1. overview of electronic business
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1. Overview of Electronic Business. Dr. CK Farn Department of Information Management NCU 2006 (update). The Changing World. Where do you shop 10 years ago Today How do you get service from banks?. Business size, before. Business size, now. The impact of IT on businesses. - PowerPoint PPT PresentationTRANSCRIPT
Dr. CK Farn, NCU 1
1. Overview of Electronic Business
Dr. CK FarnDepartment of Information Management
NCU
2006 (update)
Dr. CK Farn, NCU 2
The Changing World
Where do you shop10 years agoToday
How do you get service from banks?
Business size, before Business size, now
Dr. CK Farn, NCU 3
The impact of IT on businesses
IT-enabled business operationsIT-centered business operationsVisibility, access, control, …
Dr. CK Farn, NCU 4
Business Applications of IT
Data ProcessingDP/EDP
Computer
MIS
IT innovation
Concept Innovation
Data Analysis
DecisionSupportDSS/EIS
DecisionModels
OnlineTxn
OLTP
DatabaseTelecomms
ERP
Production,Mgt Acct.
EB
BPR
EC
Internet
50s 60s 70s 80s 90s 00s
1995
Integration
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Major Determinants of Modern Businesses
Technological InnovationsGlobalization
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Evolution of Technology
2K AD0 AD2K BCMillions of years ago
Inventions
Stone tools
Bronze
Ceram
ic
Iron Power
Printing
What around you has been therefor over a century?
Transportation IT
Paper
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Technological Innovations
Transportation and machinesSpeed up movements of goodsReduce production costs
Computers and communicationsEfficient processing and movement of informationVisibility and access
New Concepts: Do the impossible thingsLifting of existing constraintsWhat “Values” do your company offers?
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Business Environments
Intra-BusinessOperations
SuppliersLong term relationshipOne-off relationship
CustomersBusiness customersEnd consumers
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Electronic Commerce
Selling to consumers?On-line shopping, e-tailingAuctionOnline services
Doing business electronically?Business relationshipsBuying, selling and collaborating
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US B2C eC Market Size
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US B2B eC Market Size
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US EC Market Growth
$0$200$400$600$800
$1,000$1,200$1,400
2000 2001 2002 2003 2004 2005
B2CB2B
Billion
US$
Sources ： eMarketer, February 2002Source: eMarketer, April 2003
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Wal-Mart—A New Way to Compete
The ProblemUS-based, discount storeExpanded to number one in the world in the 90’s, beat K-Mart Critical success factors
Price competitivenessEfficient IT-based supply chain activitiesExtremely lean store inventory
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Classic Supply Chain
Factory
Distributor
Wholesaler
Retailer
Customer
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Traditional Order Fulfillment Model
Head Quarter
Distribution Center
Store Front
Supplier
PriceNegotiation
Delivery
ReplenishStore W/H
OrderDelivery
Stock keeping
Order
ResolveComplicated Wholesale structure
ProblemsInventory level still highOut of stock
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Continuous replenishment
HQ
D.C.
Store Front
Supplier Order
Delivery
Continuous Replenishment
DeliveryInstructions
Price Negotiation Opportunity
IT-enabled visibilityInnovative order fulfillment schemeMinimal inventory
POSSalesinformatiom
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Wal-Mart Special Issues
CRP (continuous replenishment program) helps Wal-Mart links its front-end POS systems with its head quarters, and increased visibilityAdditional process innovations
Cross-docking Collaborative replenishment by suppliersProvide suppliers with necessary information, even aggregate information of their competitors, encourage competition
Elimination of inventory and logistic costs
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Wal-Mart (cont.)
The ResultsAs of 2002, #1 enterprise in the worldLargest employer in 21 statesEmployed more workers than US defense force2001
Wal-mart 3,200stores/ 1000 supercenter/ gross-21%/ profit-5% (220Bil sales)K-mart 2,100stores/ 750 supercenter/ gross-21% profit-1.3% (35Bil sales, 1/6 of Wal-mart)
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Wal-Mart (cont.)
What can we learn…IT-enabled visibility improvementParadigm shift in business model
Process innovation counts!Continuous innovation in processes
1980’s CPFRCollaborative Planning, Forecast and Replenishment
2000’s RFIDRadio Frequency Identification
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The Dimensions of Electronic Commerce
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Electronic Commerce: Definitions and Concepts (cont.)
e-business: a broader definition of EC, which includes:
buying and selling of goods and servicesservicing customerscollaborating with business partnersconducting electronic transactions within an organization
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Electronic Commerce: Definitions and Concepts (cont.)
Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of:
– the product (service) sold;– the process; and for– the delivery agent (or
digital intermediary)
Brick-and-Mortar organizations are old-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents
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Electronic Commerce: Definitions and Concepts (cont.)
Virtual (pure-play) organizations conduct their business activities solely onlineClick-and-mortar organizations conduct some EC activities, but do their primary business in the physical world
Electronic market (e-marketplace) online marketplace where buyers and sellers meet to exchange goods, services, money, or information
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Electronic Commerce: Definitions and Concepts (cont.)
Interorganizational information systems (IOSs) allow routine transaction processing and information flow between two or more organizations
Intraorganizational information systems enable EC activities to go on within individual organizations
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EC Framework
EC applications are supported by infrastructure and by five support areas:
PeoplePublic policyMarketing and advertisingSupport servicesBusiness partnerships
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Classification of EC by Transactions or Interactions
business-to-consumer (B2C) : online transactions are made between businesses and individual consumers
business-to-business (B2B): businesses make online transactions with other businesses
e-tailing: online retailing, usually B2C
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Classification of EC by Transactions or Interactions (cont.)
business-to-business-to-consumer (B2B2C):e-commerce model in which a business provides some product or service to a client business that maintains its own customers
consumer-to-business (C2B): e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need
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Classification of EC by Transactions or Interactions (cont.)
consumer-to-consumer (C2C): e-commerce model in which consumers sell directly to other consumers
peer-to-peer (P2P):technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce
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Classification of EC by Transactions or Interactions (cont.)
mobile commerce (m-commerce): e-commerce transactions and activities conducted in a wireless environment
location-based commerce (l-commerce):m-commerce transactions targeted to individuals in specific locations, at specific times
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Classification of EC by Transactions or Interactions (cont.)
intrabusiness EC:e-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
business-to-employees (B2E): e-commerce model in which an organization delivers services, information, or products to its individual employees
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Classification of EC by Transactions or Interactions (cont.)
collaborative commerce (c-commerce): e-commerce model in which individuals or groups communicate or collaborate online
e-learning: the online delivery of information for purposes of training or education
exchange (electronic): a public electronic market with many buyers and sellers
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Classification of EC by Transactions or Interactions (cont.)
exchange-to-exchange (E2E): e-commerce model in which electronic exchanges formally connect to one another the purpose of exchanging information
e-government: e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens
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The Future of EC
2004—total online shopping and B2B transactions in the US between $3 to $7 trillion by 2008:
number of Internet users worldwide should reach 750 million 50 percent of Internet users will shop EC growth will come from:
B2CB2B e-governmente-learningB2Ec-commerce
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Benefits of EC
Global reachCost reductionSupply chain improvementsExtended hours: 24/7/365CustomizationNew business modelsVendors’ specialization
Rapid time-to-marketLower communication costsEfficient procurementImproved customer relationsUp-to-date company materialNo city business permits and feesOther benefits
Benefits to organizationsBenefits to organizations
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Benefits of EC (cont.)
UbiquityMore products and servicesCheaper products and servicesInstant deliveryInformation availability
Participation in auctionsElectronic communities “Get it your way” No sales tax
Benefits to consumers
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Benefits of EC (cont.)
Benefits to societyTelecommutingHigher standard of livingHope for the poorAvailability of public services
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Limitations of EC
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Barriers of EC
Security Trust and riskLack of qualified personnelLack of business modelsCulture
User authentication and lack of public key infrastructureOrganization Fraud Slow navigation on the InternetLegal issues
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The Digital Revolution
Digital economy: An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy
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The Digital Revolution (cont.)
A global platform over which people and organizations interact, communicate, collaborate, and search for information Includes the following characteristics:
A vast array of digitizable productsConsumers and firms conducting financial transactions digitallyMicroprocessors and networking capabilities embedded in physical goods
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New Business Environment
Customers are becoming more powerfulCreated due to advances in science occurring at an accelerated rateResults in more and more technologyRapid growth in technology results in a large variety of more complex systems
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New Business Environment (cont.)
Characteristics in the business environment A more turbulent environment with more business problems and opportunitiesStronger competitionNeed for organizations to make decisions more frequently A larger scope for decisions because more factors More information and/or knowledge needed for making decisions