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For the past year, readers of the business press have been bombarded by stories of failure in the Internet world. Much of the focus has been on the demise of dot-coms — a sector of the New Economy that in 2000 accounted for less than 10% of all Internet-generated revenue.
The gloom and doom emanating from the fall of the dot-coms has partly obscured the efforts by many traditional companies to incorporate the Internet into their activities. Some of these companies have made impressive strides, but many have suffered from the lack of reliable guides along the road to e-business transformation. The executives attempting to lead such change have all too often had to make do with half-baked ideas that made great promises but proved to be missing key ingredients.
To help remedy that situation, we have developed an operational model of e-business value creation that is backed by substantial research. We have tested the model, which is rooted in what is known as information-technology business-value research, by gathering data from more than 1,000 small, midsize and large companies in a variety of sectors.1 (See “About the Research.”) The model’s premise, one that is borne out by the data in our study, is deceptively simple: that the achievement of e-business operational excellence will lead to improved financial performance. The central task for senior managers, then, lies in understanding what drives operational excellence in the e-business realm — and then committing the necessary resources to the development of the drivers.
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1. For a discussion of IT business-value models, see R.J. Kauffman and C.H. Kriebel, “Modeling and Measuring the Business Value of Information Technologies,” in “Measuring the Business Value of Information Technologies,” P.A. Strassman, P. Berger, E.B. Swanson, C.H. Kriebel and R.J. Kauffman, eds. (Washington, D.C.: ICIT Press, 1988). See also A. Barua, C.H. Kriebel and T. Mukhopadhyay, “Information Technologies and Business Value: An Analytical and Empirical Investigation,” Information Systems Research 6 (March 1995): 3–23.
2. C. Murphy and C.T. Heun, “The Results Are In,” InformationWeek, Jan. 29, 2001, 22–24.
3. M. Baer and J. Davis, “Some Assembly Required,” Business 2.0, Feb. 20, 2001, 76–83.
4. Murphy, “The Results Are In,” 22–24.
5. E. Berkman, “Clicklayer,” CIO Magazine, Feb. 1, 2001, 92–100.
6. J. Berry, “E-Business Is Still an Elusive Goal for Most Companies,” InternetWeek, April 24, 2000, 41–42.
7. Murphy, “The Results Are In,” 22–24.
8. P. Seybold, “Customers.com: How To Create a Profitable Business Strategy for the Internet & Beyond” (New York: Crown Business, 1998).
9. Murphy, “The Results Are In,” 22–24.
10. Seybold, “Customers.com.”
11. Complementarity was recognized as a driving force in manufacturing by P. Milgrom and J. Roberts, “The Economics of Modern Manufacturing: Technology, Strategy, and Organization,” American Economic Review 80 (June 1990): 511–528.
12. T. Davenport, “Managing Customer Knowledge,” CIO Magazine, June 1998, 32–34.
13. L. Lapide, “The Innovators Will Control the Supply Chain,” Montgomery Research working paper, San Francisco, 2001, http://www.ascet.com/authors.asp?a_id=128.
14. T. Smith, “Niche Player a Standout Among Shipping Titans,” InternetWeek, June 12, 2000, 85–86.
15. T. George, “On the Move and In Touch,” InformationWeek, Sept. 11, 2000, 301–310.
16. C.H. Deutsch, “G.E.’s Management Methods Are Put to Work on the Web,” New York Times, June 12, 2000, sec. C, p. 1.
17. J. Bresnahan, “Buying Power,” WebMaster Magazine, April 1997, 34–38.
18. R. Whiting, “Value and Pain in Integration,” InformationWeek, Sept. 4, 2000, 22–24.
19. TechWeb News, “Dell Applies Direct Model to Suppliers, Too,” Aug. 8, 2000, http://content.techweb.com/wire/story/TWB20000811S0016.
20. M. Murray and J. Sapsford, “GE Reshuffles Internet Strategy To Focus on Internal Digitizing,” Wall Street Journal, Friday, May 4, 2001, sec. B, p. 1.