Extranet E-Business E-Commerce

The project involves gathering of the appropriate requirements for developing an extranet and designing an e-business model which closely follows the company’s requirements. The research project also provides some insights into the benefits of using an extranet and uses of this technology in a business context

Keywords: E-Business model, Requirements analysis, Extranets

CHAPTER 1 – INTRODUCTION

This chapter constitutes an overview of the project with its aims and objectives. It also consists of a background study on the organisation chosen and other areas of research completed. A project rationale is also addressed mentioning the originality, feasibility and value of the current research project. Finally the project structure will provide a clear and concise summary of material that has been covered in the subsequent chapters.

1.1 Background Review

This project is a case study on HSS Service Holdings Limited (HSS), a private limited company venturing towards e-business strategies. Currently it is doing most of its business through widely spread outlets and an e-commerce website (www.hss.com) .Its primary aim is to develop multiple websites including an extranet, all of which will be designed to respond to their customer’s diverse needs.

HSS is one of UK’s largest tool and equipment hire chains. The group has an established network of more than 400 outlets in the UK and Ireland. The Group’s history dates back to 1957, when Bert Taylor, a market stallholder, opened Britain’s first dedicated hire shop in Kensington, London. It primarily targets three segments of the construction and facilities management sectors – Build, Maintain and Operate. It has a strong position in the Maintain and Operate segments, which carry premiums for both service and quality. It also sells brand new tools and equipment as carried in the HSS Hire fleet. The company is also active in the USA, Greece, Holland, Italy, Norway, Spain, Trinidad and United Arab Emirates, developed by means of franchise partnership. The group is the UK’s most extensive network of hire shops, servicing trade, industrial and home-owner customers.

The question posed by many in this day and age is, why companies in any industry spend huge amounts of their income into IT systems and websites. The answer to this question has been clearly stated by Canzer (2003), “the Internet has clearly emerged as a powerful global force that is influencing and sometimes significantly changing, strategic behaviour in many organizations”. This is one of many reasons why companies at present are investing considerably large amounts on their IT infrastructure.

“Our depot managers rely on sophisticated computer systems to keep our customers supplied with the right piece of kit, in the right condition, in the right place at the right time” (Chris Davies, Chief Executive of HSS)

“Our growth is supported by our investment in IT systems….” (Chris Davies, Chief Executive of HSS)

Both these statements clearly imply that the company heavily depends on computer systems to carry out their day to day activities. As a result the company tries to keep up to date with the latest technology, hence one of the many reasons for the company to develop their own “extranet” and move towards an e-business oriented world.

According to Wilkinson (2005), it is during early 1999 – 2001 when the construction industry in UK first began to use extranets for collaboration purposes between their suppliers and partners.

An extranet allows selected customers, suppliers and mobile workers access to the company’s private data and applications via the web as it essentially works as an extension to the organisations existing intranet out onto the public internet HSS’s extranet will be a full customer based website designed specifically for large key account holders in the organisation. It will offer the client access to real-time account management for all their contracts, across multiple locations via a secure online system. It will also provide a real-time stock availability. These are some of the features that have been integrated in the extranet currently.

1.2 Project Aim

The aim of this project is to design an appropriate e-business model which closely follows the requirements of HSS. The designed model will be tested on HSS, and feedback would be obtained from the company on the designed model. This project will also illustrate the potential cost and time saving beneficiaries associated with the development of an extranet to HSS.

1.3 Research Objectives

In order to achieve the aim of the project the following key objectives were outlined:-

• Capture the relevant requirements of the extranet from the company.

• Identify and discuss if the company is already adopting an e-business model.

• Design an e-business model which closely follows the company’s requirements.

• Test the designed model by presenting it to the company and obtain feedback.

• Analyse and evaluate the feedback on the developed model.

1.4 Project Rationale – Originality, Feasibility and Value of project

This project creates value for HSS by investigating the requirements of their extranet and designing an e-business model to compliment their ongoing development in this respect. An incorrect, inaccurate, or excessive definition of requirements could result in unnecessary schedule delays, wasted resources, or customer dissatisfaction of the company’s project. These would therefore be some things that HSS could avoid as it is an expensive project in terms of resources, time and money.

The designed e-business model should help the company to develop its business visions and strategies. It would help the firm to structure its organisation in a way so as to be more efficient, flexible and responsive to customer demand and to forecast possible future scenarios in order to stay competitive in the Internet era. The research is worth conducting at the present time purely because extranets are becoming a popular tool and are in high demand by the businesses in the Building and Construction sector. 90% of HSS’s business is within the trade sector which is derived from the “Build, Maintain and Operate” segments of the construction and facilities management industries. Therefore HSS’s main focus at the present time is to satisfy majority of their customers’ needs. The extranet will be a selling tool to the company.

