e-business for business studies spring 2010

‘booking a holiday in Switzerland’ (Interhome)

E-Business
for the Business Studies Program ‘booking a camping site’ (Roompot)
lecture 1 (chapters 1, 2)
‘booking a flight Brussels - Lisbon’

B2C (B2B?)
Dr. Martin Smits
Dr. Hans Weigand www.connections.be
Patricio Silva MSc www.vliegwinkel.nl
CRISM – Center for Research on Information Systems and Management www.tuifly.com
www.ryanair.com
www.tap.nl
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Facebook / Web 2.0 application

• Feb 2004, Harvard University; PHP open source + MySQL
– Profile+picture/ view other’s profiles/ add friends
Questions on Facebook case
– Other functionalities added later (groups, messages...)
– Brand identity August 2005; international expansion Dec 2005
• As investor in a social network like FB,
• Privacy concerns: MIT students downloaded 70,000 profiles (Dec 2005)
which financial and customer related
• 13+25m US$ venture capital (May2005+April2006) 240m US$ MicroSoft Oct2007)
• News feed/ mini feed disaster (Sep 2006)
different friend categories
metrics would you useto assess current
• Facebook platform for applications (May 2007) (API/ Query / FBML)
success and future growth potential?
• What business risks could damage the
30 million active users (July 2007 future growth potential of the social
250,000 new registrations/ day
network?
65 billion views per month
Summer 2007: advertiser damages
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E-business for BS Methods for finding web pages

Invisible web
All the web - 51 billion pages

• E- Business is the application of IT to doing business Unregistered Not indexed by search

sites, engines
• E-business is the result of
inaccessible sites Search Engine
– competitive drivers which challenge companies in their marketplaces,
and databases Search against
– new enabling information technologies Google
every word on
– Both drivers interact when reshaping the business environment. every page
• IT affects Search indexed
– all business process stages (such as sales, design, manufacturing) engine Directory Yahoo!
– contracting Searches against
registered
– integration of subsequent steps in the value chain company name
sites and 25 word
– connecting different value chains to each other into a dynamic value system
Directories description
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(Chaffey, Ch 2)

M.T. Smits; lecture 1 1

e-business for business studies spring 2010

Everything is IT.... (the Economist Dec 2009)

Internet opportunities for e-business
• The global economy (2009) consists of 12 sectors:
• Reach: – Car industry
– Over 1 billion users globally – Consumer goods
 Telecom (75% of all people has a phone)
– Connect to millions of products Internet TV
 E-commerce
• Richness Internet Radio
– Energy
3D TV/ smell TV
 Financial services (information intensive)
– Detailed product information on 20 billion + pages Ambient technology
– Food and agro
indexed by Google. Blogs, videos, feeds…
 Health care (information intensive)
– Personalised messages for users  IT
 Media
• Affiliation – Real estate
– Partnerships are key in the networked economy – Primary materials
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Timeline of web site examples (1.1) Course overview

1994 amazon retailer • Aim
1995 yahoo directory and portal – Understand the issues of e-commerce and IT applications
1995 Ebay on-line auction – How e-commerce and IT affect competitiveness and business organizations
1995 AltaVista search engine
1996 Hotmail web-based email/ viral marketing • Approach
1998 Google search engine – management perspective on the processes of choosing, adopting and
1999 Blogger Blog platform (bought by Google in 2003) deploying e-commerce and IT applications
1999 MySpace Social Network – for start ups (dot coms) as well as for existing 'old economy' businesses
2001 Wikipedia Open encyclopedia
2003 Skype peer2peer telephony/ VoIP (bought by Ebay 2005) • Course main topics:
2003 SecondLife Virtual world – Introduction to e-business, e-commerce, infrastructure
2004 Facebook social network applications and groups – E-bus strategy => e3 value modeling => process modeling/ implementation
2005 YouTube videosharing and rating
– Strategy and applications
2007 Joost InternetProtocol TV
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?? The future ???

