TRANSFORMATION OF TRADITIONAL BUSINESS TO ELECTRONIC BUSINESS A transformation cum maturity model and transformation matrix Asif Ali Munshi, Fareed Hussain Faculty of Management, University of Tehran, North Kargar Ave,Tehran, Iran Keywords: Electronic business, electronic commerce, business strategy, IT strategy, business infrastructure, IT infrastructure, internet. Abstract: Electronic business provides many benefits to organizations that embrace on it. It is true that ebusiness improve business processes, integrate business processes and its corresponding value chain, give speed to internal and external organizational activities etc, but it poses the greatest challenge to today’s organizations to transform their traditional businesses into electronic business. To assist organizations, in making successful transformation to ebusiness, in this paper, we first distinguish between electronic commerce and electronic business on the basis of three parameters of scope, support and technology. After that ebusiness transformation cum maturity model is proposed, whose five levels acts as a benchmark to assess an organization at different maturity levels. Emphasis is not given on discussing maturity levels, but on the transformation stages that acts between any two levels of maturity. For this purpose, transformation matrix is proposed, which will guide organizations to take critical organizational and information technology ( IT ) domains into consideration during each transformation stage. 1 INTRODUCTION business scenario. Businesses always try to leverage new technologies in order to remain competitive in As we enter into the 21st century, the importance of the marketplace. Internet has been used by the Information Technology ( IT ) is felt more and more. business entities more than any other entities in the One of its promising technology is computer form of e-commerce and e-business. networks and internet. From the first day of its e-commerce is the buying and selling, and commercialization, internet has changed our lives in marketing and servicing of products, services, and many ways, for example the invention of e-mail information over a variety of computer networks removes the concept of distance from (James,2001), while as e-business is the use of communication, the concept of electronic internet and other networks and information marketplaces has removed the concepts of physical technologies to support e-commerce, enterprise location for businesses, any kind of information is communications and collaboration, and web enabled just a click away etc. business processes both within an internetworked The impact of all of these technologies is felt enterprise, and with its customers and business more as we make progress in our daily lives, but the partners (James,2001). Although the definitions biggest impact of internet technologies is felt on Scope Support Technology e-commerce Narrow Partial Less e-business Broad Wide High Figure 1: Shows the difference between e-commerce and e-business 33 Ali Munshi A. and Hussain F. (2005). TRANSFORMATION OF TRADITIONAL BUSINESS TO ELECTRONIC BUSINESS - A transformation cum maturity model and transformation matrix. In Proceedings of the Second International Conference on e-Business and Telecommunication Networks, pages 33-40 DOI: 10.5220/0001409900330040 Copyright c SciTePress ICETE 2005 - GLOBAL COMMUNICATION INFORMATION SYSTEMS AND SERVICES distinguish between the terms but many of us still use between the two terms, in the next section we will the two terms interchangeably, therefore more robust look at how enterprises use these platforms and what way is needed to clearly distinguish between the two problems they encounter when leveraging the web. terms. 3 RISE AND FALL OF DOTCOMS 2 DISTINCTION OF E- COMMERCE AND E-BUSINESS In 1990s, much of the hype was created for ecommerce or dotcom sites. Almost every In this section we will try to make an explicit organization or business was in a rush to set up its difference between e-commerce and e-business on own website. They thought this new model of doing the basis of there parameters of scope, support and business was profitable without thinking about say, technology ( systems ) as shown in figure 1. As far as how a traditional business can be transformed on this e-commerce is concerned its scope is narrow, new platform. With the old mindset they tried to copy facilitates different types of transactions, whereas the their old business models simply on the net. In this scope of e-business is broad, not only encompasses blind rush organizations increased their IT spending the e-commerce transactions but facilitates the and uploaded the company websites in the shortest effective communication and collaboration within the possible time. This phenomenon gave rise to the new enterprise and with external environment ( suppliers, generation of business, where business could be done partners, customers ). Another difference between almost virtually e.g Amazon.com, ebay.com etc. This ecommerce and ebusiness can be drawn on the basis way of doing business virtually was called what we of support, ecommerce supports only part of an know today as ecommerce. After ecommerce, enterprise, it can bring web initiative benefits to sales organizations started expanding their web initiatives and marketing departments but ebusiness supports the to outside suppliers and partners also, thereby giving whole enterprise, in its broadest sense ebusiness gives rise to ebusiness, where all of the business was done rise to an enterprise which works only on electronic on the web. But by the year 2000 it became clear that platform. All of its departments are interconnected, leveraging the benefits of web, simply by setting up a databases are consolidated, and more transparency site was not enough. Dotcoms started falling one after exists between ebusiness enterprise and its suppliers another. Businesses were forced to file for and partners. Another parameter that can be used to bankruptcy, take down their websites etc. The distinguish between ecommerce and ebusiness is situation became so critical that many industry technology. Ecommerce may need less technology experts said that the ecommerce era was over. After dose, systems are needed only to handle online the downturn of ecommerce it was the turn of some ordering, customer service queries etc via the website ebusinesses to post the problems for survival. of an enterprise. But ebusiness certainly requires high technology dose. To reep the benefits of a true ebusiness in addition to systems needed for 4 REASONS OF FAILURE ecommerce, an enterprise may also need to install an ERP system for internal consolidation and SCM and At the same time when newly born dotcoms had CRM systems to provide for the integration with the crippling situation, Boston consulting group external environment. mentioned that the primary cause of failure of After taking into consideration the above dotcoms was not the bad execution but bad thinking. parameters we are able to define the ecommerce and The majority of companies held the misguided belief ebusiness in a robust way. Thus we define that speed and scalability should take primacy over ecommerce, as the internet or web enabled platform, the principles of strategy (BCG,2002). An internet having narrow scope, supporting the enterprises business will work only if its business management partially, requiring a less technology dose to facilitate strategies are properly integrated into a carefully the transaction on the net. considered plan, built on a foundation of realistic and attainable goals and objectives (Raymond,2001). Whereas ebusiness is the platform having broad Also IT strategy must be in place in order to execute scope, supports the whole enterprise, and requires the business strategy, therefore business strategy and high technology dose to support all the business IT strategy must be given importance while planning functionalities of an enterprise. After differentiating for any web initiative. 34 TRANSFORMATION OF TRADITIONAL BUSINESS TO ELECTRONIC BUSINESS: A transformation cum maturity model and transformation matrix 5 IMPORTANCE OF BUSINESS both the management team as well as IT management STRATEGY AND IT team. STRATEGY Keeping all the above discussions in mind, it is not an easy task to transform a traditional business to For any business it is necessary to have a sound ebusiness without rigorous planning. Transformation to ebusiness must be tackled with more sensitivity business strategy, the same is true for web businesses. The business and its management must have clear because the fate of the whole business depends upon vision and must be fully aware of its strategic this transformation. Therefore we must have a proper model and methodology to led the transformation of objectives and goals. They must devise strategies to attain their strategic goals and objectives. The basic an ordinary business enterprise to an ebusiness principle of a traditional business management team enterprise. Much of the literature written on web based businesses discuss the ecommerce issues and was the development of a strategic plan in order to give the business a competitive advantage in the many researchers have proposed maturity models for marketplace. As the rules of doing business in the ebusiness, but there is a need to discuss the transformation period, which exists between any two digital economy may have changed but the basic principle remains the same even for businesses levels of maturity.