1.5 Project Structure

Chapter 2 – the literature review looks at related work in the relevant fields which highlights the importance of requirement analysis and e-business models. Literature has also been identified where extranets are used extensively and how extranets would be useful for HSS.

Chapter 3 – consists of the methodology, discussing the appropriate approaches to conduct the project. The path taken to achieve the project aims will be justified to highlight its relevance and importance.

Chapter 4 – will include the findings by utilised data collection methods.

Chapter 5 – includes analysis and discussion of findings using applicable existing theory, as well as data analysis techniques to identify any emerging patterns or themes.

Chapter 6 – conclusions drawn, reviews data collected, identifies prominent themes and factors. There is a section that reflects on the research highlighting difficulties and problems encountered.

CHAPTER 2 – LITERATURE REVIEW

The purpose of the following chapter is to provide the reader with some background knowledge on the main three key areas of research which have been categorised into Requirement Analysis, Extranets, and E-business models in this project. In addition, this chapter evaluates previous work undertaken by academics on the research topic and thereby, assess their work in relation to the research objectives of this project.

2.1 Requirements Analysis

Gathering requirements is typically the first step in developing a solution, be it for the development of a software application or the detailing of a business process. Requirements are essentially “what the system needs to do”. Requirement Analysis is usually a critical stage for both Information Systems development and web-based information system (WIS) development. Yang and Tang (2005), classifies WIS into four types of systems: Intranets, web presence sites, electronic commerce systems and a combination of internal and external systems (supporting business to business communication, commonly referred to as extranets). Their study investigates whether key users of any system may help provide additional requirements which could assist in the completion of the system. Some scholars consider Requirement Analysis as a crucial component for WIS development and even call for a systematic and disciplined approach (Murugesan et al., 2001). Bray (2002), defines requirements as the effects that the client wishes to be brought about in the problem domain. The author talks about four different types of requirements which are categorised into functional requirements, performance requirements, design constraints, and commercial constraints. Functional requirements specify the behaviour of a system. For example a functional requirement for an extranet website will be that it should allow a customer to log into his/hers personal webpage if they input their valid login details. Performance requirements, design constraints and commercial constraints can be all classed as non-functional requirements. For example these requirements may be regarded as parameters in that they determine how quickly or how reliable the functions must operate.

Pfleeger and Atlee (2006), offer a comprehensive review of requirements analysis and tools for interested readers. The authors mention that analysing requirements obtained from a client involves much more than merely writing down what the client wants. On the other hand, some researchers claim that determining systems requirements for an internet-based application is not different from the process of doing so for any other applications (Hoffer et al., 2002).

2.2 Extranets

Anandarajan et al (1998) defines an extranet as “the electronic computer-to-computer exchange of business information in a structured format that can occur between business trading partners and between various units within an organisation”. In simple words extranet is a network that connects organisations, which may include personnel, customers, suppliers and strategic partners.

Several authors discuss the success of implementing an extranet to an organisation, some of the benefits are as follows (Kallioranta et al, 2004; Vlosky et al, 2000; Anandarajan et al, 1998) :-

• enhances business relationships

• scalability – extranets can expand to encompass new technologies and new users

• could cut down operational costs in the long run to the firm

On the other hand the major concerns of extranets have not been discussed in the current literature as vigorously as the benefits of using an extranet. The common problems of extranets are that the development could be a time consuming and an expensive process. There are also concerns over security issues which most of the literature addresses as a crucial subject to be considered before the development of an extranet.

Riggins and Rhee (1999), states that the emergence of the extranet bridges the gap between conventional intranets and internet applications. They also predict that business to business commerce on the internet will rapidly increase compared to the consumer-to-business electronic commerce in the coming years. The diversity of applications available through the extranet can be of assistance to those firms seeking to work in partnership in a business ecosystem to create a competitive advantage by developing a learning network. A learning network can be defined as “a group of trading partners who proactively seek to become more competitive as a unit by understanding how they can better cooperate as a team to meet the increasing demands of their customers”, (Riggins and Rhee ,1999).

