Avoid 'Inside Out' Systems Development
The best way to build a profitable e-commerce business is to identify the needs of your buyers and work from the "outside in." It is no secret the Internet has created a customer-empowered world. As a result, traditional ways of doing business from the inside out no longer apply.
The outside-in approach has become the industry standard and demonstrates the importance of being customer-centric. The great giants, e.g., Cisco and Dell, have paved the way for the newbies proving that a customer-oriented platform is the way to win.
The new goals of e-commerce should revolve around improving a client's experience. How can we remove barriers and make it easier for customers to buy? What are the new demands of online customers? These are two fundamental questions that need to be answered not only to reach the next level but also to succeed in the new economy.
Despite the profitability of many online businesses, Forrester Research, Cambridge, MA, and Creative Good, New York, an Internet strategy consulting firm, report that many companies continue to create online systems that forget who the user is. As is often the case, the gap between theory and practice remains wide.
The same executives who nod their heads at Internet conferences, touting a customer-centric approach, seem unable to deliver the goods when they return to the office. Given the management effort and attention devoted to the problem, not to mention dollars, why does this gap remain?
I like to refer to this approach as the "inside out" school of systems design. Those executives who seem to get it probably want to do the right thing to make their businesses succeed. Unfortunately, they start at the wrong end of the buyer-seller equation, even though they preach the power of the buyer.
The result is a system that may please internal constituents but excludes the most important ingredient - the customer. Systems designed from the inside out were fine in the enterprise resource planning era, but the time for this approach has passed.
ERP is a software application used to run a corporation's manufacturing, financial and human-resources operations. The ERP strategy, popular in the early 1990s, spreads from accounting to manufacturing and then to the sales force.
Since the ERP model is based from the inside out, it was ineffective for e-businesses, as they incurred excessive costs and diminished sales. For this reason, Web-based electronic commerce requires an outside-in approach.
At first glance, the outside-in approach may seem a little too buyer-centric. After all, the Internet is increasingly littered with the wreckage of companies that did not focus on what is essential - the ability to sell. Even though the word "sales" connotes used-car salesman tactics, this is far from accurate in cyberspace, where it exemplifies strategic thinking.
Focusing on sales demonstrates company leadership and doing what it takes to make great companies succeed. Equally as important, it encourages buyers to go out of their way to continue to buy from companies like Starbucks or Sun Microsystems. These companies do not create relationships for relationships' sake or arbitrarily meet customer value. As is the case with good selling, suppliers that satisfy their buyers' wants are then rewarded with revenues and profits.
Outside in would not have made any sense as the refrain in Collins' song, but it makes sense for any business that considers developing an e-commerce system. Or rather, anyone that wants to create a system that will improve its ability to win online.
Matthew Roche is CEO/co-president of Fort Point Partners, San Francisco, an Internet strategy and systems integration firm.