concepts of electronic business. outline the networked economy. attributes, categories and...
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Concepts of Electronic BusinessConcepts of Electronic Business
Outline
The networked economy.
Attributes, categories and definition of eCommerce.
eCommerce infrastructure components.
eCommerce challenges.
Business models.
eCommerce benefits and drivers.
Global pressures.
Reasons for going online.
eBusiness decision making process.
Examples.
The networked economy
Create value through the collection, organization and distribution of information.
Strategy formulation to make management of the enterprise and management of technology convergent.
Competition in real time.
Low barriers to entry.
Organize resources around the demand side.
Technology for managing relationships with customers and markets.
Use of technology-mediated channels.
Impacts on business development
Reduced inventory-holding costs
Reduced time to market
Improved demand forecasting
Better communication between business units
Salespeople face better-informed consumers
Attributes of eCommerce
Exchange of digitized information between parties.
Technology-enabled.
Technology-mediated.
Intra-organizational and inter-organizational activities to support exchanges.
Definition of eCommerce
eCommerce: technology-mediated exchanges between parties (individuals or organizations) as well as the electronically based intra-organizational or inter-organizational activities that facilitate such exchanges.
Main categories of eCommerce
B2B B2B C2B C2B
B2C B2C C2C C2C
Business Consumers
Business originating from . . . B
usi
nes
s C
on
sum
ers
An
d s
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. .
.
Convergence of eCommerce categories
Publishers order paper supplies from paper
companies
Amazon orders from publishers
Publishers order paper supplies from paper
companies
Amazon orders from publishers
Consumers aggregate to bulk purchase from Amazon
Consumers aggregate to bulk purchase from Amazon
Consumers buy thousands of Harry Potter books from
Amazon
Consumers buy thousands of Harry Potter books from
Amazon
Business Consumers
Business originating from . . . B
usi
nes
s C
on
sum
ers
An
d s
elli
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to
. .
.
Consumers resell copies on eBay
Consumer behavior constants
CustomizationPersonalization
InteractivityAbility to conduct two-way communication
eCommerce triangle
eCommerce management rests on three pillars:Internet and related technologies
Business model
Marketing
All are inextricably linked to one another in e-commerce.
eCommerce infrastructure components
Technology InfrastructureHardwareSoftware
Capital InfrastructureFunding the businessValuing the business
Media InfrastructureInternet as a mass communication mediumPublish, design and edit digital content
Public Policy InfrastructureLaws and regulationsImpact of the Internet on society
Interdisciplinary eCommerce
EntrepreneurshipEntrepreneurship
Strategic Management
Strategic Management
TechnologyTechnology New MediaNew Media
AccountingAccounting Operationsand Logistics
Operationsand Logistics
FinanceFinance MarketingMarketing
eCommerce challenges
Understanding customer evolutionCost of doing businessMarket research to understand how customer needs are evolving
Charting changing technologyChoosing the “right” technologies — matching consumer tastes to technology choices
Balancing irrational estimationsEstimating the impact of technologyWeathering the storm — reassuring stakeholders
Integration of offline and online activitiesIntegration of customer-facing activitiesIntegration of systems, structure and processes
Identifying key competitive advantagesReallocating resources as competitive advantage evolves
Economics of IT
Early 1990s Computing cost erosion era
Mid 1990s Connectivity cost erosion era
Late 1990s Bandwidth cost erosion era
Early 2000s Interactivity cost erosion era
Internet Basics
Internet…The Technology
Internet…The Social Space
Internet…The Marketing Tool
Internet…The Business Tool
Directions and trends
From .com to .profit
From eCommerce to eBusiness
EBEC EC = EB EC
EB
The 2 terms are sometimes overlapping, used interchangeably or eCommerce is sometimes seen as a sub-set of eBusiness.
eCommerce definitions
CommunicationsPerspective
Business ProcessPerspective
ServicePerspective
OnlinePerspective
Communications perspective
eCommerce is the delivery of information, products and services or payments over telephone lines, computer networks or any other electronic means.