Pakstas (1999), addresses some of the most common applications available on extranets as:-

• shared product catalogues accessible only to wholesalers or those ‘in the trade’

• private newsgroups that companies use to share valuable experiences and ideas

• secure online payment systems

• training programs or educational material that companies could develop and share

According to scholars many companies are also adopting extranets as a tool for cost control. Anandarajan et al (1998), carried out a case study on one specific company, discussing how the extranet has been used to significantly reduce operating costs by analysing the company’s activities within the framework of the value chain concept developed by Porter (1985). The concept of value chain provides a framework for companies to critically analyse their activities for the purpose of realising competitive advantage. Anandarajan et al concludes saying that the implementation of an extranet will have an impact on how companies conduct their business and will drastically change the cost structure of the different activities in the value chain. However a final conclusion cannot be drawn up just by carrying out a study on only one specific company, there is no guarantee it could be just as effective on any other company.

2.3 E-business models

A few years ago the cost of information handling and operations was comparatively high, and for some companies, prohibitively so. Today the internet has driven that cost down dramatically, making it possible for commercial enterprises to turn the tables on competitors.Gary and Kettinger (2000), defines an ‘e-business’ as an enterprise with the capability to exchange value (goods, services, money, and knowledge) digitally. Among e-businesses, service, quality, agility and reach have gone up, while prices, fulfilment time, and time to market have gone down, significantly enhancing the ability to provide value to customers while taking the competitive lead. Diese et al (2000), states that e-business is turning out to be fundamental to business strategy and process execution in the twenty-first century. The authors mention that those who fail to embrace e-business fully and to change the existing organisation at its core are missing a huge opportunity and, more importantly, are vulnerable to competitors who will most certainly exploit their weakness.

“An e-business model is a description of the roles and relationships among a new firm’s consumers, customers, allies and suppliers that identifies the major flow of product, information, and money, and the major benefits to participants.” , (Weill and Vitale, 2001).It is a representation of the fundamental components of a business that operates partially or completely on the internet. According to Chen (2005), there are as many as 29 e-business models currently in use within the business ecosystem. However not all the models have been successful; Magali Dubosson-Torbay et al (2001) proposes an ‘e-business model’ that would help a firm to structure its organisation in a way to become more efficient, more flexible and responsive to customer demand, to forecast possible future scenarios and therefore to stay competitive in the internet era. According to Evans (2001) the businesses at present are looking to move from the traditional bricks and mortar structure to a more open, efficient, and profitable E-business venture. This is true but however companies should be well prepared before they step into this new channel of trading. This project aims to help prepare HSS an e-business model which will guide their business visions and strategies, analysing the risks involved as well as the benefits of moving their business from the office to online operations. (i.e. in this case using extranet and an e-commerce website).

CHAPTER 3 – RESEARCH METHODS

In the following chapter, the methods that were employed to investigate the research topic and achieve the research objectives have been revealed.

3.1 Areas to be investigated

The aim of this project was to design an appropriate e-business model which closely followed the requirements of HSS. The approach to proceed with this project was to focus on three main areas. The first was to identify the functional and non functional requirements of an extranet system .Then design an e-business model that could be used to evaluate the company’s business strategy leading to its success. Finally test the developed e-business model on a case study (HSS) and acquire feedback on the developed model from the company.

The areas were compiled after a review and investigation into literature on the subject of E-Business models in general and in particular its evaluation. The methodology used is a qualitative approach to this research paper. The initial stages in this research will be conducted in HSS’s head office based in Mitcham, UK. HSS was chosen as the case study because it is one of the UK’s leading online tool hire company’s dominating the online market share, (Stratton, 2006). The fact that there was available contacts on the ongoing project would make it easy accessible to most of the information on the ongoing project.

3.2 Justification of research method adopted

Once the main areas was determined, there had to be a strategy developed for obtaining the raw data which would be used to design the e-business model and develop conclusions. There were several factors that had to be considered;

• The type of data needed

• The amount of data needed

• Who were the participants

• Factors affecting the collection and analysis of data

• How is the e-business model designed

For both the gathering of the requirements of extranet and designing the e-business model the information needed for each area would be both factual and opinion based. According to Weaver (2004), the fact that opinions were needed meant that the volume of data to be collected would need to be considered. Usually with opinion data the richness of the data is affected by the amount collected. The author mentions for factual data it is sufficient to have a small volume of data as the information will always be the same. However, it would be practical to have more than one record of data to ensure validation. The factors affecting the collection and analysis of the data are usually dependant on the type of method chosen. For example if a face to face interview is chosen, then it will be a lot more time consuming than a phone interview. However the richness of the data gathered from the face to face interview may be far more superior, (Saunders et al, 2007). A compromise would have to be reached when deciding on the data collection methodology with regards to the collection and analysing of the data.

