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eCommerce Adoption: A Two Dimensional Maturity Model

2/14/2023

4th World Congress on the Management of Electronic Business

McMaster University| Hamilton| On.| Canada

January 15 – 17| 2003

eCommerce Adoption:

A Two Dimensional Maturity Model

Fereidoun Ghasemzadeh| Ph.D.

School of Management and Economics

Sharif University of Technology

ghasemzadeh@sharif.edu

Laleh Sahafi

Electrical Engineering

Simon Fraser University

laleh_sahafi@yahoo.com

Corresponding author:

F. Ghasemzadeh|

Address: No. 16| St. 26| Velenjak| Tehran| Iran

Tel: (9821)-8741956 to 9

Fax: (9821)- 8737133

4th World Congress on the Management of Electronic Business

McMaster University| Hamilton| On.| Canada

January 15 – 17| 2003

eCommerce Adoption:

A Two Dimensional Maturity Model

Abstract

eCommerce has expanded exponentially since 1995 and is widely expected to continue to develop rapidly in the medium-term. Different organizations are in various stages of eCommerce adoption. Several models have been proposed to specify eCommerce maturity level in organizations. In this paper we propose a two-dimensional maturity model that helps managers to assess the current status of eCommerce adoption in their organization from organizational and application perspectives by specifying its profile in the proposed model; it also helps them to identify the targeted eCommerce adoption profile that the organization intends to reach in a certain time frame. Systematic identification of the existing and required eCommerce adoption profile with the proposed model helps managers to: 1) develop a better understanding about their existing eCommerce adoption status| 2) identify the required eCommerce adoption objectives| and 3) devise appropriate strategies to move the company towards these pre-specified objectives.

Introduction

The term eCommerce has no widely accepted definition [OECD| 2000]. eCommerce can occur within and between three basic participant groups-business| government and individuals [OECD| 1997]| it is an emerging concept that describes the process of buying| selling| or exchange of products| services| and information via computer networks| including the Internet [Turban| 2002]. This recent definition of eCommerce| which encompasses a broader perspective| not only includes business on the Internet but also incorporates more recent Internet-based initiatives such as eGovernment that is defined as utilizing the Internet and the world-wide-web for delivering government information and services to citizens [Ghasemzadeh| Safari| 2001]| eHealth| and eLearning that also improve the business of public institutions and governments and so we will use these terms interchangeably throughout this paper.

At the heart of eCommerce are not only the need for more equipment| including most up to date information technology| but also the need for comprehensive plan and cultural change [Ghasemzadeh| Safari| 2002]. Availability of the required infrastructure| in addition with top management’s commitment and organization’s readiness to implement eCommerce| which can be classified as Connectivity| E-Leadership| Information Security| Human Capital| and E-Business Climate [McConnell| 2000] puts different organizations in various stages of eCommerce maturity. Recognizing these stages and assessment of current status of an organization are vital in moving towards more advanced and sophisticated levels of eCommerce implementation.

United Nations has proposed a model to identify the maturity levels of eCommerce in organizations [U.N.| 2000]. According to this model the maturity stages of eCommerce in organizations are: Emerging| Enhanced| Interactive| Transactional| Seamless. Misra and Dhingra have proposed another model that has a rather organizational view to eCommerce maturity in an organization. The emphasis of this model is on the steps organizations go through in implementing eCommerce [Misra and Dhingra| 2002]. This model identifies six maturity levels: Closed| Initial| Planned| Realized| Institutionalized| and Optimizing.

In the following we first explain previously suggested maturity models and then will propose a two-dimensional maturity model for identifying eCommerce adoption status that combines these two models into a two-dimensional framework. The proposed model takes advantages of the strengths of the previously proposed models while removing their shortcomings.

eCommerce Maturity Model

The level of eCommerce adoption in organizations| that is how they are using computer networks including the Internet to buy| sell| or exchange products| services| and information| varies considerably. Two models have been proposed in the literature to show the maturity status of eGovernment in organizations that can be applied to eCommerce in general too. The first model is suggested by United Nations| which includes five levels to identify maturity status in implementing eGovernment. The emphasis of this model| that has an application view| is on users and the quantity and type of services| which are delivered to users. The five maturity stages identified by this model are [U.N.| 2000]:

1. Emerging| which is when the organization commits itself to becoming an eCommerce player and so a web presence is established through a small and static web site. A formal but limited web presence is established at his stage which provide users with static and insufficient information that is d infrequently| if at all. There is little or no information that would assist an individual in accessing a specific service. Emerging sites may include contact information like telephone numbers and addresses of organization. In rare cases| special features like FAQs may be found.

2. Enhanced| that is when the number of web pages increase; information become more dynamic and are d with greater regularity| Content of websites will consist more of dynamic and specialized information that is frequently d. Organization’s catalogue| newsletters| search features| and e-mail addresses are available. A certain part of the site may link the user to other related organizations. The majority of organizations at the enhanced level show a greater degree of diversity in their on-line content and the quality of information. Such organizations upgrade their information on a regular basis| at least once every two weeks.

