LO205 (class2)The LO205 (class2)The State of E-BusinessState of E-Business

Judith Molka-DanielsenJan. 11, 2001

Reference: Some ppnotes from Michael Spring’s e-commerce course in 2000.

Significant Industry Significant Industry SegmentsSegments

• The E-Business industry has at least a half dozen segments– Internet Service Providers (AOL)– End user equipment (DELL)– Software and hardware infrastructure (Inktomi, CISCO)– Support infrastructure (Fed-Ex, Mail Boxes Etc)– E-tailers (Amazon)– E-Businesses (General Motors)– Portals (Yahoo)

• The first four are significant and profitable today

• The first four are infrastructure supporters

• They will all be significant segments.

IntroductionIntroduction

• E-Business is both business savvy technology and technology enabled business

• E-Business (technology) is first and foremost efficient logistics systems MRP, ERP, SCM, CRM,.

• E-Business (business) opportunities are evolving on the Web – Reverse markets, auctions, wallets– Infomediaries, portals and vortals

Defining E-Commerce:Defining E-Commerce:Buying and Selling Buying and Selling

• Most obvious definition: “the buying and selling of goods and services on the World Wide Web”

• “sites created for the purpose of selling goods and services over the Internet, regardless of whether the actual sale takes place on the Internet or via fax, phone or another means provided by the website” (Janice Anne Rohn, Siebel Systems, Inc.)

Defining E-Commerce:Defining E-Commerce:A business perspectivesA business perspectives

Electronic Commerce - A Manager’s GuideKalakota and Whinston

• The delivery of information and services by electronic means (communications perspective)

• The application of technology to automate business transactions and workflow (business perspective)

• Tools to cut the cost of, and improve the quality of, services (service/customer perspective)

• The buying and selling of products and information on the internet (online perspective)

Key ConceptsKey ConceptsUnderlying E-BusinessUnderlying E-Business

• Atoms versus Bits businesses: how to view e-business transformation opportunities

• E-markets: how are they different from traditional markets

• Fourth Wave: a source for change in business economies

Key Concept: Key Concept: Atoms to BitsAtoms to Bits

• The economics of bits– PC banking versus ATM versus tellers

• Bit commodities versus atom commodities (issues for information products, music, bandwidth)

– Singularity of ownership – Marginal Cost of duplication of bits=0– Impact of usage

Key ConceptKey ConceptElectronic Markets Electronic Markets

• The growth of markets– Town markets and port cities (Venice 1500’s)– Brokered global markets (NYC Stock Exchange)– Digital or E-markets (another focus)

• E-markets are different– Network externality (positive with growth)– Global span (non-geographic but competence focus)– Collaborative intelligence for seller and product– Brokerless access -- disintermediation

Key ConceptKey ConceptThe Fourth WaveThe Fourth Wave

• Toffler identifies three major economic revolutions/waves– The agricultural revolution– The industrial revolution– The information revolution

• Some suggest networks may induce a fourth wave (you can call it the network revolution.– The effect is the value chain may become user driven (pull)– result: know inventory&demand, not overbuild, sales prices go

away

• Waves have primary, secondary and tertiary effects– cars, roads, suburbs, and dysfunctional families– steam engines, factories, unions, and social alienation

Relative Importance of Relative Importance of Components in e-businessComponents in e-business

500 Million

Web Browsers

The Internet

OrganizationalERP

System

WebSite

Electronic BusinessElectronic Business

• A business where selected business processes are transformed using computer and network technologies.

• The targets of opportunity are:– New channels for products– New efficiencies in product and workflow management– New capabilities in customer and document

management– New opportunities for organizational structuring --

process reengineering and knowledge management.

E-Business Roots, Trunk, & E-Business Roots, Trunk, & BranchesBranches

DARPAnet

Fourth WaveE-Markets

IBM PCStar

Reengineeringand Knowledge

Communications

SocialPeriphery

Atoms to BitsUbiquity

Informating

BranchesBranches

• Information and Informating

• Reengineering and Knowledge

• Calculation and Communication

• Social Periphery and Social Capital

• Ubiquitous Computing and Idiot Savants

Informating and Informating and Reengineering & KnowledgeReengineering & Knowledge

• Informating - organzations, social groups, societies. (more information, timlier and wider reach)

• Business Process Reengineering– Focus on core processes– Utilize IT to eliminate routing delays– Triage cases to automate the process

• Turn typical cases over to logic• Provide access to needed information for complex cases

– Retrain practitioners to handle exceptions• Knowledge Management

– Lateral information may be lost in the process– KM involves discovering what an organization knows

Computing power is Computing power is Communications Beyond Communications Beyond

CalculationCalculation• The origin of computing focused on their

ability to perform repetitive calculation• Increasingly computers are being used for

communication and connection• The next 50 years of computing will focus

on enhanced communications capability and agents

Organzations and Social Organzations and Social ContextsContexts

Computing on the PeripheryComputing on the Periphery

• Much of what transpires in the workplace involves social interaction (such as in decision making)

