11/22/2014MS kap. 31 IT strategy – eBusiness (ch. 3 + more) IT strategy Business Process Reenginering (extended) eBusiness

11/22/2014MS kap. 32 IT revolution IT for most administrative functions Standards and technology for integrating systems Big effects, but for all (IT as a commodity) Requirements: High formalization level Symbolic tasks

11/22/2014MS kap. 33 Examples

11/22/2014MS kap. 34 Strategic use of IT

11/22/2014MS kap. 35 Our textbook Focus for different editions End user computing (1986) Strategic advantages (1989) Reengineering (1993) Internet, intranet and extranet (1997) eBusiness (2001) Knowledge based work ( ) Konsolidering - mer om sikkerhet (2009) Note: All areas are important today, the textbook has just focused on the ”hot” topic of the year

11/22/2014MS kap. 36 Important trends for IT: Flow of money go digital and automatic Point of sale terminals JIT (just in time), Lean, ERP (enterprise resource planning) XML will be important for B2B, in addition to EDI Digitalization (sound, pictures, books, etc) “Long tail” effects Distributed work will be more common Electronic cooperation between organizations (B2B) Reorganizations will occur more often Global operations, new markets in emerging countries, use of IT to connect

11/22/2014MS kap. 37 But: We have to be aware of the fundamental limitations for IT: Formalization Standards Largest effect where everything is symbolic Other limitations: Technical Cultural Social Security

11/22/2014MS kap. 38 Real possibilities := theoretical possibilities - constraints Teoretical possibilities Constraints Real possibilities

11/22/2014MS kap. 39 BPR: Internally BPR, ”Business Process Reengineering” Success- (and fiasco-) criteria: Growth and expansion better than reduction Both internal and external actors (employees, customers, suppliers) Driven by management Use of technology to drive change goes seldom well IT offers possibilities, but shall not drive Good understanding of technology is important

11/22/2014MS kap. 310 BPR BPR ”hot” in the middle of the nineties, replaced by eBusiness today (also in our textbook). BPR is important, especially due to the possibilities offered by the Internet and Web. Internet and Web offer the possibility of radical change - and in this respect has much in common with BPR

11/22/2014MS kap. 311 BPR: Revolution Start with a blank sheet, do everything from start (Hammer and Champy). Revolutionary approach (30-50% chance of success) Analysis: Starting again we can use today's technology in implementing business processes but, should we also demand that customers or suppliers change their processes dramatically? and to we have the complete overview when we redesign and what about the problem of moving from one system to a completely new? and then, should we relax until the next revolution comes along?

11/22/2014MS kap. 312 Ford Motor Company

Ford reduced the number of employees in their procurement departments from 5000 to 700 But, Toyota (larger than Ford) had 7 in their procurement division! Efficiency

What did they do? Suppliers had access to Toyota’s systems Then orders became unnecessary Invoicing disappeared Thus, instead of using IT to make the paper work more efficient, the need for the data (orders, receiving control, invoicing, etc.) were removed Dramatic savings

The idea – think new!

11/22/2014MS kap. 316 BPR: Evolution Continuous improvement (TQM - Total Quality Management) Risk: changes may only be superficially, nothing is done with the more deeper structures Conservatism, complacency, etc. is there to stop fundamental changes The danger of “positive thinking”

11/22/2014MS kap. 317 Case: Prudence Insurance New ways of selling insurance Improved customer contact ”Profiling” of customers IT system with all customer data Implemented office to office, got experience as the work progressed, enthusiasm, knowledge An experienced sales manager in charge – enjoyed much respect in the organization More sales, more commission, improved customer contact

11/22/2014MS kap. 318 Case: insurance Other companies used the same package It worked for some, not for others Factors to fail: Laissez-faire approach Only supported by head office It was up to the agents themselves if they wanted to use the new method No training Moral: Implementation is important It is not easy to copy others successes

11/22/2014MS kap. 319 BPR: Choices

11/22/2014MS kap. 320 eBusiness B2E - Business-to-Employee B2C - Business-to-Consumer (B2C = B2E) B2B - Business-to-Business

11/22/2014MS kap. 321 B2E Intranet Links to Internet ”Best practices” Common functionality (database access, ordering of office supplies…) Portfolio of tools Replaces paper. Can be accessed from everywhere Standard technology (browsers etc)

11/22/2014MS kap. 322 Case: Microsoft “Human Relations” system: Health plan Stock options Pension plans salary Office supplies. Intranet Integrated with ERP (SAP R/3) Reduced costs for material etc. by 75-90% Replaced more than 200 paper forms Saved $1 million each year In addition, reduced workload for employees in addition

11/22/2014MS kap. 323 B2C The “terminal” is given to the customer Intermediates can be removed The customer is given direct access to data and functions Often a better service at reduced costs Revolution!

11/22/2014MS kap. 324 B2C models Internet only (click) Internet + brick and mortar = brick and click Important questions: can all services be performed over the Internet? can traditional services be left for others to perform do the customer need both the brick and the click services?