3. Interactive| in which users can download forms| contact with organization| and make appointments and requests. More sophisticated level of formal interactions between customers and the organization is present like e-mail and post comments area. The capacity to search specialized databases and download forms and applications or submit them is also available. The content and information is regularly d. In this level an individual who accesses a website has permission to access or interact with the organization’s database. The individual can access to the required information by sending a query to the database| or customize a product or service on-line. Interactive facilities are limited.

4. Transactional| in which users can actually pay for services or conduct financial transactions on-line. This stage covers secure| authenticated financial transactions. Complete and secure transactions like purchasing a product or service on-line is available at this stage. Digital signatures may be recognized in an effort to facilitate procurement and doing business. Secure sites and user passwords are also present. At the transactional presence level| an organization has fully demonstrated the capacity for users to interact with the organization by purchasing a product or service and paying for it on-line with either a credit card| bank debit or by some other electronic means. Such eCommerce sites are under frequent revision and improvement to achieve the maximum level of user satisfaction. Content is regularly d to reflect the constant demand for current and accurate information and services. This level requires authentication or verification of the individual’s identity| used by the organization to control access to its information and services| and finally

5. Seamless| that is total integration of e-functions and services across departmental boundaries. Seamless or fully integrated level is the capacity to instantly access any service in a "unified package”. Departmental lines are removed in cyberspace. Services will be clustered along common needs. Seamless organization represents| for some organizations| the ultimate goal. Seamless level is not as easy to qualify as the four previous levels.

Misra and Dhingra have proposed another model that has an organizational view to eGovernment maturity| which can also be use for eCommerce in general [Misra and Dhingra| 2002]. The emphasis of this model is on the steps organizations go through in implementing eCommerce. This model identifies six maturity levels as follows:

1. Closed| which is when an organization is not using IT to provide better services and has no plan to do so in the near future| Followings are the characteristics of organizations| which are in this level:

· No awareness about IT and associated benefits.

· If aware about IT| they are unable to utilize it for following reasons: 1) lack of resources| 2) induction of IT is considered low priority in favor of other development issues| 3) leadership is not convinced with the benefits of IT| 4) lack of strategic thinking at the top level.

2. Initial| which is when an organization has initiated the automation of its processes on the Internet but on a very ad-hoc basis. Following characterize organizations in this level:

· Organization lacks strategic thinking and direction at top level

· There are unorganized and isolated efforts of automation in some areas. The effort sustain as long as the enthusiasm of the individual| who initiated it| remains and is often abandoned due to lack of direction.

Such organizations generally accumulate hardware without any planning and much of it goes unutilized or underutilized

3. Planned| in which organization has systematic approach to eCommerce and has a clearly defined vision| objectives| and goals. In this stage| however| the organization has to enter into planned implementation of eCommerce| a need assessment study has been conducted to prioritize areas of implementation and gauge the existing status. Taking input from the need assessment study| extensive planning has been carried out indicating policies| strategy| various activities| stakeholders| roles & responsibilities and resources required in terms of time| money and manpower to undertake the eCommerce exercise. However| the organization is yet to enter into the planned implementation of the eCommerce exercise. Planned organizations exhibit following characteristics:

· eCommerce is a part of organizations agenda

· Strategic thinking and leadership to guide the eCommerce initiatives is in place.

· Clear understanding of eCommerce needs as projected by the users.

· All the necessary documents for eCommerce planning are in place. These documents include vision & scope assessment survey document| policy guidelines| action plan & outsourcing guidelines.

4. Realized| is a stage in which organization has realized the complete eCommerce plan. Consequently an integrated system is established where all internal processes of the organization are computerized and there is a seamless information exchange among all concerned entities. Following depict the characteristics of an organization in realized state:

· The business processes are attuned with the vision and overall eCommerce objectives.

· The organization has ensured eReadiness in terms of acquiring| a sound infrastructure (technological| institutional| legal and human) for implementing eCommerce.

· The users are motivated to use eCommerce services and start utilizing it and become dependent on these services.

· The organization has an integrated system reflective of smooth information exchange within and outside the organization is well established.

5. Institutionalized| is when organization has sustained the realized state over a period of time and has addressed the design-reality gap. The organization may require undergoing several iterations between planning and realization. At this level| eCommerce becomes part of the organization’s work culture. Following are the characteristics of this level:

· The eCommerce systems of the organization are driven by a well-established Knowledge Management Systems that generates an ability in the organization to evolve with time in view of new requirements.

· eCommerce becomes an effortless exercise for the organization and it becomes a way of life for the stakeholders and users.

· The organization at this level is completely paperless. And finally|

6. Optimizing| which is when organization engages itself in a continuous exercise of improving and optimizing eCommerce efforts. The focus at this level is performance and innovation in an ever-changing world. Following characterize organizations in this level:

· The organization is driven by Knowledge Governance initiatives (Knowledge Management Systems| R&D| surveys) to continuously improve its performance.

· The organization has mechanisms to address the new requirements arising out of change in people| process and technology.

· Optimize on investments (time| cost and quality) and returns (any services| anywhere and anytime).

