Monthly Archives: January 2014

Outsourcing eCommerce Application Support/Development to India? Two Keys for Success

The need for eCommerce talent is far outstripping demand in the U.S. where rates in the U.S. run anywhere for consultants from $60/hr up to $175/hr for highly skilled solution architects. Obviously there is a need to tap into the expert talent in India where rates run closer to $20+ for similar such expertise.

There are two ways to make your outsourced project or support services work for you, your client, and your employees in India to everyone’s satisfaction.

1.     Use Scrum

Outsourcing to a company using Scrum will help you overcome the obstacles that make a traditional approach unwieldy and inefficient, and that cause endemic project failures.  How so? Unlike the traditional “waterfall” approach, where all software is delivered once, at the tail end of the project; while Scrum focuses on providing a continuous flow of value to the customer, which minimizes project risk and increases return on investment.

With Scrum, catastrophic project failures like the recent California Court Management System (CCMS) $500 million debacle are impossible by definition. This holds true whether offshoring or not.

Applied in the context of outsourced, distributed software development, Scrum acts as a catalyst of communication and as a powerful spotlight shining onto every aspect of the client-vendor relationship, forcing accountability on the one hand and unleashing tremendous productivity on the other.

Inspired by the Toyota Production System (TPS), Scrum is designed around several foundational principles and practices, including development in short iterations, incremental delivery of potentially shippable software after every iteration, prioritization of features around business value, and direct customer involvement in planning, elaboration and acceptance.

Scrum acts as a catalyst of communication and as a powerful spotlight shining onto every aspect of the client-vendor relationship, forcing accountability on the one hand and unleashing tremendous productivity on the other.

2.     Local Domestic Presence Global Reach

Different countries have different cultures.  Having a local on-site presence to facilitate communication is a key to a successful approach.  The ‘new  global’ really means demonstrating the capability for operations to seamlessly flow across centers around the world.

Continued erosion of offshore/onshore rate arbitrage benefits make this even more important, as India continues to have the world’s greatest supply of the best IT talent, which has to be utilized in a way that benefits the all parties involved.

In niche areas such as eCommerce (mission critical) platforms where demand in the U.S. is outstripping supply of highly qualified architects and developers; communication between onshore/offshore will make for a successful initiative.

These two key components will make for a win-win-win for all.

eCommerce Re-Platforming: How do you know when it’s time?

Existing eCommerce sites may be exhibiting signs that their glory days are behind them. How do companies know when that time has arrived?

  • Poor response times or frequent outages
  • Inability to keep up with competitors’ functionality
  • Stalled multichannel sales strategies caused by inadequate integration between channels
  • Difficulty complying with industry and government compliance mandates
  • Facing cost-prohibitive improvements to fix inefficiencies in the current system

According to a Forrester Research survey1, 81% of ecommerce retailers are currently using a self-built or licensed on-premises solution and nearly three-fourths (74%) fear their existing solutions won’t scale with their growth plans. Almost half (46%) of retailers report difficulty hiring the staff needed to manage their licensed platform or to continually tweak their internally built eCommerce platforms to keep up with market demands and run the underlying infrastructure.

Ultimately, the issue of re-platforming an existing eCommerce system comes down to determining the investment required to meet the organization’s goals. There is more to cloud economics than the oft-touted ‘convert CAPEX to OPEX’,

Factors such as the pattern of demand, TCO, transformation costs need to be factored into any financial analysis of a potential solution.  Choosing the eCommerce platform software balances the cost of licensing and management against the benefit of instant access to the tools needed to build and grow a competitive site. Sufficient variability in demand is required to realize cost savings using a public cloud hosting model; flat workloads are cheaper on dedicated infrastructure over a fixed contact term.

A company approaching the re-platforming stage should look into working with a partner that is able to apply skills and resources that are likely in short supply internally.

CRM + eCommerce = Customer Centered Selling

Systems Integrators are continually involved with integrating backend systems to eCommerce sites. One of the biggest trends for 2014 is the integration of CRM with eCommerce, so I thought I would comment on some of the benefits.

First, let’s consider that without integration E-Commerce companies face some notable challenges

  1. IT systems cannot measure the known and the unknown
  2. Business Processes are not designed for customer satisfaction
  3. IT systems are outdated and not designed for customer satisfaction
  4. Employees involved in the process are not trained for satisfying customer requests
  5. No interaction between customer/marketing/sales/and supply channels

By using CRM software to collect and manage information about their customers from their websites and accounting systems, B2B and B2C marketers can maintain a single database that allows them to make rapid updates to their CRM, accounting systems and websites in one fell swoop. In this regard, everything from a customer’s address to the price of a product can be altered across systems instantaneously.

