Adaptive strategies may solve e-business quagmire

META Group shares its findings of alarmingly low understanding among businesses on e-business investment and strategy. It warns of adverse consequences for companies failing to come to grips with e-business.

A META Group survey of US executive management e-business strategies earlier this year showed more than 30% of companies had no idea of what their e-business budgets were, and more than 70% had either no idea of expected income or no expectations of a return on the investment whatsoever.

SINGAPORE - If one believes that the Asia Pacific region is 12-18 months behind the US and that e-business strategy budgets are now 3-5 times greater than they were just three years ago, then ill omens are in the air.

"Companies are often making decisions based on the here and now rather than looking to the future for truly strategic advantages."

- David Cearley
META Group

David Cearley, senior vice-president and co-research director, says, "Companies are often making decisions based on the here and now rather than looking to the future for truly strategic advantages."

"The pressure to deliver more for less is forcing companies to make technology decisions costing millions of dollars today that are expected to bring little, if any returns. But worse, this will leave them with expensive disposable technology platforms in 5 years' time that will again need to be replaced to remain competitive."

Change-management issues alone are expected to cost businesses billions of dollars over the coming years as they struggle to introduce quality of service into patchwork implementations.

A solid e-business foundation is required to enable organizations to react and respond quickly to competitive market forces while maintaining stability and quality of service at a reasonable cost.

Companies need to see the full picture of e-business and where they should be making investments and what kinds of issues they should be dealing with going forward.

"Companies who think that CRM can be addressed and defined by a single product are going to fail."

- David Cearley

This requires an understanding of a structured model to work through the gamut of e-business decisions.

META Group approaches several critical areas within client companies.

For a start companies ought to build 'structure transformation programs' around these areas - namely Customer Relationship Management, (CRM) & Commerce Chain Management (CCM), the back office, adaptive infrastructure strategies, and in managing value.

"Companies who think that CRM can be addressed and defined by a single product are going to fail," said Cearley. "CRM is all of the customer-facing and customer-touching parts of e-biz strategy."

Businesses should look at all of the parts together and begin with a focus on their customers, and let the customers drive their internal business processes.

According to Cearley, successful businesses are ones that allow the customer processes drive the way their business defines those technologies across those critical areas and take that structured approach.

Speed being crucial in e-business, the need to deploy solutions or applications quickly is paramount.

"Speed is key. To create an adaptable infrastructure is to create an infrastructure that can change rapidly in response to quickly changing e-biz needs,"

- Cearley

Hence the need for 'Adaptive Infrastructure Strategies' - in essence, a structured approach to building an architected infrastructure base - hardware, software, middleware services, database service, etc.

The structured approach is where a common platform is decided based on the type of business and the anticipated needs of that business 3 to 5 years down the road. This would prevent the business from falling into the trap of building a completely new infrastructure simply to cater to a new application each time they appear.

Companies would then be able to avert the common problem of competing pieces of infrastructure that don't integrate well. It would also make the problem of having 'expensive disposable technology platforms' that are going to be disposed off since they cannot be reused non-existent.

This helps avoid duplication of technologies which needs to be thrown away because of new application requirements, saving businesses millions of dollars over several years.

To achieve this, there is a need to decouple the infrastructure from the application. Based on the existing infrastructure, for example the 'Hub and Spoke' architecture - one of 7 types of architectures identified by META Group - and build the new application that fits into that pattern on top of this existing model. This way, companies can quickly get up to speed to meet the competition.

"Speed is key. To create an adaptable infrastructure is to create an infrastructure that can change rapidly in response to quickly changing e-biz needs," said Cearley.

Companies must be able to manage and maintain these infrastructure platforms and the applications.

"...We should look to the US experience and apply the lessons learnt there to avoid making similar mistakes."

- Cearley

That relates closely to operational excellence, which requires setting up appropriate Service Level Agreements (SLAs) that can be replicated to the business for new applications, and centers of excellence.

META Group assists businesses in identifying their needs. "We tell them what their models for operational excellence should be. Then we have follow up discussions with additional products and programs that can help them build out those systems," adds Cearley. "We build the strategies and tactics along with our clients."

In addition to doing market forecasting, META Group suggests strategic models that IT companies can put in place to exploit industry trends. In addition META Group would also go through the implementation planning with their clients, and provide businesses with practical solutions.

META Group's advice to the regional business community is to recognize that e-business is not simply about new technology, but rather it is a catalyst for changing existing business and technology models in order to be prepared for opportunity.

According to Cearley, information will be the new "gold", and information technologists must take centrestage in driving the business models of the future.

He elaborated, "Given the burgeoning opportunities for e-business in the Asia Pacific region, we should look to the US experience and apply the lessons learnt there to avoid making similar mistakes."

META Group has been operational in Singapore for over two years.

David Cearley was speaking to participants at a two-day conference for the regional IT and e-business directors which was organized by META Group.

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