Doing business on the internet. (Checklist 099).

This checklist gives an overview of the steps and principles you need to assess when considering using the Internet for business.

Management Standards

This checklist has relevance to the MSC National Occupational Standards for Management: Key Roles A, B and D--Manage Activities, Manage Resources and Manage Information.

Definition

Doing business on the Internet means taking the same steps as you would in the real world. This includes:

* developing a strategy which takes you forward but does not you throw you in at the deep end

* considering the Internet's opportunities and weaknesses

* addressing fundamental questions about positioning your business

* looking at evolving business models and how they are working on the Web

* assessing the Web for buying and selling

* considering the law and how it applies to the Internet.

Advantages of doing business on the Internet

These include:

* the continuing growth and use of the Internet all over the world

* the continuing market entry of, traditionally, non-information sector players who see the Internet as a differentiation factor and value-adder for their business

* investments made by major banks and software houses to develop the commercial side of the Web and make buying and selling secure

* the spread of consumer purchasing confidence as the growth of electronic transactions takes precedence over past, well-publicised efforts of hackers

* promotion, pump-priming and legislative efforts of the EU and the US.

Disadvantages of doing business on the Internet

These include:

* information overload dominated by trivia

* slow response times because of increasing network congestion

* a rate of innovation which seems too rapid for most to keep up with

* a lack of hard evidence--apart from a few well-publicised stories--that profits can really be made from the Internet

* unregulated anarchy that allows pornography to sit side by side with respectable information.

Action Checklist

1. Get to know the Internet

Familiarise yourself with the main features of the Internet, particularly e-mail and the Web. Understand how the Internet works and what its potential is by experimenting with it, reading about it and discussing it. Explore the relevance of the Internet to your business, particularly in the domains of communication, marketing, information gathering, buying and selling, and service and delivery.

2. Address the fundamental questions

Do not let the Internet dictate to your business; it's easy to get carried away. On the other hand don't get left behind under the illusion that "it'll never catch on" Keep some key questions in mind:

* Why use the Internet?

Fear of getting left behind?

To explore business potential?

* What are we trying to do on the Internet?

Improve communications?

Gather information about markets and competitors?

Gain a lead over the competition?

Deal better with existing customers, or attract new ones?

* Who should be doing the Internet work?

What skills do we need?

Train existing staff and/or hire new staff?

Bring in a consultant?

* How can the Internet benefit your customers?

What advantages can the Internet bring to your business?

How can it add value for your customers?

How can it make things easier, more efficient or cheaper for suppliers?

3. Examine the business models

There are a number of loose business models in evidence on the Internet:

a) The Communications Model--primarily improved flexibility and efficiency through e-mail.

b) The Advertising Model--using the organisation's Web site as a shop window.

c) The Subscription Model--unlimited access to a product or service in return for payment of a fee.

d) The Niche Marketing Model--packaging personalised information, news and recreation services.

e) The Department Store Model--setting up as a seller on the Web.

Many organisations are now operating models a) and b), both of which saw rapid growth in the latter half of the 1990s. Models c), d) and e) are subject to growing experimentation. The national press as well as business magazines carry stories of initiatives, successes and failures.

4. Understand your audience

The profile of your best prospect is the profile of your best customer. Keep an eye on customer buying habits and the level of interactivity they are likely to want. Think about what customers most want to know about your organisation and what you most want to know about them. As you look at competitor or peer-organisation web sites, think about how the Internet can add value to your services and products. This might lie in better information provision, greater interactivity and 'involvement' for web site visitors, alternative methods of distribution, or more customisation for individuals and groups. Keep up with the changing Internet population as more women and older people start to grow as significant users.

5. Buying and selling on the Web

The hype--or at least one stage of it--is over, and experts and pundits look forward to a future of prodigious growth in electronic transactions. Most research, however, points to real growth in the business-to-business sector. If you are looking for business to individual consumer potential:

* Find out about your customers' buying habits and preferences for payment methods.

* Determine whether or not your products are suitable for electronic transactions and mail order.

* Find out about the full costs of electronic trading and measure the value of transactions you can weigh against those costs.

* Look at other sites to see what is attractive and effective.

* Talk to your bank and your Internet Service Provider. Without their advice and support, it is probably better to stick to a shop-window.

6. Gen up on the law

Advertising and selling: as a general rule, Web advertisements are subject to the laws and regulations of the country where the site is accessed.

Consumer protection: in the European Union, buyers are protected under the Brussels convention in dealings with companies based in other countries of the EU.

Taxation: tax laws are based on geography--where the company is located, or doing business, and on the products and services being sold.

Copyright: copyright transgressions are hard enough to monitor and control in the 'real' world; on the Internet, it is virtually impossible to enforce copyright law without relying on 'good citizenship' to help the copyright owners.

Data Protection: provides rights to people about whom personal information is held on others' computers. In 1998, a European Directive on Data Protection reinforced personal information safeguards throughout the EU.

7. Obtain commitment and integrate

Obtain commitment from senior management, and involvement and interest from as many people as possible. You won't get anywhere by making the Internet a sideline that only a few know about. Staff need time to feel their way and become familiar with the way the Internet works. You need to align and integrate Internet activities with those you perform in the real world, so that the Internet becomes a major weapon in achieving strategic objectives.

8. Assess resource requirements

When constructing an Internet presence you can go for a Rolls Royce or a Robin Reliant and there are many levels in between. Recognise that you will need technical, design and legal expertise and this may need to be brought in if it is not readily available. Once you have decided what you want to try and achieve, decide what resources you can, or are prepared, to allocate.

9. Start small

Getting started is more important than trying to get it perfect straightaway. Look for early wins but not quick fixes. Try to identify who can help to achieve early success which can serve as a persuasive case to those who need persuading. Expect your web-site to be a cost centre.

Think about policies and procedures which clarify:

* Who may access the Web, and who may not?

* What information may be imported into the organisation from the Internet?

* Who has ownership of and responsibility for information on the organisation's Web site?

10. Keep moving forward

A month is a long time on the Internet and information can go stale if it is not renewed, refreshed and changed so that customers continue to perceive the value that brings them back to your site. This means taking risks, trying things out and exploring new technological developments.

Dos and don'ts for doing business on the Internet

Do

* Keep up with Internet developments--they are usually flagged up in the press.

* Familiarise yourself with the way the Internet works.

* Look at the web sites of major customers, suppliers and competitors.

Don't

* Ignore the business issues or forget to assess all cost implications.

* Assume that Web presence equals market penetration.

Useful reading

There are many books on doing business on the Internet. These will date very quickly.

Related Checklists

* Choosing an Internet Service Provider

* Establishing a presence on the WWW

* Using management consulting services effectively

Thought Starters

* Weigh the cost of a web site against the cost of your marketing campaigns.

* Can you provide something cheaper, better or newer to customers via the Web?

Further information