The Four-Phase Model of E-Commerce Business Transformation

managing it in government, business & communities

Chapter 8 - An Analysis of Factors that Influence the Ability of SMEs to Derive Benefit in Four Phases of Electronic Commerce: 34 Australian Case Studies
Managing IT in Government, Business & Communities
by Gerry Gingrich (ed)
Idea Group Publishing 2003


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Subsequent data analysis reveals a link between the degree of SME organisational transformation and the potential to derive benefits from e-commerce activities. This led to the development of an extended four-phase model (Chau and Turner, 2001). The four phases e-commerce business transformation model acknowledges Venkatraman's (1994) work identifying an association between the range of potential benefits enabled by investment in information technology and levels of organisational transformation. It also acknowledges the research on SMEs by Poon and Swatman (1998) that identified a relationship between organisational process adjustment and potential benefits from the Internet for internal application systems integration.

Diagram 1: Four Phases of E-Commerce Business Transformation Among SMEs

The model suggests that the potential benefit from e-commerce can increase if businesses are willing to transform their organisations to facilitate the use of e-commerce within their inherent business processes. The exceptions to this phenomenon exist for dot.com organisations, which design their business to embrace the full potential of e-commerce. The model highlights three major points in the data analysis. First, the potential benefits derived from e-commerce activities increase where enterprises engage in a process of organisational transformation. When an investment in e-commerce technologies increase optimal benefits can only be obtained by suitable changes in organisational structure and processes. Second, the phases depicted do not prescribe an evolutionary path for e-commerce utilisation. The position of a particular SME relies on strategic choices made by management. Subject to business directions and strategic goals, it is possible through investment for an SME to migrate or establish themselves directly at any one of the four phases. Third, there are two distinct perspectives adopted by SMEs in relation to the use of e-commerce. The initial stage comprises a period of experimentation with e-commerce that delivers limited e-commerce benefits and requires limited organisational change. The second stage involves a clear strategic direction requiring greater resources and organisational transformation to acquire increased potential to derive e-commerce benefit.


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