Strategic Information Systems Preparing for the E-Business Environment
Dec 26, 2015
Strategic Information Systems
Preparing for the E-Business Environment
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
Inclusive Domain of E-Business
ElectronicCommerce
IT Enabled Enterprise Applications
ElectronicCollaboration
ERP CRM
SCM KM
Groupware
ElectronicCommunities
Defining E-business…one view:
Business Intelligence
Data Mining
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
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.
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)
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)
Are non-profits “left out” of
E-commerce/E-business
PurchasedSuppliesInboundLogistics
Operations
Product R&D, Technology, and Systems Development
Human Resources Management
General Administration
OutboundLogistics
Sales andMarketing Service
E-Business Impacts all processes in the Value Chain.
Michael Porter’s VALUE CHAIN
support
functions
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.
August 2, 2002 As published by eMarketer
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.
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
Disintermediation
Re-intermediation
Information Transparency
Electronic Marketspace
Mass Customization
New terms, recurring themes…
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)
Digitization of the Product/Service
Digitization of the Process
Digitization of the Delivery Agent
Three Dimensions of E-Commerce:
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
Average cost
Quantity
Quantity
Average cost
COST CURVES
Regular products
Digital products
E-Commerce Economics
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
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
E-commerce Revenue Models:
• Advertising
• Subscription/membership fee
• Service fee (per transaction)
• Direct Sales
• Affiliate (fees for business referrals)
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
Organizational Preparednessfor E-business
External forces for change
Organizational RESPONSE strategies:
BPR; Continuous Improvement; Strategic IT systems; Business alliances; E-business
Organizational Preparedness
What organizations will survive/thrive in an E-business environment?
Innovation supported by:
• Organizational culture
• Organizational structure
• Organizational leadership
Organizational Preparedness
Components of Organizational culture:
• vision
• values
• formal and informal structures
• communication networks
• decision making
• leadership style
• morale and human resources
Organizational Preparedness
Styles of Organizational structure:
• bureaucratic
• organic (informal, entrepreneurial)
• process/team oriented
Organizational Preparedness
Styles of Organizational leadership:
• authoritative
• charismatic
• coaching/enabling
• coordinating
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
WINNERS AND LOSERS
Losers:
Smaller wholesalers and distributors
Salespeople
Brokers (traditional mediaries)
Poorly planned and envisioned online-only companies (dot.coms)
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?
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?
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
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 KalakotaWHY?
Principles of E-business Design
1) Empower the customer• Self-service• Disintermediation• Disseminate, not restrict information
2) Increase process visibility• For employees, customers, suppliers
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
Principles of E-business Design5) 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
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
In-house core competencies
Infrastructure/processes
Products/Services
Channels Customers
CustomersNeeds
Integrated Channels
Products/Services
FlexibleInfrastructure/
Processes
Outsourced andIn-house corecompetencies
REVERSING THE VALUE CHAIN
Choose a FOCUS for achieving and retaining market
leadership
•Service Excellence
•Operational Excellence
•Continuous Innovation Excellence
BETTER-FASTER-CHEAPEREND