Digital E-Commerce Strategy

If you’re in the process of establishing the main drivers for your E-commerce or digital strategy, start by asking what’s most important to you. The answer will show you where and how to start. Here are some options to get the ball rolling:

• Start with the customer. They are the most important factor in your business after all. This is the best starting point when focusing on growth.
• Start with your internal processes: This is where you’re the most knowledgeable and can assert the most control. Efficiency improvements and cost savings are always valuable.
• Start with your budget and business case. Because if you run out of money, you run out of options too.

Of course, all these potential starting points have their own merits. But it’s important to realize that what proves to be most important to you will depend largely on your role and responsibilities within the organization. Managers or stakeholders will passionately defend their choices, as they seem justified from their perspective. But if you’re the CEO or digital department manager, how do you determine which improvements deliver the most value? How do you decide on the order in which to execute new initiatives? And how can you guarantee support for your decisions, even from employees whose initiatives have been de-prioritized?

SQLI Digital Roadmap Process-Template

At SQLI we developed a process that can serve as a template for creating your own unique digital strategy. The process is based on a decision framework that will enable you to make consistent and justifiable decisions. Input for the decision framework is collected both top down, high level, and bottom up, all through detailed analysis. This allows us to make a flying start based on high level estimates, adding necessary detail along the way. A recurring process of detailing and adapting helps you stay agile and adapt, without losing consistency or support in your organization.

In short, this framework helps you:

• Define and communicate what is most important and urgent for your business.
• Quantify the needed resources and projected profits.
• Create, and continuously update, a companywide digital roadmap.

Schematically, this is what the process looks like:

 

Strategy & Maturity Gap Analysis: intake and alignment on the status quo

When developing a digital strategy, it’s essential to have a shared understanding of your current situation. If you don’t agree on your current status, you probably won’t agree on the steps to take, or the definition of success. So where exactly are you today? What’s your vision and mission, and are you all set to execute it? What are the global strategic goals of the organization? And last but not least, how will all this translate to digital or e-commerce?

At the start of this process, we invite you to score your status quo in an online survey that addresses your digital maturity in different areas. The results of this survey alone can already be telling. It brings to light if everyone agrees on the current level of maturity throughout your organization, and if there are differences of opinion that need to be addressed. By sharing our ideas and vision on the organization we can come to a shared understanding and conclusion.

X-Ray your current and desired tasks: collecting options for improvement

Usually there’s already a list of initiatives, a roadmap, or backlog being implemented. But do these cover the most urgent tasks, and is their execution handled efficiently? Our method collects a broad range of important options for improvement, from different roles and departments. There are different methods for collecting these options, such as through an event storm workshop.

Further building on the information provided by such a workshop, we combine initiatives and apply some healthy common sense when putting together an initial list of feasible and relevant initiatives. It’s perfectly fine to skip initiatives that are simply too exotic, vague, or without clear business value. Be prepared to explain to the participants why these proposals didn’t make it to the shortlist for now. It’s also good practice to add initiatives that are already improved but not yet implemented, so they can still be challenged by other initiatives on their proposed business value.

The decision framework and scoring model

Another important process to align on is how you rate different initiatives, as there are always different dimensions to take into account. For example, you can rate an initiative on:

Pain dimensions

• Alignment with strategic goals.
• Costs in different dimensions: initial vs. ongoing, internal vs. external.

Gain dimensions

• Expected financial benefits: savings and profit.
• Customer satisfaction.

Project dimensions

• Lead time: how long until the company sees a return on their investments?
• Risk: how sure are you that everything will go according to plan?

Each dimension can be weighed relative to its importance.

Pain-Gain Analysis

Different ratings can be expressed in a single Pain or Gain grade, enabling them to be visualized on a Pain-Gain chart. You can use colour and size in a bubble chart to visualize lead time and risk. We can make the framework and calculations as elaborate and complex as we want, but that’s not the goal. The scoring of initiatives is done by approximation, and estimating each dimension on a scale of 1 to 5 will go a long way. The Pain-Gain chart should give a rough idea of the expected benefits and costs of each initiative relative to the other initiatives. It’s a tool to help focus the discussion, and to easily spot potential outliers: the low hanging fruit and potential bleeders.

Roadmap: collecting bottom up and top down analysis results

Using the scores from the Pain-Gain analysis, we can now create the first iteration of the roadmap, mostly based on top down analysis. We need to stress the fact this is the first iteration, because we will validate our assumptions by a deeper analysis further down the line, adding new initiatives and enhancing existing ones. Although the roadmapping exercise is based on the these steps, executing the tasks isn’t completely plug and play.

