I recently met with Sandeep Krishnamurthy PhD, an associate professor of marketing and e-commerce at the University of Washington Bothell (UWB). We spoke at length, discussing e-business, e-commerce and e-marketing issues confronted on a daily basis, by the corporate world.

Sandeep has developed and taught several innovative courses related to e-commerce to both MBA and undergraduate students. His scholarly work and writings on e-commerce have appeared in prestigious refereed journals and the business press as well. He is the author of "E-Commerce Management: Text and Cases", (South-Western/Thomson Publishing, 2002). Sandeep can be reached at sandeep@u.washington.edu.

Q: To begin with, e-business, e-commerce and e marketing are often mistakenly used inter-changeably, so let's set the record straight.
SK: Think of these three as part of a black box, with an input, some process in between, and an output. In order to better serve customers and channel members, e marketing focuses on leveraging the Internet and web technologies. The general focus is on serving the external marketplace more effectively. E-business, on the other hand, is focused almost entirely on matters internal to the firm. E-business process redesign, for example, is typically applied to things such as ensuring better knowledge flow within a company or increasing employee productivity. It could be applied to some degree, to the external marketplace. But, that is not the main focus. E-commerce, in my view, is an integrative term that requires the assimilation of business models, marketing and technology for a successful outcome.

Q: What are some of the barriers to (further) e-growth in South Asia?
SK: South Asia offers access to cheap labor markets and there also exists a lack of adequate infrastructure. Both these factors certainly impede e-growth. [Note: Gartner Asia-Pacific's July 2002 symposium, held in New Delhi, also mentioned factors such as over-dependence on F2F (face-to-face) commerce instead of new online relationships, inflexible education, affluence disparities, lower online spending levels in proportion to user base size, inadequate delivery logistics, low credit card penetration, and lack of branding skills as some of the other barriers to e-growth).

Q: From a practical perspective, what are some valued-added e-business initiatives that all firms should consider?
SK: Business process redesign (with a focus on increasing efficiency) and e-commerce are often the only two e-business initiatives that firms focus on. This could be construed as a simplistic view, since it does not necessarily focus on value to the customer. Total value to all stakeholders is realized only when there is value provided to customers. Take the example of communication. When a firm's primary focus is cost-reduction, important communication variables such as providing multiple points of contact, different levels of service and personalization often get lost in the bigger picture, thereby reducing the actual overall value of its e-business initiative. Rather, if the company had focused on providing the right information to the customer at the right time, much value could be delivered. Amazon.com's one-click service is an excellent example of the triumph of customer value.

Q: E-business ROI (return on investment) - what are some of the ways businesses can justify their capital costs regarding e-marketing implementations?
SK: For all practical purposes, marketing, in general, has not yet been able to justify ROI. Don't get me wrong - it is certainly possible to measure variables such as incremental sales, number of online vs. brick-and-mortar customers, line employee productivity, etc. For very small businesses, it is even possible to get reliable ROI numbers. But, as the business gets complicated, it becomes harder to get a strong ROI number. In an elusive search for this, firms fall into a 'measurability trap', where total measurement impact of each of these is not possible (for example, because the amount of time/resources it takes to measure something exceeds the potential gain from learning about the benefits), and therefore remains an illusion. It is important for managers to take into account their own, personal judgments based on gut and experience, without worrying exclusively about making the quarterly numbers. I realize of course, this is easier said than done but it is indeed important to consider justifying capital costs from all different angles. What is the value of ensuring consumers can contact marketing employees by e-mail? What is the value of ensuring all employees who work on a topic within a company find each other? The answers to these and other such questions are not easy. What managers must do is to create an environment where e-business initiatives can work well rather than obsessing about the value of every penny spent.

Q: During a recent presentation at UWB, you referred to e-marketing lessons learned from the "first wave of e-commerce." Can you elaborate?
SK: I believe that dotcoms did not fully understand e-marketing. Fulfillment and customer acquisition costs were the two cost categories that overwhelmed dotcoms. Both costs were extraordinarily underestimated. Among other lessons learned during this first wave, include the illusion of building market share with zero pricing/free services, and underestimating the toughness of changing consumer behavior as well as the power of entrenched interests.

Q: As you are aware, there are literally hundreds of e-commerce and e-business textbooks that have been published over the past few years. What were your reasons for writing an e-commerce textbook?
SK: About two years ago, all the textbooks were one-sided. They simply praised e-commerce without placing it in context. I have tried to act as a hype centrifuge and provide balanced coverage of many topics. For example, Amazon.com's business history is pretty balanced, and instead of unconditionally praising the company for its e-commerce accomplishments, my book also provides the counterpoint for other decisions. I feel that today this is the approach that will lead to a credible book that students can use. Similarly, I have tried to present new ideas in e-commerce in the context of old and respected theories (AIDA, for example). This is very important for some of us to get a sense of continuity. Finally, the books I had seen tended to think in silos. The e-commerce books did not provide any info on business models or a technical overview of the Internet, as they were often written by IS people and focused on information architecture and process redesign. I have tried a new, inter-disciplinary approach by focusing on business models, marketing and technology.

(About the author: Tushar recently earned an MBA from the University of Washington. An electrical engineer in a previous life, he refocused his professional interests after becoming fascinated with the business aspects of technology, entrepreneurship and venture capital. A regular volunteer at TiE-Seattle and occasionally at the Northwest MIT Forum, he resides in Bellevue, WA, with his wife and son.)