e-commerce early expectations and today's situation · it already important in the 60s...
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20 years of e-commerce
Werthner, 2015
e-commerceEarly Expectations and Today's Situation
Hannes Werthner
Electronic Commerce GroupTU Wien
History of 20 Years
Based on numerous contributions of many colleagues and friends
„More than being helped by computers, companies will live by them, shaping strategy and structure to fit new information technology„
Predicted pervasiveness of computer (and computer science) E-commerce excellent example for this quoteEncyclopedias and wikipedia
(Fortune 1988)
New companies, markets and industry sectors
20 years of e-commerce
Werthner, 2015
Outline
IT and something on tourismg Short history Reflection (markets, users and suppliers) Some future issues Conclusions
Information Technology Global infrastructure - Internet / Web
Today approx. 3,2 Bn users, in just 20 years Digitization and „transparent“ technology / access
M bil ti Mobile computing From computer to media machine
Evolution of computer:
Information Society: refers to changes in society and its structure (authors like Norbert Wiener, 1948; Daniel Bell, 76)
p• automaton manipulation of well formalized and mathematical models• tool modelling of work processes• medium representation & processing of unstructured information• omnipresence middleware connecting everything (Internet of things)
20 years of e-commerce
Werthner, 2015
Internet / Web: Not just technology
communitybuilding
information- and know-ledge representation
communication
(Klein, 96 )
Pervasive – (nearly) all areas of life Economic transformation
building
businesstransactions
Economic transformation Social expansion Psychological change Political impact Legal aspects
Related business landscape
Company examples Google launched 1998 Flickr 2004 MySpace 1999 YouTube 2005 Skype 2003 eBay 1997 Twitter 2006 Facebook 2004 Facebook 2004
Virtualization: companies rely on information (not their “own”) and user network, not infrastructure
20 years of e-commerce
Werthner, 2015
Tourism huge industry (and growth); in 2020 estimated 1.6 Bn intern. arrivals
World-wide networked industry
Tourism
World-wide networked industry In Europe 1.3 Mio enterprises, 95% very small World-wide demand (but different context,
„non-frequent“ users) Product/service is complex (bundle),
emotional and confidence good
Tourism (expressed already in 94/1995) information business future is electronic structural change
IT and Tourism Travel and tourism a major domain in e-commerce/e-business IT of strategic importance for the tourism / travel industry
-> strong reciprocal relationship
IT already important in the 60s (CRS/GDS - Computerized Reservation Systems / Global Distribution Systems): Start/Amadeus, Sabre, Galileo, Worldspan
Among first world-wide computer systems (with leased lines and 4 bit codes) to connect airlines, tour operators and travel agents
Changed tourism (accessibility and mass tourism)g ( y )
20 years of e-commerce
Werthner, 2015
History: Early Beginning
In tourism “outside” CRS/GDS it started in the late 80s /early 90s Fast evolving electronic consumer market (PCs) First “electronic” tourism destinations, with connected PCs
via telephone lines, content distribution to Minitel / France, Teletext, and CRS/GDS No Internet, proprietary protocols First system: TIS (Tirol Information System) Austria 1989 First system: TIS (Tirol Information System), Austria, 1989
TIS Architecture (1989/90)
DOSOS / 2UnixAIX
local tourist boards
local copy of the database
modem
telephone
RISC machinewith AIX
TIS CenterTirol Werbung
central database
query manager
database
update manager
communicationmodule
Start in 1991 with 140 local tourist boards
“Distribution” technology: Minitel, Teletext
DOSOS / 2UnixAIX
other remote sites: hotels, travel agencies,automobil associations, tour operators, ....
