is 425 enterprise information lecture 6 summer i 2005-2006

IS 425

Enterprise Information LECTURE 6

Summer I 2005-2006

IS425 Winter 2005-2006 Session 6 2

Agenda

Exercise Debate E-Commerce and E-Business Systems Next Week : Quiz/homework #3


Exercise You are the IT steering committee that will decide which hospital

project to fund.

From last weeks readings and lecture detail the steps that you would take in determining which hospital project to do.

Based on the previous session readings and lecture:

1. What two questions would you ask to find out which one should be implemented?

2. How would you use the prioritization tiers decision tree?

3. How would you use the prioritizing potential benefit tree?

4. What is the major problem with lagging indicators when developing new software?


Debate

How should team tasks be divided? Debater Research Report writing Arguments


Growth of the Internet

Dot com bust begins


eCommerce Will Penetrate Business and Consumer Markets


Types of E-Commerce

Business-to-Consumer (B2C): Internet Purchasing, knowledge, entertainment, other

Intra-Organizational: Intranets (B2E) Business intelligence, enterprise portal, workgroup

communications, corporate digital library, sales force productivity, workflow, datawarehousing

Business-to-Business (B2B): Extranets Supply chain management, Customer relationship

Mgt; exchange

Consumer-to-Consumer (C2C) Peer-to-Peer


US eCommerce: The First Five Years

1997 to 2002: explosive growth Spurred by consumers and VC support for dot-come and

traditional retailer, a raging economy Online shopping households grew from 5m to 36.5m;

online sales from $2.4b to 72.1b Consumers continued shopping online for convenience,

selection, and deals, especially travel, consumer electronics, and PCs

CAGR of 97%

Source: Forrester Research


US eCommerce: The Next Five Years

2002 to 2007: consistent, rapid growth By 2007, households shopping online will

increase by 26.4 m and grow to 63m, or 2/3 of all US households

Sales will grow from $72.1b in 2002 to $217.8b in 2007

CAGR of 25%; 8% of total retail sales

Source: Forrester Research


The e-Commerce Value Chain

Attract Act React Interact

Get and keepcustomer interest

Turn interest into orders

Manage orders Service customers

AdvertisingMarketing

channelsmedia

CatalogSales

staticdynamic

Order capturePaymentFulfillment

goods

Customer serviceOrder tracking


React

Act

Attract

Interact

The e-Commerce Value Cycle


Attract Customers (Marketing)

Purpose Build brand awareness, attract customers, and entice

them to buy Merchandizing Methods

Advertising Coupons Sales and Promotions Frequent buyer programs 1:1 marketing


Interact with Customers (Sales)

Purpose Turn interest into orders Catalog, Product and Service

Techniques Registration with Internet search engines Hyperlinks Onsite product search Product and price comparison Dynamic vs. static contents Pricing


Act on Customer Instructions (Order Management)

Purpose: Manage order and shopping experience Order Processing:

Shopping cart and order aggregation Order validation; Application of coupons or discounts Cross selling Calculation of sales, taxes, shipping and delivery charges, rolled-up

order Payment: handle multiple payment methods (cash, credit,

credit cards, debit cards) Act – Fulfillment

Delivering the goods ordered to their destination Transmission of order information to warehouse, packing or

order assembly for shipping, shipping and delivery


React to Inquiries (Service) Purpose: customer satisfaction, experience, and

repeat visits Methods

24X7 service capacity Proactive and Immediate feedback – voice and

email Access to status information Self-help (FAQ) Multi-language support


Value Proposition for Customers Transform customer relationship from supplier-

centered to customer-centered values self service, 1:1; choices; delivery to customer location;

customer needs; choice of service hours

Displace traditional source of values Physical vs. digital value (information) Economies of scale vs economy of scope Mass produced vs mass customized Information vs. knowledge value Distribution as constraints vs. enabler Local vs. global


Value Proposition for Firms

Ability to reach a global market Reduced marketing and selling expense Increased efficiency of operation Ability to target consumers more precisely Ability to convey more accurate product and

availability information


B2C Business Models: Generating Revenues

Merchant Model virtual merchants Click & Brick Multi-Channel Shopping Malls

Advertising Model Horizontal portal Vertical portal Personalized portal

Intermediary (Brokerage) Buy/sell fulfillment Buyer/demand

aggregator Virtual mall Hypermediary (financial

settlement) Auction broker Reverse auction


B2B E-Commerce

Global B2B revenues to grow from $282 billion in 2000, to $4.3 trillion by 2005, the bulk of B2B transactions will be made in the US.

