1 What is E-Business and does it matter? Definitions and Emerging E-Business Models Professor Feng Li The Business School University of Newcastle upon Tyne E-Mail: [email protected] © Feng Li, 2006
Oct 24, 2014
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What is E-Business and does it matter? Definitions and Emerging E-Business Models
Professor Feng LiThe Business SchoolUniversity of Newcastle upon TyneE-Mail: [email protected]
© Feng Li, 2006
© Feng Li, 2006 2
What is E-Business?
Where do you draw the line? Software; Book Car Mortgage
Measuring E-Business depends on how far you stretch the ‘rubber band’!
© Feng Li, 2006 3
What is E-Business?
E-Commerce – electronic transactions conducted by business partners (narrow definition)
E-Business: buying and selling, servicing customers, collaborating with business partners, and conducting electronic transactions within an organisations
Turban, Efraim, David King, Jae Lee and Dennis Viehland (2004) Electronic Commerce: A Managerial Perspective 2004. Pearson Prentice Hall, New Jersey
© Feng Li, 2006 4
What is E-Business? …2
E-Commerce as digitally enabled commercial transactions between and amongst organisations and individuals
E-Business refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm
E-Business are those activities other than ‘buying and selling’ via electronic channels
Laudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, Boston
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What is E-Business … 3
For this module, a broad definition of E-Business is adopted
It encompasses all internal and external electronically based activities and processes.
E-commerce is part of E-Business, which focuses on the electronic commercial transactions between and amongst organisations and individuals
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What is E-Business? … continued
‘E-business is all about time cycle, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage’
-- Lou Gerstner, ex CEO of IBM
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What is E-Business … continued.
Not just about dot com’s and Internet only companies
Transform existing businesses through the Internet and related technologies
Integration within and between organisations – break down barriers and boundaries
Enabling new possibilities – new ways of doing business - not possible in the past
Origin go back several decades A wealth of knowledge already available -
through large research programmes
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Dot Com Crash – End of E-Business?
Underlying rapid growth has never stopped – even during the dot com crash
The Web has become an increasingly important part of consumers' everyday lives - shopping, banking, amusing, education …
Part of mainstream business culture, fulfilling its promise as a medium that can connect consumers and enterprises and cut red tape from transactions
Pure plays versus multi-channels - Web sites are necessary for any business - even if the online arm loses money
E-Commerce still only a small section of the economy (e.g. e-commerce < 5% of retailing)– ‘big bang’ yet to come
Not the end – the fun has just started !
© Feng Li, 2006 9
E-Business: Classification
Business to Business (B2B) Business to Consumers (B2C) Consumer to Consumers (C2C) Consumer to Business (C2B) E-Government (B2G, C2G etc.) Intra-Organisation E-Business Others – P2P etc.
© Feng Li, 2006 10
Why E-Business? Why Now?
Demand Pull – The New Economy Information economy - Information content & labour – over
60% New economics of information
Technological Push – the ‘ICTs Revolution’ Convergence of computing, telecom & media Exponential growth of the Internet Mobile communications
Rapid development of the Internet Mass, public infrastructure Individuality, interactivity, mobility & consumer
experiences Government Initiatives & Targets Others …
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Context for E-Business
All industries became information-intensive Information – and communication – are crucial
to success of industrial & commercial operations
Fast growing ICTs & information industries Profound Impacts on what activities locate
where, how territories administered, markets served, linkages maintained between customers & suppliers
Need for new strategies, business models & organisational designs
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E-Business Models
E-Shops – web marketing or a shop (B2C)
E-Procurement – E-tendering & procurement of goods and services
E-Shopping Centres/E-Malls– a collection of E-shops
E-Auctions – E-implementation of bidding mechanisms
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E-Business Models .. continued
Virtual Communities – members with common interests
Collaboration Platforms – tools & infor. environment for members to collaborate
Third-Party Marketplaces – leaving web marketing to third party
Value-Chain Integrators
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E-Business Models .. continued
Value-Chain Service Providers – support part of value chain (e-logistics, e-payments)
Information Brokerage, Trust and other services – business information and consultancy; trusted third party services
Others (e-betting/gambling; syndication ……)
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Implications of E-Business: Fundamental and Pervasive transformation
New strategy & business models New organisational designs New inter-organisational relations New work organisation and new ways
of Working Others …
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Organisational implications
Two ways to beat competition and succeed in the market: Product/service innovations Organisational/managerial innovations
Organisational innovations essential to efficiency and competitiveness
Internet enables new organisational designs/new ways of doing business – often in ways impossible in the past
Within AND between organisations – the entire value/supply chain/network
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De-Construction of Integrated Businesses
What does your company really do? Customer relationship business -
scope Product innovation and
commercialisation businesses - speed Infrastructure management
businesses - scale Unnatural Bundle – everything
operate at sub-optimal level
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Customer Relationship
Driven by scope economy Customer service-oriented culture Customisation – developing relationship
with them and understand their needs Offer as many products as possible to
maximise selection for customers Tailor bundles of products and services
to capture a larger share of wallet
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Product Innovation & Commercialisation
Driven by speed – the faster the better Using all possible distribution channels to
reach customers Organisational culture geared to attract
and retain creative talents Operations tailored to serve the needs of
creative talents for breakthrough innovations
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Infrastructure Management
Driven by scale economy – pumping as many products through it as possible
Full utilization of facilities & low cost operations
Culture – cost reduction & standardisation
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Already Happening ...‘Transformational outsourcing’
J.P. Morgan - IBM will take over most of the bank's computing operations - $5bn over 7 years
Ford spin off Visteon – computing on demand deal with IBM - $2bn over 10 years
Telecom Italia – HP will provide IT management services – worth 225 million euros, or about US$243 million over 5 years
Other functions – and entire business processes – increasingly being outsourced too
© Feng Li, 2006 22
Organisational Design:
When is Virtual Virtuous?
