Following with the global strategy a state of the arts in e-business is continuously supported at Rolls-Royce with investments to be at around 2.5% of sales. The firm has implemented the web, front-ending SAP R/3 ERP systems with 18,000 users (via Business Intelligence Warehouse) - providing Rolls Trading Net.com with global access to electronic catalogues and into SAP while managing its legacy of other systems across the businesses, which allowed them to consolidate commodity management and increase US dollar based proportion of a purchase bill. However, Ian Farquhar, business improvement and IT director at Rolls-Royce Combustion Systems noted that the programme does present challenges on the ground. Further to the e-strategy Rolls-Royce works with EDS (a global provider of e-business solutions) to improve e-business solutions (Rolls-Royce, 2001).
- Objective of the Assignment
Getting serious e-business working for a company the size and diversity of Rolls-Royce is forcing a complete re-examination of e-business strategy. This coursework is aimed to evaluate the e-business strategy and challenges at Rolls-Royce, considering the cost-benefits factors framework. In my opinion, the organization is continuously since 1906 doing the most operations with the best outputs. In a rapidly changing e-world the company could struggle to make it better with e-strategy as it could be trying to do too much.
2. Analysis and Evaluation
Evaluating the success, quality, usability and benefit of Rolls-Royce’s e-business system can be carried out by various methods, focusing on the features, functions or usability of e-service (DeLone & McLean, 2004; Wade & Nevo, 2005). Typical evaluation approaches of customers’ satisfaction for e-services are testing, inspection and inquiry through a web search or a desk survey (Hahn & Kauffman, 2002) or by questionnaire-based survey (Lin, 2003). E-service evaluation framework has been proposed by (Zhang and von Dran, 2000) and further improved by (Lu, J. et al., 2008). Fig. 1 shows 16 benefit factors and 8 cost factors of e-business system developments and applications. This framework will be employed to evaluate RR’s e-business aeromanager strategy.
Figure 1. E-Service cost-benefit factor framework (Lu, J. et al., 2008).
2.1. E-business goals and performance indicators
E-business goals at Rolls-Royce
- Create e-support facility for products and assign online agents to these markets.
- Soft lock in by developing extranet facilities. Continued support from sales reps.
- Develop e-procurement system.
- Use collaboration and project management tools.
- Create partner extranet and aim for paperless support.
Key performance indicators (critical success factors)
- Achieve combined after-sales services revenue of 50% total sales by year-end.
- Subscribe more customers for online services resulting to 70% revenue contribution from these customers.
- Reduce cost and time to market by average of 10% by year 3.
- Reduce cost of services and sales in each of 5 main geographical markets by 25%.
2.2. E-business strategy for after-sale services
Rolls-Royce e-business has grown in the three stage approach. First, there was a shock tactic on a number of pilot projects to be complete from design to implementation in 100 days. As a result a number of e-projects have brought a lot of E-awareness and experience.
Second, main structured projects at a corporate level, but run by outsourcing partnership with EDS and SAIC, included the following:
- customer services,
- e-procurement,
- design and collaboration,
- general items about using our intranet and corporate systems better.
Third, it is about creating e-business groups in each of the business sectors to deal with vendors and the company. As a result of the e-business development Rolls-Royce has launched three main e-business sites in October 2001, as follows:
-
Aeromanager-online (Fig. 2)
- Energymanager-online
- Suppliermanager-online
The manager-online tool supplements existing communication and business channels between Rolls-Royce and its global client base. Each manager has also three sub-categories: Technical support, Asset management and Line support. Further we will analyse the aeromanager-online.
Figure 2. Aeromanager-online
2.3. Aeromanager-online
The website provides information on the diverse suite of service solutions to those who apply for community membership secure round-the-clock access to a growing number of online services. Of particular importance is that aeromanager (B2B service, shown in Fig. 2) has over 200 subscribers, which have to pass a subscription procedure (Table 1) to assess a range of aeroengine aftermarket services, including the following:
-
Repair & Overhaul option provides customers with a one-stop, online repair, the commercial documentation and overhaul IS from anywhere they can access the internet.
-
Publications folder contains all the technical documents for Rolls-Royce aeroengine products to help with every regulatory and business requirement.
-
New parts functionality provides a complete tool set enabling Aeromanager users to transact new parts business via the internet in 24/7 regime.
-
Notice board feature has been added to enable Rolls-Royce to deliver a host of publications and information notices to all web-portal users.
-
After-market services provide a selection of Rolls-Royce aftermarket services (such as training, warranty, emergency, data centre etc.) covering a full spectrum of customer requirements, from access to tooling information to Emergency Lease Engine Guide.
