e-commerce early expectations and today's situation · it already important in the 60s...

20 years of e-commerce

Werthner, 2015

e-commerceEarly Expectations and Today's Situation

Hannes Werthner

Electronic Commerce GroupTU Wien

History of 20 Years

Based on numerous contributions of many colleagues and friends

„More than being helped by computers, companies will live by them, shaping strategy and structure to fit new information technology„

Predicted pervasiveness of computer (and computer science) E-commerce excellent example for this quoteEncyclopedias and wikipedia

(Fortune 1988)

New companies, markets and industry sectors


Werthner, 2015

Outline

IT and something on tourismg Short history Reflection (markets, users and suppliers) Some future issues Conclusions

Information Technology Global infrastructure - Internet / Web

Today approx. 3,2 Bn users, in just 20 years Digitization and „transparent“ technology / access

M bil ti Mobile computing From computer to media machine

Evolution of computer:

Information Society: refers to changes in society and its structure (authors like Norbert Wiener, 1948; Daniel Bell, 76)

p• automaton manipulation of well formalized and mathematical models• tool modelling of work processes• medium representation & processing of unstructured information• omnipresence middleware connecting everything (Internet of things)


Werthner, 2015

Internet / Web: Not just technology

communitybuilding

information- and know-ledge representation

communication

(Klein, 96 )

Pervasive – (nearly) all areas of life Economic transformation

building

businesstransactions

Economic transformation Social expansion Psychological change Political impact Legal aspects

Related business landscape

Company examples Google launched 1998 Flickr 2004 MySpace 1999 YouTube 2005 Skype 2003 eBay 1997 Twitter 2006 Facebook 2004 Facebook 2004

Virtualization: companies rely on information (not their “own”) and user network, not infrastructure


Werthner, 2015

Tourism huge industry (and growth); in 2020 estimated 1.6 Bn intern. arrivals

World-wide networked industry

Tourism

World-wide networked industry In Europe 1.3 Mio enterprises, 95% very small World-wide demand (but different context,

„non-frequent“ users) Product/service is complex (bundle),

emotional and confidence good

Tourism (expressed already in 94/1995) information business future is electronic structural change

IT and Tourism Travel and tourism a major domain in e-commerce/e-business IT of strategic importance for the tourism / travel industry

-> strong reciprocal relationship

IT already important in the 60s (CRS/GDS - Computerized Reservation Systems / Global Distribution Systems): Start/Amadeus, Sabre, Galileo, Worldspan

Among first world-wide computer systems (with leased lines and 4 bit codes) to connect airlines, tour operators and travel agents

Changed tourism (accessibility and mass tourism)g ( y )


Werthner, 2015

History: Early Beginning

In tourism “outside” CRS/GDS it started in the late 80s /early 90s Fast evolving electronic consumer market (PCs) First “electronic” tourism destinations, with connected PCs

via telephone lines, content distribution to Minitel / France, Teletext, and CRS/GDS No Internet, proprietary protocols First system: TIS (Tirol Information System) Austria 1989 First system: TIS (Tirol Information System), Austria, 1989

TIS Architecture (1989/90)

DOSOS / 2UnixAIX

local tourist boards

local copy of the database

modem

telephone

RISC machinewith AIX

TIS CenterTirol Werbung

central database

query manager

database

update manager

communicationmodule

Start in 1991 with 140 local tourist boards

“Distribution” technology: Minitel, Teletext

DOSOS / 2UnixAIX

other remote sites: hotels, travel agencies,automobil associations, tour operators, ....

