www.sierrasystems.com presentation to ubc commerce faculty april 28, 2000

www.SierraSystems.com

Presentation to UBC Commerce Faculty

Presentation to UBC Commerce Faculty

April 28, 2000April 28, 2000


UBC: eComm Boom-AgendaUBC: eComm Boom-Agenda

What is eCommerce? The Business Value Chain The Impact on Developers and Engineers Business Change & New Skills Market Positioning Supply-side Metrics Sell-side Metrics Summary and Questions

Business Drivers for Future Growth in Internet E-Business Applications

Business Drivers for Future Growth in Internet E-Business Applications

Continued Productivity Growth in the Global Economy

Global Mergers and Acquisitions

Growth Outside “First World” Reinvigorated

IT Competitive Environment

Massive Dislocations in Value/Power in Supply Chain

Massive Changes in Value Licensing Economic Models

More Power to the Customer

Ubiquitous Customer Connectivity

© 2000 Giga Information Group


Think E-business, Not E-commerceThink E-business, Not E-commerce

E-commerce is the Cause, E-Business is the Effect E-Business is about Structural Transition and Business

Transformation from Old Business Models to New Business Models

E-Business Requires Effective Inter-Enterprise Integration Processes and Technology

E-Business is not a Technology Issue; It is a Serious Top Management Strategy

Success is all about Execution



Let’s have a Guess at the SizeLet’s have a Guess at the Size

B2B in 1998 - US$ 43 billion Forecast for 2003 - US$ 1.3 trillion Perspective in terms of total B2B trade:

– Only 9.4% of total – Forrester Research


Five Main Categories of BusinessFive Main Categories of Business Price Discovery - matching buyers and sellers

– eBay, eTrade, Letsbuyit.com Needs matching

– Grand and Toy Innovation

– Linux development, Business Objects Product design and delivery

– Manufacture and assembly Distribution (Transmission Services)

– Banks networks, gas distribution networks Don Tapscott

The eCommerce MatrixThe eCommerce Matrix

Business Consumer

Business

Consumer

B2BGM/FordEDI networks

B2CAmazonDell

C2BPricelineAccompany

C2CEBayQXL

Source: The Economist

Lessons From Big PioneersLessons From Big Pioneers

Phase 2:We KnowE-CommerceIs Critical andWe’ve Started

Phase 1:I GuessWe ShouldDo SomethingWithE-Commerce

Phase 3:We’ve Got

a Lot ofE-Commerce

Stuff Going onbut Where’sthe Pay-Off?

Phase 4:E-CommerceIs Giving UsCompetitive

Advantage

Where U.S. Fortune 500 Companies Are in E-CommerceWhere U.S. Fortune 500 Companies Are in E-Commerce

High WillLow Skill

Low WillHigh Skill

High WillHigh Skill

Low WillLow Skill

10 of 16

2 of 16

3 of 16

1 of 16

Information Provider

Infrastructure

Market Trust

OpportunitiesOpportunities

Seller’sAgent

Buyer’sAgentSellers BuyersSuppliers

New ways forsellers to

move products andservices into the

market?

New ways forsellers to

move products andservices into the

market?

Revenuefrom organizingreducing, selling

information?

Revenuefrom organizingreducing, selling

information?

Revenuefrom taking ononline market

risk?

Revenuefrom taking ononline market

risk?

New waysto provide market

infrastructure

New waysto provide market

infrastructure

Newexchangesfor bidding

and trading?

Newexchangesfor bidding

and trading?

New ways forbuyers to

find productsand services?

New ways forbuyers to

find productsand services?New

products?New

products?

