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What is E-Business?
Measuring E-Business depends on how far you stretch the rubber band!
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
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 Laudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, Boston
What is E-Business 3
For this module, a broad definition of EBusiness 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
Not just about dot coms 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
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 !
Business can be defined as the organized effort of individuals to produce and sell, for a profit, products and services that satisfy society's needs. In a simple sense, then, e-business (electronic business) can be defined as the organized effort of individuals to produce and sell, for a profit, products and services that satisfy society's needs through the facilities available on the Internet.
Defining e-Commerce
e-commerce is a part of e-business; the term refers only to the activities involved in buying and selling online. These activities may include identifying suppliers, selecting products or services, making purchase commitments, completing financial transactions, and obtaining service.
Telecommunications Infrastructure Internet Software Producers Online Sellers and Content Providers Global e-Business Small e-Business
A Business Model
A business model is a group of shared or common characteristics, behaviors, and methods of doing business that enables a firm to generate profits through increasing revenues and reducing costs.
Business-to-Business Model
Many e-businesses can be distinguished from others simply by their customer focus. For instance, some firms use the Internet mainly to conduct business with other businesses. These firms are generally referred to as having a business-to-business (B2B) model. Currently, the vast majority of ebusiness is B2B in nature.
Business-to-Consumer Model
In contrast to those firms using a B2B model, firms like Amazon and eBay are clearly focused on individual buyers and so are referred to as having a business-toconsumer (B2C) model.
Consumer-to-Consumer Model
Unlike the B2B and B2C models, which focus on business transactions and communications, the consumer-to-consumer (C2C) model involves the growing popular use of peer-to-peer (P2P) software that facilitates the exchange of data directly between individuals over the Internet.
Management Activities and Practices Marketing Applications and Solutions Financial Services and Solutions
Information economy - Information content & labour over 60% New economics of information Convergence of computing, telecom & media Exponential growth of the Internet Mobile communications Mass, public infrastructure Individuality, interactivity, mobility & consumer experiences
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
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
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
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 )
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
Organisational implications
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
Customer relationship business scope Product innovation and commercialisation businesses - speed Infrastructure management businesses - scale
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
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
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
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
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
Web/Cluster Strategy
Webs clusters of companies consolidate around a particular technology Examples Intel/Microsoft; SAPs 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
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?
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
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!
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
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
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 ? 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
What Next ?
Old established corporations will not disappear The new energetic dot.coms 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