Business process perspective
eCommerce is the application of technology toward the automation of business transactions and work flow.
Service perspective
eCommerce a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.
Online perspective
eCommerce provides the capability of buying and selling products and information on the Internet and other online services.
Dimensions of electronic business
PhysicalProduct
DigitalProduct Traditional Commerce
PhysicalAgent
DigitalAgent
PureeBusiness
VirtualPlayer
VirtualProduct
ElectronicBusinessAreas
Core ofElectronicBusiness
VirtualProcess
Digital Process
Physical Process
Source: Choi et al, 1997
Electronic commerce components
ElectronicCommerce
Institutions Government Merchants Manufacturers Suppliers Consumers
Processes Marketing Sales Payment Fulfillment Support
Networks Corporate Internet Commercial
Framework
eCommerceApplications
Stocks Online Banking Procurement Purchasing Malls
Online marketing & advertising Home Shopping Auctions Travel Online Publishing
PeopleBuyers, Sellers, Intermediaries
Services, IS peopleManagement
Public PolicyTaxes,
Legal, andPrivacy Issues
Technical StandardsDocuments SecurityNetwork Protocols
Payments
OrganizationsPartners
CompetitorsAssociations
Government ServicesInfrastructure
Common BusinessServices
InfrastructureSmart Cards
AuthenticationElectronic Payments
DirectoriesCatalogs
Messaging & Information DistributionInfrastructureEDI, e-mail
Hypertext TransferProtocol
MultimediaContent & Network
PublishingInfrastructure
HTML, JavaWorld Wide Web
VRML
NetworkInfrastructure
Telecom, Cable TVWirelessInternet
VAN, WAN, LANIntranetExtranet
InterfacingInfrastructureTo Databases
CustomersApplications
Management
Business or consumer model
Electronic business opportunities are identified on the basis of whether…
Transacting with consumers
Transacting with businesses
Transacting with non-businesses
Transactions between businesses and consumers
B2C• Organizational sites (Dell, Amazon)• Consumer marketplaces (Shopsmart.com)
C2C• Auctions (eBay)• Consumer reviews (Deja.com)
B2B• Organizational sites (Dell)• Business marketplaces (CommerceOne.com)
C2B• Customer bids (Priceline.com)
From
FromBusiness Consumer
Business
Consumer
Types of eBusiness
Business to business (B2B)
Business to consumer (B2C)
Consumer to consumer (C2C)
Consumer to business (C2B)
Non-business eCommerce
Intra-business (organizational eCommerce)
Business to government (B2G)
Business-to-business
Biggest global market share of eBusiness today.
It accounts for around 79% of global eBusiness transactions (to become 85% in 2002 and 87% in 2003) – www.emarketer.com.
B2B implies that both sellers and buyers are business corporations.
Broad-based sharing of information among participants.
B2B marketplaces will be customized for industries or products.
The quest to find the appropriate value-added services will be constant.
Business-to-consumer
Retailing transactions with individual shoppers.
Shoppers @ Amazon.com, dell.com, etc..
Consumer-to-consumer
Consultation and trading in personal capacities.
Consumers sell directly to other consumers.
Many consumers are using intranets and organizational internal networks to sell different services
Personal web sites, etc..
Consumer-to-business
Consumers who sell their professional services to organizations.
Consultation
Training
Non-business eCommerce
Not-for-profit organizations, NGOs, academic institutions, social organizations and government agencies.
Objective is to better provide customer service support.
eCommerce tools are used for organizational exposure.
Mostly, service oriented organizations.
Intra-business eCommerce
Re-engineering all internal organizational services and activities.
Internal exchange of information services.
On-line training to corporate employees and staff.
Business-to-Government
Transactions taking place between businesses and the government.
Small and large scale transactions.
Government-Private Sector collaboration.
eGovernment: a growing trend [government online].
Background on eBusiness
Applications started in 1970s with the innovation of Electronic Funds Transfer (EFT); however limited to:
Large corporations
Financial institutions
Few small and medium-sized enterprises.