The following topics need to be discussed and decided on:

• How to balance low risk short-term initiatives with long-term initiatives, that come with more risk and lead time, but also bigger benefits.
• The order in which you tackle projects, which isn’t only determined by benefits and costs, but also by technological restraints and dependencies on other running projects.
• Who the key employees are for supporting the development and operations, and their availability.

At this point, the roadmap puzzle isn’t complete yet. Discussing the ins and outs with a few key stakeholders from different perspectives (IT, project planning, operations, and finance) will improve the results and ensure everybody’s onboard. But remember, this is just a first sketch. Don’t try to go into detail too much, but instead make sure that everyone understands that this is a first draft and liable to change. Similar to a product backlog in scrum, the top items on the backlog should have the highest fidelity. Always try to further refine their detail, before moving down the list.

Detailed Analysis

When there’s consensus on which project(s) to start on, it’s time to start digging a little deeper. We already scored projects in the Pain-Gain analysis. But are the values we used correct? Follow these steps to refine their specification and proposed impact:

Create a backlog and define different project phases (if applicable)

• List must-have, should-have, and could-have requirements, and determine their scope. Note that in many cases there’s no clear end to a project, but the completion of phases. The first phase of a project can end with the completion of a Minimal Viable Product. This means we can start adding new milestones and plot each of the upcoming phases to the roadmap. By scoring and roadmapping the phases separately and relative to other initiatives, we ensure that we always work on the initiatives that drive the most business value.

Create a business Case

• The backlog helps in estimating the development costs, impact on human resources, lead time, and expected profits.
  With these ingredients it’s possible to make a better business case. What’s the ROI in the first year? And what about the second year? 

Evaluate roadmap decisions

• Is the project still feasible? Have conditions changed substantially? This could be reason to postpone or re-scope the project.
  Changing the plan isn’t a sign of failure. It’s actually a good and effective outcome that allows you to make even better decisions, as your knowledge and understanding of the project is progressing.

Prepare development

• Depending on the initiative, work can be done internally or externally:
  Internal work can be planned, taking into account other running projects. This provides even more insights in the lead time and impact on the organization.
  External work can be outsourced to new or existing partners. If you target existing partners, you can involve them in estimating the costs for your business case to avoid any surprises. During preparation you can ask them for a planning and discuss conditions for the project. New partners can be selected, using an RFI/RFP process (this is a rather large topic, outside the scope of this article).

Repeat this process with the next project on the roadmap.

 

Create or update the digital P&L

A Profit & Loss Analysis for your digital strategy aims to list all financial attributes that impact your overall profit and loss, and how they relate to each other. Creating a P&L requires substantial effort but will help you assess the viability of your entire strategy, and the impact of different attributes on global outcomes. A good P&L allows you to test different scenarios, such as the impact of increasing the average order value by a certain percentage, or onboarding a new product category. The P&L can also help you validate your assumptions, and create better estimates of the costs and profits of your new initiatives.

Create or update the business dashboard

A business dashboard is a collection of high level leading and lagging indicators, that provide insights in the results of your initiatives. It includes financial and customer related metrics, organization and knowledge management, and the effectiveness of your e-commerce platform. The dashboard should be aligned with your strategic objectives, and display past results compared to the prognosis and outlook for the coming periods. It’s important to keep monitoring the general outcome of your initiatives and use this data to:

• Evaluate your initial assumptions, so you learn to make more realistic estimates over time.
• Adjust the backlog and assigned resources of the project to optimize future results.
• Update the roadmap, especially if it turns out that the original estimates were substantially off the mark. This can influence other parts of the roadmap too. Certain initiatives might shift from high to low priority, due to the limited availability of resources, or because other initiatives are now better aligned with your strategic goals.

Setting up a process like this is very demanding. But fortunately, some very time consuming parts of this process need to be done anyway, such as creating a detailed analysis and backlog. Other parts, such as the creation of a P&L, are advised but optional. The main benefits of this process are:

• Guarantee all initiatives line up and contribute to the organization’s strategic goals.
• A shared approach, that helps keep all employees aligned on their goals, even if the roadmap changes.

A consistent and up-to-date roadmap, that can be shared throughout the organization.

SQLI can help you with this process, from inception to execution, by:

• Creating a scoring model that’s aligned with your strategic goals.
• Creating and distributing surveys on the maturity gap analysis, and scoring initiatives.
• Mediating value discussions.
• Providing expertise in estimating project impact.
• Creating a consistent Roadmap that respects all variables.
• Developing a complete and realistic P&L.
• Setting up a business dashboard.
• Refining project requirements, creating a backlog, and supporting the RFI or RFP processes.

And last but not least, we can provide continuous support, by coaching or managing the recurring processes of adapting the initiative lists and Pain-Gain analysis, adding detail to the projects, and updating the roadmap.

Let SQLI add a valuable outside-in perspective to your team, challenge your believes, and mediate between your departments as a neutral third party.