Proprietary protocol,daily updates, …


Werthner, 2015

The Web Start Starting with simple online presence in 1995 / 96! Travel/tourism one of the first sectors „moving“ to the Web

Early visions (forecasts) Enormous growth Transparent markets and decreasing prices Free market access, suppliers with direct link to consumers More democratic structures – benefits for smaller companies Flexible cooperation between different suppliers Lower transaction costs (search, negotiation, settlement)( , g , ) Simpler and more interactive systems for users

Web /e-commerce is a strategic issue (academic statement)

E-commerce / e-tourism Research Active research since early beginning

Analytical as well as constructive Challenge: combination of different disciplines and methods Applied research

Topics in European programs (1998): Interfaces for different cultural, social and language context (non

frequent users) Intelligent Interface Different information sources with different formats and semantics Interoperability, metadata modelsp y,

Distributed systems from planning to distribution Mediated software architectures and statistics

Merge TV and Web, and mobile devices New multimedia frameworks / applications


Werthner, 2015

The Take Off Sectors such as Tourism “really” electronic in late 90 Traditional players were reluctant E-commerce facilitated consumer trends More and shorter staysMore and shorter stays Late decision More personalized services with consumer integration and

empowerment

E-services developed from pure online presence over booking systems to consumer integration Today: well developed business landscape, high “penetration” on y p p , g p

supply side and high user numbers

Several Generations in Few YearsExample: Tourism

Goal:Establish

Online Presence

Goal:Customer

Acquisition

Goal:Customer R t ti

Goal:Customer

Online Presence

Air, Hotel, Car

•Sites launch•Online bookings begin (few)Distressed

Acquisition

Air•Personalization•Direct booking “hubs” emerge

Hotel, Car•Launch “next generation” sites

Retention

Air, Hotel, Car•Broker portal tenancy deals•Improve customer care

Cruise, Tour•Target specific

Integration

All sectors• Communities• Ratings and Blogs

• wikis• „Web 2.0“

1996 - 1998 1999 - 2002 2002- 2007

Distressed inventory emails start

Cruise, Tour•Launch info / service sites

customer segments

2008 -


Werthner, 2015

Now: All moved to

the Web

Innovation

In essence from outside In tourism two types: Copying (or extending) existing services and playersCopying (or extending) existing services and players Travel agents / tour operators (expedia) Domain specific transaction / booking support - (bookings,

airline systems) New services New market forms / negotiation / auctions (priceline, e-bay) Search and compare (Google trivago checkfelix)Search and compare (Google, trivago, checkfelix) Community / user integration (tripadvisor, facebook) Exchange / sharing (Airbnb, Uber)


Werthner, 2015

Innovation – 2

Disruptive innovation when following a platform strategy Platform: technology & service opened for broader

independent “ecosystem” of users & companies creating independent ecosystem of users & companies creating network effect; Benefit from innovations from others, also competitors Focus on market transaction, do not “own” product

Excursus: Platforms and USA

ICT Systems have “layers” (Veugelers et al., 2012):

Layer I: Network element provider (e.g. Cisco, Samsung, Alcatel)

Layer II: Network operators (e.g. BT, DT, Vodafone) Layer III: Platform, content, application providers (e.g. Google,

Amazon, ebay, YouTube)

Case Europe: good in Layer I & II but not in Layer III (USA) Case Europe: good in Layer I & II, but not in Layer III (USA)


Werthner, 2015

Reflection Market: Structural Change Vision: direct link to consumer and easier for smaller players “Informatization” of value chains, market efficiency increased! New market forms (e.g., forecast shopping, sharing) Services became commodities deconstruction of value chain Services became commodities – deconstruction of value chain Complex structure (dynamic network structures)

At the same time concentration trend – Winners take it all

Web: Evolution of order and disorder Issue: not process reengineering, but network engineering

Chance for small companies: digital divide (geography and size)

Reflection: Consumer Side

From customer focused to customer driven Already topic in 1998 (early reference to “community”) And in 2001 Not just business, also fun – from lean-forward

(concentrated) to laid-back (relaxed, enjoyable)(co ce t ated) to a d bac ( e a ed, e joyab e) Double sided market with lesson: consumer primary player Growth of communities, facilitated by tools / systems Users became content / service providers (prosumer)

