cse1720 semester 1 2005 week 6 e-business /1 1 lecture 6 in this lecture we will be looking at some...

CSE1720 Semester 1 2005 Week 6 E-Business /1

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Lecture 6Lecture 6

In this lecture we will be looking at some aspects of

E- Business

E-Commerce

Business Strategies and Technology

The World Wide Web

The Internet


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Other BusinessOther Business


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What is E-Business ?What is E-Business ?

Apart from being an ‘ear catching’ phrase -

E-business is the use of the Internet, and related technologies, and services, in business

What is your definition/understanding of the

term ‘business’ ?

It includes e-commerce - this is generally seen as the marketing, selling and buying of products and services via the Internet


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E-BusinessE-Business

E-business includes

– relationship-building between suppliers and customers ( ? consumers)

– information provision

– after sales service


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OpportunitiesOpportunities

As you have probably discovered, the Internet has had, and will continue to have, a significant effect on the business world (what would we do without it ?)

- and what did we do before it ? (do you remember that period ?)


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Why ? and How ?Why ? and How ?

1. It is very accessible (nominally 24 hours a day, 7 days a week, every day of the year).

This means the opportunity to sell goods and services without a break

(what does 24/7/52 mean ?)

2. It is convenient. The Internet can be accessed from home, work or even when people are moving about - but NOT when you are driving a vehicle.

Laptops, mobile phones, palmtops … are the agents of m-commerce (mobile commerce).


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3. The number of people with Internet access is increasing - and will probably continue to increase

4. The opportunity to market products and services internationally (globalisation)

5. Significant potential cost savings in providing products, information and services (e.g. on line catalogues, annual reports, stock market analyses)

6. Opportunity to ‘electronically shop around’


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7. Buyers can link to sellers. This opens the opportunity of changing industry supply chains. No intermediaries necessary .

Wholesalers can sell direct to customers


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Other AspectsOther Aspects

It is NOT as simple as transferring current business methods via the Internet to the Web

Business models and strategies and tactics need to be examined and modified

Business processes need to be overhauled

‘Corporate Culture’ probably needs a rethink

Relationships with customers and suppliers probably need changing and improving (HRM and SCM ?)


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Other Effects Other Effects

Other Potential Opportunities

1. Employees may find it easier and opportune to work from home

2. ‘Virtual’ working using email and the Internet to communicate and share information and effort

3. May be part of decentralised organisations, including globally - the Internet and ‘smart’ software


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What about Consumers ?What about Consumers ?

Consumers are very discerning - they also have sussed out the opportunities which can be there

They are also very computer literate in many cases

They demand a high level of of ‘customisation’ in products and services - and realise that these can become obsolete very quickly

A warning : customer profiles change - sometimes quickly


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Advantages of E-BusinessAdvantages of E-Business

Some of the advantages to business are

1. Reduction of costs by streamlining (but make sure that this is not just a knee jerk policy - such as reducing staff and then losing business because of loss of expertise)

2. Increase in income by finding/adopting new revenue sources (watch the cost/benefit ratio)

3. Improving customer service (see 1 above) by providing more and better quality and improved convenience (e.g. 24 hour trading, enquiries, …)


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Advantages of E-BusinessAdvantages of E-Business

4. Accept and reward innovation - share ideas

5. Improve knowledge management and accessibility via intranets (and keep information current)

Some Hints

Develop sound and effective strategies

Introduce and monitor them - vary, update or replace when necessary


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Types of e-businessTypes of e-business

Virtual supply chain

(extranet)

Person Internet Business B2B Business

or B2C Supplier/

Company EDI partner

Intranet E-marketplace


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Types of e-businessTypes of e-business

Web systems support a number of different layers in business

The layers can be identified as :– Customers – Suppliers– Business partners– Company staff/employees


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Types of e-BusinessTypes of e-Business

The main directions of e-business can be identified as

– Customers / Consumers– Suppliers– Business partners– Company staff/employees

so let’s have a quick look

And it is fair comment that Business and Information Technology are merging to the extent that one is now firmly entwined with the other


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1. Business to Consumer e-commerce (B2C)

– Product or service information. The Internet can (and is) being used to assist in purchasing decision by providing information on products and services

– Purchasing facility. Many web sites offer transaction processes for purchasing and payment for products and services (and are becoming secure).

