Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-1 MANAGING INFORMATION TECHNOLOGY 7 th EDITION CHAPTER 7 E- BUSINESS SYSTEMS

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-2 SOME DEFINITIONS. E-Business Systems Enable the electronic transmission of business transactions or other related information between a buyer and seller Dot-Com (pure-play) A business that conducts business solely through their Web site (single channel) Bricks and Clicks (click-and-mortar) A company that uses Internet sales as an additional channel to an offline business (multichannel)

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-3 SOME DEFINITIONS. Internet A worldwide network of networks, accessible to the public, that employs the TCP/IP protocol Intranet A private network operating within an organization that employs the TCP/IP protocol, to provide information, applications, and other tools for use by the organization’s employees Extranet A portion of a company’s private intranet that is accessible via the internet to authorized organizations that are business partners (such as customers or suppliers)

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-4 E-BUSINESS GROWTH Metcalfe’s Law is a theoretical explanation for continued e- business growth Metcalfe’s Law: The value of a network to each of its members is proportional to the number of other connected users in the network By this law, the network on the right has a value that is 15 times that of the network on the left

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-5 E-BUSINESS FRAMEWORK Internet Applications and Services are built upon two types of pillars TECHNOLOGY PILLAR LEGAL AND REGULATORY PILLAR

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-6 LEGAL AND REGULATORY ENVIRONMENT Environmental influences on Internet growth: Sales tax policies -For example: Sales taxes in U.S. at State level, but “location” of purchase not clear via Internet and federal government chose not to implement an Internet sales tax Laws to protect Individual Privacy Antitrust laws

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-7 E-BUSINESS TECHNOLOGIES: FIRST DECADE.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-8 E-BUSINESS TECHNOLOGIES Pre-Internet B2B electronic commerce used EDI EDI (Electronic Data Interchange): Proprietary applications for communicating with trading partners based on agreed-upon standards for business document transmission EDI (Electronic Data Interchange): Proprietary applications for communicating with trading partners based on agreed-upon standards for business document transmission

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-9 E-BUSINESS TECHNOLOGIES XML enables B2B electronic commerce via the Internet XML (Extensible Markup Language): A markup language standard to facilitate data interchange across applications on the Web XML specification: Tags to convey the meaning of data XML (Extensible Markup Language): A markup language standard to facilitate data interchange across applications on the Web XML specification: Tags to convey the meaning of data

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-10 XML EXAMPLE. Internet A worldwide network of networks, accessible to the public, that employs the TCP/IP protocol Intranet A private network operating within an organization that employs the TCP/IP protocol, to provide information, applications, and other tools (such as collaboration tools), for use by the organization’s employees Intranet A private network that is a portion of a company’s Intranet, which is made accessible (normally over the Internet) to business partners outside of the company (such as customers or suppliers)

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-11 E-BUSINESS TECHNOLOGIES The availability of broadband increased user access to different types of file content from their homes

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-12 E-BUSINESS TECHNOLOGIES Digital Signatures Used to authenticate the sender of a digital message Digital Signature: A type of asymmetric cryptography that provides message authentication by utilizing a public-private key pair Digital Signature: A type of asymmetric cryptography that provides message authentication by utilizing a public-private key pair

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-13 STRATEGIC E-BUSINESS OPPORTUNITIES (AND THREATS) Porter’s Competitive Forces Model can be used to assess the opportunities and threats on pre-existing companies due to the influence of the Internet

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-14 STRATEGIC E-BUSINESS OPPORTUNITIES (AND THREATS) Examples of potential Internet opportunities for existing companies: -Procurement of supplies via Internet can increase company’s power over suppliers -Size of potential market is expanded - Distribution channels between traditional company and customer can be eliminated

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-15 STRATEGIC E-BUINESS OPPORTUNITIES (AND THREATS) Examples of threats to existing companies: -Migration to price competition – difficult to keep offerings proprietary -Increased number of potential competitors -Internet reduces some traditional barriers (such as in-person sales force) - Customers increase their bargaining power – Internet reduces customer’s switching costs

