its brand names online. This will "help viewers in exchange for their viewing an ad". Like, for example, Yahoo! or Google offering free e-mail accounts and space in exchange for viewing ads on each page.

SpeedSteel can attempt to establish its name as a brand, for example, the company that makes and sells the most reliable, or fastest, or less noisy elevators - differentiation from competitors. These features can be also connected to relevance and perceived value.

SpeedSteel can use CRM for web-marketing

Customer relationship management (CRM) is a model for managing a company’s interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support. CRM systems for marketing track and measure campaigns over multiple channels, such as email, search, social media, telephone and direct mail. These systems track clicks, responses, leads and deals.

Possible platforms:  SAP, Lime Light, Microsoft Dynamics, Oracle, Amdocs, ...

For SpeedSteel, as it manufactures not mass, but unique products, it may make full sense to utilize Customer-centric (since it is B2B, it can also be called client-centric) relationship management (CCRM), and make for each its client a much more customized product, fitting the needs better. CCRM is a style of CRM that focuses on customer preferences, instead of customer leverage. It that SpeedSteel will be able to manage critical relationships more effectively and being positioned to offer new and expanded services. It will add value for itself and clients by engaging with clients in individual, interactive relationships. 

Thus the market strategy can be "Client Intimacy" + "Differentiation" + +"Perfect Business Process Execution" + "Additional Services,  customized for each client", but not "Low cost product".

[victor-hfu]

Corporate restructuring of SpeedSteel

"As is" SpeedSteel is not a modern e-company. In a new "to be" company it will need to undergo re-structuring. We propose to create two new divisions:

Division "Systems" - this is  formed by former/"as is" SpeedSteel, that was mostly selling the elevators systems, but now in "to be" it will also be focusing on developing new products, and selling these via specialized e-commerce web-site. They will use Web-Catalogue-Revenue-Model.

Division "Services" - this is mostly new division, which will focus on new revenue models (Fee-for-services, Ad-supported-revenue models). Also it will support the core business (Division "Systems"), related to sales of the elevator systems, with new e-commerce and IT tools. 

[victor-hfu]

Suitability of Fee-for-Services (FFS) revenue model for SpeedSteel

FFS revenue model fits perfectly to new ("to be") e-company SpeedSteel.

Business & competitors:

Just like its competitors [OTIS Elevator Company, Mitsubishi; Kone; Schindler; ThyssenKrupp and Fujitec], SpeedSteel can provide B2B services connected to maintenance and exploitation of the elevators.

New/additional services:

On top of the above core services, they could add, for example, the following services/products :  

* advertisement services, e.g. via installing TV screens on elevator walls or similar (B2B);

* services related to the following systems: IT, tele-monitoring, security,  (B2B, B2C); 

* providing cross-products: e.g. lightning systems for the buildings (outside, or inside: passages, rooms),  (B2B, B2C);

* cleaning systems for offices and residential apartments (B2B, B2C). 

In most of the above, the company Speed Steel can use its advantage, as having physical access to customers, users of the buildings and elevators systems. This is so called "last mile" advantage; in that, since they already install a lot of wires and cables for their elevator systems, they can easily add a few more cables for other systems and services, to generate additional revenue. Additional products, can also be also synergetically useful to all involved parties [SpeedSteel itself, user company, individual customers], e.g. monitoring can be done inside the elevator rooms, but also in corridors and [on-demand] inside customer rooms. 

They could provide services to both client companies and directly to individual customers, e.g. by serving as an internet provider.

[victor-hfu]

Business models - Fee-for-service (FFS)

FFS is a payment model where services are unbundled and paid for separately. In other words: clients pay a fee for a service provided by a business, organization or individual.

Under the FFS model, five general types of fees exist: mandatory, voluntary, requested, membership and hybrid. Hybrid constitutes a combination of other fee types. When a business or organization implements a fee-for-service model, it determines whether to make payments mandatory, voluntary or requested. Required membership constitutes a type of mandatory payment.

Examples: 

Private education:

Charging students for access to education, or for services such as instruction, the use of facilities, and, in some cases, lodging and meals.

Health industry:

Here FFS gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care. Similarly, when patients are shielded from paying via cost-sharing by health insurance coverage, they are incentivized to welcome any medical service that might do some good.

USA Medicare is a national social insurance program, administered by the U.S. federal government since 1966, that guarantees access to health insurance for many Americans. FFS is the dominant physician payment method in the United States.  In the Japanese health care system, FFS is mixed with a nationwide price setting mechanism to control costs.

http://www.medicare.gov/  

http://www.cityofhope.org/

Patent industry:

United States Patent and Trademark Office operates on a FFS model.

www.uspto.gov

Real estate:

Broker is paid a fee for service (not a commission).

http://www.realtor.com/

Gaming industry:

Internet services requiring that users pay to use them. Players may pay to maintain a playing account, as is the case with EverQuest, Warhammer Online, Aion: The Tower of Eternity, or World of Warcraft. This is in contrast to free-to-play games. The games RuneScape, Team Fortress 2 feature both free accounts for no money or pay-to-play accounts, with a much larger list of features. In online game: Habbo Hotel, there are games inside the game, which you may "pay to play" to join into a game whilst it is in progress.  

http://www.eu.battle.net/World_of_Warcraft_DE

http://www.Mootowngames.com

[victor-hfu]

Figure: A visualization of routing paths through a portion of the Internet.

The World Wide Web is a system of interlinked hypertext documents accessed via the Internet. With a web browser, one can view web pages that may contain text, images, videos, and other multimedia and navigate between them via hyperlinks.

http://en.wikipedia.org/wiki/World_Wide_Web

[victor-hfu]

The mobile web is hot and it’s getting hotter everyday.

