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Difficulties in measuring and justifying e-commerceJustifying EC (and IT) projects can be complex, and therefore ,difficult to justify. Let us see whyThe EC justification process The EC justification process varies depending on the situation and the methods used . However, in its extreme, it can be very complex . As shown in Figure 14.3,five areas must be considered in the justification of IT projects. In this section , we discuss the intangible and tangible areas . In Cheaper 1, we discussed some strategic and tactical considerationsDifficulties in measuring productivity and performance gainsOne of the major benefits of using EC is increased productivity. However , productivity increases may be difficult to measure for a number of reasons.Data and analysis issuesData, or the analysis of data ,may hide productivity gains . Why is this so? In manufacturing , it is easy to measure outputs and inputs. For example, toyota product motor vehicles a relatively well defined that shows gradual quality changes over time . It is not difficult to identify the resources used to produce these vehicles with reasonable accuracy. However , in service indystries, such as education, social services, or health care delivery, it is more difficult to define what the products are, how they differ in quality , and how they may be related to corresponding benefits and cost Other generic factors are:-EC productivity gains in one area my be offset by losses in other areas-ẩn chi phí và lợi ích -không chính xác xác định những gì được đoEC và các chi phí liên quan đến việc tổ chức hiệu suất.Lý do là mối quan hệ giữa đầu tư và hiệu suất có thể gián tiếp; yếu tố chẳng hạn như chia sẻ EC và nó tài sản và làm thế nào chúng được sử dụng có thể ảnh hưởng đến hiệu suất tổ chức và làm cho nó khó khăn để đánh giá giá trị của một sự đầu tư.Những khó khăn khácChậm thời gian dài giữa đầu tư và thực hiện lợi nhuận có thể ném ra phép đo năng suấtVô hình chi phí và lợi íchTrong nhiều trường hợp EC dự án tạo ra lợi ích vô hình, chẳng hạn như nhanh hơn thời gian để thị trường, và nhân viên tăng lên và sự hài lòng của khách hàng. Đây là những lợi ích rất mong muốn, nhưng nó có thể được khó khăn để đặt một giá trị tiền tệ chính xác vào chúng. Ví dụ, nó thường được tìm thấy rằng e-mail cải thiện truyền thông, nhưng nó là khó khăn để đo lường giá trị của improverment nàyHữu hình chi phí và lợi ích Các chi phí liên quan đến việc mua phần cứng, phần mềm, tư vấn, và hỗ trợ dịch vụ thường tái hữu hình, như là các chi phí của dịch vụ viễn thông, bảo trì, và trực tiếp lao động. Các chi phí này có thể được đo. tương tự, lợi ích hữu hình, bao gồm cả tăng lợi nhuận, cải thiện năng suất và lớn thị phần, có thể được đo với tương đối dễ dàngVô hình chi phí và lợi ích When it comes to intangible costs and benefits, organizations must develop innovative metrics to track these as accurately as possible. Intangible costs may range from the inclusion of some vague costs such as those resulting from the learning curve during of the incorporation of an Ec system, to better respond to customer inquiries. Another intangible cost may result from the need to change or adaption of certain business processes such as building and operating an inventory tracking system . An additional difficulty is separating Ec cost from the costs of routine maintenance of inventory and other relevant iT systems.Managing inntangible benefitsThe first step in managing intangible benefits is to define them (see the opening case of telstra ,And if possible , specify how they are going to be measured A simple solution is to make rough estimates of the monetary values of all the intangible benefits and then conduct an ROI or this approach is appealing , but in many case , the simplification assumptions used in these estimates are questionable . I the estimates were too high , a wrong investment may have beenmade. An estimate that is too low may result in disregarding a good investment and potentially losing a competitive advantage. Intangible costs and benefits may be approached in a number of different ways. Several of the methods presente in Setion 14 also can be used o evaluate intangible benefits. For more on intangible costs and benefits, see Ritter and rottger(2008)One way to deal with intangible benefits is to develop a balanced scorecard for the proposed investment. This approach requires listing both tangible and inttangible goals and their measures . For an example of how this works ,see Asefeso(2014)These difficulties can cause many companies not to measure the value of IT and EC projects, which can be a risky approach . For those companies that conduct a formal justification , we present a number of methods in The process of justifying EC and IT Project Justifying large scale investment is not only about selecting a method ;it is aslo about executing it. The appropriate process is not simple . The major seps of this process , according to