Sales Automation can provide you with invaluable insight into sales activities, pipeline/forecasts, and salesperson productivity. Yet by adding and relating specific products and invoices to a sale, a business is able to correlate “wins” with specific products and product lines in order to more readily understand customer buying trends, drivers, and preferences.

Support Automation will provide you with insight into customer problems and how they were resolved, and in what time period. By adding and relating specific products to customer issues, a business can begin to correlate trouble.

The goal of leveraging eCommerce activity data to further understand prospect interests and customer needs centers around the ability to integrate eCommerce with CRM and ERP applications. The results are the consolidation of data that relate to an account, salesperson, and product in order to develop trend and performance metrics.

Manage the Customer Experience

The primary purpose of using a CRM tool should be to learn more about the customer experience and use that information to improve it for all of their customers. In particular, integrating a CRM system with an e-commerce solution can provide detailed and actionable information about customer behavior on a site; this information is what allows for the personalization of the experience for each customer over time.

 The Customer is King

Personalize customers’ experiences based on where they came from, what they have been shopping for, past sales history, what’s in their cart, and so forth. There are a myriad of ways that an eCommerce platform can offer unique banner ads, related products in the sidebar, an inventory list of top products purchased over time for B2B.. As a result, there is higher conversion rate, fewer bounces, and in all cases, a more satisfied customer.

By using behavioral information from the website and CRM, a more targeted content and promotion offers a more personalized and positive experience.

Global eCommerce Expansion Challenges

As companies expand B2B and B2C eCommerce outside U.S. borders, there are a number of unique challenges encountered that require each country be analyzed on its own merits for expansion.  Rather than look at each individual country, I’ve decided to take a short look at China from which we can gather some insight that can be applied to any country.

I’ve included a chart of ATKearney’s global retail development index, in order to give you a list of countries that might be a useful starting point.

So, let’s take a look at China, since it garners the most media attention.  However, from an ROI standpoint, it might make more sense to research the lesser developed countries where the competition is less established unless you have a major brand.  And, in China a major brand has definitely not eased entry into that market.

China internet growth is moving at a 9% rate with 40% penetration.  Internet Stats. eShopper as a % of internet users is 32% as of a 2012 study.

China internet access vs desktop mobile small

Desktop users in chart above in Blue.

How do you Compete in China when companies like Amazon and Google have struggled?

Baidu.com, a company founded in Beijing in 2000, now has 78.6% market share, with Google trailing at 16.6%.  What happened to eBay? eBay purchased EachNet (a local company) and promptly lost market share from 87% to 0.7%.  Taobao became the market leader in 6 months.

eBay failed because they:

1. Did not modify the business model for customers

2. Insisted on global technology standards that decreased page load speeds

3. Overlooked the competition (Groupon entered China when there were already 1000 competitors.

Key takeaways to apply to any market:

1. Adapt your offerings to better befit the social habits of the consumers. Owing to a highly collectivistic culture, Chinese consumers rely heavily on social networks, reviews and recommendations when making a purchase decision. Consequently, Chinese customers are also avid content providers. In fact, Chinese consumers are more social online than U.S. consumers. Thus, companies have to make customer service a top priority, as any bad word of mouth can spread like wildfire and cause more damage than it would in a Western country.

2. Focus on the customer, not just on the information system. Some organizations believe that the key to success in China is superior information technology. Therefore they tend to focus more on system integration than on customer needs. But as our examples demonstrate, meeting customer needs is the most important determinant of success.

3. Speed up your decision-making processes; act fast and react faster. China’s e-commerce companies excel at making rapid, consumer-centric decisions. In China, local market conditions change rapidly. A long reporting chain with personnel at Western headquarters controlling everything is simply not feasible. Decisions have to be made quickly.

4. Consider other forms of market entry. Nowhere is it etched in stone that American organizations must launch Chinese divisions. Given how difficult the competition is, organizations would be wise to consider forming strategic partnerships with local competitors. For example, instead of building an e-commerce channel of their own, several big-name brands — including Gap Inc. and Levi Strauss — have teamed up with Taobao to sell their products online in China. Another form of entry is investing in local companies. Walmart, as part of its online strategy in China, has recently led a consortium of investors in buying a $500 million stake in 360buy.com.

 

Chart of the Global Retail Index 2013 from AT Kearney.

2013 Global Retail Development Index™