• With core processes complete, we are looking to accommodate the need for social information in the process (technology should support or enhance the social interaction)

• Organizations must pay attention to:– Physical capital (organizational infrastructures)– Intellectual capital (includes concepts, customer relations)– Social capital (human capital value includes factors of

competence, motivation, presentation, social flexibility, result oriented)

Ubiquitous ComputingUbiquitous Computing

• Information appliances are devices capable of communicating over a network

• The Negroponte flop (wires-and-waves)• Sensors, virtual machines, and micro actuators are

creating the potential for ad hoc networks– Cars will recognize neighborhoods

– Doors will recognize authorized inhabitants

– Classrooms will recognize teachers

– See Telenor’s www.fremtidshuset.com

Evolution of businesses to Evolution of businesses to E-Businesses E-Businesses

• E-Businesses emerge in several ways– the expansion of management information

systems to embrace the supply chain– The expansion of internal information systems

to external public systems – The resale of organizations own systems to

others (Interorganizational systems). – The development of new access channels – The delivery of new products

E-BusinessE-BusinessOlder TechnologiesOlder Technologies

• E-Business is not new. It is the culmination of a century of technological innovation.– The telephone, telegraph, and telex added a first order

change in the speed of transactions and the immediacy of management

– The optical copier and laser printer added a first order change in the cost and ease of information sharing

– The fax, email, online calendaring, fileservers, shared document spaces, and intranets extended this change

E-business E-business Web TechnologiesWeb Technologies

http request

Server analyzes request and gets page or

runs program

Pages for delivery

Programs that produce

pages

http response

Java Application

Javascript Vbscript HTML

CSSXML

Appletplugin capable

browser

Java Application

E-BusinessE-BusinessTargets of OpportunityTargets of Opportunity

Supply Chain

Customer Mgmt

Process Reengineering

&Workflow

AutomationVendor Mgmt

New Channels

The Enterprise

E-Business E-Business Targets of FunctionallyTargets of Functionally

Suppliers CustomersEnterprise

Supply/DemandPlanning

Procurement Sales

Order Entry

Customer Support

Delivery

Servicing

Development

Logistics

E-business Models E-business Models and Applicatonsand Applicatons

• Business to Business (B2B)– Electronic purchase order submission– Just in time inventory control agreements

• Business to Consumer (B2C)– Provision of product information online– System for product ordering online– Customer Service, updates, help, and product

documentation

• Peer to Peer (P2P)– goods exchange, training

Size of the B2B and B2C Size of the B2B and B2C MarketsMarkets

1998 1999 2000 2001 2003

$12T Market B2B (BCG)

$671B$92B HTML$579B EDI

(25%) $2.8T2T HTML

800B EDI

B2B (GG) $237B $4TB2B (FR) $43B $1.3T$3T Market

B2C (BC)$14.1B $33.1B

(1.4%)(2%) $61B

B2C (GG) $400BB2C (FR) $108B

Business to Business (B2B)Business to Business (B2B)

• Based on existing MRP/ERP/EDI systems• B2B efforts are directed toward

– Reducing procurement and distribution costs– Facilitating tighter inventory control– Allowing better supply chain management– Implementing customer relations management

Business to Business SupportBusiness to Business Support

• SAP, Baan, Oracle and others provide the basic structure within which organizations gain better control of their data

• RosettaNet, Oasis-open, and CommerceNet provide the infrastructure for exchange

• CommerceOne, Ariba, i2, and other provide the capability to build marketplaces

• Anticipated growth is expansion to SMEs

Business to Consumer (B2C)Business to Consumer (B2C)

• Organizations sell a product or service directly to the consumer– Complete electronic transactions – software– Transaction less product delivery – books– Informational shopping – cars

• Spurred by and dependent upon the existence of web protocol

Peer to Peer (P2P)Peer to Peer (P2P)

• On-line auctions (The relation P2P or C2C is essentially the same. Ebay averages 1.7 million visitors per day)– Timed auctions– Reverse auctions

• Collaborative information exchanges– Chat rooms– News groups

Basic ConclusionsBasic Conclusions

• E-Business is the next step in the evolution of strategic business management using technology

• E-Businesses strive to:– Manage large operations with attention to detail

both (in time and function) like small ones– Reach new customers via e-channels– Develop new bit based product forms – Develop new communication based services

The State of E-BusinessThe State of E-Business

• E-Business is maturing– The revolution is turning to evolution– The cost to benefit ratio is decreasing (so SMEs

can participate in the transition)

• The network has achieved critical mass– Proctor and Gamble rule (35% is critical mass)– The S-curve of technology adoption (product

lifespans maybe 7 years, decisionspan 1month)

• Models are emerging– Best practices, branding, and monetarizing