Their “integration“ improved product and service quality


Werthner, 2015

Easier and Simpler

Interfaces richer (graphics and multi-media), more intuitive, more interactive Mobile applications (“revolution”) I ti f t id d ith b i d l Innovation from outside and with new business model

An exploding number of services, sites, content Search and transaction costs decreased (for all ?) Evolved a new (travel) experience (e.g., share before consume;

or experience through camera)

Issue: Total care vs. self-service user

Specific User Issue Amount of information is exploding Products often have specific features (emotional) Users ask for playful interfaces User do not know their needs – or cannot explicitly express them User do not know their needs or cannot explicitly express them

(appr. 25-30% of users)

However: search normally based on explicit statements

Needed: new interaction / search paradigm and user models


Werthner, 2015

Personality Based Approach

Well known personality dimension agreeableness, extraversion, openness, conscientiousness, neuroticism

In tourism (Yannakis et al., 2002) identified tourist stereotypes ( Th ill S k J S S l A h l i ) (e.g., Thrill Seeker, Jet Setter, Sun lover, Anthropologist) –reflect „unspoken“ attitudes / interests

(Delic et al., 2015) show relation between personality and stereotypes

Sun lovers are nervous

(Berger et al., 2007) show correlation between pictures and roles

(Neidhardt et al., 2014) relate pictures, personality and roles

Use pictures for identifying / elicitating user profiles Based on these profiles system can offer specific products

Picture-based search


Werthner, 2015

You are …

But Not only personality, there might be something more


Werthner, 2015

Personality

Agreeableness

Personality

Extraversion Openness

ConscientiousnessNeuroticism

(Excerpt of a) user‘s lifetime

And

Personality

Mood

positive / negative



Werthner, 2015

Complex Picture

Happiness

Personality: enduring personal characteristicMood: slow changesEmotion: fast changes, more specific, more intense

Personality

Mood

HappinessAngerFearSadnessDisgustSuprise


Emotions

Open: Models as well as acquisition (Tkalcic et al., 2016)

Reflection: Supply Side

Market presence: very high penetration (nearly 100%) Transaction growth: (only) steady growth, with shares of

8 to 12 %, differences between sectors Easier to link to consumers (bypass intermediaries) Facilitate cooperation - interoperability Cheaper / easier to build an application


Werthner, 2015

Market Access Example tourism: Hotels have relatively high online share, but also high online

costs (marketing, sales, etc.) Booking mainly via few intermediaries (e.g., booking, expedia) Booking mainly via few intermediaries (e.g., booking, expedia) Intermediaries use network effect with standardized products

Platforms can use competition of suppliers (competing for keywords, or lower prices in booking channels)

Suppliers forced to use these platforms with substantial economic effects

Paradoxical spiral: expenses of suppliers for these platforms increase at the same time their dependencies

Intelligent Cooperation ExampleMiddleman looks for 100 hotels

with skilifts nearby in Tyrol within 50 km to bundle them with flights

He has contracts with some of the providersproviders

He starts communication sessions with some of them

In the search specific business rules Supplier ones: minimal occupancy /

price Middleman ones (contract rules,

preferred partners) and his utility function

For “automatic” bundling specific techniques are needed (constraint reasoning, multi-value optimization, …)

Utility function depends on type of middleman

Package max cost: 450 $Date: 05/12/06 – 15/12/06Services: half boardInterface to: Flight xxxx


Werthner, 2015

Needed Unified system of meanings – with mapping of meanings Unified system of interaction (protocol) Homogeneous repositories (data and services)g p ( ) Mapping of services Optimization and also machine learning

What we have (in Tourism) Working mapping technology (Harmonise; Fodor et al., 2008) Linked Open Data as repository (from Semantic Web) “Manual” meta data (GIATA) Manual meta data (GIATA) But still application and data silos, where dominant players

“protect” their field (data and services)

Easier to Build Application Several development frameworks and methods, but applications

become complex (e.g., Erste Bank case in Austria) Still issue to align business model with implementation (for change) Management and IT have different perspectives

