A major radio station in my local market announced last week that it will stop broadcasting music via its Web site. The effort, a loss leader with no short-term prospect of making money, is not likely to be resurrected anytime soon.

This announcement was less dramatic than a total business failure because the parent company of the radio station is still profitable, and the station will continue to broadcast in the traditional way. However, it was a bit shocking to think that a large player in a large market has conceded that Web broadcasting is a flop.

Examples such as this one illustrate that the hype surrounding e-business is fading; we are now left with the real work of transforming business. At the same time, we're facing an economic downturn, layoffs, and shrinking IT budgets.

If they haven't done so already, the top leaders in your organization will take a close look at IT expenditures. Although e-business is likely to be spared deep cuts, pressure to do more with less will be intense. The truth is that most companies would prefer to cut costs rather than cut an e-business project completely.

Cutting back

In the short term, companies can save time and precious resources by cutting back the amount of hype they generate around e-biz initiatives. The mandate to issue copious press releases and to speak about e-business initiatives at industry conferences is no longer a priority.

These efforts were much more worthwhile when businesses where trying to impress venture capitalists, build brand awareness, and turn the heads of passive job-seekers. Now generating hype is largely a distraction for your staff, whose time is better spent doing the work around e-business.

Also consider the overall e-business project portfolio and do some serious triage. Some companies have hundreds of e-business projects. Regardless of how many projects you have, divide them into the following categories: must do, should do, and could do. Immediately stop all the could-do projects. For the remaining projects, it's time to start asking for ROI. Stop rewarding project delivery and start rewarding measurable business returns (such as online sales, new customers, and cost savings). Hire professional project managers and get very good at project management. A lot of e-business costs come in the form of late, scrapped, or overly costly projects. Improving your project management processes and bringing in some professional-caliber expertise could reduce cost overruns by 20 percent.

The following are other cost-cutting tips to consider.

• Approach suppliers and ask them if they would consider renegotiating your contract terms. (Many are strapped themselves and won't be willing to give you a price break, but some will renegotiate because their services were purchased at top-of-market prices.)
• Stop weak projects sooner and improve overall project success rates.
• Fund e-business projects in rounds. Make it clear that an initial approval decision is not an indefinite commitment of support.
• Set measurable targets for ROI and project goals.
• Cut back on costly broad-brush marketing approaches. Replace such efforts with targeted campaigns.
• Build e-business competencies internally and insource a greater percentage of the work. Your company will need project managers, architects, e-business strategists, and a cadre of other IT professionals for the long run. Developing this expertise yourself makes sense.
• Develop a preferred vendor list to include the staff-augmentation companies you do continue to use. Offer them preferred access to new jobs in your company in exchange for better pricing and other perks.
• Utilize technologies such as e-learning that will allow you to trim travel and meeting expenses.

E-business is still the darling of IT, but it cannot remain unscathed during the era of cutting back.

» posted by ITworld staff

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