The Impact of Web Analytics on E-Commerce from Management, Technology and Organisations Perspectives - Literature review Example

The Impact of Web Analytics on E-Commerce from Management, Technology and Organisation’s Perspectives Student’s name: Course: Tutor’s Name: Date: Executive Summary The practice of measuring, collecting, analysing and reporting data that portrays the activities in a website is gaining popularity among e-commerce websites. As it becomes more apparent that such data is important for gauging key success factors, identifying weaknesses in the website, and forging future strategies to enhance the websites’ usability, more e-commerce organisations are now adopting web-analytics as a vital business tool. Its adoption however, is not without some impact on the management, technology and organisational perspectives in such organisations. On the management perspective, web-analytics has posed the need for more flexibility, something that is necessitated by emergent knowledge which creates the need for fast responses from the decision makers or lower level employees in the company. On the technology perspective, web-analytics makes it important for organisations not only to use technologies that enhance the web-user experience, but also those that make the data obtained from web-analytics usable. In regard to the organisational aspects of e-commerce firms, web-analytics has toppled the top-down organisational hierarchies that were predominant in the past. Regardless of the impact that web-analytics has on management, technology and organisational aspects of firms, it is recommended that e-commerce organisations must utilise it if they are to understand the performance of their websites. Introduction With e-commerce becoming commonplace in most contemporary organisations, web-analytics has become a viable management and organisational tool for such organisations. But what exactly is web analytics? Well, according to the Web Analytics Association (WAA, n.d, p. about us), web analytics “is the measurement, collection, analysis and reporting of internet data for purposes of understanding and optimising web usage”. The Aberdeen Group on the other hand defines web analytics as the process of “monitoring and reporting website usage so that enterprises can better understand the complex interactions between website visitor actions and website offers” (Aberdeen group, 2000). From the two definitions, it is clear that web analytics are used for a variety of reasons, key among them being the need to understand how web visitors respond to websites; and in relation to e-commerce, how online purchase decisions are affected by different properties on a website. Through web analytics, organisations that target using e-commerce to advance their business objectives can gain knowledge about the kind of visitors to their websites, the pages that such visitors view, the length of time spent on the website, the products that seem to interest such visitors, and the actual purchases made (Wilson, 2010). Peterson (2004, p. vii) defines web analytics more aptly as the “collection of data elements that reveal the mind-set of the market place”, hence meaning that an organisation can deduce what their customers feel about a webpage, know what web visitors gravitate towards, and determine the aspects that hold their attention while on the website. Additionally, web analytics can reveal just what marketing strategies are successful, hence appealing to the management function of such organisations. The contents of the paper are based on the assumption that e-commerce firms use the data gathered from web analytics to improve the overall quality of the website. In reality however, the author cannot ignore the probability that some firms do not know what to do with the data attained from the analytics. E-commerce and web analytics Serour and Henderson (2004, p. 751) define e-commerce as a two-way transaction involving the selling and buying processes conducted on electronic networks. The link between e-commerce and web analytics begins taking shape because the latter (i.e. web analytics) is used by most organisations as a tool for attaining standard reports, which contain key performance indicators about the selling and buying processes that occur in their respective websites. As Kohavi and Parekhi (2003) observe, e-commerce organisations use web analytics as a tool for assessing traffic patterns in their websites, evaluate the performance therein, and identify current and potential problems in the websites. Most importantly however is the fact that e-commerce websites view web analytics as a tool of enhancing their profit-making potential on the electronic platform. Notably however, and as Kohavi and Parekh (2003) allude in their detailed explanations of different web analytics tools, is the fact that the process of analysing websites is a complex phenomenon that could combine tactical, strategic, operational, data and foundation analyses before an e-commerce website realises optimal benefits from its use. Organisations can however conduct web analytics on the business aspect that they feel has the greatest importance for them (Phippen, Sheppard, and Furnell, 2004). For example, an e-commerce website willing to establish its potential customers through the number of visitors on its website can conduct a web traffic analytic. Some of the most common web analytics as identified by Peterson (2004) include web traffic data, web transaction data (common among e-commerce businesses), and server performance data (this relates to the technological aspect of the website). Anything that affects how organisations conduct business and the resulting relationships between them and