E-Commerce Life Cycle Analysis

General introduction

E-commerce arose and was greatly facilitated by the incoming of the World Wide Web and browsers that emerged in the early 1990s, and the expansion of communication volume capacity facilitated by the innovations made in the satellite, digital subscriber, and optic fiber technologies. Reduction of the cost and other barriers to e-commerce by the use of the internet has resulted in its worldwide adoption not only by large but also by small firms (Wyckoff & Colecchia, 1999). Today, the industry has grown to a large extent and still has a big future potential to grow. Today, many people are spending more time over the internet and many more companies are finding the need to exploit e-commerce through the internet. A survey conducted by American Life Project showed that in the period between 2000 and 2002, individuals who traded by buying a product online increased from 41 million to 73 million, in the United States (Bharadwaj, Nagendra, Soni, & Ramesh, 2007). Many systems and individuals are turning to the internet for quicker solutions to their problems and are taking advantage of the existing channels to market, advertise and exchange other information that would otherwise take more time to process. The internet presents a potential avenue to carrying out commercial activities in the future with an increase in innovations to cross existing barriers and challenges. Theoretically, organizations will adopt e-commerce in stages and the current theory has four stages, namely; initial, centralized, looking for inward benefits, and the global stage.

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Initial e-commerce refers to the youngest stage of adoption where the firm applies e-commerce on a departmental level to increase efficiency. The system is not complex and the underlying challenges or complications to adoption may not be known or have been considered by the firm. At the centralized stage level, the company applies e-commerce to all departments and the operations centralized and this may occur after the success of the first stage. Looking for internal benefits refers to a situation where the company is increasing coverage to e-commerce in terms of management, control, and seeking better solutions to the existing model. The global stage refers to the level of extensive use of e-commerce for further benefits like global marketing.

Aim of the research study

To research the elements of the evolution of e-commerce through various stages, identify and describe these various stages of e-commerce.

To determine the issues surrounding the evolution of e-commerce such as challenges in adoption, benefits, and drawbacks, identification of security needs during adoption, and the future options.

Hypothesis

E-Commerce takes processes during its evolution. This study seeks to present the following as expected findings in this analysis; that there is a linkage between these various types of e-commerce stages and they must sometimes evolve after one another. In addition, an expected finding is that it would be expected that companies will require dealing with the challenges related to the implementation of e-commerce so as to reap the benefits associated with the implementation. Dealing with these challenges may be further implicated by the fact that options available in the marketplace in terms of technology are many and determining the best may be a great challenge. When the organization seeks to connect with larger customers, compatibility issues may have to be dealt with. After coming from the initial stages of adoption (the first and the second), a company may have to advance with the adoption despite the complexity, cost of the system or the barriers present during adoption. Here, the drive is to reap more benefits from the model and partly because of the success story behind the adoption of initial stages. Another supposition is that security and costs concerns are the key drivers to the adoption and evolution of e-commerce to various stages, whereas maximum benefit is expected at the global level where competition is imminent. And finally, that the final stage of the e-commerce implementation will entail the company’s adoption of systems that empowers it to be globally competitive.

The adoption of each of the four stages is important because it would determine the speed of adoption on the general overview.

Research questions

What are the practical stages, characteristics, influencing factors of e-commerce during its life-cycle? What are the advantages and disadvantages of the companies adopting e-commerce at these stages?

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How can businesses ensure that they reap maximally from the e-commerce adoption at different levels?

Do all stages of e-commerce present pure advantages to the company when adopting it? What are the challenges in the adoption of e-commerce at various stages and how can these be overcome?

Need Analysis

E-commerce implementation is surrounded by various issues during evolution and implementation. Companies need to carefully identify the underlying opportunities for exploitation and in order to avoid the underlying dangers. E-commerce, in addition to referencing to a condition where companies are performing business transactions over the internet, may involve data sharing over the internet, customer services, advertising, and conducting of internet research (Hamill & Gregory, 1997; Web & Sayer, 1998 e.t.c.; qtd. in Bharadwaj et al., 2007). In this case, we restrict the meaning to the performance of the business transactions between companies and institutions with their customers and all the related activities.