Then came Electronic Data Interchange (EDI)
Evolution of information and communication technology, protocols, networks.
eBusiness started in the 1980s
Over 2,000 eBusiness offerings before the introduction of the World Wide Web in 1995 in Switzerland.
Most famous previous model had been France’s videotext system “Minitel”.
WWW ®evolution has bypassed physical networks of distributors “middlemen” and brought products and services directly to customers.
From 1995 to 1999, it was the boom in eBusiness and the presence in the world wide web.
General Motors www.gm.comOffers 18000 pages of information
98000 links to its products, services and dealers
Marketing Business Law Management
FinanceAccounting
&Auditing
ManagementInformation
Systems
ComputerScience
Economics
ConsumerBehavior
&Psychology
eBusiness - multidisciplinary approach
Rise and fall of dot-coms
Market share built with zero pricing and free services.
Customer database undervalued.
Underestimated how easily human behavior can change.
Underestimated the importance of entrenched interests.
New conceptual model for dot coms
1. Efficiency
2. Value proposition
3. Measurability
4. Networking
5. Interactivity
6. Global marketplace
eBusiness benefits
Benefits to organizations
Benefits to consumers
Benefits to society
Benefits to organizations
Expanding market exposure to a global market place.
Decreasing the cost of creating, processing, distributing, storing and retrieving paper work (5%).
Providing just-in-time manufacturing.
Customizing individual needs.
Intangible benefits: flexibility, customer support, etc…
Benefits to consumers
24 hours a day shopping, no boundaries.
Vendor free, product free, location free choice.
80% chance for a better and a cheaper product.
You get to know more in less time.
E-business customer is a more knowledgeable customer.
Interactive shopping and getting to know feedbacks.
More competition, better service, better quality and better price.
Benefits to society
More work, less traveling, less traffic and less air pollution.
More people can buy more products with less money leading to raising the standard of living.
On a global scale, minimizing haves and have nots.
Reaching out to rural areas in government and public services.
Driving forces of eBusiness
There is a need to understand today’s global forces and organizational environment.
The new world of business – “Business is not as usual”.
Assessing the business drivers and business pressures.
Driving Forces of eBusiness
There are 2 main factors that help create an eBusiness environment leading to enhancing profitability:
Potential for increased revenue arising from increased reach to a larger customer base and encouraging loyalty and repeat purchases among existing customers.Cost reduction achieved through delivering services electronically (staff, transport and materials costs).
What are the drivers?
How do expand my market?
How do we retain our customers?
How do we increase our efficiency??
Key eCommerce drivers
Cost/efficiency driversIncreased speed with which supplies can be obtained.
Increased speed with which goods can be dispatched.
Reduced sales and purchasing costs.
Reduced operating costs.
Key eCommerce Drivers (Cont’d)
Competitiveness driversCustomer demand.
Improving the range and quality of services offered.
Avoid losing market share to businesses already using eCommerce.
Tangible benefits
Increased sales from new sales leads giving rise to revenues:New customers, new markets.
Existing customers (repeat-selling) and (cross-selling).
Marketing reduction costs:Reduced time in customer service
Online sales
Reduced pricing and distribution costs of marketing communications
Supply chain cost reductions:Reduced levels of inventory
Increased competition from suppliers
Shorter life cycle to ordering
Administrative cost reductions:More efficient routine business processes
Intangible benefits
Corporate image communication.
Enhanced brand.
Rapid and more responsive marketing communications.
Faster product development life cycle.
Improved customer service.
Learning for the future.
Meeting customer expectations.
Identification of new partners.
Better management of marketing and customers information.
Feedback from customers on products and services.
