1. Moving from E-commerce to E-business
Chapter One
Moving from
E-commerce to E-business
The E-Business material shall at all times remain the property of E-Business Strategies, Inc. No license under any trade secrets, copyrights, or other rights is granted by this Agreement or any disclosure of Confidential Information hereunder. Any such permitted copies will be considered Confidential Information. Confidential Information of E-Business Strategies, Inc. may not be copied or reproduced by the Recipient without E-Business Strategies, Inc. prior written consent.
The E-Business material may not be re-sold. It is intended to be used solely for the purpose of accompaniment of the E-Business 2.0 Roadmap for Success book in an instructional manner.

2. Adaptive Supply Chains Network Infrastructure
Why Study E-business?
Promise:
Streamlined Business
Reality:
Blizzard of Buzzwords
Process Automation
Customers.com
Lack of
Framework
ERP
CRM
Adaptive Supply Chains
Digital Economy
SCM
Portals
Network Infrastructure
Exchanges
The scale and scope of modern IT investments requires that managers have a clear understanding of e-business fundamentals!

3. Consequences of not Studying E-business?
Locally Optimized Business Processes
Incompatible Projects
Order Fulfillment
Procurement
ERP
CRM
Poorly Designed Business Processes
Persistent Channel Conflicts & Cross-Department Tensions
Resistance to Changes

4. Need for a Robust Framework
E-business Course Goals
Rationalize buzzwords
Recognize commonalties across business environments
Framework for designing more effective new systems
Provide a Managerial Perspective
A set of basic principles
Understand how to map business needs to e- business solutions
Synthesis
Information Technology (IT) changes, but management principles persist!

5. E-business Applications
Framework for Book
Business Strategies
and Processes
What is the basic framework that ties business strategies to applications?
What are the key ideas of e-business strategies and how do they translate into e-business design to align IT with business needs?
Drive
Enable
E-business Applications
Drive
Enable
IT Infrastructure

6. Table of Contents E-commerce vs. E-business?
E-Business Success Stories
Ten Rules of E-business
What does this mean for managers – Looking Deep
Key Take-Aways

7. E-commerce Refers to selling of products and services over the Web
Transactions fall into three categories:
Business-to-business (B2B)
Business-to-consumer (B2C)
Consumer-to-consumer (C2C)
The goal of e-commerce is to reduce transaction costs

8. E-commerce Progression
E-commerce Maturity
Functionality
Brochure ware
Web Storefront
E-commerce
Transactions 1 2 3 4
Communities of Interest
Mega-Portals
Complex
Limited
E-commerce has evolved rapidly since 1995

9. E-business
The back-office applications, systems or processes that create goods and/or provide services.
E-business includes:
Customer Relationship Management
Enterprise Resource Planning
Supply Chain Management
Human Resource Management Systems
And more . . .

10. E-commerce vs. E-business
value added
“INPUTS”
“OUTPUTS”
TRANSFORMATION
Processes
Facilities
Equipment
Finance
People
Serves Customers
Product Sold
People
Raw Material
E-business: The transformation of key business processes through the use of Internet technologies!

11. E-business: All About Managing Business Processes
Analysis & Management
Customer
Feedback
for control
E-business
Network of activities
Inputs
E-commerce
Flow Units
(Raw material, people,
information, etc.)
Products
Services
Resources
Labor & Capital
A business process is a network of activities that takes one or more inputs and creates an output of value to customer

12. E-business: Linking Today’s Business with Tomorrow’s Technology
E-business -- includes all apps and processes enabling a company to service a transaction
E-business Evolution
Phase 1: Presence, information-only
Phase 2: Transactions
Phase 3: Profitability
E-business in third phase today:
Psychology of first two phases: technology would trump experience; future would belong to upstarts as eToys
Psychology of this phase: experience, distribution, margins are worth something

13. Table of Contents E-commerce vs. E-business?
E-business Success Stories
Ten Rules of E-business
What does this mean for managers – Looking Deep
Key Take-Aways

14. E-business is Changing All Industries
Communications
Utilities
Transportation
Hospitality
Manufacturing
Automotive
Financial
Petrochemical/
Insurance
Process
Consumer/
Entertainment/
Health Care
Retail
Services
Hi-Tech
What differentiates the e-business efforts of leading companies from the pack?

15. Visionary Firms and E-business
Visionary companies understand current business designs are inadequate for doing business in the e- commerce era
Can buy a $999 built-to-order PC from Dell online but not a customized $3000 color copier from Xerox
Cisco can overhaul its product line every 2 years, but Kodak cannot seem to deliver rapid innovations to meet changing customer requirements
Visionary companies have integrated operations to support changing customer requirements
E-customers’ needs, tastes, and expectations transforming shape of the enterprise
Necessary: fusion of business designs, processes, apps, and systems on an unprecedented scale

16. Visionary Firms and E-business
Management at leading companies often ask:
How will ecommerce change our customer priorities?
How can we construct a business design to meet these new customer priorities?
What kind of new apps infrastructure do we need to orchestrate the new business design?
What short-term and long-term investments in people, partners, and tech must we make to survive, let alone thrive, in the new economy?

