Post on 24-Dec-2015
Understanding eBusiness
The conduct of any business interaction ortransaction on an electronic network between the firm and its customers, trading partners, external constituents, and employees.What
More than transactions
WhoMore than customers
WhyMore than efficiency
Internet Impact
• Ability to enlarge the world - namely customer and supply chain
• Ability to shrink the world – make local talent available anywhere
• Ability to enlarge time by making service, products and information available 24/7
• Ability to shrink time by making information available instantaneously
BrokerageMarket Makers
• Buy/Sell fulfillment: eTrade and CarsDirect• Charge buyer or seller a transaction fee
• Auction: ebay, AuctionNet• fee scaled with the value of transaction
• Reverse Auction: priceline, MyGeek.com• fee based on the spread between bid and ask price
• Search Agents: MySimon, RoboShopper, CareerCentral
• referral charge
Advertising Model
• Portals: Yahoo, Excite, AOL• Success depends on volume (eg. # of eyeballs!!)
• Attention/Incentive Marketing: CyberGold, NetCentives• pay customers for viewing content or filling forms
• Free Model: FreeMerchant, BlueMountain• offer customers something for free to increase volumes
• Bargain Discounter: Buy.com• Sell at or below cost to attract shoppers
Infomediaries
• Consumer Info: eMachines, NetZero• Sell customer info to merchants (offer consumers freebees)
• Merchant Info: Gomez• Sell website info to customers
• Recommender System: Deja.com, ePinions• Monitor user habits and give feedback to merchants
• Registration Model: NYTimes.com• track user navigation and habits for targeted advertising
Merchant Model
• Virtual Merchant: Amazon, OnSale• sell list price or auction. Make money on margins
• Catalog Merchant: Chef’s Catalog• mail order to Web order
• Surf and Turf: Gap, B&N, Borders, Wal*Mart• Channel conflicts or opportunities??
Manufacturer • Dell, Cisco
• Compress the distribution channel by eliminating the middle man
• enhance customer service• faster response time• more efficient supply chain• better customer knowledge
• GE• E-procurement• Creative Business Destruction• B to E• Partner Support
• Ford• Product Development• Auto Hub
Subscription Model
• Wall Street Journal, Consumer Reports, The Street.com, Forrester Research
• Consumers pay to access the site
• AOL
The Web as a Mediating Technology
Interconnecting:
• Business-to-Business
• Business-to-Consumer
• Consumer-to-Consumer
• Consumer-to-Business
• Company-to-Employee
Two Different Approaches• Business-to-Customer
– Aggressive industry player. Primarily retail.
– Gain market and mind share using Internet and Portals
– Primarily Focused on seller-side of supply chain.
– Large scale, mass-market appeal.
– Brand recognition.
– High availability.
• Business-to-Business
– Aggressive industry player. Gain market and mind share.
– Using the Internet and Extranets to capture business community.
– Many business models.
– Security intensive.
– Typically targeted at an industry segment.
Best in Class Do Both!!
On-line Retailing• Advantages to leverage
– Offer the best products and services – Ability to offer a larger selection– Reduced search costs– Convenience of 24x7– Personalized shopping experience– Availability of product information– Targeted selling & promotions– Buyer rewards/loyalty program– Interaction with others who share common interests– Sales tax savings
• Challenges to address– Inability to ‘try before you buy’– Delivery delays– Shipping charges – Customer Service Challenges– Requires computer and Web access
Products on Line
• Purchase decision is information- intensive• Product demonstration and atmospherics are
unimportant• Selection is vast and stores carry limited selection• Prices and selection change frequently• Retail buying experience is unpleasant• Logistically efficient (volume and value)• Non- perishable• Delayed gratification acceptable• Gift- oriented
Quantifying vulnerability:Four dimensions of “E-
suitability”• Information- intensity : How much information does
the• consumer need to gather in the entire buying process?• Multisensory appeal : To what extent does the product• evaluation require consumers to engage the senses of• smell, taste, and touch?• Atmospherics : How important is the role of the• physical store environment and the interaction with the• salesperson in the purchase process?• Logistical efficiency : How efficiently can the product• be packed and shipped to individual consumers?
