e-commerce business impact: facts and fiction from a ... · e-commerce business impact: facts and...
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Claudia Loebbecke
Chaired Professor of Media ManagementHead of Department
University of Cologne, Germany
[email protected]. 0221-470-5364
Pohligstr. 1, 50969 Koeln, Germany
E-Commerce Business Impact:Facts and Fiction from a Company's Perspective
Electronic commerce Business Impacts Project (EBIP) WorkshopRome, Italy, 29-30 October 2001
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
E-Commerce: Unheeded Warnings
? Need to 'buy' customers
? 'Eyes' model was never proven
? Proven value in Internet communities ???
? THE 'killer application' e-mail, is free
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
E-Commerce: Confounding Factors
? 'New Economy' paradigm: old rules of valuation suspended
? Unrealistic growth projections
? Inexperienced management
? 'Rush' to participate
? The inexplicable becoming the unquestionable
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Example GE (1)- Trading Process Network (TPN) -
Objective
Coordinate purchasing acrossall GE divisionsand purchasers, and improvepurchasing process
Benefits
? Lower purchasingcosts due to high-volume discounts
? Improved purchasingprocess by auto-mated ordering andbilling
? …
Solution
? GE purchasers were given the opportunityto buy products froma central online catalogue, located onGE’s Intranet.
? GE also offers other big companies theopportunity to useTPN.
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
? 60% of staff involved in procurement are redeployed
? Sourcing department has at least 6-8 free days a month for strategic activities
? Labor involved in procurement has declined by 30%
? Materials costs has declined 5%-20% due to reaching a wider base of suppliers
? 9-11 (instead of 18-23) days to identify suppliers, prepare requests for bid, negotiate price and award contract to supplier.
? Invoices are automatically reconciled with purchase orders, reflecting any necessary modifications.
? GE Procurement departments across the world share information about best suppliers.
Example GE (2)TPN – Overall, Measurable Benefits
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
New Value Creation ...?
What? For whom? At what price? By whom ?
• Higher margin?• Lower prices
for a givenproduct/service?
• Truely newproducts and services?
• Anytime,anywhere, anyhow?
• Suppliers?
• Customers?
• (Inter-mediaries)?
• What makes s.th. to 'createa value'?
• S.b. offers it ? • S.b. pays for
it?
• Traditional suppliers?
• Customers themselves?
• Inter-mediaries?
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Further Thoughts on Value Creation
1. Value creation via branding ?
2. Value creation via process innovation ?
3. Value creation via technological solutions? Mobile Commerce (… what will be new?)? Extended archiving, searching and exploitation
tools (beyond text)? Customer friendly platform switching (similar
to telephone)? 'best' media and communication mix
4. Value creation via application development and testing
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Critical Success Factors
? Operational excellence
High transparency of price and performance? power-shift to the consumer
? Branding
? Privileged relationships
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
"A wealth of informationcreates
a poverty of attention."Herbert Simon
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Audience Attention as Scarce Ressource- Economic Impacts -
? Need to capture and retain attention
? Need to maximize economic return on that attention
Audience andrelationships with that
audience as KEY ASSETS !
Businesses will increasingly be defined by audience segments,
rather than product lines
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
eBusiness Cycles
ManufacturingAutomation
Business Integration(Re-engineering)
eCommerce(Web-enabled Commerce)
eBusiness(Web-enabled transformation)
mBusiness(Multi-device,
multi-channel integration)
Time & Scope
in less th
an 10 years !
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
From Dream-Worlds toEconomically Relevant Markets
Mental Barriers- Mental Habits- Resistance to Change
Mental Barriers- Mental Habits- Resistance to Change
Political Issues- Regulations- Financial Investments
Political Issues- Regulations- Financial Investments
Technological Barriers- Infrastructure- New Competences
Technological Barriers- Infrastructure- New Competences
Market Barriers- Business Creativity- Economic Models
Development / Adoption'Gap'
Organizational Adoption Capacity
Rate of Change
Time
NewTechnologiesDevelopment
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
Conclusions (1)
? Basic principles don't change
? Cash flow determines survival
? Consumer based models suffer from problems of the fragmented small market
? Standard barriers never change
? Management, strategy and vision are key
? Grow organically or by acquisition
? What really drives value?
? What results in a rational revenue model ?
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
It is risky to enter E-Commerce,but it is even more risky not to do so !
Conclusions (2): Most E-Commerce Cases
One will need to get good at it,
as one needs to perform well in one's traditional job !
To support and complement one's business
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© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne
"The highest bandwidth network of allis found between
the water fountainand
the coffee machine."
Thomas Davenport, 1995
© Prof. Dr. Claudia Loebbecke, M.B.A. – Dept. for Media Management - University of Cologne