– After-sales service. This relates to all forms of service (not just replacement of product). It can be directed at how to use the product (e.g. software package)

And it can include notification of upgrades to purchasers


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– Marketing. Information can be gained from customers (and potential customers) to create customer profiles which can then be used for marketing and product development.

This information may be time based, area or region based, age/gender/income/status based …

– Business partnerships. Companies can provide links to other web sites and recommend other products which complement their own. (an example of this is in the hotel business when a hotel will or may recommend sightseeing tours, and the siteseeing tours in turn may recommend accommodation at a chain or individual hotel or motel


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– Investor information. Company financial performance information should interest its investors. It may include download facility e.g. annual reports, press releases, manage, management changes

– Brand image (have you spotted the ‘Brand Name’ TV advertisements ?)

This is deliberately used to promote the brand image and to increase awareness of products and services (and to keep sales high).

– Public relations. Includes environmental strategies policies - e.g. mining. Some food chains advertise how they support community projects


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2. Business to Business e-commerce (B2B)– This facility is developed to link companies for

purchasing and selling products and services

The linking of a company with its suppliers is described as an ‘extranet’ - which is normally a protected and restricted network. Firewalls are commonly used. An internet or the Internet can also contribute to the extranet.

This allows for :– access to a company’s stock levels by a supplier– access to product information– automatic ordering, reprovisioning ( ? JIT)


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As an extension, E-marketplaces are web-based environments where suppliers are matched with buyers for the sale of products, services and specialised equipment

They are ‘open exchanges’ which are in opposition to the supply chain systems.

Electronic Data Interchange is associated with the sale of goods and services online. It is normally on private networks.

A good example of this is the way in which travel agencies, and not individuals, are able to make flight and hotel bookings. It is not normally done ‘direct’ by a customer.


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IntranetsIntranets

These are normally Hypertext systems designed for the staff of a company.

Can be used for – accessing information in databases– company manuals and documents– providing information on Company strategies and

initiatives– processing internal data and information– internal sales and purchasing– communication of company policies and guidelines– internal employment opportunities– employee contact details (email, phone)


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Intranet and Internet RelationshipIntranet and Internet Relationship

Firewall

Intranet

Internet

All connections TCP/IP


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What Else ?What Else ?

E-Business is seen as a ‘Strategic Driver’

It can either complement or substitute for Information System / Information Technology strategies

One of the ‘unknowns’ especially in Information Technology is that the Business environment is changing, or does change, rapidly

It is difficult to make ‘long term predictions’ - with accuracy and with certainty


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E-Business - A Strategic DriverE-Business - A Strategic Driver

What models exist ?

1. Traditional Information System – planning focuses on a ‘top down’ approach– it may not be ‘opportunistic’– business goals define the technologies– more detail = less scope for adopting new opportunities– long term predictions are difficult to predict and assess

2. The use of Technology as a Strategy


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The two alternatives in Business Planning seem to be

1. Strategy-driven Information Technology

2. Information Technology as a strategic driver

(also known as Top Down strategies and Bottom Up strategies)


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Corporate Information

Strategy Technology

Decisions

Business Goals Business Goals

IS/IT decisions Strategy

Strategy-driven IS/IT as a Strategic

Planning Driver


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We are not going to solve the problems inherent in either model

You will no doubt in your careers be required to do this - but the ‘problem’ may well have changed its nature or dimension

What we will do is to have a look at some current conditions


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Some businesses which have adopted ‘new, leading edge technology’ have gained a competitive advantage

This has become, in some cases, a sustainable advantage

The Web is a classic example of the the Technology arriving first and the uses have evolved afterwards

This is an opportunistic, and flexible, use of technology

But is a repeat of the Web likely to occur again ?