their targeted consumers no doubt requires some amount of scrutiny, and web analytics is no different. According to Peterson (2004) web analytics should be used in the continuous improvement process, and should ideally follow five steps. The steps include defining the goals that one wants to attain through web analytics. For example, one could state that they want to increase the conversion rate on their websites by 10 percent within two months. The second step according to Peterson (2004) is measurement. Here, an e-commerce website should take the baseline measurement in order to determine if indeed its defined goals are beginning to shape up. The third step is prioritizing and changing the different aspects of the e-commerce business based on web analytics. For example, on realising that the outlook may not be appealing to web visitors, an organisation could start redesigning the WebPages, creating different wire frames, and consult a different kind of marketing agency. The short and long of it as stated by Peterson (2004) is that the management should work with the technical team and other stakeholders to prioritise the changes that need to occur first, and then review each at a time. The fourth step relates to verifying that the changes the organisation is making on the website are effective. Peterson (2004) recommends that instead of testing the changes on an expansive sample, the procedure should be limited to a few web users. By limiting the verification process to a few web users, the website owner is able to avoid major mistakes by judging the reception of the site based on the limited sample. The final step relates to analysing the effects of changes on the website. Like any other business strategy, changes based on web analytics can either succeed or fail (Wilson, 2010). Either way, the results should be compared against the desired results which the website owner had used when initiating the process. Notably however, the electronic environment is ever-changing and hence no e-commerce enterprise can afford to bask on the success of its previous changes. As consumer preferences keeps on changing, so do innovations that seek to satisfy such needs. With web analytics however, e-commerce website owners are quickly alerted when their websites are not having the desirable effect on the targeted consumers. Web analytics impact management Most e-commerce companies invest huge amounts of resources when building a website. To such organisations, the website becomes not only a marketing tool, but a platform where customers can conduct online searches and purchases conveniently. The essence of web analytics in an e-commerce site is perhaps best captured by Hurol Inan (cited by Peterson, 2004), who stated that organisations that do not take time to understand how their websites work just wasted the time and money they invested in its creation. The assertion by Hurol Inan could be interpreted to mean that without a clear understanding of how the website works, the organisations cannot optimally conduct electronic commerce on the same platforms. The management function in any organisation is meant to align business processes to the business objectives (Ndede-Amadi, 2004). Specifically, the management must tie the strategic, organisational and operational perspectives of the business together in order to enhance performance. To this end, the management could use web analytics as a tool to improve the operative efficiency in the firm. The knowledge gained from the web analytics can also be used to enhance organisational processes by enhancing the functions that address customer needs efficiently (this will be discussed elsewhere in detail). Through web analytics, the management can identify the core processes needed to take the organisation to even greater heights through increased competitiveness and profitability (Phippen, Sheppard, and Furnell, 2004). With the management function being responsible for the strategic planning aspect of such e-commerce organisations, it could use the web analytics to connect business processes to set business strategies as has been argued by Ndede-Amadi (2004). The work system framework proposed by Alter (2001) could be used in this context, where the management function is responsible for analysing each work system in an e-commerce website. The analysis is done for purposes of identifying how the organisation’s performance can be improved, and to re-certify whether its scope fits with specific business goals. Web analytics and their effect on management can also be linked to Leymann and Altenhuber’s (1994) concept, which indicates that information management is a prerequisite to the successful management of firms. Through provision of analysed data covering both the content and technical perspectives of a website, web analytics provide the management in e-commerce organisations with the knowledge required to manage their firms effectively. Notably however, not all knowledge attained from web analytics can be useful for immediate planning. As Patel and Ghoneim (2011) observe, in addition to tacit and explicit knowledge, organisations need emergent knowledge in order to rationally plan for the desirable future of their organisations. There is also the probability that constant analytics will bring forth emergent knowledge. Patel and Ghoneim (2011) define emergent knowledge as the information that results from sudden situations in an organisation’s internal or external environment. When emergent knowledge is born out of web analytics, the management needs to act fast in order to counter any negative effects or seize the emerging opportunities that result from the emergent situations. Hence, web analytics could have contributed