launching a successful online business and ec projects - Prentice Hall

Chapter Twelve: Launching a Successful Online Business and EC Projects W12.43
STEP 5: NEGOTIATE A CONTRACT AND OBTAIN LEGAL ADVICE
The contract with the software vendor is very important. Not only does it specify the
price of the software, but it also determines the type and amount of support to be provided
by the vendor. The contract will be the only recourse if the system or the vendor
does not perform as specified. Furthermore, if the vendor is modifying the software to
tailor it to the company’s needs, the contract must include detailed specifications (essentially
the requirements) of the modifications. Also, the contract should describe in detail
the acceptance tests the software package must pass.
Contracts are legal documents, and they can be quite tricky. Experienced contract negotiators
and legal assistance may be needed. Many organizations have software purchasing
specialists who assist in negotiations and write or approve the contract. They should be
involved in the selection process from the start. If an RFP is used, these purchasing specialists
may be very helpful in determining its form and in providing boilerplate sections of the RFP.
STEP 6: ESTABLISH A MUTUALLY AGREEABLE SERVICE-LEVEL
AGREEMENT
Service-level agreements (SLAs) are formal agreements regarding the division of work
between a company and its vendors. Such divisions are based on a set of agreed-upon milestones,
quality checks, “what-if “ situations, how checks will be made, and what is to be done
in case of disputes. If the vendor is to meet its objectives of installing EC applications, it
must develop and deliver support services to meet these objectives. An effective approach to
managing SLAs must achieve both facilitation and coordination. SLAs do this by (1) defining
the partners’ responsibilities, (2) providing a framework for designing support services,
and (3) allowing the company to retain as much control as possible over their own systems.
Section 12.9 ◗ REVIEW QUESTIONS
1. List the major steps in selecting an EC application vendor and package.
2. Describe a request for proposal (RFP).
3. Describe a service-level agreement (SLA).
MANAGERIAL ISSUES
Some managerial issues related to this chapter are as follows.
1. What does it take to create a successful online
business? The ability of a business to survive, and
thrive, in the marketplace depends on the strength
of the business concept, the capabilities of the
entrepreneur, and successful execution of the business
plan. Creativity, entrepreneurial attitudes, and
management skills represent a human capital
investment that every potentially successful business
needs (Umesh et al. 2005). This is true for
both online and offline businesses. However, to
succeed in online business, management needs to
consider additional factors, such as e-business
models, revenue models, synergy and conflict
between the online and offline channels, Web site
service-level
agreement (SLA)
A formal agreement
regarding the division of
work between a
company and a vendor.
management, and integration of information systems
for EC and back-end systems.
2. Is creating a Web site a technical task or a management
task? It is both. Although somewhat expensive,
the technical skills required to build a Web site
are readily available in the marketplace. The prerequisite
managerial skills are somewhat more difficult
to find. Online business owners need to possess traditional
business skills as well as understand the
technical aspects of building a Web site in order to
be able to hire and work with information architects,
Web designers, and Web site hosting services.
Management should be able to map the business
goals with a combination of solution sets, such as