Role of eBusiness globally
Organizations
MarketGlobal
CompetitiveChanging WorkforcePowerful Consumers
SocietySocial Responsibility
Government RegulationsDeregulations
Shrinking BudgetsSubsidies
Ethics
TechnologyInnovations
ObsolescenceeBusiness
Information Overload
ITeBusiness
Global business pressures
Market and economic pressures
Societal and environmental pressures
Technological pressures
Market and economic pressures
Strong competition
Global economy
Regional trade agreements
Low labor cost in many developing countries
Continuous changes in market conditions
Increasing, dynamic and importance of consumers power and choice
Societal and environmental pressures
Changing nature of the work force
Government deregulation
Shrinking government subsidies
Ethical and legal issues
Social responsibilities of organizations
Rapid political change
Technological pressures
Rapid technological obsolescence
New technologies all the time
Performance and cost are going in opposite directions
Information overload
Business drivers and pressures
An Organization
Business AllianceJoint VenturesVirtual Corporations
ContinuousImprovement Improved ProductivityImproved DM, JIT, TQMManaging InformationChange ManagementCS Information
Strategic SystemsStrategic Information
Systems
BPRCycle time, EmpowermentCollaborative work, Mass customizationRestructuringTeam-based organization
eBusinessAny place, any timeanyway
eBusiness value added
eBusinessimproves
Product promotionNew sales channelsDirect cost savingsReduced cycle timeCustomer service
Brand/Corporate image
eBusinesschanges
Technology learningOrganizational learning
Changing nature of work
eBusinessredefines
New product capabilitiesNew business models
Shifts in the marketplace
From mass marketing and advertisementTo target, one-to-one interactive marketing and advertisement
From mass productionTo mass customization
From monologueTo dialogue
From paper catalogTo electronic catalogs
From One-to-many communication modelTo Many-to-many
From supply-side thinkingTo demand-side thinking
Shifts in the Marketplace (Cont’d)
From customer as a targetTo customer as a partner
From SegmentationTo communities
From physical products and servicesTo digital products and services
From branding and mega-brandTo communication and diversity
From intermediationTo disintermediation and new intermediation “infomediation”
eBusiness Processes
Changes in Business EnvironmentGlobalization of Commerce
Ongoing Competition
Streamline Needs
Business Process Redesign
Electronic Commerce
Reasons for going Online
Expand market reach – collect experience with a new customer segment.
Visibility – generate more visibility in your target market and gain mind share.
Responsiveness – increase responsiveness to customers and partners
New services – provide new services for customers and partners.
Strengthening business relationship - real-time data increase the profit for every partner involved.
Cost reduction – reduce cost of product, support service and estate.
Cases and examples
Europe becoming online
59% of European homes will have some sort of internet appliance by 2005.
Roughly 57% of these appliances will be PCs.
UK leads the online appliance market with 30% penetration, followed by France with 16% and Spain with 15%.
European residential Internet use rose to 28.4% in October from 18% in March 2000
Small and medium-sized European businesses also posted a sharp increase in Internet use
70% are online
40% have their own websites.
Internet in India
Internet subscribers will reach 15 million by 2003. Establishment of 10,000 community Internet centers [each with 6 PCs] over the next 3-4 years.Indian state and federal governments will invest $890 million between 2001 and 2002 in eGovernance.
Source: Reuters
US Music downloaders
eBusiness concerns
Competition – growing from local to a global competition.Copyright – Once information has been published on the Internet, it becomes easy to copy it and use it for own business. Customer acceptance – many companies are afraid that their customers will not accept the new channel. Legal issues – no legal framework for the Internet that is binding on a worldwide basis.Loyalty – no binding to any vendor. Pricing – the new economy makes it easier to compare prices whereas prices will drop and quality and add-on services become more important. Security – most companies are very concerned about security on the Internet Service – a customer can compare the offerings of a certain company much easier with another one. Viability – many companies are unsure about the viability of their digital business case.
eBusiness decision making process
Source: Rayport and Jaworski, 2001
1. Which customer group should I serve?2. How do I provide a compelling set of benefits to my targeted
customer?3. How do I differentiate my “value proposition” versus online and
offline competitors?4. How do I communicate with customers?5. What is the content “look-and-feel” level of community and degree of
personalization of the website?6. How should I structure my organization?7. What business services and application software choices do I need
to consider?8. Who are my potential partners?9. Whose capabilities complement ours?10. How will this business provide value to shareholders?11. What metrics should I use to judge the progress of the business?12. How do I value the business?