Channel outcomes of E-commerce
Brand Augmentation Channel Augmentation
Channel Proliferation Channel Disintermediation
Ric
hnes
s of
ph
ysic
al i
nte
ract
ion
sin
buy
ing
Pro
cess
Low
High
Low High
Intensity of information in buying process
• Grocery products
• Garden products
• Footwear
• Apparel
• Consumer electronics
• Appliances/white goods
• Automobiles
• Home furnishings
• Travel
• Computer hardware/software
• Personal investing
• Prescription drugs
• Books
• Music and videos
• Videos
• Office Supplies
The Challenges of B2C
• Getting customers to visit your site
• Enticing site visitors to buy things
• Building customer loyalty
• Fulfillment
• Generating Profits
The promise of B to B e-commerce
• Managing inventory more efficiently
• Adjusting more quickly to customer demand
• Getting products to market faster
• Cutting the cost of paperwork
• Reigning in rogue purchases
• Obtaining lower prices on some supplies
Example – IBM as an eBusinesse-commerce
$15b sold over the web in 1999, run rate of $40/day.
e-procurement$13 billion procured over Web, saving $750m in costs.
e-supply chain managementSupply/demand planning time – 45 days to 20 days, order cycle time
27-44 days to 2-23 days, rapid response (QuickShip and Custom QuickShip) revenues from 0 to $1.3b.
e-customer relationship management52, inquiries handled on Web, saving $750m in support
e-partner relationship managementPartnerCommerce allows 45,000 partners to order, track status, and
get financing and credit online through IBM
Example – IBM as an eBusinesse-external relationship management
Tailored web sites for press, IT consultants, financial analysts and shareholders. Investor page – 300,000 page views/month.
e-learningOnline management development programs, learning simulators and
training tools. Savings of $200 million in 1999.
e-product developmentCentralized part descriptions for vendors. Collaborative design tools
for software developers. Savings of $175m in 1999.
e-employee relationsIBM intranet gets 11m hits per day, 87% of IBM employees use the
intranet every day. Employee directory, customized news delivery, performance scorecard for IMB vis-à-vis competitors.
Example: e-Business at Ford Motor Company
Customer Service
Supply Chain Management
Marketing
Sales
New Product Development
Procurement
EmployeesOffer 350,000
employees computers and web access for $5 per month. Move B2E
transactions to the Net.
• Auto-exchange web site with Oracle/Cisco for online purchasing from 30,000 suppliers. Save $8.9b in purchasing. Generate $3b in exchange fees.
• OwnerCommection web site for online help, warranty service management, financing status. Cut customer interaction costs.
• Build cars with”digital dashboards” – Net access, location-based GPS services. Generate ISP, commerce and subscription fees.
• Team up with portal sites to sense buying preferences.• Move Ford Credit to web-based model. Save 15% in costs.
• BuyerConnection and MSN CarPoint for web-based lead generation and “pull” model of ordering cars. Save $650/car in selling costs.
B2B efforts require:
• Negotiationhaggling over prices, delivery and product specifications.
Not so with most consumer sales.
• IntegrationRetailers don't have to integrate with their consumer
customers‘ systems. Most companies selling to businesses do integrate because their systems have to be able to communicate with those of their customers without human intervention.