to a change in management theory, in that the speed of decision-making can no longer be laid back (Phippen, Sheppard & Furnell, 2004). Instead, and depending on the sensitivity of the emergent knowledge, one would expect that the management of e-commerce enterprises are forced to possess mental agility in order to react quickly for purposes of ensuring that their enterprises retain an impressive image to the expansive online audience. A different aspect of web analytics and its effect to management concerns managing change. As indicated earlier, emergent knowledge may require e-commerce organisations to act quickly and flexibly. As indicated by Serour and Henderson-Sellers (2004), different people react to change differently, and the most natural reaction is usually resistance, or a cautious approach to the same. Ideally, the management can enhance acceptance of change by involving all the parties concerned. As Seour and Henderson-sellers (2004) argue, making all stakeholders understand the need for change makes them more receptive to the process since they feel as being part of the process. Hence, the management who are willing to attain impressive results by acting on the data gathered from web analytics must stay away from monitoring and controlling employees, and adopt supportive, collaborative and helpful functions which not only solve short-term problems, but also create long-term plans for e-commerce solutions. The effect of web analytics on technology By itself, technology is not and would not be a useful concept; the essence of technology therefore lies with people’s ability to understand and use it (Serour & Henderson-Sellers, 2011). Considering the earlier stipulated uses of web analytics, there is no doubt that an e-commerce organisation can be able to understand whether the technology used in its website has enhanced the user experience. For example, through reports on server performance, and /or usability studies, the technical experts working on a website can determine whether the technology used therein was successful, or whether an improvement on the same is needed. Some of the web analytics that are technology related include search analysis, real-estate usage analysis, market basket analysis, and the automatic product recommendation systems (Kohavi & Parekh, 2003). A search analysis enables an e-commerce website owner to determine the number of failed searches on their website, searches that return too many results, and even the keywords that lead to the greatest number of conversions. By sifting through failed searches, the e-commerce website administrator can liaise with the technical team to evaluate how the problem can be solved. For example, the keyword ‘toilet paper’ can result in numerous failed searches for a website that sells ‘bathroom tissue’. In such a case, it becomes the prerogative of the technical team to include the term ‘toilet paper’ as a synonym to ‘bathroom tissue’ as one of the viable ways of solving the issue. Website attributes that may encourage or discourage web users to use a site should also be considered. Through web analytics, Kohavi and Parekh (2003) observe that website owners can be able to tell correlated trends or problems that emerge when web users are using a specific website. For example, the website may be too slow to load, or too brightly coloured among other things. It thus becomes the responsibility of the technical department to remedy any technical issues that may hinder the effective usability of a website. Rizzoto (2007) takes the technical argument further by stating that those charged with overseeing technological advancement in e-commerce organisations should work with other departments to ensure that the technical aspects that affect the web analytics in a website receive the tactical and strategic focus necessary to enhance the website-user experience. Overall, web analytics have increased the need for technology workers, especially working within departments in specific e-commerce organisations, to come up with even more effective customer-centric processes (Rizzoto, 2007). Unfortunately, designing such processes is not usually a simple undertaking and for that reason, organisations are still searching for some sort of web-traffic reporting that would effectively integrate with their overall business strategies. As one would expect, and in line with everything else that has the technological tag on it, research and development will continue unabated until such a time that web analytics are perfected into some sort of an automatic intelligence generation tool. As Rizzotto (2007) notes, most web analytic tool offer statistical and analytical data, which organisations need to interpret and internalise in order to use for planning or immediate action purposes. However, the need for “actionable, real-time data about company website visitors that can feed and support marketing, sales and customer relationship management processes” will continue pushing technology innovators in e-commerce organisations (Rizzotto, 2001, p. 1). The pressure on technology innovators will be fuelled further as the quest for solutions intensifies. The effect of web analytics on organisational aspects of e-commerce organisations As Serour and Henderson-Sellers (2011, p. 753) observe, “Technology is only a tool; what makes the difference in practice is the individual who makes use of the technology and the culture that motivates people to realise and understand the advantages of adopting such a technology.” The observation by Serour and Henderson-Sellers alludes to the immense responsibility placed on the organisation to facilitate the transformation needed for e-commerce. Considering the fact that technologies