434 SMEs ECT Reality Well we’ve had some sort of Web presence for quite a long time, about three years but we had made progress over that period and redesigned the site a number of times but we’d not taken it seriously enough, I don’t think until probably this year when we put a little bit more money into it and really looked to it as something which would support the value of the brand of magazine itself which is [magazine name]. It’s the only magazine (…) publishers and the Web site was designed around two themes in terms of supplementing the brand itself, one was to provide additional information on the product to the consumer and the second was to provide information to other businesses for example, potential advertisers in the magazine, that sort of thing, contact details, up and coming events, readers holidays and so on, some of which they get through the magazine. We deliberately don’t put magazine content online, the idea is that people pay for it and we see the site at the moment as being free access. (NP SME case 11). Quayle (2002) argues that SMEs that devel- oped e-commerce capabilities have not done so VWUDWHJLFDOO\DQGKDYH\HWWRHQMR\VLJQL¿FDQWFRVW and time savings. This is evident from NP SME (case 5) who owns two Web sites; a catalogue and an e-commerce site which is not fully functional. The owner-manager is in continuous discussions with the change agent to provide a technical so- lution for the e-commerce site. It can be argued that developing e-commerce capabilities does not depend only on internal factors, but equally depends on the availability of external support and type of ECT solutions provided and acces- sible to SMEs. We have two Web sites, we have a catalogue, a magazine if you like … and we have an email, e-commerce thing. The e-commerce site is SQL server-based which means that if you actually click it, you call up a database, a pick list if you like and it is slow and we are talking just now to [Consultant at Connect] he can improve potential customer access to it in terms of speed of delivery. So we get sales from it [site] but most of them are from the magazine where we get email contact with enquiries….so we have had business through the catalogue but not through the e-commerce site …it is enquiries that lead to business but not directly, there is always a second stage in it, we are not directly selling from the e-commerce site at all hence our continued discussions with Connect about its effectiveness… It’s still too slow but as I say that’s since last October, we’ve been trying to get that speeded up… [Consultant at Connect] is aware of it, he himself has in the SDVWEHHQWU\LQJWR¿QGVRPHRWKHUPHWKRGIRU speeding up the server but although I ask him on a regular basis, it’s never there next month and probably the month after, it’s not happening yet. (NP SME case 5) Contrary, passive adopters are companies that mostly outsource update, management and rede- sign phases. Some, passive adopters have gained Web authoring skills and manage minor content update. Their Web sites are in a sporadic state of content update depending on circumstances and resources. While other passive adopters update their site yearly; their Web sites are in a static state where limited or no content update is evident. These companies have not established a clear business objective for their Web presence, and they are not aware of the need for any strategic planning to incorporate into Web site develop- ment and redesign. These SMEs depend mostly on the change agent or perceived change agent efforts, and they invest limited resources in the development and management processes. These TP SMEs had limited involvement in Web site development and testing, and they continue to have limited impact in update and management. We just had the pictures and told them [Connect] what we wanted and they designed it…we could have done anything we wanted to but we just left it to them because we had no knowledge on it…We 435 SMEs ECT Reality KDYHRQO\GRQHRQHFKDQJHZH¿QGLWYHU\GLI¿FXOW to make the changes ourselves…we tried to get in to change a price and we lost a picture and there was no way we could get that picture back, so I went to Connect for some support and they said, we’ll put it on for you this time but after this we’ll need to charge you further … [When asked if they would approach another Web design bureau]… Not really, it would be too much, we are paying about two hundred and something to stay with them a year to host the site, so we wouldn’t like to change. (TP case 1) SUMMARY OF FINDINGS Findings presented in this chapter have shown that NP SMEs and TP SMEs differ to a large ex t e nt i n t he i r i m ple me nt a t io n p ro c es s. N P SM E s are mostly internally motivated in their adoption decisions. Management enthusiasm and perceived EHQH¿WVIURPDGRSWLRQHQFRXUDJHGPDQ\RZQHU managers to gain awareness of the technology and improve their Web authoring skills, either through their personal efforts or through the change agent training. NP SMEs have a favourable opinion of the technology, initiate the development of their Web presence, and have more authority