And there's spares buying and availability too. As these services supplement the majority of traditionally delivered work on the engine support, Rolls-Royce has achieved a significant progress towards to the e-business-type company.
Table 1: How to join Aeromanager - The joining process to bring your company on board
3. Changes to RR’s e-business
E-business has brought significant changes to the RR’s operations. Firstly, the introduction of e-business-online has changed the nature of customer support, products update and after-sales marketing compared to traditional on-site services (Beynon-Davies P., 2004).
Secondly, online tools provide a more convenient way to communicate with the customers. As the Internet provides global access, the business can have a worldwide support through its websites. The interactivity of these new manager-online enables Rolls-Royce to get ever closer to its customers anytime - to really understand their needs and their behavior.
Thirdly, the electronic tools can help the business reduce the cost for servicing, advertisement and thus generate more profits.
Fourthly, e-commerce enables businesses to be price competitive and increase the sales. Because providing e-access offers a cheaper way to disperse information for host organization compared with using paper publications or recorded messages. However, e-commerce also has brought costs to the businesses as it caused significant security issue.
Increased globalisation of the business and advances in technology has resulted in more data being transmitted across global communication links, posing an increased security risk. In a result the company has a corporate IT department and the latest security technology responsible for data management at the company as well as communication specialists at each department.
Cost and complexity of IT is another factor to be considered as a problem. Features of the next generation e-business architecture offers more personalised customer service but it also adds extra costs to be justified. The company depends upon external e-business technology providers to enable rapid deployment of e-business models. Adapting of so-called “programmed logic” (redefining capacity of business value propositions) of the enterprise is a crucial for the long-term success of e-business strategy (Malhorta, Y, 2001).
4. Conclusion
Improving operational efficiency is still very important - eliminating waste, streamlining processes and getting lean manufacturing in e-business is as important as in the engine production. Rolls-Royce has extended its IT systems to engineering/technical and latterly SAP, with the emphasis on getting better 'customer value' and more efficient manufacturing 'value streams'. Among cost and benefit factors of the e-business evaluation, certain cost factors are more important than others in achieving the benefits comparing with other cost items:
- Increased investments in e-business facilities (such as Internet connection, hardware and software) and training staff to better work in e-service at Rolls-Royce have significantly helped in the establishment of customer profiles, improved the company’s global presence and enhance a business’ image via e-business strategy, resulting to 50% after-sale service revenue.
- High security and legal issue related investments in e-service systems would bring high benefits to Rolls-Royce in both building trust customer relationships and cooperation with other companies.
It can be recommended that if Rolls-Royce plans to further improve customer relationships through the development of e-services, an appropriate way is to increase investments in system security, legal issues and staff training rather than other items. The company image of reliably supplier can be improved by investments in maintaining e-service systems and updating related information technologies.
(1493 words excluding executive summary and references)
Bibliography
Beynon-Davies P. (2004). E-Business. Palgrave, Basingstoke. ISBN: 1-4039-1348-X
DeLone, H. W., & McLean, R. E. (2004). Measuring e-commerce success: Applying information systems success model. International Journal of Electronic Commerce, 9(1), 31.
Hahn, J., & Kauffman, R. J. (2002). Evaluating selling web site performance from a business value perspective. In Proceedings of international conference on e- Business, May 23–26, 2002 (pp. 435–443), Beijing, China.
Lin, C. (2003). A critical appraisal of customer satisfaction and e-commerce. Managerial Auditing Journal, 18(3), 202–212.
Lu, J. et al., (2008) Cost-benefit factor analysis in e-services using bayesian networks, Expert Systems with Applications, doi:10.1016/j.eswa.2008.05.018
Lu, J., Zhang, G. Q. (2003). Cost benefit factor analysis in e-services. International Journal of Service Industry Management (IJSIM), 14(5), 570–595.
Malhorta, Y. Enabling Next generation e-business architecture. The Intel E-business strategy white paper, BRINT institute, June 2001
Rolls-Royce. (2006). Aerospace Market Outlook. London.
Rolls-Royce. (10, July 2000). Rolls-Royce Awards EDS $2.1 Billion Contract; New Agreement Extends EDS-Indiana's Contract With Rolls-Royce Indianapolis for 12 Years. Retrieved from INDIANAPOLIS (BUSINESS WIRE):
Tinham, B. Rolls-Royce approach to e-business, Manufacturing Computer Solutions, January, 2001
Wade, R., Nevo, S. (2005). Development and validation of a perceptual instrument to measure e-commerce performance. International Journal of Electronic Commerce, 10(2), 123.
Zhang, P., von Dran, G. (2000). Satisfiers and dissatisfiers: A two-factor model for website design and evaluation. Journal of American Association for Information Science (JASIS), 51(14), 1253–1268.
