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Old-Fashioned Sense for the New E-Conomy

  • March 01 2001, 1:00am EST

We are no doubt in the midst of the dot-com collapse. Some new economy, don't you think? Nasdaq was down 39.2 percent for the year 2000, and it continues to slide.1 Hundreds of dot-coms have slashed their staffs or closed their doors entirely. Refugees are flooding the human resource departments of brick-and-mortar companies by the thousands. Why are so many e- companies barely treading water? Because it's one thing to have a business, but it's entirely another thing to manage it effectively.

To be sure, for so many businesses to fail so dismally, many things had to go wrong. However, if my – and many of my friends' – Internet shopping experiences over Christmas were any indication of the causes of failure, the lion's share of the problems lie in the way many companies manage or fail to manage their information systems. No amount of revenue will cover the lack of information systems management in the long run.

Haven't things changed in the new economy? Aren't there new paradigms for managing e-businesses? After all, we've never seen this kind of business. Don't we need new ways of thinking to manage it? No! Good, old-fashioned common sense works for anything. What the dot-coms (and anyone with any Internet presence) must do is apply proven information management techniques to their e-businesses.

You know what these techniques are: integrate your systems to enable nimble analysis and forecasting, and put processes in place to make the most of the data you have and the market you're in. None of this is new, but there are ways to apply these techniques to e-businesses that may mean the difference between success and catastrophe for your business.

To avoid large infrastructure ramp- ups when putting new product lines on the market or moving into new business areas, many e-businesses (and non-e-businesses as well) acquired other companies. When they did, they acquired those companies' information systems – and a number of information integration problems. The new, hybrid entities often don't know who their customers are – much less what they want. That's a deadly prescription for any business.

There's a relatively simple way to avoid this dis-integration chaos. Before you make the decision to build new systems or obtain them through the acquisition of another company, take steps to integrate them into your existing technical architecture. Of course, you can't integrate systems you don't have, but you can start to integrate the systems you do have. Or, if you've jumped on the enterprise application integration (EAI) bandwagon with me, you can create a virtual spot for the systems in your integration architecture. The bottom line, obviously, is that you must have an integration plan in place before you start the systems proliferation game. Sure, you can wait until the systems are up and running before you do anything, but you will lose valuable planning time while you integrate post-purchase.

Another thing that will save you valuable time in the long run, especially if your business plan involves growth through acquisition, is building business processes that are formal, flexible and repeatable. They must be formal in that they are documented and followed most of the time. The only time they shouldn't be followed as written is in cases of exceptional emergency, such as a massive systems failure or natural disaster. Even then, you must stick with your processes as much as possible. They are there for a reason: to help you know how to react when you don't have much time to make a decision.

Your processes must be flexible in that they are able to handle new situations and new customers without much rework. Don't change your processes wholesale to fit new customers. I've had clients that insisted on going that route. They ended up with no processes, just a morass of client-specific procedures in multiple, often outdated documents.

Finally, your processes must be repeatable. This repeatability is related to the formality of the processes. If the processes are constructed correctly, and if they are followed, they will be repeatable and they will yield the same results time after time. You will be able to capture the right information from your customer-contact activities, and you will be able to maximize the use of that information to grow your business.

Isn't growing the business the bottom line? Yes, it is. And getting that bottom line to stay black is all about applying common sense and time-tested information-management techniques in new situations. It's not about flying by the seat of your pants all the time and inventing new rules as you go along. It's the old adage: make a plan and stick to it. But, as always, with me there's a caveat. The plan must be flexible. After all, a little flying by the seat of your pants never hurt anyone.

1. CNN Headline News. January 1, 2001.

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