Not all the smart people work for you - market gives you access to them
Internal capability vs. partners Short-term vs. long-term Autonomous vs. Systemic innovations Integrated companies vs. SMEs
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Web/Cluster Strategy
Webs – clusters of companies consolidate around a particular technology
Examples – Intel/Microsoft; SAP’s integrated solutions;
Spread risk, increase flexibility, enhance innovation, reduce complexity
Conditions - technological standard & increasing returns
Shapers and adapters – choose your role Grow market share vs. grow the pie Unbundling & outsourcing
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Internet Banking:Cheap channel VS new business model?
Internet as a new cheap convenient distribution channel
New entrants challenge the integrated banking model
De-construction of the integrated banking processes
Future scenarios?
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Deconstruction of Telecom Value Networks
Boundaries increasingly eroded Traditional business model may
not longer be sustainable Deconstruction of integrated value
chains The emergence of new value
networks Competing at multiple fronts
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E-Government and E-Public Services
‘After ecommerce and e-business, the next Internet revolution will be e-government’ The Economist, 28 June 2000
USA - $600billion annual procurement spending EU – euro720billion combined Big private sector companies typically achieve
20% saving by procuring online Slashing purchasing and fulfilment cycles and
lower admin costs by up to 75% and halve stocks Potential to fundamentally change the way
people relate to government!
© Feng Li, 2006 27
Modernizing government in the UK
Better government, better policy making, better responsiveness to what people want and better public services by reforming the machinery of government in the UK- especially through the use of ICTs – information age government
Electronic service delivery to join up service provision across departmental boundaries, break down silo based delivery networks and allow citizens to interact with government whenever they choose
Joined up working between different parts of government and provide new efficient and convenient ways for citizens and businesses to communicate with government
E-Government targets - making 100% of services available electronically by 2005 – almost achieved
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Emerging issues in E-Government
All existing research shows in the UK joint up government providing joint up services is not happening – yet?
Public services - People as citizens or customers
So far 85% all public sector IT projects are deemed to be failures (IBM worldwide head of government services)
Purposes of E-Government – stated and real
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Emerging issues in E-Government (2)
E-Government and the redefinition of power structure and the buy-in from key stakeholders Strong resistance from those negatively affected The practical feasibility of achieving joint up
government ? Potential Conflicts between strategic objectives
efficiency gains could be translated into reduced employment in certain sections of the public sector (as many as 1 in 5 - 800,000!)
clash with other strategic objectives of the Government such as full employment – an issue that will need to be carefully addressed given that the public sectors are the biggest employers in many regions in the UK
© Feng Li, 2006 30
What Next ?
Old established corporations will not disappear
The new energetic dot.com’s would not necessarily survive
A new class of firms would emerge All organisations need to go through profound
changes Prahalad, C K & Venkat Ramaswamy (2004)
The Future of Competition. Harvard Business School Press, Boston
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What is E-Business? How the Internet Transforms Organisations
Chapter 1. Introduction Chapter 2. What is E-Business
and Does It Still Matter? Chapter 9. Emerging E-Business
Models in the Network Economy
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Suggested Reading Jelassi, Tawfik & Albrecht Enders (2005) Strategies for E-Business:
Creating Value through Electronic and Mobile Commerce. Pearson Education Ltd, Harlow
Farhoomand, Ali (2005) Manageing (e)Business Transformation: A global perspective. Palgrave Macmillan, Basingstoke
Turban, Efraim, David King, Jae Lee and Dennis Viehland (2004) Electronic Commerce: A Managerial Perspective 2004. Pearson Prentice Hall, New Jersey
Laudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, Boston
Chaffey, David (2002) E-Business and E-Commerce Management. Pearson Education Ltd, Harlow
Timmers, Paul (2000) Electronic Commerce: Strategies and Models for Business-to-Business Trading, Wiley, Chichester
Rappa, Michael (2004) Managing the Digital Enterprise. http://digitalenterprise.org/index.html Especially chapter 5 - Business Models on the web. http://digitalenterprise.org/models/models.html
100’s of new books on e-business and e-commerce …
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Suggested reading 2
Cabinet Office (2000) ‘e-governmnent-A strategic framework for public services in the Information Age.’ London: HMSO
Li, F (2003) Implementing E-government Strategy in Scotland: Current Situation and Emerging Issues. Journal of E-Commerce in Organisations 1 (2) April-June 2003:44-65
Cornford, J (2004) Understanding the Process of Implementing Electronic Local Government in England - http://www.campus.ncl.ac.uk/unbs/sbi/Project2.asp?ProjectID=3
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Readings … 3 Hagel III, John and Marc Singer (1999) Net Worth: Shaping
Markets When Customers Make the Rules. Harvard Business School Press, Boston (Chapter9)
Li, Feng (2002) Internet banking in the U.K.: From new distribution channel to new business models. The CAPCO Institute Journal of financial transformation. http://www.capco.com/pdf/j06art10.pdf
Christensen, Clayton & Michael Raynor (2003) Innovator’s Solutions, Harvard Business School Press, Boston
(also Christensen’s earlier book on Innovators Dilemma and latest book Seeing what next?)
Zuboff, Shoshana & James Maxin (2004) The Support Economy. Allen Lane, London
Prahalad, C K & Venkat Ramaswamy (2004) The Future of Competition. Harvard Business School Press, Boston
Peters, Tom (2003) Re-Imagine! Dorling Kindersley, London