Paisley Patterns Company Expanding to the Web Report

Introduction

Moving the traditional brick and mortar business top the web means running both ‘traditional’ and ‘new’ business concurrently, and creating the right integration between them for a synergistic and smooth operation. However, Nadler and Tushman (1997) tell us that currently, businesses are finding it absolutely necessary to develop new channels of distribution and customer management in order to compete in a global market

Even if the company is not global, competition is. Palmer (2001) points to the recent problems of businesses involved in the dot-com bust shows us that there has actually been little change in framework underlying any business. Dutta and Biren (2001) suggest a major role technology was not huge changes in business, but instead improving efficiency through electronic enabling of the current business practices. This creates change, which is consistent with current organizational culture. According to Phillips (2001) applying technology to create improvements in the efficiency of company operations encompasses 72 per cent of all IT projects.

Paisley patterns will fall into that 72 percentile, because it does not want to change its core business. Instead it wants to expand its market and increase the recognition of its brand. The major problems will not be caused by the creation of the e-commerce site, but rather, its integration with current business practices. Paisley patterns has a current sales force in the field. In order to get the most cooperation from employees, it is important that the addition of the website benefit this mobile sales force and not cost them. Therefore it will be very important to create the website so that it augments the activities of the sales force and increases their sales.

Especially because of the nature of their product, the website needs to be presented as an additional sales channel, supporting their current sales channel, not replacing it. In addition, the company must plan for increased customer support, employee training and documentation. These will be absolutely necessary in order to integrate the website with the current operations.

Planning for the Change

Careful planning will be the secret to success for this type of expansion. What additional resources will be needed to provide the framework for the website, how current operations must be changed in order to be dynamically responsive to electronic ordering and how the integration between the new electronic business and current business will be enabled. There is no substitute for careful planning.

“In a piece of research conducted by Jupiter Communications in 2000, only 24 per cent of the US CEOs surveyed actually viewed their Web initiatives as an integrated part of their core business.” (Harris, and Dennis 71)

This is generally a mistake, since it really presents leveraging the tremendous power of electronic commerce to support the core business. Siegel (2000) suggests that all strategic possibilities be looked at, even including creating partnerships with some suppliers and even some competitors, especially if they’re not in absolute direct competition. There are a number of companies that supply fabrics that do not compete directly with Paisley patterns, in that the composition and use of the fabrics is totally different. This could help to create a synergy that would not only benefit the customers greatly, but creative team for the future.

It is especially important for some companies to consider all the barriers to change before embarking on such an initiative. However, in the interests of focusing this paper, tightly on the problems of adding in integrating a website with current operations, we will assume that all barriers to the change have already been addressed. This paper will simply consider the problems of implementing, managing and supporting the necessary change.

The first consideration, of course, is how this will change the business. In this case, we have several considerations to consider.

How will this affect our current sales force?

• It is planned that this expansion will support the current sales staff and increase their sales. Since each member of our sales force has a certain territory, it is quite simple to assign the new customer to the sales person on that territory. International customers, whom we plan to serve in the future will be handled internally. Perhaps a new position will be created to serve this sector.
• The sales force will have to have training, so they can introduce their current customers to this new service. It should increase their sales as the customers will not have to wait until the salesperson gets back to them to place another order. In addition, new products can be introduced on line.
• In order to avoid the possibility that additional sales force might need to be added in each of the territories to support the new online business, support for the online orders of new customers will be provided in-house. This could possibly be another responsibility of the person who will eventually serve the international sector. Therefore, in order to allow for this additional cost, the commissions on new customers acquired through the website will be slightly lower than commissions for current customers or customers developed in the field. This will be negotiated with the sales staff.

How will this affect our current IT infrastructure?

• There’s no question that the current infrastructure will have to undergo considerable change, even though it is planned that the hosting of the site will be outsourced to a company which specializes in hosting e-commerce businesses.
• Even though the order taking will be done online, for the most part, all orders developed online must eventually passed into the company infrastructure in order to be fulfilled. Therefore, there has to be tight integration between our current intranet and the Internet site. Some of our current technology may need to be upgraded. We will certainly need to add at least one new server. We already use databases for order tracking, contact lists, customer information, HR functions and accounting. We will simply have the IT staff add additional fields to the current proprietary software for identifying that the orders come from the website. Currently, orders are tracked and reported to the appropriate sales people when fulfilled, and CRM has this information available, so little will change oin this score.
• Security issues for our current intranet, or the new website, and also for the connection between them must be carefully reviewed our IT staff as it is expected that we will need to implement considerable change in this area. New policies for security must be created, because this intimate connection to the Internet creates new vulnerabilities. We should consult with the CTO and the Director of IT to see if we need to hire a security specialist or if current staff need additional training. There especially needs to be adequate security between the web server and our company intranet for the protection of our records, customer information and the systems as a whole. We are currently using a proxy server, and our sales staff has long been logging in to our VPN, but these will need additional security, since the processing of orders on line on a company website make us a target for hackers.

