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SLM: Learning from Dot.coms

Illustration: Pets.com sock puppet

In life, wisdom is generally thought to come with age. But in business, years of experience do not always lead to best practices. This often seems to be the case when it comes to the systematic application of performance management or service level management (SLM) practices.

Lately I've been working on the business value of SLM. In particular, I've been focusing on how to establish the value of SLM activities devoted to improving the availability and responsiveness of Web sites and e-business applications. In the process I've been speaking to several companies about how they approach this question.

Different corporate cultures

Personally, I'm convinced that there is always a good business case for SLM, if it's implemented properly. But I've spent many years advancing this proposition, so my opinion probably does not count for much. For any advocate, what matters more is the listener's own predisposition. In this case, regardless of how strongly a company seems to be embracing e-business approaches, their history and culture can still affect their readiness to embrace and justify SLM programs to support that business.

It's now more than five years since the dot-com bubble burst in 2000, wiping out billions of dollars that had been invested in speculative Web businesses. The survivors may have picked a better idea for an online business, but more importantly, they knew how to make a profit running that business. Those who did not quickly joined the ranks of eToys, Pets.com, Webvan, and hundreds of other long-forgotten companies who proved only what most companies already know -- you must have a viable business model.

But companies can also learn an important lesson from the e-business e-business startups that succeeded. Because their business is conducted entirely over the Web, the value chain connecting SLM process to site usability to customer satisfaction to revenue and profits is an ever-present fact of life. At older companies, where e-business components are now being added to existing offline businesses, the corporate culture is not nearly as attuned to that e-business value chain.

Years of investment in IT infrastructure and applications were designed primarily to deliver the back-office systems that supported "bricks and mortar" businesses. Back-office systems are used by company employees, not customers. Although poorly performing applications may annoy employees, and even lower their productivity, it's usually safe to assume that they do not drive away business.

But when the company starts adopting e-business, those old assumptions must change. Older companies must learn what successful dot-coms must already know -- SLM is important, because it affects the bottom line. Performance matters!

[This post was first published on Blogger on November 7, 2005.]

Posted on Monday, November 7, 2005 at 03:51PM by Registered CommenterChris Loosley in | CommentsPost a Comment

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