The adoption of e-commerce at various stages may be hampered by various factors. For example, security and costs according to a survey conducted by Riemenschneider and McKinney (2001-2002 qtd. in Bharadwaj et al., 2007), were the greatest handles to adopting e-commerce by small businesses. The research involved 184 small business owners or chief executive officers.

Four barriers identified to the evolution of e-commerce are according to (Veeramani, 2000);

  • The knowledge
  • Technology and the development infrastructure for the business
  • Initiatives and financial resources of the company
  • The human resources accessible to a company

These factors determine to what extent a company will be willing to adopt e-commerce or what interest vital to the adoption, a company will initially have. Therefore companies must learn the technological stages to be able to apply appropriate strategies during implementation. The following are the four stages of e-commerce that have been widely focused on (Business to Business e-commerce focus) (Chan & Swatman, 2004);

Initial e-commerce

This is the entry-stage where an organization is adopting e-commerce. In this stage, knowledge is of paramount importance, and the adoption is driven by the need to improve the performance of a department. A study launched on SPPD Steel identified that the personal computer was used to realize the goal in this stage and was concerned mainly with the supply chain. At this level, the management may not be aware of the results and effects of implementation on a wide scale and as a result, an implementation may be blurred or negatively affected by few technological issues. Moving to stage two would be after the effective management of this stage.

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Centralized e-commerce

The focus in this stage would be to expand the implementation of e-commerce from departmental to the whole organization. Centralized management and control would replace departmental management and control, but the various departments would work in collaboration to manage e-commerce projects. More funds should be necessary to ensure full implementation of e-commerce technology, and the company would be required to have assistance from the internal or external IT specialist or consultants. A change of focus from suppliers to consumers is realized. Among the advantages the company may seek would include establishing closer relations with large customers and attaining a competitive advantage rather than having mere technological benefits by the implementation of the first stage level. A company may encounter challenges involving the complexity of the technology and compatibility issues, for example when outside connections are required.

Looking inward for benefits

Amid slow acceptability of the implemented e-commerce system by the customer and other external customers in addition to the e-commerce technological issues generated by the implementation initiative, makes the company seeks other possibly successful opportunities offered that the technology can offer. The company may require engaging the entire firm in adopting the technology and again require adopting a uniformly standardized system in order to achieve full benefits in this stage. Organizations may link their technology with other supportive technologies that advance the implementation or maximize the benefits of both.

Global e-commerce

The company management may find the need to continue investing in e-commerce after reaching the mature stage of technological implementation (usually after implementation of the first and the second stage). The management may never want to allow to be influenced by a ‘hype’ of new technologies like it happened in the initial two stages. The company therefore may continue to invest in newer and better technologies while keeping with the others that are beneficial. The company may further adopt internet-based commercial systems and lays emphasis on the customer on a wider range.

The likely result of the full implementation of e-commerce is the global relationship amongst the companies and organizations. It would be necessary to consider that technological innovation will evolve from time to time and especially now on a very first pace, and therefore implementation may be a slow process faced with a lot of dangers. For example, a company may have weaker internal systems of administration or management and resist implementation which may slow the process altogether.

Because e-commerce is expanding from the initial stages, the company may also wish to restructure the organization structure to accommodate the new aspects or add more departments dealing solely with issues of implementation of e-commerce and related research.

Research and evaluation

Growth and expansion of Information Science, as well as its occupation of a special place in organizations, led to the theories associated or that describe stages of growth. Gibson and Nolan took issue with the paternity evolution of data-processing technology in the organization and recorded that it followed S-curve as the pattern of learning and experiencing Information Science (Nolan, 1974). E-commerce arose and was greatly facilitated by the incoming of the World Wide Web and browsers that emerged in the early 1990s, and the expansion of communication volume capacity facilitated by the innovations made in the satellite, digital subscriber, and optic fiber technologies. Reduction of the cost and other barriers to e-commerce has resulted in its worldwide adoption not only by large but also by small firms (Wyckoff & Colecchia, 1999). Today, the industry has grown to a large extent and still has a big future potential to grow.