Proprietary protocol,daily updates, …
20 years of e-commerce
Werthner, 2015
The Web Start Starting with simple online presence in 1995 / 96! Travel/tourism one of the first sectors „moving“ to the Web
Early visions (forecasts) Enormous growth Transparent markets and decreasing prices Free market access, suppliers with direct link to consumers More democratic structures – benefits for smaller companies Flexible cooperation between different suppliers Lower transaction costs (search, negotiation, settlement)( , g , ) Simpler and more interactive systems for users
Web /e-commerce is a strategic issue (academic statement)
E-commerce / e-tourism Research Active research since early beginning
Analytical as well as constructive Challenge: combination of different disciplines and methods Applied research
Topics in European programs (1998): Interfaces for different cultural, social and language context (non
frequent users) Intelligent Interface Different information sources with different formats and semantics Interoperability, metadata modelsp y,
Distributed systems from planning to distribution Mediated software architectures and statistics
Merge TV and Web, and mobile devices New multimedia frameworks / applications
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The Take Off Sectors such as Tourism “really” electronic in late 90 Traditional players were reluctant E-commerce facilitated consumer trends More and shorter staysMore and shorter stays Late decision More personalized services with consumer integration and
empowerment
E-services developed from pure online presence over booking systems to consumer integration Today: well developed business landscape, high “penetration” on y p p , g p
supply side and high user numbers
Several Generations in Few YearsExample: Tourism
Goal:Establish
Online Presence
Goal:Customer
Acquisition
Goal:Customer R t ti
Goal:Customer
Online Presence
Air, Hotel, Car
•Sites launch•Online bookings begin (few)Distressed
Acquisition
Air•Personalization•Direct booking “hubs” emerge
Hotel, Car•Launch “next generation” sites
Retention
Air, Hotel, Car•Broker portal tenancy deals•Improve customer care
Cruise, Tour•Target specific
Integration
All sectors• Communities• Ratings and Blogs
• wikis• „Web 2.0“
1996 - 1998 1999 - 2002 2002- 2007
Distressed inventory emails start
Cruise, Tour•Launch info / service sites
customer segments
2008 -
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Now: All moved to
the Web
Innovation
In essence from outside In tourism two types: Copying (or extending) existing services and playersCopying (or extending) existing services and players Travel agents / tour operators (expedia) Domain specific transaction / booking support - (bookings,
airline systems) New services New market forms / negotiation / auctions (priceline, e-bay) Search and compare (Google trivago checkfelix)Search and compare (Google, trivago, checkfelix) Community / user integration (tripadvisor, facebook) Exchange / sharing (Airbnb, Uber)
20 years of e-commerce
Werthner, 2015
Innovation – 2
Disruptive innovation when following a platform strategy Platform: technology & service opened for broader
independent “ecosystem” of users & companies creating independent ecosystem of users & companies creating network effect; Benefit from innovations from others, also competitors Focus on market transaction, do not “own” product
Excursus: Platforms and USA
ICT Systems have “layers” (Veugelers et al., 2012):
Layer I: Network element provider (e.g. Cisco, Samsung, Alcatel)
Layer II: Network operators (e.g. BT, DT, Vodafone) Layer III: Platform, content, application providers (e.g. Google,
Amazon, ebay, YouTube)
Case Europe: good in Layer I & II but not in Layer III (USA) Case Europe: good in Layer I & II, but not in Layer III (USA)
20 years of e-commerce
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Reflection Market: Structural Change Vision: direct link to consumer and easier for smaller players “Informatization” of value chains, market efficiency increased! New market forms (e.g., forecast shopping, sharing) Services became commodities deconstruction of value chain Services became commodities – deconstruction of value chain Complex structure (dynamic network structures)
At the same time concentration trend – Winners take it all
Web: Evolution of order and disorder Issue: not process reengineering, but network engineering
Chance for small companies: digital divide (geography and size)
Reflection: Consumer Side
From customer focused to customer driven Already topic in 1998 (early reference to “community”) And in 2001 Not just business, also fun – from lean-forward