17. E-business Capabilities
Process-based
Capacities that transforms material or information and provide advantages on dimensions of cost and quality.
E.g., United Parcel Service (UPS)
Systems-based
Capacities that are broad-based involving the entire supply chain and provide advantages of short lead times and customization.
E.g., Dell Computer
Organization-based
Capacities that are difficult to replicate and provide abilities to master new technologies.
E.g., Cisco Systems
Let’s look at a few visionary companies…. 11

18. United Parcel Service
Founded in 1907 to become world’s largest express and package delivery firm
13.2 million packages per day, 3 billion/year
344,000 employees; $29.8 billion revenue
11th largest airline; Largest cellular user in the world
Initially a laggard in use of IT. In 1980s and throughout the 90s, spent billions of dollars putting in place
Tracking and tracing technology
Frontline handheld technology
E-commerce capabilities
Huge customer databases
Benefits
2 Million tracking requests per day over the web
Connect 1.7 million sellers with 7 million buyers every day
Annual IT investment of over $1 billion

19. Dell - Build to Order E-channel
Challenges
Scale to large volumes - $50 million a day
Service consumers & businesses
Solution
Premier Pages: Provide full-service (leasing, financing, order status)
Increases effectiveness of their sales force
Benefits
Sales today: 60% Businesses, 40% Consumers
Improved Customer Service (7x24 account status, real-time order status)
More efficient, lower-cost sales cycle

20. Cisco Systems
Most successful “New Economy” firm with “Old Economy” discipline and operational excellence
Cisco has propagated IT throughout the organization, in every major function
Significant investments in back office ERP ($30M) and Internet/Intranet ($100M)
Almost $400M annual savings from use of technology
E-business use is a major competitive long-term strategy for Cisco
Made it very difficult for slow-moving, traditional companies (Lucent, Nortel) to catch up

21. What Do Leading Firms Have in Common, Business-Wise?
Unusually successful within their industries
Profitable and growing
Clear strategic intent – Wal-Mart (Low Price Guarantee)
Long-term technology blueprint -- “Built to last”
Complex, multi-functional business model
Good places to work – employees turnover low
Continually innovative
Fit among strategy, business model, systems

22. Table of Contents E-commerce vs. E-business?
E-business Success Stories
Ten Rules of E-business
What does this mean for you – Looking Deep
Key Take-Aways

23. Ten Rules of E-business
Technology is no longer an afterthought in forming business strategy, but the actual cause and driver
Rule 2
The ability to streamline the structure, influence, and control of the flow of information is dramatically more powerful and cost- effective than moving and manufacturing physical products
Rule 3
Inability to overthrow the dominant, outdated business design often leads to business failure
Rule 4
E-commerce is enabling companies to listen to their customers and become either “the cheapest,” “the most familiar,” or “the best”
Rule 5
Don’t use technology just to create the product; use it to innovate, entertain, and enhance the entire experience surrounding the product, from selection and ordering to receiving and service

24. Ten Rules of E-business
The business design of the future increasingly uses reconfigurable e-business community models to best meet customers’ needs
Rule 7
The goal of new business designs is for companies to create flexible outsourcing alliances that not only off-load costs but also make customers ecstatic
Rule 8
For urgent e-business projects its easy to minimize application infrastructure needs and to focus on the glitzy front end apps. The oversight can be costly in more ways than one
Rule 9
The ability to plan an e-business infrastructure course swiftly and to implement it ruthlessly are key to success; ruthless execution is norm
Rule 10
The tough task for management is to align business strategies, processes, and applications fast, right, and all at once; Strong leadership is imperative

25. Ten Rules of E-business: Rule 1
Technology is no longer an afterthought in forming business strategy, but the actual cause and driver
Conventional, risk-averse businesses cannot ignore e-business
E-commerce poses most significant challenge since advent of computing
Most execs unaware of impact of these changes
Need to see business differently; maintaining status quo not a viable option

26. Ten Rules of E-business: Rule 2
The ability to streamline the structure, influence, and control of the flow of information is dramatically more powerful and cost-effective than moving and manufacturing physical products
Core driver of structural transformation of business
Few companies have info-centric business designs for continuous business change and innovation
Changing info flow requires changing product mix and ecosystem
DEC’s demise
Most companies unable to cannibalize existing business structures, reallocate assets to compete with startups

27. Ten Rules of E-business: Rule 3
Inability to overthrow the dominant, outdated business design often leads to business failure
CompuServe & Prodigy Vs. AOL
Not the earliest adopters, but the most serious, eventually prevail
AOL outlasted, outwit, and outsmart competition
Often in the early phase, there is an “arms race” between competitors
Need to convert technology advantage to process advantage to business model advantage
Deeply-embedded innovations are difficult to implement – but also to copy!

