Chapter 1 Introduction to e-Business

ICT Learning objectives  Define e-commerce and e-business and understand the relationships of e-commerce and e-business to the existing IT resource in an organisation  Understand some fundamental concepts surrounding e-commerce and e-business

ICT Learning objectives  Appreciate the extent and diffusion of e-commerce  Discuss business uses of the Internet, and appreciate the costs and benefits for an organisation of adopting e-commerce and e-business  Understand the determinants of success for e-commerce and e-business

ICT Defining e-commerce and e-business  Commerce –Some transaction, an exchange of goods & services for money, or other goods & services  Does e-Commerce therefore imply commerce taking place electronically? –If yes, then payment by telephone, credit card, EFTPOS all represent e-Commerce

ICT Defining e-commerce and e-business  Does e-Commerce require completion of transaction electronically? –If yes, then Internet advertising, information provision, internet-based after-sales support & service are NOT examples of e-Commerce  Is e-Business different to e-Commerce?

ICT Defining e-commerce and e-business  Buying & selling over the internet –Online ordering, payment  + Activities that support revenue generation –Generating demand for goods/services by marketing & advertising activities –Sales support, customer service –Facilitating communication, information exchanges, collaboration

ICT Defining e-commerce and e-business  Deployment of Internet-based technologies & other ‘traditional’ IT to support commerce or the organisation’s core business, and to improve business performance  This can be achieved through increased connectivity, & via Intranets, Extranets, the Internet & EDI-based interorganisational systems

ICT Defining e-commerce and e-business  Aim to –Improve efficiencies internally –Improve efficiencies & effectiveness along supply chain –Create value for customers

ICT Defining e-commerce and e-business  An e-Business is one that –Creatively & intelligently utilises & exploits the capabilities of modern IT and Internet technologies to create efficiencies, achieve effectiveness gains, and exploit strategic opportunities

ICT E-business: new phenomenon or natural progression? The hype of the dotcom era followed by Gloom & pessimism with respect to e-Commerce Recent history…

ICT E-business: new phenomenon or natural progression?  Looking ahead… –terms e-Commerce and e-Business will merge into “broader” meaning  Will we eventually drop the ‘e’?  Do we still talk about telephone-enabled business? Fax– enabled business? –divisions between “traditional” & “on-line” businesses will fade/are fading –thinking of e-Commerce and e-Business primarily in terms of dot.coms or “pure play” Internet start-ups not all that helpful

ICT E-business: new phenomenon or natural progression?  As e-business matures.. –With maturity, question for all existing organisations & new businesses will be:  In what ways can Internet technologies be employed to improve our business performance? – efficiencies? – effectiveness? – flexibility, competitiveness?  Can our business (established or new) effectively harness the potentialities of the Internet & associated technologies to help us achieve our business goals?

ICT E-business: new phenomenon or natural progression?  It’s now 2010… –Are we still shopping in stores, shopping centres? –Do sales staff still call on customers? –Are we still flying interstate and internationally for business purposes? –Are we collaborating more electronically? –Have intermediaries (like travel agents, insurance brokers, real estate agents) disappeared? What will be remembered in history? 1960s, for advent of IT into business, or 1990s, for advent of Internet?

ICT E-business: new phenomenon or natural progression?  Key changes in contemporary business environments -Business environment now highly interconnected via computer networks, especially the Internet -Electronic linkages to players all along the supply chain allow the achievement of substantial efficiencies & better service

ICT E-business: new phenomenon or natural progression?  Key changes in contemporary business environments (cont.) -Direct access to customers & end consumers provides opportunities for goods & services to be better targeted towards specific consumer needs, & for information regarding customer preferences to be fed back into internal decision making about production, product & service design & development -Internal efficiencies can be achieved through the provision of more timely information & streamlined business processes

ICT Perspectives on e-commerce and e-business  Some key concepts: –B2C (B-C, B to C, b-c, etc) –B2B Obvious, or not?