Baseline (2006) and the authors experience are:1 establish an appropriate basis for analysis with your vedor, and then conduct your ROI2 investigate what metrics to use (including internal and externad metrics) and be sure about thei accuracy3 justify the costs benefit under approprite assumptions (see the referefces provided in the opening case)4 verify all data used in the calculation 5 include strategic benefits, including long term ones. Find contributions to competitive advantage. Make sure not to underestimate costs and overestimate benefits(a tendency of many managers) 6. Make data as realistic as possible , and include costs avoidance and risk analysis.Commit all business partners, as well as suppliers and major customersThe use of gartners hype cycleBefore we introduce the specific methods used in justification, we present briefly the concept of the hype cicle . Organizations can use this tool to assess the maturity level of specific EC technologies so they can develop a strategy befor they invest effort and money in conducting costs benefit and justification analysis.What is gartners hype cycle ?A hype cycle is a graphic representationOf the life cycle of specific IT and EC technologies (cloud computing ,3D printing, e-payment). They term was coine by Gartner. The hype cycle provides a snapshot of technologies , IT methodologies, and management related disciplines overtime.the hype cycle highlights the overhyped technologies versus those that are matured and already have hugh usage in industry. The hype cycle also provides estimates of how long technologies and trends will take to reach maturity. The methodogy and details are presented at gartner.com/technology/research/methodol-ogies/hype-cycle.jsp. Hype cycle can be customized (by Gartner Inc ,for a free) to fit certain industries and companies. Gartner revises the hype cycles once a yearEach hype cycle has five stages that reflect the basic adoption path any technology follows, starting with a trigger point, through over enthusiasm hype,and then enduring disillusionment, befor finally becoming accepted. (note that Gartner developmed the hype cycle to replace the product life cycle, which includes four stages.)The five stages of the hype cycle re:
1Technology trigger. The generation of media interest and industry exposure in new IT or EC technology, which includes publicity events (such as product launch parties, public demonstrations,or press releases), that result in considerable atention to the technology.
2 peak of inflated expectations. His is the phase of exuberance and overenthusiam, and too much publicity and over-estimation of the technology’s potential. In 2003, augmented reality and the internet of Things were in this stage. The technology performance may not be able to kee up with the promises made by technology leaders, consultants, and financial analysts
Trough of disillusionment. A point where the media no longer care about the technology because its result were disappointing
4 slope of rnlightenment . The usefulness,risks,and benefits of the technology are understood because of the combuned god results and best efforts and practies of many organizations
5. Plateau of producrivity . Thetechnology has shown to have actual benefits . Now on their second or third generation , the methodologies and tools are more stable and consistent. The location of the plateu of the echnology depends on whether the technology is specifically for a niche market or is universal
Application of the hype cycle
Gartner ,Inc, provides an annual report that covers about 102 different hype cycles evaluating over 2,000 different technologies across 75 industries. For information, including a video,see gartner.com/technology/reseach /hype cycle. Gartner Inc, charges fees for providing is repors, which include technology trends. The 2011 and 2014 reports cover many EC technologies such as mobile commerce and devices, microblogging ,augmented reality, green I in data centers,social analytics,cloud computng,context-aware coputing,internet of Thing ,virtual worlds, location-based applications,security,RFID ,video telpresence, and collective intelligence.
An example of how EC technologies were placed on the hpe cycle in the past isavailable t gartner.com/newsroom/id/2575515. The press release provides interesting informaton about several emerging EC technologies. Examination of the hpe cycle can be useful to any organization that seriously considers the emerging tools of e-comerce,m-commerce, and social commerce
Section14.3 review questions
How do organizations measure performance and productivity ? What are the difficulties in measuring performance and productivity?
2why is it difficult to relate EC(IT) investments to organizational performance? List the major reason
. define intangible costs and benefits
Define intangible costs and benefits and explain why they must be considered when justifying an Ec investmen
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