Supporting Roles

Production Roles Transactor Consumption Roles

Stages of Web FunctionalityStages of Web Functionality

LEVEL 4 - LeadingLEVEL 4 - Leading

LEVEL 3 - AdvancedLEVEL 3 - AdvancedUser profiling ~ Authentication ~ Access control ~ Electronic Commerce ~ Online support ~ Basic Advertisement serving ~ Legacy integrationChats and Forums ~ Dynamic publishing ~Imported partner content ~ Advanced reporting

LEVEL 2 - StandardLEVEL 2 - StandardBasic Profiling ~ Content Management ~Basic searching ~ Personalized Email ~ Electronic catalog

LEVEL 1 - EntryLEVEL 1 - EntryStatic content ~ Simple animation effects/Java Script ~ “Stock” usage reporting

Personalized content ~ Secure commerce ~ Advertisement serving ~Advanced searching ~

Custom usage reporting ~ Custom Java applets ~Advanced user management and access control

Getting Started With eCommerceGetting Started With eCommerce

Identification Assessment

Do we need to dosomething?

Are we alreadyinvolved in a

project?

Are the thingswe’re doing todaythe right things?

If not, what are theright things?

How do we bestdeploy our limitedresources andfocus on our realobjective?

Impl

emen

tatio

n

Market Facing

Workspace

Supply Chain

Directed Discovery

Supply Side Market FacingInternal Operations

Sales and Marketing

R&D / Knowledge Mgmt

Finance

Supply Chain Mftg

HR

Suppliers

Vendors

Start by understanding and getting closer to the customer!

Agents

End User

Sales Reps

Distributors

Retailers

Start Here!

eCommerce Affects the Entire BusinessWhere Do You Start?

eCommerce Affects the Entire BusinessWhere Do You Start?

Value Chain of a DifferentiatorValue Chain of a Differentiator

FirmInfrastructure

TechnologyDevelopment

HRManagement

Procurement

Corporate’s support in sales and marketingSuperior management information system

Facilities that enhance the firm’s imageTeam work

ProprietaryProcess

EffectiveTraining

Handling of inputs that minimizes damageDelivery on time

InboundLogistics Operations Outbound

LogisticsMarketingand Sales Service

UniqueEquipment

Unique vehicle scheduling

Application eng supportMost repeat response to customer’s quotation

Career development for staff

Highest quality incoming parts

Statistical process controlReliable & high quality productsShort cycle timeFlexible labour

Transportation suppliers that minimizes damage

Rapid timely deliveryHandling that minimizes damageAccurate and responsive order processing

Superior technical literature & sales aidLatest trade & product seminarHigh customer face time

Advanced testing/evaluation techniques

Extensive training on application and marketing

Highest quality replacement parts

Extensive buyer trackingComplete field stocking of replacement parts Margin

Margin

The Internet Reshapes the Value ChainThe Internet Reshapes the Value Chain

The new Internet value chain

Customers found through•Affiliate networks•Shopping bots•Portals/hub sites•Ad networks

In B2C:•Direct sales by manufactures•Retailers pass orders and payment to supplier, take a commission.In B2B:•Hub Sites facilitate orders•End users buy directly with purchasing cards

Customer Acquisition

Ordering/ Payment

Production Delivery ServiceRelationship Management

•Build to order becomes more common•Orders sent to component makers for just-in-time assembly•Suppliers take on greater role in building quick-to-assemble modules

•Manufacturer ships to customer•Shippers like FedEx move into home delivery business•Suppliers take on greater role in building quick-to assemble modules

•Retailer takes on more service & support•Service becomes a new sales opportunity

•Customer relationship management becomes a reality, not just an aspiration


Rebuilding the Value ChainRebuilding the Value Chain

Manufacturer/publisher

Wholesaler/distributor

E-retailer

Portal/aggregator

Consumer

Disintermediation

Reintermediation

Sources: Benchmark Capital; The Economist

Re-engineering the Customer ExperienceRe-engineering the Customer Experience

Purchase Criteria

Customer Anger

Preferences

Power

Decision-Making Process

Purchase Occasion

Buyer Behavior

Functional Needs

Systems Economics

CustomerPriorities

Content&

Experience

Content&

Transaction

ChannelIntegration

Assets


The Evolving Value ChainThe Evolving Value ChainThe Internet is blurring traditional boundaries between what companies, customers and suppliers do and what services they offer.