28. Value Chain Disaggregation and Reaggregation
Disaggregation to separate means, or products, from ends, or customer needs
Value of a business in the needs it serves, not in products it offers
Intel with continuous innovation in chip design and manufacturing
Requires identifying, valuing, and nurturing core of business: the underlying needs satisfied by company
Reaggregation to lower cost or enhance differentiation from competitors
Streamlines entire value chain
Success dependent on well-integrated enterprise apps
Amazon.com Vs. Barnes and Nobles

29. The Road Ahead: Steps to a New Beginning
Six steps of disaggregation and reaggregation
What is the new industry structure?
Configuration
What does the digital consumer want?
Value in terms of experience and expectations
What are the new economics?
How to convert value creation into revenue?
How do you engineer the end-to-end value stream?
How do we reorganize our business?
Right partnerships
Where is the value?
Integration
How do we implement change?
New generation leaders who understand how to create digital future by design and intent, not by accident

30. Challenging Traditional Definitions of Value
Customers need businesses to improve
Speed of service
Convenience
Personalization
Price
Managers should ask how they can use technology to create new value proposition for the customer
Domino’s Pizza, Dell, Amazon.com
Ability to view world from customers’ perspective prevents visionary companies from starting in wrong place and ending up at wrong destination
Market segmentation analysis difficult to execute in turbulent environment

31. Changing the Notion of Value: E-commerce
Web and ecommerce have accelerated value innovation in speed, convenience, personalization and price dimensions of a service
Changed underlying value proposition
Customer’s looking for cheapest, most familiar, or best quality product
A product or service that is 98 percent as good, unfamiliar or costs 50 cents more will not survive
Companies following such middle-of-the-road strategies will underperform

32. Ten Rules of E-business: Rule 4
E-commerce is enabling companies to listen to their customers and become either “the cheapest,” “the most familiar,” or “the best”
“The cheapest” not synonymous with inferior quality
Southwest’s “No Frills Flying”
Wal-Mart’s “Everyday Low Prices”
“The most familiar” means customers know what to expect
McDonald’s, Coca-Cola took decades to build brand
AOL and Yahoo carved out strong identities in only a few years using technology

33. Ten Rules of E-business: Rule 4
Being “the best”
Reinventing service processes to enhance quality
Turning company on a dime to move in more profitable directions
Raising relationships with customers and suppliers to unprecedented levels of cooperation and trust
Amercian Express’ Return Protection Plan

34. Ten Rules of E-business: Rule 5
Don’t use technology just to create the product; use it to innovate, entertain, and enhance the entire experience surrounding the product, from selection and ordering to receiving and service
Amazon.com in the book retailing industry identified new source of customer value by streamlining consumers’ buying experience
Microsoft anticipated changing customer experiences and reengineered several value chains: Travel (Expedia), Automotive (CarPoint), Real Estate (HomeAdvisor), Finance (Investor)

35. Ten Rules of E-business: Rule 5
CEOs must understand the threat posed by value migration
Is there an Amazon.com that can squeeze margins in your business?
If not, can you create one -- “destroy your business” initiative at GE?
Are any new entrants in your industry leveraging Web to rewire customer experience and change service expectations?
CEOs must understand how to manage in a fast-moving environment

36. Ten Rules of E-business: Rule 6
The business design of the future increasingly uses reconfigurable e-business community models to best meet customers’ needs
Competition no longer between companies but between Business Webs (BWs)
Auto-By-Tel vs. Big Three in the car industry
Cost
Quality
Delivery
Flexibility

37. Harvesting Outsourcing: E-business Core Competencies
3rd Gen:
Need advice, contacts
and Web savvy
2nd Gen:
Cannot go
at it alone
Process Outsourcing
Investment
Partnerships
1st Gen:
Cannot do everything well
Contract
Manufacturing
Co-create
critical tasks
Focus:
Market position via
ease of doing business (e.g, GE in India)
Administration HR
Accounting IT
Outsource
critical tasks
Focus: Time-to-market,
Market position via
ease of doing business
Do not outsource
core competence
Focus: efficiency
and cost reduction

38. Creating the New Technoenterprise: Integrate, Integrate, Integrate
App integration key to e- business
Not easy, requires major app overhaul for integrated front-end/back-end infrastructure
Integrated app architecture critical with advent of e-commerce
Threat of losing customers looming large with advent of new market entrants
Strategy Process
Customer Needs
Corporate Strategy
Process Strategy
Application Integration Decisions

39. Ten Rules of E-business: Rule 7
The goal of new business designs is for companies to create flexible outsourcing alliances that not only off-load costs but also make customers ecstatic
E-business enabled outsourcing a big deal
Pressure by shareholders for double-digit revenue growth
CEOs have already reengineered, downsized and cut costs; now looking at technology to transform business model and deliver results

40. Ten Rules of E-business: Rule 8
For urgent e-business projects its easy to minimize application infrastructure needs and to focus on the glitzy front end apps. The oversight can be costly in more ways than one
Decision to adopt e-business architecture is a business, not technical, decision
The lack of attention to the back-office systems and process side of E-business is the primary reason for many project failures.

