An E-DSS for Strategic Planning of
E-Commerce Website Development
Ranjit Bose
Associate Professor of MIS
Anderson School of Management
University of New Mexico
Albuquerque, NM 87131
USA
E-mail:
ABSTRACT
In this new millennium, entirely new markets, products, and services are emerging from digital technologies such as Internet based businesses or e-commerce. Strategic planning of e-commerce website development is one of the critical activities of an organization within the context of its e-commerce investment and success. The unstructured nature of this problem-solving activity makes it an appropriate candidate for decision support systems (DSS) based solution design. In this paper, we propose the development of such a DSS, which we call an e-DSS, since it is Internet based. The purpose of this research is to analyze the requirements for creating the e-DSS. The research findings are organized and presented as detailed requirements and content assessment of each of the e-DSS components, which include the user interface, model base and database. In particular, these findings will immensely
help the information technology managers and professionals who are considering construction of such a DSS for their organization.
1. INTRODUCTION
Today’s e-commerce environment is increasingly becoming complex, the focus is towards using “The Web” and its enabling technologies to strategically create a web presence or website that can provide value-added capabilities and integration in all aspects of a business’s functional and operational areas. More businesses are moving toward these electronic processes and procedures that use e-commerce, pushing the rest of the businesses to take action or be “e-lagers,” that is, left behind. For example, Lai and Yang (2000) predict that, “total value of goods and services traded over the web in the United States alone will reach US$327 billion in the year 2002, an average annual growth rate of 110%.” Interestingly, Ince (2000) notes that, “only about half of small businesses even have Internet access. Of those, only a small percentage has continuous Internet access. To really open up this market, you have to get people to understand that the Internet is something that can be useful to their business.”
E-commerce can be defined as internal and external operations of businesses that are performed at high speed and response rate to satisfy the customers, who expect real time communication and guaranteed satisfactory outcomes in products and services. The foundation of e-commerce, in an organization, relies on developing appropriate websites based on its business strategies. It is then critical for decision-makers to strategically plan the e-commerce website development, as well as for them to know what tools and technologies could be used, and how they could be used to analyze and to act effectively on this new paradigm.
In an unprecedented manner, today’s e-commerce requirements are placing increasing strain on decision-makers to have the channels available and the infrastructure visible and effective. Therefore, a specific Internet-based DSS which would provide insight into the critical and complex activity of strategic planning of e-commerce website development could be quite beneficial to a range of companies from startup to Fortune 500. The decisions that would be made based on the strategic planning of e-commerce website development will directly impact the ability to satisfy customers, suppliers, and key stakeholders.
This research contends that in this “e-era,” a specific Internet-based DSS for strategic planning of e-commerce website development, which we call an e-DSS, is needed. The unstructured nature of the above problem makes it appropriate for a DSS based solution. The e-DSS would be able to provide alternative strategies, as well as facilities to analyze and evaluate these strategies for selecting the best strategy for an organization for its e-commerce website development. The implications of such a system are, first, the e-DSS would bring together new models, new data as well as information, and expert e-commerce knowledge that many individual organizations and researchers have successfully utilized and are seen as critical in such development. Second, the e-DSS would provide the decision-makers such as marketing managers, IS managers, and executives the expectations, investment resources, threats, risks, costs, and opportunities of e-commerce website development.
The purpose of this research is to analyze the requirements for creating the e-DSS. The research findings are organized and presented as detailed requirements and content assessment of each of the e-DSS components, which include the user interface, model base and database. In particular, these findings will immensely help the information technology managers and professionals who are considering construction of such a DSS for their organization.
2. CHALLENGES AND ISSUES FOR E-DSS
Creating a strategic website for e-commerce has many challenges and impact on an organization’s functional, managerial, and strategic levels. Specifically, the major groups impacted are strategic planning, IS departments and marketing. Although, other groups, such as accounting, operations and procurement could be included. For the purpose of this research, only the major groups have been studied and analyzed.