The ladder of E-business evolution
• Basic web site• Information-only• Tactical/outsourced
• Process automation• Department level• Tactical/in-house
• Process redesign• Extended enterprise• Strategic (VP, E-Biz)
• New businesses• Industry-level impact• CEO as leader
Presence
Exploration
Integration
Transformation
Incumbents
Challengers
Business to Business E-commerce (B2B)
• Procurement
• Supply Chain Management
• Customer Relations Management
• Product Development
• Employee Relationship
• PR
Information infrastructure for e-Business
ERP Backbone
Customer-facing Applications(CRM)
Supplier-facing Applications(SCM and ORM)
Customers andInfluencers
Suppliers (direct andIndirect materials)
Par
tner
-fac
ing
Ap
pli
cati
ons
(PR
M)
Res
elle
rs a
nd P
artn
ers
Em
plo
yee-
faci
ng
Ap
pli
cati
ons
(ER
M)
Em
ploy
ees
E-procurement
• Increase # of suppliers
• Aggregate buying activity
• Standardize buying process
• Reduce transaction costs
• Increase competition
E-procurement mechanisms
• Auctions – Force suppliers to bid for your business• Reverse Auctions – name your price and see if
anyone is willing to take your business for that price• Catalogues – Have agents search the web for the
product you want • Hubs – e-marketplaces
GE
S:GELOGO/File.ppt 33
Supplier Exchange Customer Exchange
ProcurementProcurement
Open Exchange• Demand collaboration• Inventory reduction• Transaction efficiency
Private Exchange• Hosted demand and
inventory planning• Inventory pooling• Procurement efficiency• Excess inventory
reduction
Evolution of B2B e-Commerce
Hub
eMarkets(many to many)
EDI(1 to 1)
Dell, Cisco(1 to many)
Many-to-many(Mediated)
One-to-one(Direct)
Nat
ure
of t
rans
actio
ns
Closed (EDI) Open (Web-based)
Infrastructure/Standards
Enter the eMartplace (eHub)
• Electronic hubs (eHubs) are third-party Internet-based intermediaries that specialize in specific vertical markets or specific functional processes, host electronic marketplaces, and enable many-to-many transactions among businesses.
• Sources of value creation:• – Reduced transaction costs• – Buyer and seller aggregation• – Improved marketplace liquidity• – Improved marketplace information• – Redesigned workflowAuto-Xchange
Supply Chain Management
• Provide a single view of customer• Just-in-time buying• Eliminate steps in the buying/selling process
– Increase response time– Reduce delivery cost
• Increase flexibility• Increase information flow• Better management of cash flow
Dell
Supply Chain ManagementSupply Chain Management
DistributionDistributionManufacturinManufacturingg
SupplierSupplierss
TransportatioTransportationn
CustomerCustomerss
InformationMaterial/products
• Demand Management• Planning & Scheduling• Logistics
Moving to one integrated Supply Chain for whole business...Moving to one integrated Supply Chain for whole business...
Changes the DNA of the BusinessChanges the DNA of the Business
Will drive huge impact . . . Real game changers . . .
• Integrated demands, consolidated planning and logistics• Higher service levels with lower working capital• Automated processes drive big productivity• The engine behind e-Business
The VisionThe Vision
Huge Opportunity to Reinvent The BusinessHuge Opportunity to Reinvent The BusinessHuge Opportunity to Reinvent The BusinessHuge Opportunity to Reinvent The Business
Customer Relations Management• Improve Customer Satisfaction
– 24/7 availability– Multi-service capability
• Web• Telephone• Personal
– Improve response time– More accurate response
• Reduce cost– Help groups– Bulletin boards– Most frequent questions– Eliminate steps in the process– Outsource
Harrah Entertainment – Walgreens
Spare Parts
Features:• Price & Availability• Order Information• Saved Parts Lists• Advanced Searching• Order Status
Benefits:
• Most recent prices, availability and status information
• Monitor/track all orders, Personalized product information
• Enhanced accuracy, consistency, and 24 x 7 support
Product Development
• Remove geographic constraints• Use Best-in-class capability• Focus on core competencies – increase outsourcing –
reduce costs• Better information flow• Eliminate redundancies• Reduce time to market• Better after development service
Charles Schwab
B to E e-commerce
• HR - benefits management
• Expense reporting
• Communications tool
• Knowledge Management
Health Canada
eStrategy Competitive Portal Overview Future
Technical Publications
Features:
• Illustrated Parts Catalog
• Engine Service Manuals
• Online Service Bulletins and eMail Notifications
• Fleet Highlites
Benefits:
• Search thousands of pages within seconds
• Immediate desktop access and custom searches
• Visual drill-down of diagrams in Illustrated Parts Catalog
Benefit: Engineers spend an hour each day searchingBenefit: Engineers spend an hour each day searching
through books & CDs--the CWC does it in secondsthrough books & CDs--the CWC does it in seconds
Public Relations
• News Releases
• Product Developments
• How to
• Financial Reporting
• Advertising
Abbott LabsAbbott Labs
The builders of e-architecture• Enterprise Management
ERP applications (SAP, Peoplesoft)
• ProcurementORM applications (Ariba, Commerce One)
• Supply Chain ManagementSCM applications (i2 Technologies)
• Customer Relationship ManagementCRM applications (Siebel, Silknet)
• MarketingEMA applications (MarketFirst, Rubric, Annuncio)
• SalesSell-side e-commerce applications (Broadvision, OpenMarket)
• Enterprise Applications IntegrationEAI applications (BEA Systems, TIBCO, Crossworlds, etc.)
