Cisco is a leading e-commerce business with the majority of its business online. The success has been achieved through e-commerce activities. A particularly interesting part of its online operations is its customer service provision.
In the early 1990s Cisco was a relatively small company, but was growing rapidly. This success caused a problem - a backlog in the area of after-sales support. This problem developed since Cisco's electronic components such as routers and hubs need configuration after delivery. The queries that arise are of a highly technical nature and at the time there were many customer questions. The solution was to provide online support whereby if possible customers could resolve their own problems; however, highly specialised engineers were also available to deal with particularly troublesome problems. Susan Bostrom, head of Cisco's Internet Solutions Group, said the idea was 'almost an instant success': it became a 'self-inflating balloon of knowledge'. The expansion of knowledge occurred as customers not only gleaned information from Cisco's customer query web site but also shared their experiences with Cisco and other customers. The support system has continued to be a success and today almost 80% of customer queries are answered online. Cisco's sales have increased tenfold while the number of customer support staff has only doubled.
Source: Adapted from Cisco System web site www.cisco.com
E-commerce involves the transaction of goods and services between organisations using Internet technologies and has the potential to deliver many benefits to an organisation.
According to Croom (2001) the use of Internet-based technologies will affect procurement systems by making them 'leaner'. Buyers will become more informed with increased access to product information available on the web. Changes may occur in the configuration of the buying group: the purchasing function will become more streamlined and restructuring of the supply chain will also be possible.
The US-based BuyerZone.com is a leading online marketplace that brings together the premier Internet-based 'Request for Quote' service with its original award-winning purchasing guides. This research facility serves the needs of small-business owners by providing access to relevant and timely information. Additionally, BuyerZone.com provides a guided buying experience that empowers customers to evaluate easily and make quickly the right purchases for all their business needs. It is also important to be aware that a major challenge for the Internet marketers is that access to information empowers the buyer in the purchasing decision-making process, as online information becomes available to assist purchasing from all of a company's competitors. Therefore, each business needs to make an effort to provide better information than its competitors if it wishes to retain customers. An example of a business that uses such a tool to help assist the buying decision is Marshall Industries, which provides an on-screen tool that helps show customers the range of products available that meet their needs. Regardless of such innovations, Croom (2001) suggests that in the future, especially in 'routine purchasing' situations, companies will be more inclined to completely outsource the purchasing function and in doing so will make the quality of the information and its search facilities largely irrelevant.
Another change to the buying process, which may occur as a result of adoption of Internet-based technology, is a change to the people involved in the buying decision. Internet solutions are in certain instances enabling organisations to streamline the purchasing function both in terms of the number of supplier contacts (electronic data interchange via the Internet facilitates access to increasing numbers of suppliers) and the empowerment of company individuals involved in the buying decision through access to consistent and coherent information. The adoption of Internet technologies can have far reaching implications for purchasing practices. Some key initiatives which B2B organisations might consider are:
• E-procurement: Timmers (2000) suggested that e-procurement, defined as 'tendering and procurement of goods and services', is a business model that has effectively been implemented by businesses around the globe. Kalakota and Robinson (2000) advocate that increasing an organisation's profitability through cost reduction makes online procurement an important strategic issue. For example, Marshall Industries (a large American electronic components company) was one of the first companies to recognise the advantage of information systems, computer networking, collaborative tools, intranets and the Internet. These new technologies continue to play a key role in helping Marshall differentiate its offering from that of its competitors and establish a competitive advantage in what is basically a commodities market. Marshalls demonstrate the strategic relevance of moving to online e-procurement and whilst many others have undoubtedly made significant cost savings by shifting many previously manually processed paper-based tasks to the web, it is important to consider whether this is a 'quick-fix solution' to satisfy shareholder aspirations in the light of the turbulent 'dot-com boom and bust era', showing that Internet technologies can make a real difference to profitability, or whether such models can produce long-term benefits. See Mini Case Study 11.4.
Mini Case Study 11.4
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