We are witnessing the early, We are witnessing the early, turbulent days of a revolution as turbulent days of a revolution as

significant as any other in human significant as any other in human history. A new medium of human history. A new medium of human communication is emerging -- one communication is emerging -- one

that may surpass the printing press, that may surpass the printing press, telephone, and television in its telephone, and television in its

impact on our economic and social impact on our economic and social lives. Interactive multimedia and the lives. Interactive multimedia and the

information highway are creating a information highway are creating a new economy based on the new economy based on the

networking of human intelligencenetworking of human intelligence..

-- Donald Tapscott-- Donald TapscottThe Digital EconomyThe Digital Economy

The Network Era of The Network Era of Computing as an Computing as an

EconomicEconomic Opportunity Opportunity

Bradley C. Wheeler

Assoc. Professor of Information SystemsKelley School of Business

Indiana UniversityBloomington, Indiana

bwheeler@indiana.edu

1960 1975 1980 1995 2010

Data Processing Era

You are here.

Organizations Learn how to

get Valuefrom Info

Technology

Network Era

Micro Era

Adapted from Nolan, 1995

3 Eras of Info Technology3 Eras of Info Technology

1. Shifting Economics1. Shifting Economics

A greater proportion of economic valuewill be created by managing the bits.

Being Digital, Negroponte

2. Technology Standards2. Technology Standards

Interoperability among private and public telecommunications networks using TCP/IP

Now: HTTP & HTML, GSM, Java

Taking hold…XML, GPRS, Bluetooth

Soon: more Java, .Net, Distributed Objects, more XML, WAP, 3G, Bluetooth

3. Innovation3. Innovation

Digital products and processes can be created, adapted, deployed, adapted, bundled, adapted, unbundled, adapted in near-real time

Does anybod

y know...

Yes! You should …..

Dallas

London

Singapore

4. Rapid Diffusion4. Rapid Diffusion

Metcalfe’s Law The Value of a network approximates the number of

users2 for large networks.

Coasean Economics Digital products/processes have very low transaction

costs Network form of organizational design Focus on core competencies of the firm

5. 5. DigitalDigital Convergence Convergence

Voice Video Data

+ Computing ~ DelegationNew CapacityNew AvailabilityNew Pricing

Thus, Organizations RealizeThus, Organizations Realize

Arie De Geus, Head of Planning, Royal Dutch/Shell

“The ability to learn faster than your competitors may be the only sustainable competitive advantage”

1. Redefining Industries1. Redefining Industries

Industrial Age

Linear data flows

Proprietary data

Do it all, proprietary

Make and sell

Network Era

Massively parallel data flows

Replicated or shared near real-time data

Coopetition in establishing roles

Customer intelligence has new urgency

Redefining Industry StructureRedefining Industry StructurePhysical and Information FlowsPhysical and Information Flows

inboundopera-tions outbound sales service

inboundopera-tions outbound sales service

Profit Margin

inboundopera-tions outbound sales service Profit Margin

Industrial Age Network Era

Implications?

2. New Mediation2. New Mediation

Disintermediation Fewer intermediaries in the physical flow of goods

(Atoms)

Reintermediation Creation of new infomediaries in the flow of

information (Bits), portals, content aggregators

Conventional Atom & BitsConventional Atom & Bits

Dealer?Agent?

Manufacturer

FedExWholesaler

Physical Flow of Goods (Atoms)

Information Flow (Bits)

EC Diverges Atoms & BitsEC Diverges Atoms & Bits

Infomediary:Dealer?Agent?

Manufacturer

FedEx

Physical Flow of Goods (Atoms)

Information Flow (Bits)

3. Pricing3. Pricing

The assumption is that prices will not be fixed

Return to the old world bazaar Yield-based pricing models proliferating

4. New Resource View4. New Resource View

Scarce Resources

Time Talent Management Attention

Plentiful Resources

Money Computing Power Service Providers

Adapted from Geoffery Moore

Are you rationing and leveraging the right resources?

5. IT/IS are Critical5. IT/IS are Critical

Information Technology (IT) becomes a factor of production

Information Systems (IS) become increasingly strategic

IM is a strategic capability of the organization

e-Business Skillse-Business Skills

Behavioral“People”

Technical“Tools”

“Business Technologist”.

Organizational“Strategy”

SummarySummary

Drivers

Shifting Economics Technology Standards Innovation via

Networked Intelligence Rapid Diffusion Digital Convergence

Effects

Redefining Industries New Mediation Pricing New Resource View IT/IS Skills Essential

An An AlternateAlternate View Viewfrom 2000-2002from 2000-2002

“Ten Deadly Myths of e-Commerce”

Bert RosenbloomBusiness Horizons, March-April

2002

Ten Deadly MythsTen Deadly Myths

1. Myth of disintermediation2. Myth of lower costs3. Myth of real-time product flow4. Myth of “profits don’t count”5. Myth of first mover advantage6. Myth of market cap worship7. Myth of “convenience and efficiency are

everything”8. Myth of pure play9. Myth of valuation by publicity10. Myth of the Internet as a whole new culture

Defining Electronic Defining Electronic CommerceCommerce

E-Commerce versus e-Business?E-Commerce versus e-Business?

E-Commerce - the online exchange of goods, services, and/or money within firms, between firms, between firms and their customers, and between consumers.

e-Business - automating all business processes andintegrating them with E-Commerce applications to createone seamless, digital enterprise serving customers and partners.

eBeC

EC SegmentsEC Segments

To:

From:

Consumer/

CitizensBusiness Government

Consumer/Citizens ebay.com priceline.com irs.treas.gov

Business1800flowers.comwww.addall.com

depot.comorderzone.com

www.fda.gov

Government irs.treas.gov www.ftc.gov www.gao.gov

PointCast

Reflect.com

Winners!

Losers!

?

What differentiateswinners and losers ine-business?

Commerce Threshold

Hyper-growth

Computers & Electronics

Aerospace & Defence

Utilities

Motor Vehicles

Shipping & Warehousing

Petrochemicals

Pharmaceuticals & Medical

Paper & Office Products

Source: Forrester Research; adapted from The Economist 26th June 1999

Heavy Industries

Food & Agriculture

Construction

1997 1998 1999 2000 2001 2002 2003

Consumer Goods

Leaders & Laggards : When Leaders & Laggards : When Supply Chains move onlineSupply Chains move online

e-Business Questionse-Business Questions

What are some of the Big e-business questions confronting business??

Making Business SenseMaking Business Sense

How should a manager frame the decision to "weight the importance of protecting existing relationships with the distributors and partners that account for most of their current revenue against the advantages of establishing future strategic positions and revenue streams?"

Making Business SenseMaking Business Sense

"Pirates will probably emerge from the ranks of those innovative companies that can recognize where core value will be most effectively delivered to customers over a network."

How can managers identify real digital value opportunities?

The Network Era of The Network Era of Computing as an Computing as an

EconomicEconomic Opportunity Opportunity

Bradley C. Wheeler

Assoc. Professor of Information SystemsKelley School of Business

Indiana UniversityBloomington, Indiana

bwheeler@indiana.edu