After considering all of the different methods for collecting data, the methods chosen were the in-person interview and the online surveys. The main purpose of the interview was to obtain information on what necessitated the need for an extranet by the company from their top level management staff who are involved in the development process itself. The in-person interview would enable rich data to be gathered their staff. This was particularly important as a lot of the information needed to determine the requirements of the extranet and developing the e-business model was opinion based rather than factual. As shown in the information above the plus points for the interview method covers areas that are important for the data gathering for this project. The negative aspects of the interview method do not apply as much as they would if another method was chosen.

On the other hand the online survey was prepared to ascertain the awareness about the ongoing project amongst employees who were not involved in the extranet development project. The online survey would enable to reach a huge audience of respondents. The project would benefit from an increased sample size, but for a project of this size it is reasonable to suggest a sufficient sample could be gained from just 30 to 40 employees from HSS.

3.3 Method of carrying out interview

As mentioned above the interviews’ main purpose was to obtain information on what necessitated the need for an extranet by the company from their top level management staff who are involved in the development process itself. The interview questions were based around information gathered from the literature review on extranets and e-business models. This approach lends itself to an easier analysis and categorising of data results. All the questions were open-ended questions which were specifically used as they provided the interviewee with the ability to provide a more extensive answer, which may also reveal attitudes or facts, and therefore be more exploratory. An example question was, ‘Can you explain the initial need for an extranet at HSS?’

There were also sets of questions which were prepared to retrieve information to identify if the company is currently adopting an e-business strategy. The questions will also be based to identify the requirements of their ongoing project to develop an extranet.

A small sample of one participant was proposed, as it was felt

The interview was performed to

The responses will be noted down as the interview progresses on a paper which would be then referred in the project appendix. This vital information will play a significant role in the project towards investigating the company’s requirements of an extranet and achieve some of the outlined objectives. Only once this is information is gathered could the project progress towards developing an e-business model to achieve one of the project aims.

The initial step in conducting this research will be to approach the Project Manager (Chris Bagnall) who is in charge of the entire “extranet” project in the company. Key information for the research on the requirements of the extranet will be gathered from Chris.

3.4 Method of carrying out survey

Once the method for collecting the data had been chosen, the next phase was to study into the construction of a survey and how best to fit this around the needs of this project in order to gain the necessary information.

On the other hand the questionnaires were prepared to ascertain the awareness about the ongoing project amongst employees who were not involved in the extranet development project. The reason for the investigation into this is to analyse if this would have any impact on the e-business model that is going to be designed as part of this project. It also had questions to identify their views on the requirements of an extranet in addition to the information obtained from the top level management staff at HSS. The questionnaire was designed online and was emailed to the employees of HSS to complete it. This was the best suited method that could be used to carry out this task, as it made sure the respondents did not need to waste a lot of time. This would be an advantage as the number of feedbacks received would be greater.

3.5 Designing the e-business model

3.6 Testing the E-Business model

The final step of this project will be to test the developed model on the case study. This will be achieved by presenting this model to the company in the form of a presentation to the Marketing Director, the Project Manager and the Webmaster. Once the model is presented, possible feedback will be gathered from the company on the designed e-business model. These will then be discussed using theories and other e-business models to see if HSS is on the right path to gain competitive advantage.

3.7 Problems encountered

One ethical issue that arose during the interview process is the commercial confidentiality. As HSS is a private limited company, the company was not happy to provide actual figures of any performance. The results were always given as an approximate percentage close to the actual value. This was however expected before this project was initiated, so the lack of the actual figures did not have any effects on the project. The information already provided by the company was sufficient for the project to progress and every effort was taken to ensure that the data obtained from HSS was kept secure and confidential. Another issue encountered when gathering information from HSS on their ongoing project, there was a long delay in obtaining feedback from the employees. This was mainly due to the festive season, as all the employees in HSS were busy or away during this period. This delay lead to some time loss and required extending of the deadlines of the initial objectives of capturing the requirements of extranet and analysing the current business model adopted by HSS. This was however overcome by negotiating an appropriate time at the employee’s discretions. Some of the meetings which were to be held in person were later swapped to phone interviews, still managing to gather most of the information as initially planned.

CHAPTER 4 – ANALYSIS OF RESULTS

CHAPTER 5 – DISCUSSION

CHAPTER 6 – CONCLUSION AND RECOMMENDATIONS

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APPENDIX