and autonomy in their adoption and implementation decisions. However, these decisions are limited by owner-manager Web authoring skills, techni- cal knowhow, and knowledge of ECT solutions. Contrarily, TP SMEs are mostly externally moti- vated by the change agent efforts and support. TP SMEs adopted a Web presence without forming a favourable opinion of ECT. They mainly wanted to experiment with the new technology without any objective evaluation of their business needs and resource constraints. Their Web presence was developed by the change agent, and was mostly L Q À XH Q FH G  JRY HU Q HG  D QGO L P LW H GE\ W K HV RO XW L RQ V  provided by the change agent. SMEs implementation process can be grouped into four main categories: strategic planning, ad hoc decisions, sporadic state, and static state. This categorisation is based on whether the company depends on internal resources or out-sources the development and management stages, and whether WKHFRPSDQ\LVDSDVVLYHRUDFWLYHPRGL¿HUStra- tegic Planning is evident in NP SMEs that had the initiative to develop their Web presence, and overtime developed a systematic approach to the Web site development and management. These SMEs outsource the redesign of the Web site, regard the Web presence as a strategic business tool, and intend to gradually incorporate ECT functionalities that meet their business needs. These SMEs have the chance of encompassing e-business. These companies are larger in size and outsourced the redesign and development of the s u c c e s s i v e We b s i t e s . T h e y h a v e b o t h t e c h n i c a l a n d ¿QDQFLDOUHVRXUFHVWRPDQDJHWKHLU:HESUHVHQFH in-house. Furthermore, the owner-manager and staff are better trained in managing their ECT adoption. However, at the time of interview only one SME (NP case 11) falls in this category. Generally, most NP SMEs have a tendency towards strategic planning, as they have clear business objectives that govern their maintenance process. However, their implementation process is primarily based on ad hoc decision. Most NP SMEs fall within the ad hoc decision category. 7KH\DUHDFWLYHPRGL¿HUVDQGDUHLQWHUQDOO\ motivated in developing and updating their Web presence. These companies have reached a stage of self-reliance, either through their personal inter- est in Web authoring and/or change agent efforts. These companies are actively and constantly FKDQJLQJDQGXSGDWLQJWKHLUVLWHWRUHÀHFWWKH company’s image and attract customer. Web site changes and updates are driven by owner-manager enthusiasm, knowledge of Web authoring skills, and relative advantage gained. These companies tend to take a pragmatic ad hoc approach to the development process. The choices of ECT solution adopted are based on the owner-manager’s indi- vidual judgment and experience. Although, these SMEs tend to outsource major redesign, however, 436 SMEs ECT Reality they lack the resources to access professional advice and encompass strategic planning. Most TP SMEs fall within the sporadic state or static state. These are companies that are VWURQJO\LQÀXHQFHGE\H[WHUQDOIRUFHVQDPHO\ the change agent or any perceived change agent, in both their awareness and adoption of ECT. Companies within the sporadic state have gained ECT awareness, Web authoring, and knowhow, primarily due to the change agent efforts. Simi- ODUO\WKH ¿UVW :HE VLWHDGRSWHGZDV WKHGLUHFW result of the change agent services, in particular the free Web authoring and hosting services. These companies can be described as passive adopters, as they have limited technical skill to update Web site content and actively change Web presence functionality. They update their Web presence on a quarterly or yearly basis and tend to outsource any major redesign. Thus, their Web presence is in a sporadic state of content update. Companies within the static state, share similar implemen- tation background as companies in the sporadic state. In addition, these companies have limited knowledge of Web presence development and management. They depend mostly on the change agent efforts in the initial Web site developed, Web site update and management, and subsequent redesign Web sites. These SMEs depend entirely on external support and Web site in a static state with minimum or no update. $QXPEHURIIDFWRUVLQÀXHQFH60(VFRQWLQX- ous adoption of a Web presence. Both NP and TP SMEs are encouraged to continue their adoption due to the perceived and experienced relative advantage gained, mostly from using the Web presence as a promotional and communicational means. NP SMEs are internally motivated by the owner-manager enthusiasm. The owner-manager is the main person developing and managing ECT. Peer pressure is motivating NP SMEs to adopt ECT, but does not encourage further investment of resources to develop a more competitive Web pres- ence. Lack of time and lack of technical resources are among the common factors hindering both NP and TP SMEs’ continuous adoption. Moreover, 7360(VDUHPRVWO\H[WHUQDOO\LQÀXHQFHGGXH to their dependence on outsourcing of Web site development and management rather than in- house expertise. TP SME continuous adoption is affected by cost of Web presence maintenance and subsequent redesign, trust in change agent services, lack of trust in independent service providers, and lack of awareness of alternative ECT solutions, and their dependence on change agent support for further awareness. 