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Chapter 1 Introduction to e-business and e-commerce 31

Cost/efficiency drivers
1 Increasing speed with which supplies can be obtained
2 Increasing speed with which goods can be dispatched
3 Reduced sales and purchasing costs
4 Reduced operating costs.

Competitiveness drivers

5 Customer demand
6 Improving the range and quality of services offered
7 Avoiding losing market share to businesses already using e-commerce.

More recently, in interviews with Australian businesses, Perrott (2005) identifies four key
areas driving performance which are cost–benefit, competitive pressures, market advantage
and value adding, i.e. improving customer satisfaction while building strong relationships.
When reviewing potential benefits, it is useful to identify both tangible benefits (for
which monetary savings or revenues can be identified) and intangible benefits (for which it
is more difficult to calculate cost savings). The types of potential benefits are summarized in
Table 1.3.

Table 1.3 Tangible and intangible benefits from e-commerce and e-business

Tangible benefits Intangible benefits
• Increased sales from new sales leads giving • Corporate image communication
rise to increased revenue from: • Enhancement of brand
– new customers, new markets • More rapid, more responsive marketing
– existing customers (repeat-selling) communications including PR
– existing customers (cross-selling). • Faster product development lifecycle enabling faster
• Marketing cost reductions from: response to market needs
– reduced time in customer service • Improved customer service
– online sales • Learning for the future
– reduced printing and distribution costs of marketing • Meeting customer expectations to have a web site
communications. • Identifying new partners, supporting existing partners
• Supply-chain cost reductions from: better
– reduced levels of inventory • Better management of marketing information and
– increased competition from suppliers customer information
– shorter cycle time in ordering. • Feedback from customers on products
• Administrative cost reductions from more efficient
routine business processes such as recruitment, invoice
payment and holiday authorization.

In Chapter 5 (Figure 5.12), an alternative information-based model of value creation is dis-
cussed in relation to financial services organization Capital One. This reviews new
opportunities for adding value, reducing costs, managing risks and creating a new reality
(transformation).