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ROI Advice for Decision Makers
As organizations tighten ROI standards for e-business, the focus shifts from cost savings to managing customer value for top-line growth.
Posted Jun 8, 2001
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While e-business ROI potential will vary dramatically from project to project and company to company, the following checklist provides some general tactical insights for decision-makers in areas that profoundly impact the success of an e-business initiative.

Software

Software choices should also be made with a view to shorter investment cycles. Because e-commerce, CRM and content management software are specialized and expensive, return analysis should focus on short-term gains to be realized from these investments, which climb quickly into the hundreds of thousands of dollars for most organizations.

• Over time, e-business software costs will drop substantially, while their components will become much more full-featured. This has proven the case already with credit-card software, such as CyberCash, which commanded huge premiums when first introduced. Companies locked into an investment amortized over a five-year period will not be in a position to upgrade to cheaper, more powerful software as it becomes available.

Scalability

The ability to scale a solution quickly is essential to online survival. Careful analysis of the actual and potential customer base will enable the organization to prepare for fluctuations in traffic. A project should ideally be scaled to the maximum number of customers who will go online over the course of two years. To plot an appropriate path, decision-makers must consider how fast that online population is growing.

• While a multiple midrange server approach to hardware enables the organization to respond readily to increased traffic at the front end, the back-office portion of the e-business solution is generally less flexible. "We've grown accustomed to living on the just-in-time basis on the Internet," explains Tom Oleson, research director for IT strategies at IDC. "And you can't do that with the back-office stuff. That's where you have to be really robust, solvent."

Choosing a Software Vendor

Deploying software from multiple "best of breed" vendors can have the long-term disadvantage of impeding the flow of customer information across the organization if not properly integrated. Integration of disparate software can
be both time-consuming and expensive. Before deciding on a vendor, ascertain how open its solutions are. How many customer databases will you have to maintain? Will you need one for e-mail management software, another for marketing software, and so on?

• Make sure the software vendor's architecture is browser-based and supports browser-based distribution of the intelligence and reporting capabilities, without the need to install another information access solution.

•Understand the breadth of a prospective vendor's offering and the extent to which it will integrate with existing systems. Assess how easily the solution can be customized to a particular industry or a particular business environment.

• Integrated suites can simplify many aspects of implementation, but some may require the organization's processes to conform to the way in which they are structured, rather than the reverse. This can be an advantage if the software enables the organization to reduce the costs of integration over time.

• Before deciding on an integrated suite, assess whether the provider's strength is in the areas that will most impact your organization. A vendor whose offering is strong, in terms of online sales and marketing applications, may be weak in call center support, for example. An integrated solution inevitably requires some level of compromise.

Hiring a Consultant/Developer

The decision to develop a solution in-house or to hire a third-party consultant depends on the nature of the implementation, the expertise available in-house, and the impact that allocating internal resources will have on the organization's performance. According to IDC's research, companies are split evenly over whether or not to outsource e-business development.

• Companies hiring a consultant should ensure that knowledge of the implementation is transferred to internal personnel by the time it is complete, rather than leaving this information to third-party consultants over whom they have no control.

• Often internal IT staff is best equipped to handle integration of legacy systems, especially if they are proprietary, but is not necessarily adept at handling Web development. A good consultant will favor splitting the solution development in these cases. Be sure that a prospective consultant believes in teamwork between internal and external staff.

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