Buying:•Research•Decision•Order•Payment

Producing:•Source•Buy•Build•Assemble

Delivering:•Distribution•Shipping•Pick-up•Set-up

Servicing:•Questions•Problem•Resolution•Repair

Reselling:•Identify Need•Match Need with Product•New Order

Traditional Roles

Customer & Retailer

Manufacturer & Suppliers

Distributor & Retailer

Retailer & Customer

Manufacturer & Retailer

Customer Manufacturer Supplier Distributor Retailer

Internet Roles


The Internet Reshapes the Value ChainThe Internet Reshapes the Value Chain

Potential Impact of Internet on Business Processes(0-2 = Small; 3-4 = Some; 5-6 = Medium; 7-8 = A Lot; 9-10 = Major)

Customer-Oriented Processes:Acquiring customers

Taking order/billing/getting paidMaking the product

Delivering the productServing the customer

Deepening relationshipInternal Processes:

Developing the productProcuring supplies

Hiring/retaining employeesRaising capital

Tracking/managing moneyManaging risk

0 2 4 6 8 10



Positioning in a MindPositioning in a Mind

You see what you expect to see– Past conditioning

Build a leadership position in the prospect’s terms– NOT YOUR terms!!!

Change dethrones leaders – So, if you are not a leader, look for the hole

Don’t trick the prospect, build trust

0

2

4

6

8

10

Per

cen

t o

f C

ust

om

ers

Per

cen

t o

f C

ust

om

ers

0

2

4

6

8

10Distribution of Customers, Distribution of Customers, Pre-InternetPre-Internet

Distribution of Distribution of Customers, Post-Customers, Post-InternetInternet

The Internet’s Impact on IndustriesThe Internet’s Impact on Industries

Because the Internet allows assisted self-help, it affects industries where Because the Internet allows assisted self-help, it affects industries where self-help was not an option before — like brokerageself-help was not an option before — like brokerage

Distribution of Customers by Self-Help PreferenceDistribution of Customers by Self-Help Preference

Internet ShiftsInternet ShiftsCurve This WayCurve This Way

No Self-ServiceNo Self-Service Mixed Self-Service Mixed Self-Service With Help When With Help When

NeededNeeded

No Human HelpNo Human Help

0

2

4

6

8

10

0

2

4

6

8

10

The Internet’s Impact on IndustriesThe Internet’s Impact on IndustriesIt also affects industries where self-help has become the norm — like It also affects industries where self-help has become the norm — like books, computers or groceriesbooks, computers or groceries

Internet ShiftsInternet ShiftsCurve This WayCurve This Way

Distribution of Customers, Distribution of Customers, Pre-InternetPre-Internet

Distribution of Distribution of Customers, Customers, Post-InternetPost-Internet

Per

cen

t o

f C

ust

om

ers

Per

cen

t o

f C

ust

om

ers

No Self-Service No Self-Service Mixed Self-Service Mixed Self-Service With Help When With Help When

NeededNeeded

No Human HelpNo Human Help

Distribution of Customers by Self-Help PreferenceDistribution of Customers by Self-Help Preference


E-Commerce for Small and Mid-Sized CompaniesE-Commerce for Small and Mid-Sized Companies

ProcessProcess Closing sale/taking order/getting

paid Connectivity with trading partners Acquiring customers Delivering the product Billing/getting paid Procurement

SolutionSolution Commerce service

providers IP-based EDI Competitive bidding Outsourcing logistics EBBP Hosted e-procurement

service


Positioning in the Deeper ForestPositioning in the Deeper Forest Do it the “Amazon way”

– have a button on every page searched – whether relevant or not

Tune the features to fit the search routines– yeild a high level of returns for searches – provide a repetitive recognition of name

