11/05/99 1 eBusiness Overview

11/05/99 2 eBusiness - Definition eBusiness is a framework for seamless integration of critical business systems and their direct connection to key constituencies (customers, employees, suppliers and distributors) via the Web (Internet, Intranet and Extranet). As all key players - customers, employees, suppliers and distributors - are connected to the business systems and share the information they need, eBusiness actually transitions the traditional business processes to a new level with the ultimate focus on customers and Customer Relationship Management (CRM).

11/05/99 3 E-business is not just ONE thing The community uses the term in various ways Decision-makers from even the largest businesses confess it’s hard to get a handle on E-business approach among large companies varies by Level of Involvement (pure play, alternative channel, etc.) Area of Focus (customers, employees, suppliers) Scope of Business (business-to-business vs. consumer; genuinely global vs. multi-local)

11/05/99 4 Four levels of engagement There are multiple models for e-business adoption, depending on level of involvement –Internet service & content providers (Yahoo!, iVillage): e-business both product and channel –Internet pure plays: delivering real products virtually (Amazon) –Mixed plays: Web is channel complementing brick- and-mortar outlets (Barnes & Noble) –Non-transactional e-business: key is automating other business processes besides sales

11/05/99 5 Two types of business scope Business-to-Consumer –The media attention is here, especially where nature of product makes e-delivery a good fit –Early emphasis on transactions, often at the expense of other e- business opportunities Business-to-Business –The biggest economic impact is and will be here –Looking for controlled evolution: need to build an integrated architecture to support transformed business model –Within B2B, firm-to-firm interactions (EDI, for example), are being matched or overtaken in importance by firm-to-individual interactions (FedEx). Many businesses report that Internet enables decision-making to shift from center to nodes, closer to source of needs.

11/05/99 6 Two categories of temperament Most large businesses see the Internet as containing an element of threat (if not pure threat) –Many establishing defensive plays to ward off inroads from smaller, more nimble competitors Who sees e-business as more opportunity than threat? –Those with products that can be easily delivered over the Internet (music, information) –Those who broker or establish a market for transactions (eBay, Priceline) –Visionaries who see the Internet as transformative (very few in number) for their whole business

11/05/99 7 Three meanings of e-business Despite heavy use, “e-business” lacks a single fixed meaning. Speaking clearly means understanding the customer’s dialect: –e-business is equivalent to e-commerce (among transaction-focused businesses) –e-business covers all business processes deployed onto the Internet (sales, marketing, R&D, etc.); e- commerce is a subset of e-business covering transactions where money changes hands (among business with more diverse e-applications) –e-business is a B-2-B function; e-commerce focuses on the consumer

11/05/99 8 First stages of e-business For many large companies, the initial appeal of e-business is the big pipe: –large volumes of supplier data via EDI –large volumes of bandwidth to employee desktops –large volumes of customer transactions via e- commerce, and extended customer reach in marketing/sales Another explosive growth curve will come through targeted knowledge delivery: –not just information, but knowledge for action –flexibility and precision the key

11/05/99 9 Three strategic areas Emphasis here strongly determines the direction of the evolutionary path Focus on the Customer First generation: enable transactions; extend geographic reach; increase awareness Next generation: one-to-one marketing, Web self- service Focus on Supply Chain First generation: improving transaction efficiency Next generation: increasing supplier choice & efficiency; build seamless virtual enterprise Focus on Employees First generation: increase bandwidth to desktop; remote access Next generation: empower employees through flexible work arrangements; superior decision tools; creation of virtual teams

11/05/99 10 Customer focus: solution spaces Retail: –Use demographic knowledge to structure marketing, purchasing ; customize offers for individuals based on previous and predicted buying patterns Transportation: –Optimize scheduling; tailor fares Health Care: –compare effectiveness of treatments, devise prevention approaches

11/05/99 11 Supplier focus: solution spaces Today: efficiency transfer of volume data Next generation: Enabling rapid shifts when it comes to location of manufacture or delivery –increases flexibility –reduces costs –allows businesses to be more responsive to short-term shifts in customer demand Next generation: increasing disintermediation –using the Internet to bypass traditional distribution channels

11/05/99 12 Spotlight: Empowered employees What: –Types of flexibility Home-based working Home working Nomadic working “Hot desking” –Decision tools and analysis software that give employees more timely and actionable access to relevant information

11/05/99 13 Spotlight: Empowered employees Why: –Businesses gain by investing in tools and people (big ROI) rather than facilities (inevitable depreciation) –Important for recruiting and retaining skilled employees in tight labor market –Helps to optimize employee productivity –Employee loyalty highly correlated with customer loyalty

11/05/99 14 Spotlight: Empowered Employees “What we are doing is changing the way we operate with people and their locations…it doesn’t really matter where I am…it changes the world…that is the way of the future…there will definitely be people working at home, people working in satellite offices…” Partner, business services company “Employees are demanding more flexibility.... It’s a good way to retain employees.... I think it’s going to be a necessity.” AVP Marketing, FIRE

11/05/99 15 Spotlight: Empowered employees Competitive environment: –B2B firms are working with consultants to plot the Internet’s impact on the HR future Lucent’s play: –Networking capacity; VPNs; development of next generation wireless technology: Lucent could use its substantial relationships with FIRE companies to make inroads here

11/05/99 16 Customer e-business: Barriers Cost-benefit analyses in these areas still poorly developed –Amazon still loses nearly $200m quarterly –Some CIOs report they won’t act unless there is a high-level executive champion Fear of cannibalization of existing channels Customer preference in some segments for some type of human contact

11/05/99 17 Supplier e-business: Barriers In a word, security –Creating virtual enterprise by definition multiplies access points, and thus security risks –Security solutions have at least three dimensions access (do you have the right to log in?) authentication (are you who you say you are?) authorization (is this information you’re allowed to have?)

11/05/99 18 Employee e-business: Barriers Security also an issue here –allowing appropriate network access from remote & mobile terminals Lack of workforce cohesion –company culture may get lost in the creation of virtual teams Risk of customer dissatisfaction –if employees’ need for flexibility outpaces customers’ willingness to tolerate it

11/05/99 19 The Architecture Enterprise-wide integration Front-end to back-end integration The client-server based architectural models Distributed networked services Architectural issues -presentation, personalization, security, etc. The “Net”

11/05/99 20 The Technology The network resources Policy-based management Tools, languages, environments Standards Products and Vendors

11/05/99 21 The Competitive Landscape Markets Products Competitors Architectures: enterprise-wide integration Enabling Technologies

11/05/99 22 Thanks! Some of the materials in this section are from: “E-Biz Study” of The Taylor Research & Consulting Group, Inc.