One approach: BSOPT for developing EC systems covering three

Business Modelinge³ Value, REA

Management

One approach: BSOPT for developing EC systems, covering three perspectives (Schuster et al., 2011) Value perspective (business model) Process flow perspective Execution perspective (IT artifacts)

Business Process ModelingUMM

Process SpecificationsBPEL, Workflows

Business

IT

link artifacts

(semi‐) automatic


Werthner, 2015

Supply Side – 2 Market presence: very high penetration (nearly 100%) Transaction growth: steady growth, with shares of 8 to 12 %,

but differences between sectors Easier to link to consumers (bypass intermediaries)

Opportunity and challenge of data analytics Systems and data pervasive – used to learn Online market monitoring / research, network analysis …. IBM / Watson recovers personality from 200 tweets

Facilitate cooperation - interoperability Cheaper / easier to build an application

IBM / Watson recovers personality from 200 tweets Infer a company‘s business performance from EDI data exchange

(Worawat et al., 2015) (Neidhardt et al., 2016) show social influence in user networks;

emotions are contagious

Short Note on Research Approaches Multidisciplinary and interdisciplinary, with methods / paradigm

Formal, Engineering, Design Methods from application domain and other sciences (e.g., Psychology) Applications needed – especially issue of data driven “paradigm” (Banerjee and Ceri 2015) see move from T-shaped to Pi-shaped model (Banerjee and Ceri, 2015) see move from T shaped to Pi shaped model

T-shaped: domain specialization (on the vertical axis) with horizontal knowledge (i.e. general and cross-disciplinary competences)

Pi-shaped – another vertical competence: specific mathematical, statistical, and computational abilities


Werthner, 2015

Some Research Issues

Digital infrastructure with 5 layers (Werthner et al., 2015):1. Individual

Mobility, context awareness and service proactivity Attention, sentiment and persuasion managementAttention, sentiment and persuasion management (Personality based) recommender and enjoyment Switch-off button

2. Group / social Group decision making & ad hoc groups (incl. seamless plug and play) Devices for sharing group experience Reputation and social influence

3 Corporate / enterprise3. Corporate / enterprise Data/services storage & data quality control Multi-channel incl. social Web platforms Performance analysis, data analytics and process mining Rapid software development and implementation

Some Research Issues – 2

Digital infrastructure with 5 layers – cont.:

4. Network / industry Technology/innovation diffusion models (focus on platform models)

A l i f t k t t d d i Analysis of network structure and dynamics Sector wide data analytics Cross platform approaches – seamless interoperability and common

service layers

5. Government / policy layer (more principles!) Sustainability (environmental, economic, democratic, social, cultural) Privacy Self-governance and participation Fairness


Werthner, 2015

Conclusions

IT (e-commerce) changed industries and created new ones

Continuing disruptive innovation: technology and service waves

Several forecasts were wrong, some issues are still open, but many developments were foreseen

Continuing disruptive innovation: technology and service waves

Innovation mainly from outside

We will see both further concentration as well as new services

Complexity will not decrease (structures & technology)

Complexity trap (simpler and also more complex)

Web pervasive –> issue of social impact (e.g., privacy, work)Web pervasive > issue of social impact (e.g., privacy, work)

Importance of research and know how Finally: It‘s about strategy

Deconstruction of Value Chain


Werthner, 2015

Deconstruction of Value Chain – 2

Winners take it allDistribution channels in Hotels (CH)

(Schegg & Fux, 2013)


Werthner, 2015

E-business Adoption by Size (% of enterprises)

European Commission, Eurostat

People never used the Internet, 2014 (%)

European Commission, Eurostat


Werthner, 2015

Consumers: Online Retail USA

US Census Bureau of the Dep. of Commerce2Q15 e-commerce sales were 84 Bn. USD, or 7,2 % of total sales.

e-commerce early expectations and today's situation · it already important in the 60s...

Documents