Challenges facing Suppliers
• Determining core competency – willing to outsource the rest
• Differentiation• Low cost producer• Creative Business destruction/creation• Thinking Globally vs. Regionally• How much info to share with customers and
suppliers• Proactive vs. reactive web strategies
Checklist for an e-business case• Outline the business problem that will be solved• Identify the business process that will be targeted• Profile the audiences who will be affected• Estimate the business impact (ROI/NPV) that is
expected• Create metrics for measuring this impact• Select technology, vendors, and implementation
partners• Organize the team and define roles• Develop milestones and prototyping/validation strategy• Address implementation hurdles and contingency plans
Architecture: Challenges
• What are the key challenges facing organizations designing web sites today?– Time to market
– Creating a reliable, maintainable site
– Creating scalable site that can easily grow with demand
– Creating a dynamic site with data driven content
– Integrating data from external systems
– Security
– Privacy
– technology choice
What is Scalability?
• The ability to accommodate more and more users simply by adding resources to the system.
Scalability vs. Performance
• Many sites that perform well with a small number of users do not perform well with a large number of users
• Many sites that perform adequately with a small number of users continue to perform adequately with a large number of users
Scaling Your Web Application
• Scaling Up vs. Scaling Out– Scale up by moving to bigger hardware or
upgrading existing hardware– Scale out by adding more hardware to existing
solution
Scaling Up
• Pros– Fewer machines to manage– Program one system– Simpler programming model– Only option in some cases
• Cons– Expensive hardware– Single point of failure– Downtime for upgrades
Scaling Out
• Pros– More cost effective – No single point of failure– Virtually unlimited growth potential– Easier to add capacity
• Cons– More complicated programming model– More machines to manage
Other Design Challenges
• Accurate load simulation– Volume of hits per second
– Distribution of hits over different site features
• The “Early Adopter” problem– Some of the technology is immature, but there are
few alternatives
– Need to ignore marketing hype and do proof of concept to find out what actually works
Privacy
• Have a Privacy policy in place for both your customers and your employees
• Display policy on website• Explicitly seek customer input and approval when
using their data• When in doubt do not share data outside your
organization• Guaranteed e-delivery • Rights Management • Records Management
Security
• Monitor activity and develop audit trails• Develop backup and Recovery Plans• Establish a password policy to prevent
unauthorized access to data• Use latest Encryption key technology to
combat telecommunication fraud• Use Firewalls to protect internal data from
external hackersRemember that no site is 100% secure
The New E-conomy - Value Shifts*
Old Economy New Economy
Assets Information
Products Services
Vertical Integration Virtual Integration
Money Time
Revenue (Size) Growth Rate
Profit / Loss Market Cap
Fortune 500 The Next Big Thing
* Geoffrey Moore, Living on the Fault Line, 2000
New E-conomy Critical Resources
Scarce
Resources
1. Time
2. Talent
3. Management
attention
Plentiful
Resources
1. Capital
2. Technology
3. Outsourced
Service Providers
Developments that will impact E-commerce
• Technology– Broadband– Wireless Technology– Voice Recognition
• Taxation
• Legislation
• Cultural
Interesting Articles• The New Growth Engine of the Economy
• Leveraging the Web
• Impact on traditional Business
• Managing the Distribution Channels
• Marketing on the Internet
• Globalization issues
• Taxing the Internet
• Privacy Policies