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					LO205 (class2)The State
          of E-Business


                 Judith Molka-Danielsen
                      Jan. 11, 2001
Reference: Some ppnotes from Michael Spring’s e-commerce
                     course in 2000.
           Significant Industry Segments
• 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.
                                      Introduction
• 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:
                     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:
                A business perspectives
        Electronic Commerce - A Manager’s Guide
                    Kalakota 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 Concepts
               Underlying 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:
                                    Atoms 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 Concept
                            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 Concept
                                   The 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
    Components in e-business
             Web
  500        Site
 Million               Organizational
  Web                      ERP
Browsers                  System



              The
            Internet
                        Electronic 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, & Branches
             Communications
        Social             Informatin
       Periphery                g
                          Reengineering
  Ubiquity               and Knowledge
              Atoms to Bits
               E-Markets
              Fourth Wave

  DARPAnet                    IBM PC
                   Star
                                 Branches

•   Information and Informating
•   Reengineering and Knowledge
•   Calculation and Communication
•   Social Periphery and Social Capital
•   Ubiquitous Computing and Idiot Savants
                     Informating and
          Reengineering & 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
           Communications Beyond
                       Calculation
• 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 Contexts
    Computing 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 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
                       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-Business
                          Older 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
                          Web Technologies

  Javascript
   Vbscript
   HTML                           Server     Pages for
     CSS                         analyzes    delivery
                 http request     request
    XML
    Applet                       and gets     Programs
                 http response    page or   that produce
plugin capable
   browser                          runs        pages
                                 program

    Java                               Java
 Application                        Application
                           E-Business
               Targets of Opportunity
                 The Enterprise

Supply Chain                           New Channels

               Process Reengineering
                        &
               Workflow Automation

Vendor Mgmt                            Customer Mgmt
                            E-Business
                Targets of Functionally

 Suppliers        Enterprise     Customers

Procurement                         Sales
                 Development

  Logistics        Delivery      Order Entry

Supply/Demand     Servicing    Customer Support
   Planning
                           E-business Models
                             and 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 Markets
              1998        1999     2000    2001    2003
$12T Market   $671B                        (25%)   $2.8T
B2B (BCG)     $92B HTML                            2T HTML
              $579B EDI                            800B EDI

B2B (GG)                           $237B           $4T
B2B (FR)      $43B                                 $1.3T
$3T Market    $14.1B      $33.1B           (2%)    $61B
B2C (BC)                  (1.4%)

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

• 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)

• 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 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-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

				
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