The party is over and the hype has died down.   The emerging technologies behind e-business are not going to kill your company tomorrow, but they are also not going away.

If you have not already started, now is the time to get serious about using these powerful new weapons to maintain or improve your competitive advantage.  It’s time to dive in to the nuts and bolts of implementing your e-business. 

Getting There is All the Fun

There is no single characteristic that defines a company as an “e-business.”  Instead, the term represents a constantly changing spectrum of technologies and processes.  From email to web sites to order entry on a cell phone, the technologies are a moving target.  Therefore, you must recognize that developing your e-business is an ongoing process – a journey rather than a destination.  Don’t fixate on a specific technological endpoint.  Instead, prepare your organization to be flexible, adaptive and “change friendly.”

 So, how do you move now to take advantage of these exciting tools without getting burned?  How can you avoid the common pitfall of investing in the wrong technology?  How do you balance the need for competitive advantage against the risks of living on the “bleeding edge? ”  No single article or white paper can give all the answers, but the following three guidelines will dramatically cut your risk.  

#1: Don’t let technology drive your business 

Fundamentally, the emerging technologies are nothing more than tools that have the potential to improve your business processes.  Looking down from 10,000 feet, industry gurus proclaim that the various instruments of e-business represent a broad paradigm shift.  The reality on the ground, however, is that a large number of complex systems must be implemented successfully to fulfill even a portion of the grand vision.  This doesn’t mean that new technologies can’t have a revolutionary effect on business.  Rather, it means that their effect is limited by how much they improve basic business processes.  This distinction is key to keeping new technologies in perspective.  You must evaluate them solely in terms of how they can enhance your business. 

 By this simple measure, many of the ill-defined products currently in vogue (e.g. e-business “platforms,” “transaction enablers,” “application services”) are of dubious value. 

If a software or service vendor can’t explain the business benefits of his products without resorting to jargon there probably aren’t any.  To some extent, these vendors exploit the intimidation factor and prey on our fear of not “getting it.”  You must reverse the tables and ask hard questions about what their stuff can do for your bottom line. 

When planning any business initiative always start with the fundamentals: markets and competitors, channel strategy, financial goals and organizational effectiveness.  These define what you want to accomplish.  Only after the goals are laid out should you consider the specific technology tools that make up the “how” of your plan. 

As an example of technology myopia, consider the debate about two standards used for inter-company data communications. 

XML vs. EDI.  Many experts describe how XML, the newer technology, is cheaper to implement and more powerful than EDI.  These assertions are rarely qualified or placed into a specific business context.   In strictly technical terms they may be correct, but it’s a bit like saying that “Italian is better than Japanese.”  Italian may be more efficient in some ways (e.g. 26 keys on the keyboard vs. thousands), but if all your employees, customers and suppliers communicate using Kanji this fact is meaningless.  Here are two facts that mitigate the differences between these two technologies for most companies:

§ You don’t need an expensive value added network (VAN) for EDI.   Virtual private network (VPN) software, which is included in the Microsoft Windows operating system, allows you to send EDI files securely over the internet.  This eliminates the single most commonly identified cost differentiator in the EDI vs. XML debate. 

§ There are almost no useful XML standards.  XML is very flexible, but this means that partners must agree on detailed data definitions in order for them to communicate meaningfully.  In most industries, this has not occurred, despite years of hyped standards and initiatives.  EDI also requires field definitions, but it is much stricter and so the definitions are simpler.  More importantly, the EDI standards are well established in many industries. 

The point here is not that EDI is better than XML.  The point is that the choice of one over the other should be a carefully researched business decision rather than a technical beauty contest. 

#2: Insist on incremental value

In the typical high-tech project the benefits are only achieved after most or all of the development is complete.  Often, the real bottom line impact awaits full deployment and training followed by months or years for the changes to “work their way through the system” or be adopted by your partners.  In some disciplines, where the pace of innovation is slower, this may not present a problem (aside from the obvious investment implications).  In the high-tech arena, however, these long time horizons are deadly.  You may be able to successfully predict what the reigning technology standard will be in 6 months.  But how confident can you be of your choice three years from now?  The technology bandwagon may pass you by before you see one dime from your investment.   Many companies spent the last 5 years and millions of dollars improving their proprietary ERP software only to find that what they really need now is an open trading platform. 

Figure 1:  Typical Project Payback		Figure 2:  Incremental Project Payback

Although it may be extremely difficult, you must insist that lag between investment and benefit is always less than 6 months.  This doesn't mean that longer projects aren't allowed.  Rather, it forces such projects to produce some benefit before they are fully implemented.  This discipline is the only way we know to avoid building a technological road to nowhere. 

#3: Get your own house in order first

This runs somewhat contrary to current thinking on the business value of new systems.  Most experts contend that you will achieve the greatest benefits from improvements to your “external facings” using tools like Customer Relationship Management (CRM), supply chain optimization and e- marketplaces.  And, if your internal databases and processes are optimized, this view is correct. 

Most companies, however, are not in this situation.  Very few distributors, and even fewer manufacturers, know their real-time inventory levels and order statuses.  It’s quite common to find product catalogs and pricing spread amongst dozens of incompatible systems within a single organization.  Key customer information is often only stored between the ears of an inside salesperson.  These are all examples of “dirty” data: information that is dispersed, unorganized, and/or out of date. 

The fact is, if your internal information sources are truly "clean," the effort required to interface to a new supply-chain partner, regardless of the interface protocol or technology used, is very small. 

Fortunately, you have much more control over your internal systems than you have over those of your partners and customers.  Cleansing your data systems also offers benefits beyond integration, such as improved decision- making and better customer service.  For all of these reasons, it makes sense to start the migration from your own backyard. 

Steve Deist ( This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ) is responsible for the Operations Practice at Indian River Consulting Group. IRCG is an experienced based firm specializing in Distribution. Started in 1987 by J. Michael Marks, IRCG’s specialists consult with distributors and suppliers to make the changes necessary to maintain competitive advantage. You can contact them by calling 321-956-8617, or visit www.ircg.com for more information.

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