41. Ten Rules of E-business: Rule 9
The ability to plan an e-business infrastructure course swiftly and to implement it ruthlessly are key to success; ruthless execution is norm
Most e-business strategies in dire straits even before they start
Managers often don’t understand complexity of converting strategy into a working architecture
The goal of every successful e-business strategy is help the firm either save or make money.

42. Ten Rules of E-business: Rule 10
The tough task for management is to align business strategies, processes, and applications fast, right, and all at once; Strong leadership is imperative
Many managers good at planning strategy and looking at things strategically but not at implementing strategy
Implementation takes leadership, commitment and backbone
“Creative destruction” or breaking free from habits of past necessary

43. Table of Contents E-commerce vs. E-business?
E-business Success Stories
Ten Rules of E-business
What does this mean for managers – Looking Deep
Key Take-Aways

44. Current Issues in E-Business
Effectively consolidating the processes and IT operations resulting from mergers
Developing flexible supply chains – physical, information and financial -- to enable mass customization of products and services
Managing global supplier, production and distribution networks
The customer oriented integration -- using technology to combat the increased “commoditization” of products/services
Using self-service to cut internal and external operating costs  

45. Are You Ready? Does senior management understand?
Implementation side of strategy?
That entire business platform is being transformed by new technology that tightly integrates internal and external processes?
The risks, challenges in integrating and implementing enterprise apps necessary for an e-business enterprise?
What it takes to build inter-enterprise, tech-supported processes, such as SCM, that form backbone of ebusiness?
Do you have baggage – legacy apps, calcified processes, bureaucratic controls and inflexible business models

46. Fundamental Questions in Each Phase
How will e-commerce change our customer priorities?
What new things do our customers want?
How can we construct a business design to meet these new customer priorities?
What kind of new applications infrastructure do we need to orchestrate the new business design?
What short-term and long-term investments in people, partners, and technology must we make to survive, let alone thrive in this new environment?

47. Are Customers Are Looking for Internet Business Solutions
Customer attitudes — from tactical to strategic
Customers require solutions — not just products and services
Internet business solutions are evaluated and selected by the business decision-makers — not the technical staff
Business decision-makers are looking for a trusted advisor

48. Table of Contents E-commerce vs. E-business?
E-business Success Stories
Ten Rules of E-business
What does this mean for managers – Looking Deep
Key Take-Aways

49. E-business is NOT about Technology
Business decisions
Strategic
Technology decisions
Tactical
Time
E-business decision-makers are Presidents, CEO’s, CFO’s, and department heads
What motivates them – business strategy & direction, NOT technology

50. E-business Management Challenges
Why Should Senior Management Be Much More Focused On E-business Decisions Today?
The Cost Of Making A Technology Mistake Has Increased Exponentially
Siemens invests 1 Billion in Supply Chain Project
Nike reports 400 Million loss due to supply chain software snafu
Coco-Cola invest 600 Million in Logistics platform

51. Questions for every E-business manager
How will e-business transform business models in my industry?
How can e-business help to achieve my business goals and objectives?
What is our e-business design that lets us compete effectively?
What e-business opportunities are attractive for my company?
Based on customer needs, what processes can be streamlined or enhanced by e-business?
These are some of the key several key questions every manager should ask themselves as they embark on creating a business design for their company.
Executives must recognize that before they get to the 21st century, they must leave past practices behind. They recognize that there is a tollbooth at the entrance to the new millennium. Not all firms will be unable to pay the toll because it requires a new type of currency — e-business leadership! Admission will not be grated to firms that continue to use yesterday's assumptions and practices. To proceed, executives need to recognize that new realities call for new mental models, new approaches and new ways to do business.

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The E-Business material shall at all times remain the property of E-Business Strategies, Inc. No license under any trade secrets, copyrights, or other rights is granted by this Agreement or any disclosure of Confidential Information hereunder. Any such permitted copies will be considered Confidential Information. Confidential Information of E-Business Strategies, Inc. may not be copied or reproduced by the Recipient without E-Business Strategies, Inc. prior written consent.
The E-Business material may not be re-sold. It is intended to be used solely for the purpose of accompaniment of the E-Business 2.0 Roadmap for Success book in an instructional manner.