A Two Dimensional Maturity Model

In this section we propose a two dimensional maturity model that helps managers to assess the current status of eCommerce adoption in their organization from both organizational and application perspectives by specifying its profile in the proposed model; it also helps them to identify the target e-commerce adoption profile that the organization intends to reach in a certain time frame.

The model| as is depicted in Figure A.1. consists of two dimensions. On the vertical dimension the maturity level of eCommerce in an organization from application perspective| i.e.| emerging| enhanced| interactive| transactional| and seamless is presented. On the horizontal dimension of the model the maturity status of eCommerce in the organization from organizational perspective that are closed| initial| planned| realized| institutionalized| and optimizing is presented. Using the proposed two-dimensional model an organization can identify its current and planned eCommerce adoption profile to devise appropriate strategies to bridge the gap between current and desired status.

We applied this model to identify Iran Air (Homa) Company’s current eCommerce adoption status and drew its profile on the model. As the first profile in this model clearly shows Homa’s initial eCommerce application is in its emerging stage and no enhanced| interactive| transactional| or seamless eCommerce application is being used in this company. In other words at this stage Homa has a formal but limited presence on the Internet through a static web site that includes basic information for its customers.

Identification of the current status of Homa eCommerce adoption from application and organizational views with this model not only helps this company to gain a better understanding about the stage of eCommerce adoption in the company but also it helps the company to plan for the growth of eCommerce in Homa considering the limitations that are imposed to the company from inside (resource limitations| etc.) or from outside (infrastructure limitations in the country and so on).

The second profile on the model shows where Homa eCommerce adoption status is planned to be in the next two years. As the model clearly shows Homa plans to enhance its web site by adding to the information provided on its site and making the site dynamic and also wants to add transactions to its web site. Although Homa intends to take its ticket sells on-line| due to infrastructure limitations in the country| it might not doable because no credit card that supports on-line purchases is still available. Also making eCommerce applications seamless takes more time than the existing planning horizon. From organizational perspective as the second profile shows Homa’s major emphasis in the next two years would be on institutionalizing its different eCommerce activities.

The proposed model serves as a communication tool between people who are involved in the eCommerce projects in the organization such as managers| specialists and also the outsourcing company who will do the project. Using this model all stakeholders would clearly know where Homa currently stands in terms of its eCommerce applications and where it plans to be in the next two years considering its internal and also external limitations. Consequently the “in scope” and “out scope” of its eCommerce project can be very well defined and all decision makers involved in the project can have consensus on the scope of the project. This is a very important issue that can prevent from potential future disputes among project stakeholders during the ution of the project.

Now| that using the model Homa knows where it stands in terms of its eCommerce applications and where it want to be in the next two years it can devise appropriate strategies to reach to its pre-specified target that is shown by the second profile on the model.

It should be pointed out that the target of each organization depends on its strategic plans and also its internal situation and external factors. For example an SME organization| which is enhanced-emerging stage| might not want to add interaction to its site but wants to institutionalize its current eCommerce activities. The same thing might apply to large company that does not want to add transaction to its existing infrastructure to avoid channel conflict but plans to institutionalize its current eCommerce activities.

Summary and Conclusion

Different organizations are in various stages of eCommerce adoption. Several models have been proposed to specify maturity level of eCommerce in organizations. Some of the proposed models have application approach while others have organizational approach to assess eCommerce maturity level in organizations. In this paper we proposed a two-dimensional model to identify eCommerce adoption status in organizations that combines previously suggested models to take advantages of their strengths while removing their shortcomings.

The proposed model| which serves as a useful communication tool between managers and other stakeholders who are involved in planning eCommerce activities in the organization| not only helps them to assess the status of eCommerce but also allows them to plan for the growth of eCommerce in their organization. Identification of current and targeted eCommerce adoption status in an organization helps to reach consensus about the targets within a specific time horizon considering the company’s capabilities requirements and also internal and external limitations. Moreover| identification of in-scope and out-scope of eCommerce projects that should be undertaken can prevent from many potential disputes that normally happens in the course of action and cause many problems specially in outsourced projects| including the failure of the whole project. Moreover| by providing a clear picture of organization’s current and future eCommerce status the model helps to devise better strategies to bridge the gap between the existing and desired status.

Acknowledgement

We are grateful to Professor Norm Archer for his valuable comments and also would like to thank Dr. Milena Head for her great contribution in this congress.

References

Ghasemzadeh| F.| Safari| H.| “Transition to E-Government: A plan for Iran”| Management Knowledge| No. 55| pp. 252-278| 2001.

McConnell International LLC| Risk E-Business: Seizing the Opportunity of Global E-Readiness| August 2000| http://www.mcconnellinternational.com/

OECD| E-Commerce: Impacts and Policy Challenges| Economics Department Working Papers| No. 252| 2000

OECD| Electronic Commerce| Opportunities and Challenges for Government| 1997

Turban et al.| Electronic Commerce: A Managerial Perspective| 2002| Prentice Hall

U.N.| Division for Public Economics and Public Administration American Society for Public Administration| Benchmarking E-government: A Global Perspective--Assessing the UN Member Status| May 2000