(concentrated) to laid-back (relaxed, enjoyable)(co ce t ated) to a d bac ( e a ed, e joyab e) Double sided market with lesson: consumer primary player Growth of communities, facilitated by tools / systems Users became content / service providers (prosumer)
Their “integration“ improved product and service quality
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Easier and Simpler
Interfaces richer (graphics and multi-media), more intuitive, more interactive Mobile applications (“revolution”) I ti f t id d ith b i d l Innovation from outside and with new business model
An exploding number of services, sites, content Search and transaction costs decreased (for all ?) Evolved a new (travel) experience (e.g., share before consume;
or experience through camera)
Issue: Total care vs. self-service user
Specific User Issue Amount of information is exploding Products often have specific features (emotional) Users ask for playful interfaces User do not know their needs – or cannot explicitly express them User do not know their needs or cannot explicitly express them
(appr. 25-30% of users)
However: search normally based on explicit statements
Needed: new interaction / search paradigm and user models
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Personality Based Approach
Well known personality dimension agreeableness, extraversion, openness, conscientiousness, neuroticism
In tourism (Yannakis et al., 2002) identified tourist stereotypes ( Th ill S k J S S l A h l i ) (e.g., Thrill Seeker, Jet Setter, Sun lover, Anthropologist) –reflect „unspoken“ attitudes / interests
(Delic et al., 2015) show relation between personality and stereotypes
Sun lovers are nervous
(Berger et al., 2007) show correlation between pictures and roles
(Neidhardt et al., 2014) relate pictures, personality and roles
Use pictures for identifying / elicitating user profiles Based on these profiles system can offer specific products
Picture-based search
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You are …
But Not only personality, there might be something more
20 years of e-commerce
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Personality
Agreeableness
Personality
Extraversion Openness
ConscientiousnessNeuroticism
(Excerpt of a) user‘s lifetime
And
Personality
Mood
positive / negative
(Excerpt of a) user‘s lifetime
20 years of e-commerce
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Complex Picture
Happiness
Personality: enduring personal characteristicMood: slow changesEmotion: fast changes, more specific, more intense
Personality
Mood
HappinessAngerFearSadnessDisgustSuprise
(Excerpt of a) user‘s lifetime
Emotions
Open: Models as well as acquisition (Tkalcic et al., 2016)
Reflection: Supply Side
Market presence: very high penetration (nearly 100%) Transaction growth: (only) steady growth, with shares of
8 to 12 %, differences between sectors Easier to link to consumers (bypass intermediaries) Facilitate cooperation - interoperability Cheaper / easier to build an application
20 years of e-commerce
Werthner, 2015
Market Access Example tourism: Hotels have relatively high online share, but also high online
costs (marketing, sales, etc.) Booking mainly via few intermediaries (e.g., booking, expedia) Booking mainly via few intermediaries (e.g., booking, expedia) Intermediaries use network effect with standardized products
Platforms can use competition of suppliers (competing for keywords, or lower prices in booking channels)
Suppliers forced to use these platforms with substantial economic effects
Paradoxical spiral: expenses of suppliers for these platforms increase at the same time their dependencies
Intelligent Cooperation ExampleMiddleman looks for 100 hotels
with skilifts nearby in Tyrol within 50 km to bundle them with flights
He has contracts with some of the providersproviders
He starts communication sessions with some of them
In the search specific business rules Supplier ones: minimal occupancy /
price Middleman ones (contract rules,
preferred partners) and his utility function
For “automatic” bundling specific techniques are needed (constraint reasoning, multi-value optimization, …)
Utility function depends on type of middleman
Package max cost: 450 $Date: 05/12/06 – 15/12/06Services: half boardInterface to: Flight xxxx
20 years of e-commerce
Werthner, 2015
Needed Unified system of meanings – with mapping of meanings Unified system of interaction (protocol) Homogeneous repositories (data and services)g p ( ) Mapping of services Optimization and also machine learning
What we have (in Tourism) Working mapping technology (Harmonise; Fodor et al., 2008) Linked Open Data as repository (from Semantic Web) “Manual” meta data (GIATA) Manual meta data (GIATA) But still application and data silos, where dominant players