7KH ¿QGLQJVSUHVHQWHGLQWKLV FKDSWHUKDYH some limitations. Mainly, the data was collected IURP60(VWKDWKDYHEHHQLQÀXHQFHGE\WKH change agent efforts in the diffusion of ECT; either directly as in the case of TP SMEs or indirectly as evident in NP SMEs. The presence of external F KD Q JH DJH QW V LQ ÀX H QF L QJ W KH D GR S W LR QG H FL VL RQ V  and implementation process, might limit the conclusions only to similar scenarios where the involvement of a change agent, or any perceived change agent, is paramount. Nonetheless, the ¿QGLQJVSUHVHQWHGDUHFRQVLVWHQWZLWKOLWHUDWXUH First, the factors that encourage implementation (e.g., management enthusiasm and relative advan- tage) and barriers to implementation (e.g., lack of resources, awareness, and trust) are in line with l i t e r a t u r e ( W i n d r u m & D e B e r r a n g e r, 2 0 0 3) , e ve n in the presence of a change agent that provides LQFHQWLYHVWRHQFRXUDJHDGRSWLRQ6HFRQG¿QG- ings are in agreement with the argument that SMEs underestimate the need for planning prior to adopting e-commerce and that e-commerce strategy is missing from SME business plans (Quayle, 2002). Finally, it is argued that in absence of a stra- tegic vision from within the company, external support can not always have the ability and desire WRSURYLGH³NQRZKRZ´NQRZOHGJHDQGDLGLQWKH formation of strategic planning (Jones, Hecker, & Holland, 2003). This is clearly evident in the ¿QGLQJVSUHVHQWHG7KHFKDQJHDJHQWSURYLGHG knowhow knowledge and aided in creating aware- ness, but did not aid in developing ECT strategic 437 SMEs ECT Reality planning, even in companies that host their Web presence at the change agent’s Web directory and are in continuous contact with the change agent. However, contrary to literature, where implemen- tation is presented as a linear stage-based process, the chapter presented a new dimension in SMEs implementation of ECT, based on the allocation of resources (in-house/outsourced), develop- ment process (passive/active), and management practices (strategic planning, ad-hoc decisions, sporadic state, and static state). Further research ZLOO EHQH¿W IURP LQYHVWLJDWLQJ ZKHWKHU WKHVH implementation patterns exist in the absence of change agent involvement in the implementation process. CONCLUSION This chapter unravelled a different dimension to SMEs implementation of electronic commerce technologies. The chapter focused on Web site development and management practices and explored the different Web presence implementa- tion patterns among SMEs. Two distinct groups RI60(VDUHLGHQWL¿HG7KHPRUHDEOH1HHG3XOO SMEs, who are aware of their business needs and internal resources in developing and maintaining their Web presence. These companies update and manage their Web presence based mostly on owner-manager’s ad-hoc decisions and have a tendency towards strategic planning. Contrary, the less able Technology Push SMEs, who have EHHQLQÀXHQFHGDQGHQFRXUDJHGWRDGRSWD:HE presence by change agent efforts in the diffusion of ECT. These companies gained ECT awareness and some level of technical knowhow, due to change agent training. However, these companies lack the technical knowledge to maintain their Web presence in-house and depend largely on external support, particularly the change agent. Their Web presence is either in a sporadic or a static state of update and maintenance. 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Chapter 2.8 BSC-Based Framework for E-Business Strategy Fen Wang University of Maryland, Baltimore County, USA Guisseppi Forgionne University of Maryland, Baltimore County, USA INTRODUCTION E-business is far more about strategy than technol- ogy (Raisinghani & Schkade, 2001). An effective e-business strategy is concerned with e-business multidimensional characteristics associated with different levels, parties, elements, and growth pattern features (Bakry & Bakry, 2001). In the process, the strategy must incorporate the effects of the instant and global Internet communication mechanism on the company’s business manage- ment architecture. The global reach and intercon- nectivity of the Internet have spawned new models of e-business strategy and radically transformed existing ones (Pant & Ravichandran, 2001). In- deed, what distinguishes many of the dot-coms is not their new technical power, but the radical new business models (Hamel, 2000). Aided by such innovative e-business models, managers will be able to identify the major deci- sion factors involved in their business strategies and generate strategies that would improve their RYHUDOO SHUIRUPDQFH DQG SUR¿WDELOLW\ ,Q WKH current context, four essential perspectives are LGHQWL¿HG WR EH DVVRFLDWHG ZLWK DQ HEXVLQHVV VWUDWHJ\¿QDQFLDOFXVWRPHULQWHUQDOSURFHVVHV and learning and growth. These four perspectives ZHUH¿UVWLQWURGXFHGLQHDUO\VDVWKHbal- anced scorecard concept (BSC) (Kaplan & Norton, 1992). Because