Strategic planners such as small business owners, CEO, CFO, and VP marketing are continuously looking to improve business but are also inherently risk adverse which in itself creates challenges in web development and e-commerce integration. In this technology era organizations are more prone to demand risk, innovation risk, and inefficiency risk, the goal would be to use the web to reduce these risks and have a clear risk analysis. Therefore, at the same time there has to be controls and audits in place for websites development and e-commerce projects before hand. Creating a web environment will impact current customers, suppliers, partners, B2B (business to business) (Papazoglou and Tsalgatidou, 2000), and B2C (business to consumer) relationships. Opportunities for focused, quality, high-speed communications products and components for communications could fulfill the need or concept of immediacy; where customers, partners, banks, etc. want everything right now. Therefore, the challenge is to know how to strategically go about integrating websites and e-commerce into the business functions that currently exist to solve business problems. Such critical success factors can impact what decision-makers must take into consideration and how they should take them into consideration when investing in developing new or redeveloping existing website infrastructure.
The IS department deals with issues such as the development and resources of websites that include high performance and high availability, web design, security risks, authentication and privacy issues. The challenges of maintaining user-friendly websites and their applications, and the testing process of middleware technologies are also critical. One of the critical tasks of the IS departments in organizations is prioritization of the above issues. Furthermore, they are challenged with selecting algorithms, design models, agent technologies, and doing analysis of business and market planning.
From the marketing perspective the challenge of e-commerce website development is to define the Internet customer prior to establishing an Internet presence (Kiang, Raghu and Shang, 2000). “Firstly, how many existing or potential customers are likely to be Internet users? If a significant proportion of a firm’s customers are Internet users, and the search cost for the products and services are reasonably (even moderately) high, then clearly an organization should have a presence; otherwise, it is missing an opportunity to inform and interact with its customers… If a firm does not have a website, there is a risk that potential customers, who are web savvy, will flow to competitors who have a web presence. Also, what is the information intensity of a company’s products and services?” (Watson, Zinkhan and Pitt, 2000). Marketing then has to answer the question, what web enabling technologies are geared for their target market? The website must be able to identify and target customer groups and individuals, personalize and give guidance in the buying process, use innovative ways of packaging information and services, such as video clips. Although, the “marketing goal will be the same as ever: deliver the right product to the right customer at the right time,” (Kenny and Marshall, 2000). The question then is what new marketing models can be followed to create an effective website.
The complexity and unstructured nature of the problem-solving process for addressing the above challenges and issues, clearly indicate that an e-DSS is needed. The e-DSS, like any DSS, would consist of the following components: (a) the users, (b) the user interface, (c) the model base, and (d) the database. A brief review of DSS is provided in the next section, which is followed by sections that identify the detailed requirements and contents of each of the above components of the e-DSS respectively.
3. DSS BACKGROUND
Decision support systems (DSS) allow people at many different levels to systematically analyze problems before making a decision (Turban 2001). In the process, these systems extend the range and capability of the decision-making process, increasing its effectiveness. DSS are especially useful in supporting semi-structured and unstructured problems. DSS are very different from traditional information systems that are based on fixed logic patterns and are mainly report generators. In contrast, DSS are customized management systems that support non-routine decision-making and evaluation by offering a variety of options to develop various logic methodologies.
DSS are integrated multi-platform system focused on specific decisions that combines corporate data, models, and interactive, user-friendly software into a single powerful support system under user control. DSS occupy a wide band in the spectrum of data versus model-oriented systems. DSS are always a combination of both data and models, but one system will differ in emphasis from another. The interactive and user-friendly software in DSS is designed to be as easy to use as possible. It is geared primarily toward corporate users who are not very computer-oriented. The system does exactly as it is titled. Its function is to provide decision support. It does not make decisions for the user, nor does it simply supply reports.
DSS assist managers in assessing the future impact of current decisions. The system provides this support by returning results based on “what if?” questions, or assumptions about future conditions. Through an iterative process, a DSS can provide the following types of information to decision makers: (a) decision objectives or criteria, (b) decision alternatives or strategies, and (c) consequences of decision alternatives. In deriving these results, the process may be either model-oriented or data-oriented. Model-oriented processes make comparisons and perform analyses based on an objective model. The model is a coordinated set of parameters or conditions and their relationships. Models usually are derived from analysis of historical data and trends. Data-oriented processes focus on responses for specific inquiries and data analysis. While models deal with sets of conditions, data inquiries and data analysis are concerned with specific questions.
4. E-DSS USERS
The users of the e-DSS would include but not limited to the following members: strategic planners, VP of marketing communications, project leader of web development, marketing design team leader, technical IS managers, programming leaders, web server managers, and database administrators. Other decision-makers that might be involved would be project auditors, human resource managers, enterprise business application leaders who may need large application integration to systems such as Peoplesoft, Oracle Financials, SAP systems, and procurement.