“protect” their field (data and services)
Easier to Build Application Several development frameworks and methods, but applications
become complex (e.g., Erste Bank case in Austria) Still issue to align business model with implementation (for change) Management and IT have different perspectives
One approach: BSOPT for developing EC systems covering three
Business Modelinge³ Value, REA
Management
One approach: BSOPT for developing EC systems, covering three perspectives (Schuster et al., 2011) Value perspective (business model) Process flow perspective Execution perspective (IT artifacts)
Business Process ModelingUMM
Process SpecificationsBPEL, Workflows
Business
IT
link artifacts
(semi‐) automatic
20 years of e-commerce
Werthner, 2015
Supply Side – 2 Market presence: very high penetration (nearly 100%) Transaction growth: steady growth, with shares of 8 to 12 %,
but differences between sectors Easier to link to consumers (bypass intermediaries)
Opportunity and challenge of data analytics Systems and data pervasive – used to learn Online market monitoring / research, network analysis …. IBM / Watson recovers personality from 200 tweets
Facilitate cooperation - interoperability Cheaper / easier to build an application
IBM / Watson recovers personality from 200 tweets Infer a company‘s business performance from EDI data exchange
(Worawat et al., 2015) (Neidhardt et al., 2016) show social influence in user networks;
emotions are contagious
Short Note on Research Approaches Multidisciplinary and interdisciplinary, with methods / paradigm
Formal, Engineering, Design Methods from application domain and other sciences (e.g., Psychology) Applications needed – especially issue of data driven “paradigm” (Banerjee and Ceri 2015) see move from T-shaped to Pi-shaped model (Banerjee and Ceri, 2015) see move from T shaped to Pi shaped model
T-shaped: domain specialization (on the vertical axis) with horizontal knowledge (i.e. general and cross-disciplinary competences)
Pi-shaped – another vertical competence: specific mathematical, statistical, and computational abilities
20 years of e-commerce
Werthner, 2015
Some Research Issues
Digital infrastructure with 5 layers (Werthner et al., 2015):1. Individual
Mobility, context awareness and service proactivity Attention, sentiment and persuasion managementAttention, sentiment and persuasion management (Personality based) recommender and enjoyment Switch-off button
2. Group / social Group decision making & ad hoc groups (incl. seamless plug and play) Devices for sharing group experience Reputation and social influence
3 Corporate / enterprise3. Corporate / enterprise Data/services storage & data quality control Multi-channel incl. social Web platforms Performance analysis, data analytics and process mining Rapid software development and implementation
Some Research Issues – 2
Digital infrastructure with 5 layers – cont.:
4. Network / industry Technology/innovation diffusion models (focus on platform models)
A l i f t k t t d d i Analysis of network structure and dynamics Sector wide data analytics Cross platform approaches – seamless interoperability and common
service layers
5. Government / policy layer (more principles!) Sustainability (environmental, economic, democratic, social, cultural) Privacy Self-governance and participation Fairness
20 years of e-commerce
Werthner, 2015
Conclusions
IT (e-commerce) changed industries and created new ones
Continuing disruptive innovation: technology and service waves
Several forecasts were wrong, some issues are still open, but many developments were foreseen
Continuing disruptive innovation: technology and service waves
Innovation mainly from outside
We will see both further concentration as well as new services
Complexity will not decrease (structures & technology)
Complexity trap (simpler and also more complex)
Web pervasive –> issue of social impact (e.g., privacy, work)Web pervasive > issue of social impact (e.g., privacy, work)
Importance of research and know how Finally: It‘s about strategy
Deconstruction of Value Chain
20 years of e-commerce
Werthner, 2015
Deconstruction of Value Chain – 2
Winners take it allDistribution channels in Hotels (CH)
(Schegg & Fux, 2013)
20 years of e-commerce
Werthner, 2015
E-business Adoption by Size (% of enterprises)
European Commission, Eurostat
People never used the Internet, 2014 (%)
European Commission, Eurostat
20 years of e-commerce
Werthner, 2015
Consumers: Online Retail USA
US Census Bureau of the Dep. of Commerce2Q15 e-commerce sales were 84 Bn. USD, or 7,2 % of total sales.