Electronic Business

ISM3011

What We’re Going to do Today

• Announcements• Q&A• Electronic business• Alphabet soup• MIS in the professions

Alphabet Soup

• ASP– Application service provider

• Manages and distributes software applications to users over a WAN (such as the Internet). Software runs on the ASP’s servers, not the customers.

• DSL– Digital subscriber line

• Telecommunications network technology that uses existing twisted-pair cables (the telephone wiring in most homes) for high-speed connections, typically to the Internet

• “Last-mile” technology

MIS in the Professions –Operations Management

• Grand Hyatt– Uses a purchasing/inventory management control software called

Adaco.– Designed to assist businesses in the hospitality industry manage

products that with high obsolescence as well as durable goods.– Streamlines information about purchases, inventory data, and

COGS.• “The Adaco System provides us with powerful purchasing functionality

for 100% of the hotel requirements. The reporting capabilities allow us to track purchase orders, departmental costs and inventory turnover. Adaco is easy to use and is one of the major reasons for improved productivity and customer services in our hotel. Adaco helped us grow as a business, realized improved profitability, efficiency and strategic direction by connecting project activities to company financials.”

— Christina Donath, Profit Improvement ManagerGrand Hyatt WashingtonWashington Center, Washington, DC

– http://www.adacoservices.com/company/stories.php

Electronic Business

E-commerce vs. E-business

• E-commerce – the buying and selling of goods and services over the Internet

• E-business – the conducting of business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners

Most people use these terms interchangeably, which is usually OK

Why Now?

• Why is e-business emerging now? – Take “now” in a broad sense

• Two potential reasons– Convergence– Critical mass

• The two are not independent

• What is convergence?– Coming together of various technologies

• Technologies that have converged to enable e-business– Digital content– Network access devices– PC speed and storage– Graphical user interface– Network transmission– Data compression (MP3)

Convergence

• The value of the technology increases with the addition of each new person using it.

• When a technology hits “critical mass” it may pull other technologies along with it.

Critical Mass

Interoperability

• The ability of systems running in different operating environments to communicate and work together.

• This is a critical issue in e-business• Standards are one way to achieve

interoperability– (Use of translation software called middleware

is another)

Standards

• When everyone on a network uses the same standards, they can interoperate

• Protocols– E.g. TCP/IP

• Languages– E.g. HTML

Categories of E-business

Business Consumer

Government

B2BB2C

G2C G2C

C2C

G2G

Business Models

• How a company generates revenue– Architecture of the business – flow of

goods/services– Description of benefits for entities involved– Sources of revenue

• One of the biggest criticisms of “dot-coms” is the lack of viable business models

• Without a solid business model, there’s little chance of survival

Business to Business

• The largest category by far• Approaches

– Exchanges• Catalogue aggregators (Sciquest) • Auction model (IndiaMart Auction)• Market exchange model (Chemconnect)• Barter model (uBarter)

– Direct sales

Business to Consumer

• Electronic stores (Road Runner Sports)– Traditional catalogue translated to the web

• Clicks and bricks (aka clicks and mortar) (Target)– Different levels of integration of web and store activities

• On-line auctions (uBid)• Electronic mall (ChoiceMall)• Promotion and customer service sites (Hewlett

Packard)• Content and advertising sites (Motley Fool)• Subscription models (Wall Street Journal)• Clubs and communities (Dixie Chicks)

Consumer to Consumer

• Auctions and classifieds– eBay is a good example of C2C– They have done a good job of overcoming

barriers to C2C e-business.

• Meetings and buddy lists, discussion groups– Where is the “business”???

Government to Constituent

• Information regarding services• Permits and licenses• Portals and “welcome mat” to visitors• Examples

– Seminole County– Orange County– New Zealand

• Voting and governance

Impacts of E-business

• Reduces cost of carrying out transactions• But, substitutes costs of building and

maintaining the system• Can you point to examples of e-business

increasing efficiency??

Economic Efficiency

Network Effects

• Email is more valuable if more people are using it

• Growth can be explosive

2 nodes, 1 connection

3 nodes 3 connections

4 nodes, 6 connections

How many connections with:5 nodes?6 nodes?7 nodes?

• Extension of Electronic Data Interchange (EDI)

• Supply chain management– Raw materials– Parts– Assembly, manufacturing, packaging– Distribution– Retail– Customer

• How is this different for intangible goods?

Operational Efficiency

• Disintermediation– Cutting out some of the steps in the supply chain– There’s also “reintermediation” (new middlemen)

• Payment processing; product delivery; trust providers; etc.

• Lowering communication costs– May also lower inventories with “just in time”

deliveries

• Enterprise resource planning (ERP) systems

Effects of Operational Efficiency

Disintermediation

Assembly,Manufacturing,

Packaging

Distributor Retailer Customer

1st TierSuppliers

2nd TierSuppliers

Are there dangers to cutting out these links?

• Channel conflict– Retailers challenged by manufacturers– Examples

• New markets

• New products

• New competition

Other Organizational Impacts

• Created “day trading”• Travel industry• Created MP3 enabled music players

– What other impacts have e-business technologies had on the music industry?

Changing Market Structure

Business Models

Categories of Business Models

• Brokerage– Bring buyers and sellers together– Examples: eBay, Priceline

• Advertising– Provides content and services, generates

revenue through advertising that’s mixed with the content

– Examples: Google, Yahoo!, Craigslist

• Infomediary– Gathers/analyzes data regarding customers– Examples: DoubleClick, Nielsen/Netratings

Categories of Business Models cont’d

• Merchant– Sell goods and services– Examples: Amazon, Buy.com, eMusic

• Manufacturer (direct sales)– Manufacturer sells directly to end customer,

rather than through a distributor or retailer– Examples: Dell, Gateway

• Affiliate – Offers $$$ to partner site in exchange for

driving traffic to the target site– Examples: Amazon, iTunes, many others

Categories of Business Models cont’d

• Community– Builds a “community” of loyal users; revenue is

generated by sales, donations, ads, subscriptions

– Examples: My Space, FaceBook, Second Life

• Subscription– Charge a periodic fee to gain access to a service– Examples: eMusic, Classmates, WSJ

• Utility– “Pay as you go” charges

• Some ISPs, Slashdot

Next Time

• Wireless• Emerging technologies