Usage of informational systems by companies and corporations takes place in stages. To be able to plan and develop the informational system, it is important for an organization to understand the growing process of these systems and e-commerce. Understanding of these can be explained by basing on literature developed by the examples of Chan & Swatman, 2004, Galliers and Sutherland (1991), Earl (1989), and Gibson and Nolan (1974), but a more recent approach for example B2B e-commerce which proposes the four stages of growth discussed in this research. The four model structure of evolution was expanded to six by Nolan (1979) and Chan & Swatman (2004) by addition of ‘integration and data administration’ components between control and maturity stages. According to this model, the first stage involved the taking of the investment decision and initiating of the project, and was characteristic of using simple systems such as the automation of payrolls through the usage of technology. The second stage was characterized by the upward mobility of the learning curve and the advancement of the organization’s confidence to use technology among another characteristics-the stage of learning and adaptation of technology. Realization of need for controls to systems would arise at the third stage, namely rationalization and management control, as a measure aimed at curbing late deliveries and rising expenditures, for example, in addition to other characteristics in this stage. The third one involved rationalization and management control, and the final was technology transfer or diffusion on a wide-scale basis. The fourth stage was characteristic of users beginning to accept the use of the system and the realization of the benefits thereof, and thus increased use would be expected. Demand for better controls within the systems for higher efficiency needs would also be a characteristic of this stage whereas the control of these systems would be enhanced through data administration put in place in the fifth stage. Confidence in the management and administration of the technological systems would be realized in the sixth stage. This model was criticized by authors on the basis of lacking organizational and management focus (Galliers and Sutherland, 1989 & 1991; Chan & Swatman, 2004), the argument that organizations using different types of IT would follow different learning curves-an idea posed by Earl (1989) and its unpredictability on future changes as well as a misrepresentation of the IS implementation (Galliers and Sutherland, 1991; Swatman, 1993; and Benbasat, 1984; Chan & Swatman, 2004). This model was therefore further refined. In addition, the four-stage model discussed in the beginning section of this paper (see introduction section) has gained more recognition than the six-stage model includes (Business to Business e-commerce focus) (Chan & Swatman, 2004);

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Findings and practical implications

The study found out that the evolution of e-commerce takes place in various stages, which may be interlinked for example the success in the first and the second stage may drive the subsequent implementations. Again, the organizations are faced with various issues as they implement e-commerce from the initial to the final stage. Because the evolution of technology is faster, an organization may also be faced with issues of making choices between competing technologies, and determining the best may also present challenges both to the absorption and adoption of e-commerce technologies. Another finding was that different opinions on the number of stages in e-commerce and their characteristics have been suggested by various people in history. The study found out that although the four-stage model is commonly used today, there is an indication of the characteristics of the other stages in the six models in the organizations.

In order to make sure that the e-commerce systems are implemented well, the company will need to equip itself with human resources facilities, knowledge, the finances necessary, and the technology or the infrastructure as seen. This makes e-commerce not a simple venture but that which requires careful management and planning.

Today, issues of security of technological systems in e-commerce such as transactions that are done while dealing with credit cards, for example, are raising concern with the e-commerce systems across the internet. Thus, the company may require attacking security issues with up-to-date technological innovations and research. Security issues are only a one-line problem, others that would need to be considered and subsequently solved if they arise include the resistance of adoption of the new systems within the firm, choices between many competing technological systems, and the company’s management and organizational issues. Issues to do with organizational structure may arise because the company would require establishing new departments as they enlarge the e-commerce system. Compliance with certain requirements by the governments, either in the local country or international arena, and the company may be required to spend more money in consultations and IT in order to solve these and related issues. Since competitor firms would also be going through the same process of implementing e-commerce, it means that there would be expected competition on a global scale once many firms rise to the final stage of adopting e-commerce. Competition amongst the firms will require that individual firms may tend to invest more in better e-commerce systems so as to improve efficiency, usability to the current needs, and security, reliability, among other factors. This would lead to more innovations in e-commerce.

Executive summary

Learning the stages of e-commerce is an important step to a company so as to be aware of what stages they are in, what challenges they will anticipate and the way they can be dealt with, time management or the implementation schedule, and so as to ensure that they put in place. Because e-commerce largely deals with the implementation of information technology systems and technology, and that the company will need to keep track in investing in new systems, learning of the stages may be necessary so as to make sure they make the wisest decisions possible towards the changes in innovations and related information.

The study found out that the adoption and implementation of e-commerce may be described as taking place in various stages which may be linked. The initial stage refers to where the organizations use technology to enhance performance which may mostly happen on the departmental level. In addition, the focus at this stage may be the supplier to the organization. Complex systems of e-commerce technology may not be evident at this level. The organizations may not be aware of the underlying problems in the implementation of the technology and may move to the next stage of this cycle. The organization may further implement technological systems that expand e-commerce in its cycles and the technological systems may become more complex in the next stage in the evolution cycle. In the second stage of implementation, the company may benefit by establishing collaborations and linkages with larger customers. Issues of management and control may become of interest because the company may be seeking more technology that supports the one they have already implemented, and at the same time seeking better alternatives offered by the technology. Maturity in the implementation has already been reached after success in the first two stages, and the company would be willing to advance with the implementation of technology and reap more benefits. A company may be interested in rolling a global e-commerce network because they want to be more competitive or remain so due to their competitors who have also rolled out a similar global strategy to gain the related advantages. Once the company rolls out the global strategy so as to gain the advantages that are associated with further expansion, it may encounter competition from other organizations that have also been expanding. Issues to do with the efficiency of the e-commerce system, security, and usability to the current need and other necessities may become of more importance and further innovations may be necessary to adapt to improve the e-commerce system. The technological innovations made by a company may be derailed by the challenges or be felled altogether. The implementation of e-commerce may again be influenced by the internal structures of the organizations which may derail and/or fail the process.

References

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Chan Caroline and Swatman Paula. B2B E-commerce Stages of Growth: the Strategic Imperatives. Proceedings of the 37th Hawaii International Conference on System Sciences – 2004.

Earl J. (1989). Management Strategies for Information Technology. Burr Ridge, ILL; Irwin.

Galliers R and Sutherland A. (1991). Information Systems Management and Strategy Formulation: the Stages of Growth Model Revisited. Journal of Information Systems. 1, 89-114.

Galliers R. and Sutherland A. (1989). Information Systems Management and Strategy Formulation: Applying and Extending the Stages of Growth Concept in Strategic Information Management.

Gibson F. and Nolan L. (1974), Managing the Four Stages of EDP Growth, Harvard Business Review, 52(1), pp.76-88.

Hamill, J., and K. Gregory (1997). Internet Marketing in the Internationalization of UK SMEs. Journal of Marketing Management. 13(1-3), 9-28.

Nolan (1979), Managing the Crisis in Data Processing, Harvard Business Review, 5(2), Pp.115-126

Riemenschneider, C. K., and V. R. McKinney (2001-2002). “Assessing Belief Differences in Small Business Adopters and Non-Adopters of Web-Based E-Commerce,” Journal of Computer Information Systems .pp.101-107.

Swatman P. (1993). Integrating Electronic Data Interchange into Existing Organizational Structure and Internal Application Systems: the Australian Experience. PhD thesis, School of Computing, Curtin University of Technology. Australia.

Webb, B., and R. Sayer (1998). “Benchmarking Small Companies on the Internet,” Long Range Planning 31(6).pp. 815-827.

Wyckoff Andrew & Alessandra Colecchia. (1999). The Economic and Social Impact of Electronic Commerce: Preliminary Findings and Research Agenda. 1999. Paris; OECD Publications.

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