The 2010 Mobile Web Progress Report revealed that the mobile web is showing incredible growth worldwide: it grows at a far faster rate today than the desktop Internet did in a comparable timeframe. And now, in 2010, there are over 3 million sites.

More and more big brands are adopting mobile Web strategies, but there’s still incredible room for growth considering the number of mobile Internet devices that are being added every day. Consider this: right now, there are four mobile phones purchased for every computer purchased.

http://www.opensrs.com/blog/2010/12/gomobi-is-here-try-it-out-for-30-days-free/

[victor-hfu]

 The Top B2B (Fig. top) and B2C (Fig. bottom) Priorities: in Response To Mobile, Social, and Cloud Macro Trends

The competing needs to optimize while innovating appears throughout the Q3 2010 Software Insider survey of 135 organizations with e-commerce initiatives.  Respondents selected their top 5 priorities for the next 12 months and the findings show:

    •    B2B e-commerce initiatives focus on a vertical last mile build-out of existing efforts. Customer self service (60.24%), vertical requirements (56.63%), product and service sales (51.81%), multi-channel selling (49.40%), and integrated support through chat emerge as the top 5 priorities for the next 12 months (see Figure).  Given that all but 11 of 83 surveyed respondents have initiatives greater than 7 years old, organizations face a serious need to renew existing programs.  Increasing competition requires operational efficiencies in right channeling services and integrating support capabilities through chat.  Vertical requirements improve the relevance of offerings to meet specific industry-specific challenges.  Product and service sales reflect the shift from manufacturing to distribution and related higher margin revenues from installation, service plans, and warranty management.  Multi-channel selling reflects the need to integrate existing e-commerce efforts with other B2B buying experiences.  Of interest, social business and social commerce still remain a lower priority for B2B organizations.

    •    B2C e-commerce findings indicate greater emphasis on a personalized buying experience. The 61 respondents ranked customer self service (62.30%), product and service sales (57.38%), stakeholder driven personalization (55.74%), multi-channel selling (52.46%), and end to end “perfect orders” (50.82%) as the top 5 priorities (see Figure).  In fact, consumer expectations for greater levels of personalization drive organizations to apply full-featured e-commerce to mobile devices, add location based services and augmented reality to enhance buying experiences, and reward customer loyalty with earned value programs.  Perfect orders must address a seamless experience from opportunity to order capture; order capture to order fulfillment; order fulfillment to order completion; and order completion to collection.  In addition, Social CRM (SCRM) use cases play a key role as additional social features such as product reviews, peer communities, and use of video bolster existing efforts.  Expect prioritization around social business or social commerce trends to increase in the next 12 to 18 months as some customer segments increase social media adoption.

http://blog.softwareinsider.org/2010/09/06/research-report-next-gen-b2b-and-b2c-e-commerce-priorities-reflect-macro-level-trends/#more-6056

[victor-hfu]

Next Generation E-Commerce Evolves To Meet Next Gen Requirements

Given the landscape, organizations must adjust to less control of their business than the prior decade.  The rules have changed.  Buying behaviors have evolved.  Consequently, organizations must relearn and reengage to revive their e-commerce initiatives.  They should establish trust, not obfuscate through half-truths.  They should focus on influence, not attempt at regaining control.  Consequently, e-commerce must play a key role in the transformation of the customer’s buying experience.  In fact, next generation e-commerce initiatives must address 12 main shifts (Fig; and in italics below).     1.    Ownership. Governance transitions from a siloed role to part of the overall buying experience.     2.    Approach. Organizations shift from top-down messaging to bottom-up advocacy.     3.    Business requirements. Efforts focus on completing industry vertical specialization.     4.    Marketing style. Initiatives target bolstering brand trust.     5.    Channel management. E-commerce re-integrates back to the overall buying process as a significant entry point to customer lifetime value.     6.    Business process. Functional excellence grows into end to end perfect orders.     7.    Personalization. Improvements in technology enable tailored buying experiences.     8.    Business analytics. Business intelligence moves from basic reporting to real-time decision support.     9.    Social media. Non-existent programs evolve to address one of the greatest trends of the decade.     10.    Product margins. Organizations must evolve to grow profitable revenues.     11.    Product life cycle. Decreasing product life cycles require better inventory management and demand planning.     12.    Deployment options. Multiple options exist and organizations have more opportunities to experiment with try and buy SaaS alternatives.

http://blog.softwareinsider.org/2010/09/06/research-report-next-gen-b2b-and-b2c-e-commerce-priorities-reflect-macro-level-trends

[victor-hfu]

e-business makes the world more transparent:

the bigger the e-business share in a country, the lesser the proportion of shadow (gray, black) economy it gets.

[victor-hfu]

Electronic business

  E-business involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. E-commerce seeks to add revenue streams using the Internet to build and enhance relationships with clients and partners.

According to research firm IDC, the size of total worldwide e-commerce, when global business-to-business and -consumer transactions are added together, will equate to $16 trillion in 2013. IDate, another research firm, estimates the global market for digital products and services at $4.4 trillion in 2013. A report by Oxford Economics adds those two together to estimate the total size of the digital economy at $20.4 trillion, equivalent to roughly 13.8% of global sales.

"The New Digital Economy: How it will transform business", Oxford Economics, 2 July 2011

[victor-hfu]

Examples of companies, belonging to a particular type (by economic activity): B2C  business-to-customer       Otto Group (DE), Amazon, Dell B2B  business-to-business       GM, Ford, EDI networks C2B  customer-to-business      Priceline, Accompany C2C  customer-to-customer     e-Bay, QXL B2G  business-to-government  FleishmanHillard (DE)