11/22/2014MS kap. 325 B2C advantages Global access Improved access (24*7*52) Automatic order handling Automatic dissemination of information Updated information Symbolic products can be downloaded New products and services Improved communication with customers (or the opposite?) Customer loyalty (?) Direct marketing

11/22/2014MS kap. 326 B2C problems User Interface (may be difficult to use) Takes time Logistics, reverse logistics Unstable customer base (too many potential customers) Global regulations (many are selling only nationally) Competition Information to competitors Can we trust ”dot-coms”?

11/22/2014MS kap. 327 Case: Internet shopping Online grocer: Failed (Rema) Failed after huge losses (Webvan, IHG) Distribution costs Formalizing of products Niches?

11/22/2014MS kap. 328 case: Stop & Shop

11/22/2014MS kap. 329 e-Business models New requirements from customers simple access customization (?) new services (e.g., from bank to music) Relations with partners: Remove intermediates (travel agency, bank) Virtual organizations

11/22/2014MS kap. 330 Case: Banking More than 98% of all transactions are digital If we do the job ourselves we want something back (as free services) Internet banks are increasing their customer base Is a bank a computer? Ideal application for B2C?

11/22/2014MS kap. 331 Norge tidlig ute Det var administrerende direktør Harry Konterud i Sparebanken Hedmark som brøytet vei for banktjenester på internett. - Jeg hentet ideen fra en studietur til USA i 1994, og tenkte dette skal vi ha. Men vi ble rett og slett frarådet å satse på nettbank i Den gang mente mange at sikkerheten rett og slett var altfor dårlig, og det var det største ankepunktet mot å overføre penger og å betale regninger på internett. - Men vi har ikke tapt en eneste krone på dette, bank i bordet, sier Konterud, som har vært sjef i 21 år i det som nå er landets sjette største sparebank med kunder. I 1996 kappløp Sparebanken Hedmark mot LO-eide Landsbanken om å være først ute med nettbank, og slo konkurrenten på målstreken. I sommer knivet banken igjen om å være den første med mobilbank. Aftenposten,

Men Bankene etablerte internett tjenester, men forstod kanskje ikke helt hvilken endringer denne teknologien ville medføre For bank er brick & click en meget god løsning for kundene Men det krever at bankene kan tilby konkurransedyktige click tjenester, som er de vi bruker mest Dessuten, i dag kan kundene få dette ved å ha konto i en ren Internett bank og konto i en fysisk bank. Men dette er ikke en god modell for den fysiske banken.

11/22/2014MS kap. 333 Case: Travel agency Still existing? Not all customers use Internet today But in a few years time? Ideal for brick & click?

11/22/2014MS kap. 334 B2B (Business-to-Business) Since 1950 EDI from 1975 VAN (Value Added Networks) XML, XML/EDI Integration of value chains Demand: Good IT infrastructure Formalized data and services Willingness to think ahead Accept for standards

11/22/2014MS kap. 335 XML 2000 Fifth Avenue Pittsburgh PA 15260

11/22/2014MS kap. 336 XML: namespaces <item xmlns:invoice= xmlns:delivery= P.O.Box Main St namespaces define ”scope” for name

11/22/2014MS kap. 337 XML: Schema Describe document structure Ideas from programming languages and databases DOM (Document Object Model) – document structure description XPath XSL ( eXtensible Stylesheet Language) and XSLT can we transform XML to other forms, e.g., to HTML An XML structure can be input to a program or a browser

11/22/2014MS kap. 338 XML: way ahead Much optimism (or ”hype”) Slower than expected – formalization required Is it too complicated? Competition from alternatives (HTML, Excel, database formats, ASCII) Establishment of standards is a social process Not everybody benefits However: XML will be used

11/22/2014MS kap. 339 Electronic markets Oil companies (Norway, abroad) Markets for fish, vegetables, etc. Market for Norwegian communities (kommuner, fylker) – No success! COVISINT – International electronic market Used by Ford, GM, DaimlerChrysler Offer supply services

11/22/2014MS kap. 340 Covisint Nå helse- tjenester i tillegg til bilindustri.

11/22/2014MS kap. 341 Covisint As a globally recognized leader of interoperability solutions and services, Covisint creates value for organizations of any size by connecting people and systems across industries. Our goal is delivering innovation to customers, enabling and assisting them in maintaining a competitive advantage.

11/22/2014MS kap. 342 A success? Covisint today supports over 266,000 users, representing more than 30,000 organizations in over 96 countries in the global automotive industry, and supports seven languages. Covisint also supports over 14,000 users, representing more than 78 health systems, nine state Medicaid programs, 11 commercial payers and over 300 physician groups/practices, home health agencies, third-party administrators, extended care facilities and home medical equipment providers across the North American healthcare continuum.

11/22/2014MS kap. 343 eBusiness factors Technology Security Regulations Copyright Online contracts and signing Culture Competition