5. E-DSS USER INTERFACE
Given that the e-DSS itself is Internet based, the user interface would have to be very user friendly. The e-DSS would be a true example of what a website might ultimately provide (Conway and Koehler, 2000). The user interface must be “adaptable to different users’ needs and communicate consistent commands to the internal components of the DSS,” (Hoffman and Novak, 2000). In order for the user interface to be adaptable, at the level mentioned above, it must incorporate collaborative technology capabilities and integration facilities and additionally, be able to provide each of the major user groups, specific abilities and functions for them to carry out.
In order for the market planners to generate ideas, that could use animation and video clips, to facilitate marketing products, the e-DSS must be able to display these utilities in a general format so as to help these market planners in the determination of whether such technology might be included in their own site. Data capturing samples from web server logs, and agents or algorithms should be provided to assess what type of critical data must be captured for marketing analysis. Additionally, the user interface must allow the users to use the models interactively, for example, use of cost models must be web form based so that variables could be easily inputted by strategic decision makers; what-if scenarios could be analyzed and saved for later decision ranking by the user group. Integration, for example, with MS FrontPage and Netscape enterprise Web Server could allow web designers and web programmers to jointly create prototypes, then have the group vote or rank website prototypes or integration functions.
Collaborative utilities such as brainstorming engine and workflow engine such as Action Technologies might be integrated with project task applications and vote and ranking process to facilitate the decision-maker’s progress. Additionally, an EDM system such as WebFileShare, where “documents in an electronic form are provided by a single repository (typically a web server), only the current version needs to be provided. Access can be restricted as is required. Essentially, electronic document management (EDM) system provide information to decision-makers in a usable format, much like an executive information system,” (Turban, 2001). This would be ideal for the formation of website strategic planning, proposals, audits, ranking evaluations, and executive acceptance documents. The user interface must also be able to provide input to web models that are within the model base.
6. E-DSS MODEL BASE
It is increasingly becoming difficult for organizations to adjust their business models to accommodate emerging e-commerce technologies that could potentially provide sources for business opportunities. The e-DSS model base would provide a representation of models that organizations would use to understand and analyze the domain problems and their possible solutions. In the model base, the models would include traditional strategic, marketing, and IS models that have been time-tested and proved to be effective such as SWOT (strength, weakness, opportunity and threat) analysis, CBB (customer buying behavior), Systems Life Cycle analysis, Feasibility analysis, decision tree analysis, costing models, NPV analysis, ROI analysis, etc. Additional models, obtained from research literature, that are specific to different aspects of the strategic planning of e-commerce website development process would also be included in the model base. These models can be categorized, by the major user groups’ involvement in the decision process, into three categories: strategic planning, marketing and IS.
6.1 Strategic planning models
Research was conducted to find new strategic planning models that have a clear focus towards expected costs, benefits or expectations, and ability to narrow options for developing e-commerce websites. Three of the most critical strategic planning models found are described below.
Larsen and Bloniarz (2000) developed a model called “the cost-performance model,” (see Figure 1), that is very insightful for the purpose. This model consists of three tools.
“The first tool – the system features and functionality worksheet – helps identify the business goals a web service has to serve, as well as the delivery mechanisms that will be used to support the service (see Table 1). This tool provides a framework for making decisions supported by the model. The second tool – called the performance worksheet – identifies the important factors defined through the first tool (see Table 2). These factors are fleshed out as performance variables, measures, and targets. The factors give an organization a method for defining in detail the goals of a service, as well as a framework for measuring whether the service meets these goals after its implementation. The third tool – the cost worksheet – helps address comprehensive set of cost areas and calculates a rough estimate of the system’s costs (see Table 3). Though any one of the three tools can be used alone or be customized to fit a specific organization’s process of system development, the three together are complementary, providing a comprehensive perspective of the planned system,” (Larsen and Bloniarz, 2000).
The decision-makers, using this model, could then look at the cost and benefits analysis, or use a more formal project cost or resource allocation methods, or a combination of traditional project evaluations such as multiple attribute utility models. Advantages of this model was that it was simple and straightforward to understand, and it also provided the opportunity to organizations that were considering expanding their websites with additional services or upgrades or integration with B2B functions and e-business functionality. It captured the critical information from the planner and gave a detailed process of evaluation and use.