Beyond the Hype: ROI
* e-Business decisions must be based on expected Return on Investment (ROI).
* Small and medium-sized businesses should treat e-business initiatives like any other business decision. Ask: what's the benefit to my bottom line?
Where should you invest your scarce resources? That's the question allorganizations face. Naturally, you answer the question by comparing alternatives and evaluating the potential benefits of each investment. The technologies and/or projects you choose are the ones you expect to produce the largest benefit to your firm's bottom line. This "benefit to the bottom line" is known as the return on investment (ROI). ROI is a key metric organizations use to determine where theyshould place their investments.
This is the way it should be. And it's how you should approach e-business decision-making. Why should you invest resources in a project that you believe will not produce a positive benefit for your firm or organization? A prudent manager should always consider the ROI before spending resources on a new process, machine or employee. And just as thisbusiness/economic principle has been used to determine "physical" capital investments, ROI should be a key determinant in a firm's decision to implement an e-business solution.
The single most important factor determining success when devising an e-business strategy is to approach the issue as a business issue, not a technology issue. Technology is a tool, an enabler, which is to be used to further yourbusiness goals.
e-Business for small and medium-sized firms is not about technology or dot com "glitter". It's about pursuing a healthy return on investment.
Where is the ROI in e-Business?
* The greatest potential for e-business ROI is in business-to-business relationships and internal processes.
* Don't think of the Internet only as a business-to-consumer sales channel.
Mostmedia attention to e-business has focused on start-up "dot coms" that are devoted solely to selling products over the Internet. This has obscured the inherent potential of e-business for Canadian companies by focusing attention on a narrow and relatively "low-impact" aspect of the overall phenomenon: business-to-consumer electronic commerce (B2C).
In fact, the overwhelming majority (80–90 percent)of the benefits available to organizations is in the areas of business-to-business relationships and internal business processes. The most effective way to realize profits through e-business is by becoming more efficient and connecting to suppliers and customers.
Stories of dot.com failures and difficulties faced by established retailers in moving into the electronic marketplace have resulted in acynicism towards the potential benefits of e-business. It has led many organizations and entrepreneurs to believe that the Internet is a passing fad or that their products do not lend themselves to the Internet. To date, most of the media commentary has missed the point with respect to the potential of the Internet for business.
The fact of the matter is that every business, of every size, inevery sector can benefit by implementing e-business solutions. An important first step to achieving this, however, is to look past the hype surrounding this issue and approach e-business just as you would approach any other business challenge. In essence, its time to get back to business basics.
Getting Back to Business Basics
* Focus e-business on traditional business functions.* Look for e-business solutions that increase efficiency and productivity.
* Other Canadian companies provide models of success in targeting e-business at real business needs.
Where e-business can help every organization in the Canadian economy is in traditional business processes. This idea may not be "front page news", but it is the basis for profitable implementation of e-business....