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There are dangers in this approach

1. It is ‘high risk’

2. There are likely to be high failure rates

3. Possibility of the technology not being fully exploited

But :-

Those businesses which ‘succeed’ enjoy considerable advantages

1. High returns

2. Established as a ‘leader’

3. Attract high quality staff

4. Attract customers from competitors (and may keep them).


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A quick summary:-

Characteristics Strategy Driven Technology Driven

Key Feature Planned Opportunistic

Role of Technology Support Business driver

Risk Low to medium Medium to high

Rationality Highly rational Uncertainty

Gains (term) Medium to long Short to medium

Adopt Technology Post innovative Innovative


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Business Models:

e-business has been credited with the emergence of new forms of business models (so were calculators when they were introduced, and so were spreadsheets).

The ‘models’ consist of– the advertising model– the online brochure– transaction-based systems


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Let’s look at 1 such model - the electronic brochure

1. The simplest form of the ‘brochure’ is for a display only of products and services. Purchases and payments are by conventional methods - phone, fax, personal

2. The brochure + ordering system. In addition to 1 above, the customer may order over the Internet, but payment is by phone, fax, personal

3. The electronic brochure + ordering + payment systems. The customer is able to perform the full ‘transaction’ over the Internet


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Organisational Structure

This is a component of the Business model.

The structure should facilitate the implementation of the business objectives

Flat networks (as in an earlier lecture) should be able to respond more quickly to change than hierarchical structures

Communication technologies are essential in the emergence of organisational structures


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Organisational Management

These range from – cautious– bureaucratic (accountability and procedures)– innovative (risk tolerant)– entrepreneurial (unchartered waters, risk)


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Some other aspects of business models to be aware of are :– Distribution channel - how a product is delivered to the

consumer (CD, DVD, downloads)– Partnerships and Alliances - An organisation could be

totally independent or engage in partnerships or alliances with other organisations

– Marketing approach - May be seen as a separate component of the business model

– Revenue stream - there may be one, or many, revenue streams


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A Business Model - Key ComponentsA Business Model - Key Components

Product or

Service

Distribution Organisation

Structure

Marketing Management

Style

Strategy

Personnel Customer

Service

Partners and IS/IT

Alliances Infrastrucure


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E-Business StrategiesE-Business Strategies

Marketing and Advertising on the Web:

Uses :

Brand name marketing

Sales Information provision

Product catalogues

Product announcements

Service announcements

Marketing systems require much planning, support and skills


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The web offers some ‘unique’ attributes:

All customers can be accessed at once

All customers can be informed at the same level at the same time

Large amounts of information can be communicated cheaply and quickly

Users can interact with the system

‘Personalisation’ of information can be done

- i.e. altering an individual user web page


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Strategic Web use is used to capture and increase the share of a particular market segment - a case is the advertising of credit cards at specific sites to attract different age groups

E-mail marketing - supported by databases of email addresses - BUT, the email header and content are designed to attract people’s attention (have you seen, or do you ‘subscribe’ to PET mail ?)

‘Advanced’ examples of Web marketing allow for users to exchange information with other users - and there is another technique known as ‘online communities’.


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Web Retailing:

Transaction based online shopping

A convenient service for consumers who can order products at a time a place of their choice

These systems require a strategic plan, and a transaction support system (infrastructure - ? $$$’s)

The systems need to deal with payments, link to corporate database systems (?) and provide customer support


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A Question :

What would be your strategy for return of goods ?

Another Model - Internet Auctions

(Amazon.com is an example).

Retail auction sites generate a level of competition to sell products in a cost-effective manner

How many bidders ?

What is ‘cost effective’ ?

Who controls the bidding ?