ICT Perspectives on e-commerce and e-business Which of the relationships represent B2B and which represent B2C?

ICT Perspectives on e-commerce and e-business

ICT Perspectives on e-commerce and e-business  Organisational types & e-Commerce –Bricks and mortar  A traditional organisation, presenting to its customers through its factories, warehouses, retail outlets & sales force  Little adoption of e-Commerce

ICT Perspectives on e-commerce and e-business  Organisational types & e-Commerce (cont.) –Pure dot com (Internet pure play)  Presents to customers via web pages  Interactions accomplished over the Internet –Bricks and clicks (clicks and mortar)  Organisations that have both a traditional presence and web pages to support the completion of transactions

ICT Perspectives on e-commerce and e-business

ICT Business uses of the Internet  As organisations become more mature, potential benefits of e-Commerce increase –BUT so do the risks & costs associated with e- Commerce

ICT Business uses of the Internet  Businesses use Internet for the following: –Direct dialogue with customers, suppliers, interactive marketing & CRM –Commercial transactions –Communication & collaboration –Formation of strategic business alliances –Management of procurement & supply chain activities –Operational efficiencies

ICT Potential costs and benefits of e- commerce  Costs associated with moving to e-commerce –Computer hardware & software –Telecommunications hardware & software –Development and/or acquisition of systems –Systems integration –Use of consultants –Additional personnel (specialised IT staff, web designers, network specialists) –Training (both IT staff and general business staff)

ICT Potential costs and benefits of e- commerce  Costs associated with moving to e-commerce (cont.) –Security –On-going technical support –Operating costs & maintenance –Process re-engineering costs –Enhancement of business strategy & development of e-Business vision & strategy –Change management

ICT Determinants of e-commerce and e-business success  Profitability & viability –All e-Businesses must ultimately make a profit –Profitability is not certainty –Must understand e-Business models –Identify sources of costs & revenues, & risks associated with move to e-Business –Understand sources of value from customers’ perspective –Establish appropriate performance measures

ICT Determinants of e-commerce and e-business success  Planning –Sound planning is vital to successful e-Business ventures –Planning now resembles day-by-day strategic thinking & acting, not a bureaucratic process –Requires clear vision for organisation –Requires strategy for achievement of vision, along with organisational goals & objectives –Requires alignment between business strategy and all functional strategies, especially IS/IT

ICT Determinants of e-commerce and e-business success  Re-engineering of processes –Opportunity to become customer-centric organisation –Core business processes are likely to change –Must seek opportunities to re-engineer core business processes –Internet technologies providing opportunities to streamline internal operations, & build flexibility & responsiveness in relationships with business partners & customers

ICT Determinants of e-commerce and e-business success  Management of knowledge resources –Knowledge about customers, suppliers, business processes, technologies & ‘know-how’ now regarded as a corporate resource, & possible source of competitive advantage –Managing & exploiting this knowledge resource therefore vital to long-term success

ICT Determinants of e-commerce and e-business success  Developing & sourcing capabilities –Need to combine strengths associated with large enterprises (efficiency, power, resources) with those of small enterprises (speed, agility, responsiveness) –Careful decisions needed about where to source required knowledge, skills, capabilities –Trend to move towards flexible arrangements in accessing required resources  Some will be provided and required internally (insourced) while others will be provided by external providers (outsourced)

ICT Determinants of e-commerce and e-business success  Proactive uptake of technologies –Success is contingent on appropriate exploitation of technologies –Innovation and change regarded as opportunity, not threat –Adoption of technological innovation provides opportunity to enhance customer service, achieve efficiencies in operations, and the like

ICT Determinants of e-commerce and e-business success  E-Business Governance –Processes must be in place to ensure that business value derived from investments in IT & Internet –IT must support achievement of corporate goals & objectives, while not exposing organisation to undue risk –IT investments need to be aligned with priorities of organisation –Decision making & accountabilities deliberately designed to ensure risk is managed and positive outcomes achieved