Structure the features to mirror the the touchpoints of the complimentary community

– regular association with supportive businesses– eCommunity - A Group of Common Interest


Example: BP Amoco (BP Chemicals)– 7 million tons of production per year– Manual collating of information from shipping brokers– Implemented an Extranet linking brokers, BP units and

customers globally– Resulted in a flexible system requiring minimal resources– Global tracking efficiency

Benefits of Integrating with your eCommunityBenefits of Integrating with your eCommunity


Expectations of the ProspectExpectations of the Prospect

Target your sector – move from the local to the global view

Once you have the interest – don’t let go – continue to build trust – perform in your prospect’s terms

People want instant reliable information Your Value Chain becomes your delivery key

Ordering & paymentOrdering & payment

User User profilingprofiling

PricePricenegotiationnegotiation

User User authenticationauthentication

DisplayingDisplayingproductsproducts ProductProduct

configurationconfiguration

Pre-sales Pre-sales supportsupport

CustomerCustomer

BillingBilling

AdvertisingAdvertising

Attracting customers, marketing productsAttracting customers, marketing products

Post-sales activitiesPost-sales activities Negotiating prices, Negotiating prices, accepting ordersaccepting orders

Fulfillment/Fulfillment/distributiondistribution

CustomerCustomerserviceservice

User User feedbackfeedback

Technical Technical supportsupport

The Sell-Side E-Commerce Value CycleThe Sell-Side E-Commerce Value Cycle

Impact of Internet on Sell-Side Business ProcessesImpact of Internet on Sell-Side Business Processes

00 22 44 66 88 1010

External Customer Processes:External Customer Processes:1. Acquiring customers for products

2. Taking the order/billing

3. Making the product

4. Delivering the product

5. Serving customer after sale

6. Relationship management

Internal Processes:Internal Processes:7. Developing the product

8. Procuring supplies and inventory

9. Hiring/retaining employees

10. Raising capital (debt/equity)

11. Tracking/managing money

12. Managing risk

(0-2 = Small; 3-4 = Some; 5-6 = Medium; 7-8 = A Lot; 9-10 = Major)(0-2 = Small; 3-4 = Some; 5-6 = Medium; 7-8 = A Lot; 9-10 = Major)

00 22 44 66 88 1010

Attracting customers/Attracting customers/marketing productsmarketing products

BillingBilling

Customer serviceCustomer service

Relationship mgmt.Relationship mgmt.

Source: FreeMarkets

Innovations in Closing the Sale: FreeMarketsInnovations in Closing the Sale: FreeMarkets


Goal: most cost-effective management of procurement activities Situation: “When did you order it… ?”

– Procurement inundated with paper– 70% of orders high-volume, low-dollar items (comprise only 3% of

accounts payable) Challenge: an intranet application to provide “one-stop shopping”

– Automated ordering & tracking, strategic procurement partner interface, online hiring of outsourced services

ProcurementProcurement


Solution: MS MarketSolution: MS Market

Online ordering and resources – Order office goods, locate approved vendors, initiate purchase

orders, track vendor payments, and submit expenses Automatic transaction approvals

– Electronically routed, sent to approving authority when required Web app built on Microsoft platform

– Server: Windows NT & BackOffice Products (IIS, SQL Server, Site Server Enterprise )

– Client: Windows NT Workstation (32-bit OS), Microsoft Office, Microsoft Internet Explorer 4.0


January 1998 MS Market ActivityJanuary 1998 MS Market Activity

January MS Market activity – $155M and 23,951 requisitions processed worldwide

The number of year-to-date MSMarket users is:– 9,494 requisitioners, 2,496 approvers who are not also requisitioners.– 11,990 People in the process

Domestic activity: International activity:– 16,638 requisitions 7,313 requisitions– $115M $40.5M

Current month volumes equate to an annual run rate of over $1.6B.