How will this affect other staff?

• Additional staffing will be needed for customer service via e-mail or telephone and web live help.
• We will need an additional technical writer to cover at the website, product descriptions, marketing materials, SEO, FAQ, help files and training materials.
• You’ll create a new position for handling orders from the website and routing them through the traditional order fulfillment process. The major difference in order fulfillment from website ordering, will be that the order is taken online and credit cards or purchase orders will be handled electronically. Otherwise the process of fulfillment is essentially the same. There will be notations in the order department that the order was electronic, so that HR, marketing and accounting will track these orders properly, and the new customers will be added to the appropriate sales staff.
• Our current webmaster will likely need some additional help in order to maintain the e-commerce site properly. Up until now. Our company has only maintained to be to be website, primarily informational, using the domain name we purchased long ago: paisley patterns.co.uk. While our current webmaster will not be required to handle the day to day operation of the e-commerce site, he or she will be responsible for the look and feel of the site and for timely content changes. Part of this work will fall into the domain of the new technical writer. However, it will be overseen by the webmaster.
• In anticipation of increased business, the HR department needs to be alerted to be ready to fill the new positions we’ve outlined, and possibly add to current staff in marketing fulfillment accounting training and order handling. The manufacturing staff may also need to be augmented. Currently, the manufacturing facility has enough scalability to meet up to 40% increased demand. However, operations must keep a close eye on this so that we don’t get caught with our staff down.

How will this affect management?

• In the past we have not needed, a chief information officer. However, it may be necessary to create this position, in order to have someone that oversees the entire infrastructure and is responsible for seeing that all of our technology is as up to date in well-integrated as is necessary to serve the continuing needs of this company.
• In addition to the creation of a CIO position, our marketing manager may need an additional assistant to oversee the electronic commerce portion.
• All management personnel will need to be further educated concerning e-commerce. To this end, we will seek the assistance of one of the local colleges or universities, or perhaps we will contract, a company that specializes in moving a company into the area of e-commerce. We believe this will help us to avoid many pitfalls of which we are currently unaware.
• Our creative staff, who are responsible for design of our fabrics may with to increase our offerings after a time in order to expand our market further. The director of products design will make these decisions in concert with upper management and manufacturing.
• An additional manager may be needed to facilitate cooperation among the new partners in the e-commerce strategy: our suppliers and some of our competitors who do not have products directly competing with ours, but complementary products. Our legal department will need to draft contracts with all partners.

How will this affect CRM?

• Additional training and staff will be needed to augment current customer support. All CRM personnel need to be trained to support the functions of the web site in addition to providing traditional customer support.
• The Cluetrain Manifesto (Levine et al., 2000), asserts that ‘markets are conversations’. Newell’s Loyalty.com (2000) suggests that companies must ‘leverage customer information’ for effective E-commerce customer support and marketing. Seybold’s Customers.com (1998) insists that customer-focused strategies will create a community which includes customer, suppliers, partners and personnel.

How will this affect operations?

• Manufacturing is currently flexible as far as scalability is concerned, but we may need to move to lean manufacturing. This process can be gradual, since inventory is not a huge problem with fabric. It takes little space and is not terribly perishable. The website, in fact, can be leveraged to dispose of slightly outdated fabric at cost instead of the current practice of wholesaling it at a loss.
• Information gathered from the website can be leveraged to provide for more accurate forecasting for product development. Marketing and design should collaborate on this option, with the help of the IT staff currently in charge of knowledge bases and records. The role of electronic commerce is also as a marketing tool for attracting and maintaining customers (Dreze & Zufryden, 1997; Vrolijk, Huizingh & Hoekstra, 1998; McMurdo, 1998; Dholakia & Rego, 1998; Hofacher & Murphy, 1998; O’Keefe, O’Connor & Kung, 1998).

