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E-ENABLEMENT: The Enterprise Gets E-ready

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DQI Bureau
New Update

Here’s a questionnaire for your enterprise:

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  • Does it take so long to upgrade your systems that by the time it is done,

    you need to start working on the next upgrade?

  • Is information difficult to find, access and manage?

  • Are security problems getting worse instead of better?

  • Are maintenance and ownership costs getting out of hand?

  • Is the need to streamline internal processes becoming increasingly urgent?

  • Are you unable to manage your network remotely?

  • Are your system administrators spending most of their time fixing things

    that don’t work, instead of adding new functionality?

If you answered yes to a majority of these questions, your

network isn’t e-ready, and it’s time you thought about Web-enabling your

enterprise lest you lost out to a more Internet-savvy competitor.

The new economy enterprise has to realize the urgency to be

Web-enabled, the sooner the better. "It’s time for all enterprises to get

cracking with their e-strategies. If you haven’t started as yet, you are

already late," says Sanjay Jain, Partner, NetAcross.

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Towards a complete e-enterprise

The process of e-enablement of any enterprise is not merely

about having a Web presence. It has evolved over the years to include many more

features that would transform the entire business. A complete e-enterprise has

to be ready for supply chain management (SCM), customer relationship management

(CRM), enterprise resource planning (ERP) and many knowledge management and

infrastructure management disciplines. A global survey conducted by IDC

indicates that while 65% corporates have created Web sites, only 30% of those

sites are e-com enabled.

The E-strategy

A complete e-business strategy should include:

Vision

How and to what extent you want to transform your

business through e-enablement

Leader

The business leader or group of leaders who will be

responsible for implementing the plans

Plan

An plan or architecture that incorporates information,

processes, infrastructure, partners and people

Implementation

A realistic step-by-step strategy to implement the plan

Sourcing Strategy

From where to source the requisite skill set, people and

infrastructure to fulfil the plan

Risk Management

Learn from your experience, identify the risks and work

out how you will manage them

Business Model

Identify the sources of revenue and cost structure to

support your plan.

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However, if your organisation is among the large IT-savvy

enterprises, you would have already automated your internal business processes

through ERP software such as SAP, Baan or ESS. Vijay Sethi, GM, business

solutions, IT, Ranbaxy, explains that since Ranbaxy had already invested in SAP,

it had to spend only about Rs 25 lakh on extending its functionality for the

Web. Most ERP vendors today offer supply chain functionality in addition to

transactional functionality. According to a Nasscom study in India, the most

commonly found business practice is to establish extranets or EDI infrastructure

for an initial or learning period. This is subsequently upgraded to

Internet-based access mechanisms for the supply chain. A global study conducted

by Gartner Group says that by 2004, 90% of enterprises that fail to apply SCM

technology and processes will lose preferred supplier status and thus

profitability.

Aligning business with IT

Before an enterprise implements any e-enabling technology, it

is very important to work out a detailed strategy for aligning the company’s

business processes with its Web plans. One needs to define the points of

interaction with customers, do a cost-benefit analysis and decide what you can

achieve from e-enablement. "Any enterprise trying to migrate to e-business

has to first decide why it wants to go for it. It is very important to have a

clear understanding of how it will implement and how it will integrate and

augment its offline business," says Jain.

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Till recently, the primary concern of any enterprise going

for e-enablement was to get there before its competitor could. The mistake that

most early entrants made was that they hurriedly went for implementation,

whether or not the technology was relevant for their businesses. "Nine

months back everyone wanted to move to e-business. When suddenly the market

fell, most of them realized the need to align IT activities with their

business," says Jain. In a rush to be there, companies had implemented

half-baked plans, without the support of back-end processes.

Enterprises are gradually realizing the need to have a

sustainable business model. According to Sethi of Ranbaxy, the Web approach of

enterprises has become more serious over the last six months. "In fact, we

started our Web initiative only three months back because we wanted to be very

clear on what we wanted to achieve from it. We did not want to join the me-too

bandwagon," he says.

