Value creation in e-business is attributed to four primary and interrelated value drivers: novelty, lock-in, complementarity, and efficiency. (Amit and Zott, 2001) For eBusiness value to be realized, its adoption must first be perceived as an intrinsically strategic tool by senior management. The resource based view of the firm asserts that organizations compete by developing distinctive capabilities and competencies that provide sustainable competitive advantages. (Fahy/Smithee 1999) In their paper they discussed “… the essential elements of the resource-based view of the firm are the firm’s key resources and the role of management in converting these resources into positions of sustainable competitive advantage leading to superior performance in the market place.” I’d like to recommend that eBusiness is one such capability or competency for sustaining competitive advantage. Anand in post 90 talks about the change in management offered by eBusiness, the automation of various departments signal a new way of thinking about running a business.
Suddenly eBusiness tools such as CRM allows a company to know customers better, sifting out the valuable customers, and creating new market opportunities. “At Wells Fargo, where 3.2 million customers are enrolled for online banking, the promise of e-commerce is being realized already. The bank’s retail penetration, three times the national average, is the highest of any bank and a reminder that e-commerce can work” (Daniel S Levine , 2002) Well implemented web-based CRM systems tightly integrated to legacy systems can be a source of Sustainable Competitive Advantage. Yet others like General Electric and CISCO, goes further by giving web-based tools for customers to innovate products that they will buy. (Thomke; Hippel Apr2002)
In the paper “Strategy and the Internet”, Michel Porter gives an incisive view of the state of affairs concerning the reality and hype of the Internet and its relevance to business and strategy. He argues that the Internet “tends to dampen profitability and has an overall leveling effect on business practices, reducing the ability of any company to establish an operational advantage that can be sustained.” He contends that “the key question is not whether to deploy Internet – companies have no choice if they want to stay competitive – but how to deploy it”. He suggested to gain a competitive advantage businesses needs to build on the proven principles of effective strategy and using the Internet as a complement to not as a replacement of traditional way of competing. He argues that “far from making strategy less important, as some have argued, the Internet actually makes strategy more essential than ever”.
EBusiness is not a fad and continues to evolve in-step with technological advances. Firms have struggled with implementing eBusinesses due to the nature of the change being transformational in the way business was previously thought of. They have been lured by the promises of potential benefits but have not aligned these tools along strategic principles. This position is contrary to Steven’s post 196 that eBusiness is not strategic in nature. Firms need to appreciate the obstacles in harnessing real value created by eBusiness through a sustainable model. They also need to look at IT departments in a new way, as revenue generating business units instead of cost centers. Real benefits have been realized by more and more companies in the area of CRM and others too will find their place as well.
1 Amit, Raphael; Zott, Christoph (2000). “Value Creation in e-Business.”
2 CIO Magazine IT: A Brave New World March 2002 Robert Frances Group
3 Charles W. Wessner, Editor, Board on Science, Technology, and Economic Policy, National Research Council, The Advanced Technology Program: Assessing Outcomes 2001. pg. 88
4 Daniel S Levine “Phoenix rising” San Francisco Business Times; San Francisco; Jul 26, 2002;