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Some Real Estate Agencies list their products on or at Web sites

Could House (Property) Auctions be conducted ?

What safeguards would be necessary ?

Who would control bids ?

How would deposit and payment be assured ?

Would you be a bidder ?


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Customer Service and Support on the Web:

A consumer would normally work through a number of stages of decision making prior to buying a product

There would probably several related enquiries

Some of the enquiries would be about price and features of the product - could also be availability, delivery, insurance …..


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Web based Customer service enquiry and support systems costs could be reduced (compared to telephone enquiries)

Service and support, via the Web, could be of the 24/7/52 standard.

After sales support - have you tried Microsoft ?

Software patches, Help, downloads - the Web is a distribution channel for customer support - but know exactly what you are seeking, and be patient.

Online chat systems are also a possibility WebCT ?


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Personalised replies can be made to customers or potential customers .

Airlines - a very competitive business, and one which doesn’t suffer mistakes, has ‘frequent flier points’ which can be queried by each intending passenger

Another organisation is the Tax Office - how to complete a tax return

Public relations campaigns - but take care to be different, and innovative, and personalised and interesting (if not entertaining)


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What about Environmental Scanning ?

This is a technique to gather information on– market trends– competitor strategies (have you heard of

Competitive Intelligence?)

The results are normally fed back into product or service development

The Web provides a rich source of information on trends - sometimes developed and supported by firms such as Dunn and Bradstreet, Standard and Poors ….


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Business-to-Business E-Commerce:

Much interest in Supply and Purchasing Chains

Will cause changes in – organisational structures– management approaches (strategies)– business models– staffing levels– personnel responsibilities– relationships with customers– relationships with suppliers


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Which is likely to be the more difficult issues ?– The technical problems associated with integrating

• back end transaction systems• data warehouses, marts• manufacturing tracking systems• inventory tracking systems

or– The Organisational issues such as

• changing management culture• changing organisational culture• developing and ensuring trust between Companies


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And a few thoughts about E-Marketplaces

Many of the Supply Chains are ‘fixed’ - companies are integrated with their Suppliers (remember the Car Industry dispute where the Supplier of Exhaust systems would not supply because of Industrial Action ?)

The Web offers the opportunities for ‘as - required’ relationships or ‘virtual’ relationships

This means that there need be NO pre-established relationship (which is the way you shop, probably).


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Some ‘success factors’ in the electronic marketplace include– Technology infrastructure– Transaction administration system system– Income stream– Participants– Participant needs satisfied– Competitive advantage– Relationship management– Security– Level of Independence


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Some possible problems– Too many e-marketplaces - lack of participants for some– Lack of revenue due to lack of participants– Income streams not viable– Payment relationship security– Information confidentiality– Technical performance of the e-marketplace– Administrative performance of the e-marketplace– Legal aspects related to contracts– Lack of strategy


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Perceived Benefits :– Cost savings in selling– Savings in purchasing– Speed selling / purchasing– Contact with new customers– User convenience– Transparency to users - the marketplace is an open

environment– Better quality of products and services– Reduction of Office space required (or none)– Expanded choice of products and services for buyers– Better quality information on products and services


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Intra-Organisational Systems :

These make use of Intranets.

Intranets offer a cost-effective method of document management - presenting documents which present policies, procedures and initiatives

Transaction and query processing systems can be developed for :

– internal purchasing– order processes– payroll– leave


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Intranets can also host bulletin boards

Intranets offer an opportunity as management tools

Many are used for capturing data and presenting data

And Virtual Organisations ?

Key characteristics of ‘Virtual Organisations’ are that they form structures made up of different companies (or people) which come together to complete certain tasks.

They appear as one organisation to a customer

Communication, cooperation and coordination is via Information Technology


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Some things to do duringthe (short) break !!

cse1720 semester 1 2005 week 6 e-business /1 1 lecture 6 in this lecture we will be looking at some...

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