ResultsResults

Rules removed, red tape reduced– Can place order in 3 minutes or less– No need to go through admin assistant

Better business practices– Uploads transactions directly into SAP – Handled $1.6 billion in orders last year– 12 employees redeployed to advantage

Flexible deployment for IT– Incremental changes to app without reloading each desktop– Reliable, only 3% of orders require help


SavingsSavings

P.O. Costs reduced from $60/per to $5/per (saved 30 minutes/order by automating data entry)

Requisition to P.O. time reduced from 2 weeks to 8 minutes $1.6M/yr in CP staff redeployment (12 FTEs) $4-6M in additional supplier price and payment discounts On track for 5-10% decrease in ~$2B/yr spend Scalability Time savings for employees


Information FragmentationInformation Fragmentation

On average, business information resides in 7 systems 75% claimed lack of integration caused problems:

– Consistency and compatibility of data– Extraction and collation of data

Only 10% thought their automated processes communicated well with the value chain.



E-Business Application StrategiesE-Business Application Strategies

Buy vs. Build-&-Integrate, Buy and Build-&-Integrate Loosely coupled plug ‘n’ play

– Whether business units or companies Customer-centered business process innovation New and rapidly evolving business processes Stick to the knitting…specialize in core competency Form and break business relationships rapidly Powerful content aggregator as central mover, vs. federated association of more

equal players

All require more flexible, business process-driven application solutions, that can be sliced and diced in many ways


InternetInternet

Client/Client/ServerServer

M’framM’framee

Application Enabling Services

Common Transport Semantics

Signaling&

Control Plane

Transport ServicesSNA TCP/IP NETBIOS APPN IPX

ATM Channel WAN LAN

Physical Networks

PresentationServices

NetworkComputers

Web Browser

PersonalComputer

Terminals

Data AccessServices

Applications and Application Development Tools

TP Monitors Work FlowEvent Services MailIntelligent Agents Telephony

Object ServicesCOM/DCOM

CORBA

Comm. ServicesConversational

Remote Proc. CallMessaging

Dist. ServicesDirectory, Time

Security,Transactions

SYSTEM

MANAGEMENT

Packaged Applications Object Oriented Tools

4GL Tools, 3GL APIDesktop

Workgroup

Department

Division

Enterprise

Common architecture

• Presentation Services

• Application Packages

• Development Tools

• Application Enabling Services

• Data Access Services

• Comm. Services

• Object Services

• Distributed Services

Build versus BuyBuild versus Buy

Best-Practice SoftwareDevelopmentLifeCycle

Best-Practice SoftwareDevelopmentLifeCycle

7-Month Process

0 1 2 3 4 5 6 7

Initiation, Evaluation

Purchase and Play With Tool

Business Testing, a.k.a. Requirements! 2nd Iteration

Deploy

Have Idea, Buy Tool

Training Prototypes Throw Out First Iteration

Evaluate

Planning is everything, plans are nothing.© 2000 Giga Information Group


Lessons LearnedLessons Learned

BPR and outsourcing essential– Senior management involvement

Project successful because of teamwork– Business, IT, consultant/vendor– BUT, production support group wasn’t involved early enough

Must design for all workflow exceptions– Some steps/issues left out of the process– Involve users in acceptance testing early on– Talk to workers, not just management– Dig deeper, longer


Lessons LearnedLessons Learned

• Look for integration points - Workflow, E-Forms, Output

- Legacy renewal and workflow• Hire necessary skills and experience

- Web development- Client/Server

• Do not develop “homegrown” workflow within applications- “workflow is at the heart of e-business”

• Deploy slowly (pilots & phased implementation)• Involve business partners at the beginning• Focus on bandwidth and security issues



Thank you UBC Commerce Community

Thank you UBC Commerce Community

Questions? [email protected]

604.891.6255

Questions? [email protected]

604.891.6255

www.sierrasystems.com presentation to ubc commerce faculty april 28, 2000

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