“The revenue generated from Internet shopping is increasingly rapidly in terms of both its share of all retail sales and its overall value (Economist 2/26/00; 6/2/00). Sales from multi-channel retailers (catalogue and/or physical stores that also sell on-line) dominate this outlet, and they are expected to increase their dominance as the Internet matures (Economist 8/21/99). Businesses recognized, however, that use of the Internet should not be restricted to sales — functions such as “building brand awareness” and “providing marketing information” are also relevant (www.yankeegroup.com). These trends and issues, alongside the changing nature of consumers’ online shopping habits, reduce the importance of traditional distribution channels to retailers.” (e.g., Quelch (Balabanis, and Reynolds)

How will this affect finance?

• A new initiative will have to be created to separate the cost of developing e-commerce from regular business, so we can track the ROI. We will meet with all department heads to create a detailed plan for the needed changes, so we can cost them and create a realistic budget.
• We need to assign a project manager to oversee this project from start to finish. This should be someone internal to the company who has intimate knowledge of operations, company culture and our entire business structure. Buchanan and Boddy (1992) call for a ‘change agent’ or ‘project champion’. The project manager will be responsible for managing the changes in order to successfully implement the e-commerce initiative.

How would all this change if we moved the web and in house instead of outsourcing the website?

I cannot recommend in how hosting of the website this time, because the changes required to host this site in-house would be tremendous. We would need to expand the staff to include programmers for the back end of the website. Additional security personnel, database management person now and we would have to add 24/7 outsourced troubleshooting, such as that provided by Williams Communications or Cisco. In addition, we would have to add to or hardware, just for the website an additional two servers, a switch, another backup server and additional space in which to house them. Who are experienced in creating and maintaining website servers. This is an additional consideration that would have to be addressed.

The budget would have to be increased by quite a bit more than the cost of outsourcing this service. While in-house facilities would definitely be more secure and under our control, hiring a reliable company to handle these details is currently the best plan.

We would also have to consult the legal department in order to identify the required increased insurance that we would need in order to protect this installation. We would need an extra management team, just to manage the on site server for the website, and several areas of our infrastructure would have to be remodeled in order to carry the load.

Creating and maintaining a website is a big step in itself. However, we have most of the expertise among our staff at this time for that kind of initiative. It is true that we will have to hire new people to augment this staff, and that we will see people with extra knowledge to augment what we currently have. However, the hosting of the website would put the e-commerce initiative under additional risk that might compromise the entire program.

Our current IT staff are well-versed in taking care of our internal security needs, maintaining the manufacturing substructure and maintaining the IT infrastructure necessary for our day-to-day operations. It requires a different kind of expertise to set up and maintain and support Internet servers and all their attendant security. This might be an initiative we may take up in the future, but to do this from the start as we create the e-commerce site to complement our brick-and-mortar company may be an overextension of our current capabilities.

Wrap-up

Careful planning will be required in order to implement the new e-commerce initiative, but we do believe that this is the best plan for our company at this time, in order to increase are branding ability and our customer base. Headed up by a Project manager in order to begin the planning for this initiative. That this will involve the entire company. Our internal newsletter will announce these plans and invite contributions from all our employees.

Commensurate with our company tradition, we plan to post invitations for current employees to apply for new positions that we will be creating. HR will be alerted to begin recruiting and interviewing for those positions for which we have decided we have a definite need. It is expected that we will need at least a month to put together a comprehensive plan to implement the e-commerce site. Following that we expect this to be six months or more in development. However, if all of the previously mentioned needs are carefully considered, the transition to expanded e-commerce to support our future business should not be terribly difficult.

Following the planning stage a website host will be sought that can best support our needs. Our current hosting is in-house, since the company website has never been much more than an advertising portal. The CTO is currently researching hosts.

As soon as we have hired additional website creation personnel, work will begin on creating the e-commerce website. Cooperation with the design staff, who create our products, will ensure that our new portable also supports a forward thinking branding initiative. The project will not be fully initiated until we have named a project manager and created a project team. It will be the responsibility of the project manager to keep everyone apprised of the current status of this development project, so we urge all personnel to cooperate fully with the project management team. This is going to increase our business, though the initial outlay for this project is certainly a substantial investment.

We expect this to be good for the entire company and all our personnel, our customers, our suppliers, and even some of our competitors, whom we’ll invite to partner with us in e-commerce initiative. We mention Burlington among others as one such company, who are competitors in the field but not directly with our products. It is suggested that every department should have short meetings with the project management team on an ongoing basis until this entire project is under way, training is completed and the transition to e-commerce supported business is complete.

References

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