the BSC methodology explicitly focuses on links among business decisions and outcomes, it is intended to guide strategy devel- opment, implementation, and provide reliable feedback for management control and perfor- mance evaluation. This BSC rationale is thereby appealing to managers who face new challenges in the current turbulent e-business climate. The real challenge is to determine how the BSC can be successfully applied in the context of e-business’s constantly changing environment of interdependencies (Hasan & Tibbits, 2000). E-business introduces new business objectives 441 BSC-Based Framework for E-Business Strategy and strategies and the old measures of success may no longer apply. It is anticipated that the departure from the original BSC for a strategic e- business management framework would be more radical than the existing BSC adaptations (e.g., Martinson’s balanced IS scorecard; Martinsons, Davison, & Tse, 1999). BACKGROUND Few, if any, precise and complete e-business strategy models are available from the literature (Dubosson-Torbay, Osterwalder, & Pigneur, 2001). There are a few theoretical academic stud- ies with some empirical evidence on e-business models success (Horsti, Tuunainen, & Tolonen, 2005). Generally, these e-business model studies fall into two categories: subsystem research and generic frameworks. Examples of the subsystem research include modeling for price structures (Liu, Wynter, & Xia, 2003), customer needs (Ols- son & Karlsson, 2003), process synchronization (Park, 2002), and knowledge sharing (Koh & Kim, 2004). Since these subsystem models deal with a particular aspect of e-business, they do not offer a global and complete view of e-busi- ness strategy. There are several generic frameworks for the development and analysis of e-business models. Whelan and Maxelon (2001) proposed that an e- business architecture requires product, channel, customer management, resource management, and information elements. Afuah and Tucci (2001) presented a more detailed list of components in- cluding scope, customer value, revenue sources, connected activities, and so forth, but like Whelan and Maxelon, they did not specify the interre- ODWLRQVKLSV+DPHOVSHFL¿HGDFRPSOHWH four-part framework with bridge components that is geared toward guiding strategic choices of management. Similarly, Dubosson-Torbay et al. (2001) used a framework with four principal components to analyze e-business: product in- novation, customer relationship, infrastructure PDQDJHPHQWDQG¿QDQFLDODVSHFWV*RLQJEH\RQG the segment frameworks, De, Mathee, and Abra- ham (2001) developed a pragmatic framework that offers different perspectives for the analysis of e-business including transaction costs, switch- ing costs, infrastructure investment, and revenue models and so on. For the most part, the generic models offer theoretical, not analytical, decision guidance for practitioners. One exception is the BSC-based e- business framework, with preliminary empirical evidence, proposed by Hasan and Tibbits (2000). Their empirical evidence, which was gathered from a case study in an Australian state-govern- ment utility, gave four high-level perspectives EXWQRVSHFL¿FDQGH[SOLFLWPHDVXUHVZLWKHDFK perspective. Currently, there is no comprehensive and concrete investigation that applies the tradi- tional BSC to e-business strategy. EBBSC FRAMEWORK SPECIFICATION Considering a wide range of factors and relation- ships in this fast-changing e-era, we adapt the original BSC methodology into a comprehensive e-business strategy framework (EBBSC) con- sisting of four updated perspectives: business model, analytical e-CRM, process structure, and e-knowledge network (see Figure 1). The EBBSC framework links business strategies to a broad range of innovations and measures, examines important business issues facing e- business managers, and provides a complete view of e-business strategies. The framework can be better understood by examining the components in detail. Business Model Perspective Although e-business models differ from the tra- ditional brick and mortar models in various ways, 442 BSC-Based Framework for E-Business Strategy the fundamental needs of consumers and busi- nesses remain much the same. Consumers want the best deal by price and service comparison, while businesses want to grow sales by targeting the right e-shoppers. On the other hand, traditional rear-view and static planning and budgeting cycles don’t measure up to the dynamic, competitive, and compressed business cycles in the global e-era. E-business managers need to focus on a IXWXUHRULHQWHGSUR¿WPD[LPL]DWLRQVWUDWHJ\WKDW will support on-the-spot decision making at the turning points. • 3UR¿W0D[LPL]DWLRQ3UR¿WLVHTXDOWRWKH difference between the revenue and cost. Many intangible and tangible factors may DIIHFWSUR¿WE\LQÀXHQFLQJUHYHQXHDQG cost directly or indirectly, creating risk or uncertainty in achieving the company’s SUR¿WDELOLW\3DOPHU:LVHPDQ • Revenue Increase: Revenue increase refers to expanding and re-pricing product and service offerings to achieve a higher value added mix. According to economics theory, revenue