Compound annual growth rate (CAGR) of 73% in US, 91% in Europe, and 109% in Asia

lower costs, shorter cycle time, quicker response, and global markets


B2B Models

Firm-based Models Sell-side (1-to-many), Cisco Buy-side (many-to-1) , GE

Many-to-Many Marketplaces – Exchange and catalog models

Vertical vs. Horizontal Marketplaces Virtual Service Industries in B2B

Travel, Real estate, electronic payments, online financing and online trading, Logistics


Sell Side: 1:Meg. Cisco

Buy Side: M:1e.g., GE

Public or Private Marketplaces M:MCatalogs (Newark in One) Exchanges, Houstonstreet

Buyers Sellers/suppliers

Sellerssuppliers

Buyers


Firm-based modelSell side B2B: One to Many

Delivers a Web-based, private-trading sales channel over an extranet to business customers

The seller can be a manufacturer, or a distributor Architecture similar to B2C Similar technology Sell by electronic catalogues, auction, or by contract Differences in commerce value chain


Firm-based Model: Direct sale form Catalogue

Benefits Reduced order processing

costs Speeds the ordering cycle Reduce errors in ordering and

product configuration Reduced buyers’ search costs Customize products Different prices to different

customers (personalization, customization)

Improve service levels for low-volume customers

Provide higher-quality information for customers

Limitations Channel conflicts with

existing distribution systems

EDI (if used) is costly and could limit the participation


B2B Value Proposition

Reduced cost of selling Reduced order processing costs Improved service levels for low-volume

customers Higher quality information for customers Accurate information


B2B Commerce Value Chain--different from B2C

Attract: Advertising & Marketing merchandising and

branding become a p referred vendor

Interact: Catalogs Searching capability for

large electronic catalog Customized catalogs --

special part number and pricing

Security Requirements

Act: Order Processing Approval & Workflow Delegation

Act: Payment Purchase Order,

Procurement Cards, EFT Act: Fulfillment

Predefined ship-to address and order aggregation

React: Customer Service Training, Software

maintenance, tech support


Firm-Based Model: Buy-Side: Many to one, E-Procurement

Two types of purchases (what are purchased) Direct materials: production materials go directly

to the manufacture or assembly of a product or the creation of a service. Their use is scheduled, purchased in volume at pre-negotiated price

Indirect materials: used in maintenance, repairs, and operations (MRO), nonproduction materials


Traditional EDI vs. Internet Enabled EDI (VAI)

Standardized transfer of electronic documentation (Two Standards: ANSI x.12 vs. EDIFACT)

Manage supply and distribution relationships; application or transaction based; emphasize efficiency (purchase orders and invoices)

Limitations: Costly; Proprietary VANs Participation sometimes through coercion and pressure Compatibility issue limited impact on process change

VAI: Common standards; Flat pricing; Security Easy/cheap access; Infrastructure


Why XML is Successful

XML is a text format, can be processed by text-oriented tools

Extensible to specific an industry or domain Neutral, an open source tool Easy to implement Interoperable across different platforms


XML and B2B Improve compatibility between disparate systems Allows parties to exchange structured data over the

Internet. XML tags define the meaning of data (catalogue) and business processes

XML also supports Unicode that enables the display and exchange of most of the world's written languages.

Benefits: Reduce costs, competitive advantage, strengthen relationships with trading partners (processes)

Simplifies application architecture—a uniform framework


Internal and External Process Enablement


E-Commerce Application Building Blocks


Sell-Side E-Commerce Systems


Examples of e-Commerce Web Site Engineering

http://condor.depaul.edu/~schan/455home/ECTgallery.htm


Question: EDI is electronic data interchange –

Uses traditional record format to record transactions between firms

Has standards the X.25 for example Has been around since 1970’s Used to transmit transactions between

suppliers/customers Expensive to implement and maintain

Will XML / Web Services take over from EDI?

is 425 enterprise information lecture 6 summer i 2005-2006

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