do not function in a vacuum, Serour and Henderson-Sellers (2004) seem to underline the fact that introducing new technologies requires organisations to educate and train their human resource in order to enhance their capacity to participate, assess and acquire the new technologies required to make e-commerce a success. One of the widely cited web analytics tool that affects organisation aspects of e-commerce firm is the usability studies. Peterson (2004, p. 9) describes usability studies as a difficult but necessary web analytics tool, which enables an organisation to see “how people really interact with the content and navigation systems” that website designers build. As indicated elsewhere in this paper, e-commerce enterprises, just as their brick-and-mortar counterparts, adopt different strategies in order to enhance the consumer experience, thereby increasing sales and profitability. To be successful in e-commerce, Serour and Henderson-Sellers (2004) rightfully note that organisations need to effectively plan and manage vital success factors in their respective organisational settings. With web analytics at play, the need for organisations to manage such success factors becomes an even more pressing requirement. It is worth noting that most organisations that have adopted e-commerce had established traditional businesses before the electronic revolution took over. As such, a great deal of shifting business processes to conform to the electronic e-commerce platform does occur. Often times, organisations have to re-engineer their core business processes in order to support the new electronic commerce environment. As Serour and Henderson-Sellers (2004, p. 753) note, the power shift often creates a new environment for employees, thus requiring an organisational strategy that links activities such as production, stock control and sales together in the new electronic platform. Notably, the theory of deferred action as explained by Kohavi and Parekh (2003) is applicable in the e-commerce scenario, where the web analytics bring the need to constantly upset what would otherwise be long-term organisational structures. Weick (2004) for example observes that rigid organisational structures restrict people from responding when faced by real or perceived situations. As such, Weick (2004) recommends that organisations, which are constantly being faced with emergent knowledge should apply the principle of under specification, whereby employees are given some flexibility to make decisions, interact, disagree and manage any disputes that may emerge in their daily situations. Notably however, the management, which is ideally responsible for the performance of an e-commerce enterprise, should be prudent enough to adopt risk-management practices in order to reduce actions that may undermine its survival. Recommendations Every e-commerce organisation must adopt web analytics as a viable approach to determining the performance of their websites, identifying problematic areas, and devising solutions based on results obtained from the web analytics process. E-commerce organisations must be more flexible in their decision-making in order to create room for emergent knowledge created through web-analytics to be effected E-commerce organisations that have retained past business strategies need to rethink them in order to accommodate the new dynamics brought about by web-analytics. E-commerce organisations need to effectively plan and manage vital success factors in their respective organisational settings in order to make full use of web analytics. Conclusion The impact of web analytics on all e-commerce enterprises is undeniable. As stated in this essay, web analytics help organisations to gauge their key performance indicators in the e-commerce market. Based on data gathered from the web analytics, organisations are able to define new plans to enhance their performances in a market that is rife with competitive, functional and operational pressures. The effect of web analytics on e-commerce has also impacted in traditional business processes such as management, technology and organisational structures. One notable effect is the fact that long-term planning seems to be taking a back seat as organisations respond to emergent knowledge born from the web analytics. Consequently, organisations have to redesign their decision-making processes to allow for more flexibility. This not only ensures that such organisations do not suffer adverse effects that would result from delayed decision-making, but also enables them to take advantage of opportunities that may come up on electronic-commerce platforms fast. On the technological perspective, organisations that use web analytics have to be more innovative and fast in addressing consumer needs. As such, the e-commerce website needs to be better than a non-commercial website in all aspects including load time, design, and other aspects that enhance the web-user experience. Web analytics have also impacted the organisational perspectives since more flexibility is desired in the e-commerce enterprises. Overall, it is worth noting that the web analytics, although just a function of e-commerce, have played a major role in infusing change in the management, technology and organisational perspectives. Hence, organisations are able to gauge their performance, plan (albeit for the short-term), and execute changes that improve their competitiveness in their respective markets. References Aberdeen Group 2000, Web Analytics: Translating Clicks into business, Aberdeen Group, Boston, MA. Alter, S 2001, Information Systems: Foundation of E-Business, 4th ed., Prentice-Hall, Upper Saddle River, NJ. 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