1. Strategic Information Systems Preparing for the E- Business Environment

2. What is E-Business? IT enabled business processes. Netcentric business: Traditional networks Internet technology (extranets, intranets) Telecommunications intensive Transforms processes (business, society, government) Achieve better-faster-cheaper. Business processes that EXPLOT IT

3. Inclusive Domain of E-Business Electronic Commerce IT Enabled Enterprise Applications Electronic Collaboration ERP CRM SCM KM Groupware Electronic Communities Defining E-business…one view: Business Intelligence Data Mining

4. Defining E-business…another view: Phased Development Over Time brochureware E-commerce Catalogs on Internet Customer transactions on Internet E-business E-enterprise Business to Business Internet Enterprise Apps

5. Extranets Intranets The Internet Suppliers Customers The Firm E-business Systems E-commerce Systems Defining E-business…yet another view: See quote on next page.

6. E-commerce is concerned with revenue-generating transactions that cross firm boundaries. E-business is primarily concerned with the application of Internet technologies to business processes within the firm. From E-Commerce by Traudon and Laver (2001)

7. How is E-commerce different from E-business? E-Commerce: Generating revenue (direct or indirect) Selling goods and services over the Internet Transaction focused (buyer and seller) Numerous business models (how do we make money?) E-Business: All aspects of the business (ex: cost reduction; business intelligence). General better-faster-cheaper focus. Business process re-engineering Wider organizational impact (all processes)

8. Are non-profits “left out” of E-commerce/E-business

9. E-Business Impacts all processes in the Value Chain. Michael Porter’s VALUE CHAIN support functions

10. July 30, 2002 U.S. sales in the interactive/e-commerce sector climbed steadily from $28 billion to $31.4 billion from 2000 to 2001, an increase of 12.1%. By 2002, interactive/e-commerce sales are expected to increase by another 14.6%, hovering around $36 billion. E-commerce revenues in the United States are predicted to reach $81.1 billion by the year 2006. SOURCE: Direct Marketing Assn.

11. August 2, 2002 As published by eMarketer

12. January 15, 2002 Of the estimated 497.7 million Internet users worldwide, 29.8% of them are from Western Europe. The United States lays claim to 29.2% of Internet users. However, the United States still takes home the bulk of e- commerce revenues (43.7%), compared to Western Europe (25.7%), Japan (15.8%) and the Asia-Pacific region (6.1%). SOURCE: International Data Corp.

13. Retail e-commerce sales hit $9.8 billion May 30, 2002 U.S. retail e-commerce sales for Q1 2002 reached $9.849 billion, up about 19% from the same period in 2001. The latest results were down, however, from the Q4 2001 figure of $11.2 billion. Total retail sales for Q 2002 were $743.8 billion. SOURCE: U.S. Census Bureau

14. Disintermediation Re-intermediation Information Transparency Electronic Marketspace Mass Customization New terms, recurring themes…

15. E-Commerce existed before the Internet and is not completely reliant on the Internet. Electronic Data Interchange (EDI) Value Added Networks (VAN’s) Local Area Networks (LAN’s)

16. Digitization of the Product/Service Digitization of the Process Digitization of the Delivery Agent Three Dimensions of E-Commerce:

17. E-Commerce Economics Physical Agent (A) Digital Agent (B) Physical Product (A) Digital Product (B) Physical Process (A) Digital Process (B) The Continuum: Product A is purely physical; Product B is purely digital

18. Average cost Quantity Average cost COST CURVES Regular products Digital products E-Commerce Economics

19. The Power Shifts Inherent in E-Commerce Examples: Information availability affects consumer decision making. Information transparency exposes the inefficiencies of processes to customers. Downward price pressures. E-Commerce Economics

20. BENEFITS OF ADOPTING E- BUSINESS Economic Benefits: better-faster-cheaper (Hold down transaction, labor costs) Relational Benefits: customers and other organizations Strategic Benefits: long term survival, profitability

21. E-commerce Revenue Models: Advertising Subscription/membership fee Service fee (per transaction) Direct Sales Affiliate (fees for business referrals)

22. E-commerce Business Models: (based on the nature of transaction agents) Business to Consumer (B2C) Business to Business (B2B) (E-marketplaces; infomediaries) Consumer to Consumer (C2C) (infomediaries) Business to Employee (B2E) Government to Citizens (G2C) Collaborative Commerce Mobile Commerce

23. Organizational Preparedness for E-business External forces for change Organizational RESPONSE strategies: BPR; Continuous Improvement; Strategic IT systems; Business alliances; E-business

24. Organizational Preparedness What organizations will survive/thrive in an E-business environment? Innovation supported by: Organizational culture Organizational structure Organizational leadership

25. Organizational Preparedness Components of Organizational culture: vision values formal and informal structures communication networks decision making leadership style morale and human resources

26. Organizational Preparedness Styles of Organizational structure: bureaucratic organic (informal, entrepreneurial) process/team oriented

27. Organizational Preparedness Styles of Organizational leadership: authoritative charismatic coaching/enabling coordinating

28. WINNERS AND LOSERS Winners: Internet service providers (AOL) Portal service providers (Yahoo) Software companies selling E-business services Technology suppliers Mid-size (and some smaller) businesses that gain wider access to customers Large companies that successfully build fully integrated systems (FedEx; Walmart) Consumers

29. WINNERS AND LOSERS Losers: Smaller wholesalers and distributors Salespeople Brokers (traditional mediaries) Poorly planned and envisioned online-only companies (dot.coms)

30. A change in the foundation of competitive advantage… New companies are advantaged by their Lack of legacy systems Lack of legacy assets Lack of legacy mindset What about their disadvantages ?

31. Organizational Change for E-Business Old Rule: IT for operational support. New Rule: IT is critical to business strategy. What are the barriers that keep organizations from adopting this new rule?

32. IT and Change IT Leader must deal with... Changes to Information Technology. Changes to the organization because of changes to IT. Change can be viewed as problem or opportunity: Problem when not effectively managed Opportunity for organizational success

33. Organizational Change for E-Business “If an entity in the value chain begins to do business electronically, companies up and down that value chain must follow suit, or risk being substituted.” *Ravi Kalakota WHY?

34. Principles of E-business Design 1) Empower the customer Self-service Disintermediation Disseminate, not restrict information 2) Increase process visibility For employees, customers, suppliers

35. Principles of E-business Design 3) Treat each customer as a market segment Technology-mediated customization “Mass-customization” 4) Treat your assets as liabilities Outsource processes (manufacturing) Brand intensive, not capital intensive

36. Principles of E-business Design 5) Build enterprise applications Connect disparate systems (middleware as an alternative) Knowledge workers Multi-channel integration for customer 6)Create communities of value (E-business communities) Supplier partners Related technology partners Same industry competitors

37. Principles of E-business Design 7) Separate the economics of information from the economics of things Content separated from medium Near-zero cost of info replication 8) Control the “standard” Innovate Give away product to reach critical mass

38. In-house core competencies Infrastructure/ processes Products/ Services Channels Customers Needs Integrated Channels Products/ Services Flexible Infrastructure/ Processes Outsourced and In-house core competencies REVERSING THE VALUE CHAIN

39. Choose a FOCUS for achieving and retaining market leadership Service Excellence Operational Excellence Continuous Innovation Excellence BETTER-FASTER-CHEAPER END