Doing away with legacies

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While the Internet has created opportunities for new

businesses to emerge, it has compelled the traditional companies to change the

way they do business. Old ways of invoice processing are being replaced by a

new, more diverse order that changes the approach to trading partner

relationships. New business models have given way to electronic marketplaces,

electronic catalogues and electronic bidding systems, which are creating an

open-sourcing environment.

Most global companies have created  their Web sites, and 30% of them are already e-com enabledTraditional enterprises worked on a more conservative

approach based on a command-and-control philosophy and limited flow of

information to the outside world.

E-enablement, on the other hand, demands a free flow of

information and hence a need to do away with these barriers.

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Studies indicate that the Internet fever has already caught

on with Indian enterprises. Compelled by competition, they are all moving

towards new emerging business norms. A Nasscom projection shows that e-commerce

transactions in India are expected to reach Rs 1,200 crore this year. More than

55% of corporate respondents say e-commerce transactions are now an integral

part of their corporate plans. Of these, nearly 85% are industries that did not

have direct or frequent contact with end consumption. About 23% of the top 500

companies in India already have some form of e-commerce system in place. These

have been facilitated either through the upgradation of existing IT systems or

fresh installations configured for e-commerce transactions. The traditional

brick-and-mortar businesses no longer want to be restricted to their old

fashioned ways of doing business. It’s time to get rid of old legacy systems

and become Net-savvy. "The new emerging technologies bring with them the

best international business practices. Our company has been quite open to

them," says Sethi.

B2B or B2C?

A well-planned e-model can work wonders for any business,

whether it is B2C or B2B. Many of the routine business activities can be

automated, which minimizes physical interaction and saves cost. In the Nasscom

survey, more than 90% of the respondents cited perceived efficiency in supply

chain management as a motive for B2B e-commerce and enhanced customer service

for B2C transactions. The other cited benefits included moving

towards just-in-time management.

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Samsung’s IT/telecom arm, for instance, today manages a

5,000-dealer network with a staff of only 15 people. "Without such a

network, it wouldn’t have been possible for us to manage with such a thin

staff. It’s not just convenient, but also keeps our manpower cost low,"

says MS Bhalla, business manager, Samsung Electronics India Information and

Telecommunications. Fortunately for Samsung, all its distributors were IT-savvy,

but even in cases where all the dealers are not online, automation of even a

fraction of transactions can be useful. "I can’t afford to wait till all

my business contacts get e-enabled. Even if 10% of them are online, I feel it is

worth the effort," says Sethi of Ranbaxy. Also if you expect revenues right

away, it’s probably the wrong model. "We can’t expect revenues to come

immediately, but we can certainly be prepared for the future," agrees

Rajesh Uppal, IT head, Maruti.

Not without risks

Even though projections appear optimistic, enterprises need

to be more realistic in their approach. E-business is not risk-free. One cannot

expect dramatic results at least for some time. It may not be difficult for a

large enterprise to invest a few lakh rupees without expecting immediate gains,

but for the smaller enterprise it won’t be that easy. The Nasscom study has

found that for the SME sector, some of the concerns with e-commerce revolve

around fear of eroding their existing customer base and technical issues arising

out of lack of computer expertise and the cost of necessary hardware and

software.

Security is another major concern with all enterprises,

whether large or small. "E-enablement has certainly made companies more

vulnerable to risk. They have started investing heavily in new technology,

without having their security measures in place. You can’t afford to wait till

the damage is done," warns Neel Ratan, head, operations and risk

management, PriceWaterhouseCoopers.

Moreover, the opportunities unleashed by the Internet cannot

be fully exploited in the absence of an adequate physical infrastructure and

bandwidth. The online activities will remain restricted to exchange of

information and will not translate into actual business transactions till the

payment issues are addressed. Although the IT ministry has been working on cyber

laws, a number of regulatory norms are yet to be tackled. Even after the

mechanisms are in place, businesses will take time to get rid of their legacy

systems and adapt to the new economy environment. There is no doubt that the

e-enterprise has arrived and is here to stay, but it will take time before

e-business can really take off in a big way.

SHWETA VERMA



in New Delhi

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