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-16 THE DOT-COM MELTDOWN E-business changes after the “dot-com meltdown”

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-17 B2B APPLICATIONS If buyers and sellers are fragmented markets, Independent intermediaries are more likely to be needed

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-18 B2B APPLICATIONS If sellers are concentrated, sellers are likely to dominate

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-19 B2B APPLICATIONS If buyers are concentrated, buyers are likely to dominate

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-20 B2B APPLICATIONS- Reverse Auctions Suppliers bid online in real time for a customer contract. They lower their prices to out bid their competitors.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-21 INTERNET USAGE ACROSS THE GLOBE.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-22 B2C APPLICATIONS Benefits to Sellers Seller Benefits: 24/7 access to customer for sales and support Lower costs from online channel Multimedia opportunities for marketing New ways to research potential markets New ways to distribute (if product/service can be digitized) Global reach to buyers Fig 7.9: Potential B2C benefits to Sellers

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-23 B2C APPLICATIONS FOR RETAILERS Dot-com - Amazon.com - Netflix.com Traditional Catalog - Dell - Lands’ End Traditional Store - Staples - Tesco

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-24 DOT-COM RETAILERS AMAZON Dot-com pioneer in online retailing of third-party products Began as bookseller Superior online shopping experiences for millions of customers By 1999: Competitor to Wal-Mart 2003: First year profitable 2007: Proprietary E-Book reader (Kindle) 2008: Most popular shopping site worldwide AMAZON

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-25 DOT-COM RETAILERS NETFLIX -Established in DVD rentals mailed to members : Proprietary video streaming : Greater market share than Blockbuster Netflix

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-26 CATALOG RETAILERS DELL -Traditional direct seller -Early market leader of made-to-order PCs - Developed custom software to support “mass customization” strategy -Took advantage of early Internet-savvy users - By 2010: Increased focus on Business customers DELL

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-27 CATALOG RETAILERS LANDS’ END - Traditional catalog seller -Developed capability for online sales of custom–crafted clothing - Acquired by Sears in 2002 Landsend.com

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-28 STORE RETAILERS STAPLES - Superstore retailer of office products - Launched online site in Web site designed for online order efficiency - By 2006: 25% of revenues from online sales; world’s largest office products company Staples

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-29 STORE RETAILERS TESCO - Grocery supermarket, based in England -Launched online site after Y2K -Delivery challenges due to perishable goods - By 2009: One of four successful multichannel grocery retailers in the world TESCO

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-30 DOT-COM INTERMEDIARIES eBay -Launched in Pioneer in electronic auctions (C2C) -Evolved to also be B2C and B2B intermediary -One of first dot-com’s to achieve profitability - By 2000: 80% of online auctions worldwide -2003: purchased PayPal for payment capability eBay

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-31 DOT-COM INTERMEDIARIES Google - Founded in 1998 by Stanford University students - Leading online search engine -Current world leader in online advertising revenues : Renewed compromise agreement with China for censorship compliance Google

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-32 DOT-COM INTERMEDIARIES Facebook - Founded in 2004 by Harvard students -Social Networking site -Major challenge: User privacy versus revenue -By 2010: 70% of users were outside of the U.S. -In 2010: Somewhat fictional account of startup days became award-winning movie Facebook

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-33 WHAT MAKES A GOOD WEBSITE FOR CONSUMERS.C Context: Site layout and design - functionally vs. aesthetically dominant or both (integrated) Content: Text, pictures, sound, and video that Web site contains, including dominant “store types” Commerce: Site’s capabilities to enable commercial transactions - functional tools and pricing Community: Ways that the site utilizes user-to-user communication to enable feelings of membership and shared common interests Connection: Extent to which the site is linked to other sites Customization: Site’s ability to tailor itself to different users or to allow users to personalize the site

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-34 WHAT MAKES A GOOD B2C SOCIAL MEDIA PLATFORM. Capabilities to: Brand the company or its products/services Support for sales and customer services Leverage consumers for product development and marketing Usage goals aligned with business strategy Providing users control over their privacy settings

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 7-35 COPYRIGHT Copyright notice All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall