Dr. CK Farn, NCU1 1. Overview of Electronic Business Dr. CK Farn Department of Information Management NCU 2006 (update)

Dr. CK Farn, NCU2 The Changing World Where do you shop 10 years ago Today How do you get service from banks? Business size, beforeBusiness size, now

Dr. CK Farn, NCU3 The impact of IT on businesses IT-enabled business operations IT-centered business operations Visibility, access, control, …

Dr. CK Farn, NCU4 Business Applications of IT Data Processing DP/EDP Computer MIS IT innovation Concept Innovation Data Analysis Decision Support DSS/EIS Decision Models Online Txn OLTP Database Telecomms ERP Production, Mgt Acct. EB BPR EC Internet 50s60s 70s 80s90s00s 1995 Integration

Dr. CK Farn, NCU5 Major Determinants of Modern Businesses Technological Innovations Globalization

Dr. CK Farn, NCU6 Evolution of Technology 2K AD0 AD2K BC Millions of years ago Inventions Stone tools BronzeCeramic Iron Power Printing What around you has been there for over a century? Transportation IT Paper

Dr. CK Farn, NCU7 Technological Innovations Transportation and machines Speed up movements of goods Reduce production costs Computers and communications Efficient processing and movement of information Visibility and access New Concepts: Do the impossible things Lifting of existing constraints What “Values” do your company offers?

Dr. CK Farn, NCU8 Business Environments Intra-Business Operations Suppliers Long term relationship One-off relationship Customers Business customers End consumers

Dr. CK Farn, NCU9 Electronic Commerce Selling to consumers? On-line shopping, e-tailing Auction Online services Doing business electronically? Business relationships Buying, selling and collaborating

Dr. CK Farn, NCU10 US B2C eC Market Size

Dr. CK Farn, NCU11 US B2B eC Market Size

Dr. CK Farn, NCU12 US EC Market Growth Billion US$ Sources ： eMarketer, February 2002Source: eMarketer, April 2003

Dr. CK Farn, NCU13 Wal-Mart — A New Way to Compete The Problem US-based, discount store Expanded to number one in the world in the 90 ’ s, beat K-Mart Critical success factors Price competitiveness Efficient IT-based supply chain activities Extremely lean store inventory

Dr. CK Farn, NCU14 Classic Supply Chain Factory Distributor Wholesaler Retailer Customer

Dr. CK Farn, NCU15 Traditional Order Fulfillment Model Head Quarter Distribution Center Store Front Supplier Price Negotiation Delivery Replenish Store W/H Order Delivery Stock keeping Order Resolve Complicated Wholesale structure Problems Inventory level still high Out of stock

Dr. CK Farn, NCU16 Continuous replenishment HQ D.C. Store Front Supplier Order Delivery Continuous Replenishment Delivery Instructions Price Negotiation Opportunity IT-enabled visibility Innovative order fulfillment scheme Minimal inventory POS Sales informatiom

Dr. CK Farn, NCU17 Wal-Mart Special Issues CRP (continuous replenishment program) helps Wal-Mart links its front-end POS systems with its head quarters, and increased visibility Additional process innovations Cross-docking Collaborative replenishment by suppliers Provide suppliers with necessary information, even aggregate information of their competitors, encourage competition Elimination of inventory and logistic costs

Dr. CK Farn, NCU18 Wal-Mart (cont.) The Results As of 2002, #1 enterprise in the world Largest employer in 21 states Employed more workers than US defense force 2001 Wal-mart 3,200stores/ 1000 supercenter/ gross- 21%/ profit-5% (220Bil sales) K-mart 2,100stores/ 750 supercenter/ gross-21% profit-1.3% (35Bil sales, 1/6 of Wal-mart)

Dr. CK Farn, NCU19 Wal-Mart (cont.) What can we learn… IT-enabled visibility improvement Paradigm shift in business model Process innovation counts! Continuous innovation in processes 1980’s CPFR Collaborative Planning, Forecast and Replenishment 2000’s RFID Radio Frequency Identification

Dr. CK Farn, NCU20 The Dimensions of Electronic Commerce

Dr. CK Farn, NCU21 Electronic Commerce: Definitions and Concepts (cont.) e-business: a broader definition of EC, which includes: buying and selling of goods and services servicing customers collaborating with business partners conducting electronic transactions within an organization

Dr. CK Farn, NCU22 Electronic Commerce: Definitions and Concepts (cont.) Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of: –the product (service) sold; –the process; and for –the delivery agent (or digital intermediary) Brick-and-Mortar organizations are old- economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents

Dr. CK Farn, NCU23 Electronic Commerce: Definitions and Concepts (cont.) Virtual (pure-play) organizations conduct their business activities solely online Click-and-mortar organizations conduct some EC activities, but do their primary business in the physical world Electronic market (e- marketplace) online marketplace where buyers and sellers meet to exchange goods, services, money, or information

Dr. CK Farn, NCU24 Electronic Commerce: Definitions and Concepts (cont.) Interorganizational information systems (IOSs) allow routine transaction processing and information flow between two or more organizations Intraorganizational information systems enable EC activities to go on within individual organizations

Dr. CK Farn, NCU25 EC Framework EC applications are supported by infrastructure and by five support areas: People Public policy Marketing and advertising Support services Business partnerships

Dr. CK Farn, NCU26 Classification of EC by Transactions or Interactions business-to-consumer (B2C) : online transactions are made between businesses and individual consumers business-to-business (B2B): businesses make online transactions with other businesses e-tailing: online retailing, usually B2C

Dr. CK Farn, NCU27 Classification of EC by Transactions or Interactions (cont.) business-to-business-to-consumer (B2B2C): e-commerce model in which a business provides some product or service to a client business that maintains its own customers consumer-to-business (C2B): e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need

Dr. CK Farn, NCU28 Classification of EC by Transactions or Interactions (cont.) consumer-to-consumer (C2C): e-commerce model in which consumers sell directly to other consumers peer-to-peer (P2P): technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce

Dr. CK Farn, NCU29 Classification of EC by Transactions or Interactions (cont.) mobile commerce (m-commerce): e-commerce transactions and activities conducted in a wireless environment location-based commerce (l-commerce): m-commerce transactions targeted to individuals in specific locations, at specific times

Dr. CK Farn, NCU30 Classification of EC by Transactions or Interactions (cont.) intrabusiness EC: e-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization business-to-employees (B2E): e-commerce model in which an organization delivers services, information, or products to its individual employees

Dr. CK Farn, NCU31 Classification of EC by Transactions or Interactions (cont.) collaborative commerce (c-commerce): e-commerce model in which individuals or groups communicate or collaborate online e-learning: the online delivery of information for purposes of training or education exchange (electronic): a public electronic market with many buyers and sellers

Dr. CK Farn, NCU32 Classification of EC by Transactions or Interactions (cont.) exchange-to-exchange (E2E): e-commerce model in which electronic exchanges formally connect to one another the purpose of exchanging information e-government: e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

Dr. CK Farn, NCU33 The Future of EC 2004 — total online shopping and B2B transactions in the US between $3 to $7 trillion by 2008: number of Internet users worldwide should reach 750 million 50 percent of Internet users will shop EC growth will come from: B2C B2B e-government e-learning B2E c-commerce

Dr. CK Farn, NCU34 Benefits of EC Global reach Cost reduction Supply chain improvements Extended hours: 24/7/365 Customization New business models Vendors ’ specialization Rapid time-to-market Lower communication costs Efficient procurement Improved customer relations Up-to-date company material No city business permits and fees Other benefits Benefits to organizations

Dr. CK Farn, NCU35 Benefits of EC (cont.) Ubiquity More products and services Cheaper products and services Instant delivery Information availability Participation in auctions Electronic communities “ Get it your way ” No sales tax Benefits to consumers

Dr. CK Farn, NCU36 Benefits of EC (cont.) Benefits to society Telecommuting Higher standard of living Hope for the poor Availability of public services

Dr. CK Farn, NCU37 Limitations of EC

Dr. CK Farn, NCU38 Barriers of EC Security Trust and risk Lack of qualified personnel Lack of business models Culture User authentication and lack of public key infrastructure Organization Fraud Slow navigation on the Internet Legal issues

Dr. CK Farn, NCU39 The Digital Revolution Digital economy: An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy

Dr. CK Farn, NCU40 The Digital Revolution (cont.) A global platform over which people and organizations interact, communicate, collaborate, and search for information Includes the following characteristics: A vast array of digitizable products Consumers and firms conducting financial transactions digitally Microprocessors and networking capabilities embedded in physical goods

Dr. CK Farn, NCU41 New Business Environment Customers are becoming more powerful Created due to advances in science occurring at an accelerated rate Results in more and more technology Rapid growth in technology results in a large variety of more complex systems

Dr. CK Farn, NCU42 New Business Environment (cont.) Characteristics in the business environment A more turbulent environment with more business problems and opportunities Stronger competition Need for organizations to make decisions more frequently A larger scope for decisions because more factors More information and/or knowledge needed for making decisions