equals the product of the purchases and price. Purchases equal the minimum of the product quantity offered (quantity sup- plied) and quantity customers are willing and able to purchase (quantity demanded). Quantity demanded is treated as a function of the customer retention, marketing mix, and competition. Customer retention mea- sures the company’s customer stickiness or loyalty. The marketing mix includes the company’s major marketing decisions. Com- petition represents the rivalry between the company and other businesses in the target market. Determinants of the quantity sup- plied include price, capacity, supply chain PDQDJHPHQWHI¿FDF\DQGVWDIISUR¿FLHQF\ E-business capacity measures not only the limit imposed by the equipment and/or avail- able personnel, but also the limit associated with the network technology. Supply chain PDQDJHPHQWHI¿FDF\UHIHUVWRWKHHIIRUWRI the company in managing relationships with its suppliers. • Cost Reduction: The Internet age enables businesses to reduce unnecessary or redun- dant buyer–seller costs. Generally, cost is FRPSRVHGRI¿[HGFRVWZKLFKLQDQHEXVL- ness context can include e-business system development and maintenance expenses, and variable cost, which equals the product of unit cost and quantity supplied. • Marketing Mix: Marketing effort helps in identifying market opportunities and generating marketing strategies that support Process Structure Process intelligence & - business -CRM - customer e-Knowledge Network E-business Strategy Business Model Figure 1. Adapted four perspectives of e-business strategy 443 BSC-Based Framework for E-Business Strategy attainment of e-business objectives. The major factors involved in the marketing mix include people, promotion, price, product, presentation, and distribution effort. The RULJLQDO³3ODFH´IDFWRULVGHFRPSRVHGLQWR presentation and distribution effort to rep- resent e-market reality. Presentation refers to the effort involved in online product presentation and distribution. Distribution effort facilitates the connection of the prod- uct with the target customer. • Sales Cycle Shortened: The sales cycle consists of the time that elapses between the customer interest and the purchase de- cision. In e-business, a shorter sales cycle enables management to respond promptly to emerging opportunities or threats. The major factors that impact the sales cycle LQFOXGHWKHFXVWRPHUSUR¿OHSURGXFWSULFH promotion, and presentation. A customer SUR¿OHLVDFRPSRVLWHYDULDEOHWKDWUHÀHFWV the customers’ demographic characteris- tics, preferences and behavior patterns. Generally, the more positive the customer SUR¿OHLQGH[WKHORZHUWKHSURGXFWSULFH the higher the product quality, the better promotion methods and efforts, and the more preferable presentation formats, the shorter the sales cycle would be. Figure 2 summarizes the business model perspective in the framework. Analytic E-CRM Perspective The Internet enables customers to conveniently shop online, have a broader selection, get com- petitive pricing and greater access to critical business information (Chen et al., 2004). Online retailing, however, is impeded by security and privacy concerns, downloading time and other technology barriers (Chen, Gillenson, & Sher- rell, 2004). Furthermore, customers can switch to other competitive URLs in seconds with minimal ¿QDQFLDOFRVWZKLFKPDNHVVXFFHVVIXOFXVWRPHU management vital in e-business. • New Customer Acquisition: Customer acquisition depends on precise and timely targeting that delivers valuable offers to prospects. The factors involved in customer acquisition include the company’s marketing mix, HVHUYLFHTXDOLW\WKHFXVWRPHUSUR¿OH and competition. Competition represents the company’s external relationship with the supplier, availability of other distribution channels, entry barriers, and product substi- tutes. When addressing the factor, we have converted the original customer perspective from an external view (Kaplan & Norton, 1992) into a relationships perspective (Hasan & Tibbits, 2000). • Customer Satisfaction: 6DWLVIDFWLRQLVLQÀX- enced by lead time, product quality, service quality and competitive pricing (Kaplan & Norton, 1992). Lead time measures the time required for the company to meet its customers’ needs, sometimes referred to as ³RUGHUWRGHOLYHU\ F\FOH WLPH´ $ SURGXFW with high quality and customization level and relatively lower price may increase the degree of the customers’ satisfaction. E- service quality represents the level of the service offered in e-business. Figure 2. Business model perspective for e-busi- ness strategy . Policy and Re- search Conference, Leicester. Taylor, M. J., England, D., & Gresty, D. (2001). Knowledge for Web site development. Internet Research: Electronic Networking Applications and. sup- plied) and quantity customers are willing and able to purchase (quantity demanded). Quantity demanded is treated as a function of the customer retention, marketing mix, and competition needs and internal resources in developing and maintaining their Web presence. These companies update and manage their Web presence based mostly on owner-manager’s ad-hoc decisions and have