Chaffey (3rd) E-business and E-commerce management

• Ch1 Introduction to e-business and e-commerce
• Ch 2 E-commerce fundamentals
• Ch 3 E-business infrastructure
• Ch 4 E-environment
• Ch 5 E-business strategy
• Ch 6 Supply Chain Management
• Ch 7 E-procurement
• Ch 8 E-marketing
• Ch 9 Customer relationship management
• Ch 10 Change management
• Ch 11 Analysis and Design
• Ch 12 Implementation and maintenance
martin smits, Tilburg University
Overview of lectures Jan-Apr 2009
preliminary! Check BB latest ppt!
Jan 19 (Smits) Introduction (Ch 1, 2).
Jan 26 (Weigand) Infrastructure: Ch 3, 4
INTRODUCTION Feb 2 (Weigand) Strategy (Ch5) and e3-value modeling. Assignment 1
Tutorial Value Modeling (Tue/Th)
Feb 9 Guest Lecture e3-value and process modeling in practice
Feb 23 (Weigand) Implementation (Ch 10-12) and process modeling. Assignm 2
STRATEGY &
Tutorial Process Modeling (Tue/Th)
APPLICATIONS
Mar 2 no lecture (deadline assignment Value Modeling)
Mar 9 (Smits) SCM (Ch6) Procurement (Ch7)
Mar 16 (Smits) Marketing and CRM (Ch 8,9)
Mar 23 Guest lecture
IMPLEMENTATION
Mar 31 Wrap-up
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M.T. Smits; lecture 1 2

e-business for business studies spring 2010

Grading Ch 1. Introduction to E-Business and E-commerce

• Two group assignments (graded 1-10)
– Both assignments are introduced in class by Weigand
– Must be finished in March (assignment 1 and 2), detailed dates follow.
– You fail the course if you miss an assignment, or if the total grade for the • Difference between e-business & e-commerce
2 assignments < 4.5 • Impact of electronic communication on traditional business
• E-business opportunities, risks, barriers, management responses
• Written exam (graded 1-10)
– covering the book chapters and lectures
– You fail the course if grade < 4.5

Final grade for the course is the weighted & rounded average of
final grade of the two assignments (40%)
exam grade (60%)

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Figure 1.1 The distinction between buy-side and sell-side e-commerce Figure 1.4 Three definitions of the relationship between e-commerce and e-business
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E-commerce defined E-business defined

• All electronically mediated information exchanges
between an organization and its external stakeholders
• Examples:
– Buying books online (transactional)
– Selecting a car online (informational)
– Interacting with brand online (relationship building /
experiential, e.g. www.tango.com)
– Asking a customer service query, e.g. www.easyJet.com
• All electronically mediated information exchanges,
both within an organization and
with external stakeholders
supporting the range of business processes
• Examples:
– Purchasing from suppliers (e-procurement)
– Supplying partners with information through an extranet
– Supply chain integration & mass customization

E-commerce is a sub-set of e-business

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M.T. Smits; lecture 1 3

e-business for business studies spring 2010

Types of IT since 1960s

Era IT Focus Generic Purpose Primary IT
Popularity of online purchases B2C
Systems Technology

I: Organization TPS, MIS Efficiency Mainframes

50s-
60s
INTRA
II: Individual DSS, ES Effectiveness Mini-
70s- computers
80s

INTER
III: Intra-industry CRS Strategic/ Networking
80s- Competitiveness
90s

IV: Inter-
Inter- WWW and Economies of TCP/IP- INFRA
TCP/IP-
90s-
90s- industry; Browsers scale, market based
00s consumers penetration, new Client/Server
bus. directions networking Source: The Internet Monitor, BMRB, November 2001 (www.bmrb.co.uk)
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SOCIAL

Estimated Quarterly U.S. Retail E-commerce Sales as a Percent of

Total Quarterly Retail Sales: 4th Quarter 1999–3rd Quarter 2008

www.census.gov/mrts/www/data/html/08Q3.html Figure 1.5 UK rate of adoption of different digital media (MORI Technology Tracker,
January 2006. See www.mori.com/technology/techtracker.shtml for latest details)
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Drivers for e-commerce

Figure 1.8 Adoption of Internet and e-business services across Europe (Eurostat, Chaffey (Fig 1.6): Attitudes to benefits of online technologies.Source: DTI (2002)
Community Survey on ICT usage in enterprises, eEurope (2005) Information Society Benchmarking
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Report, © European Communities 2005, htttp://europa.eu.int/information_society)

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e-business for business studies spring 2010

Driver: Cost Performance Relationships in Computing Power

Some barriers to e-commerce (Moore’s Law)

Figure 1.7 Barriers to development of online technologies. Source: DTI (2002)

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Driver: Changing Organizational Models

Partnering –firms now focus on their core competencies and make Ch 2 E-commerce fundamentals
strategic alliances with companies that complement these strengths
• E-commerce environment
Tele-work – knowledge workers are increasingly liberated from specific
• (Dis-) Intermediation
locations through the use of broadband links – Portals
– Location of trading
Virtual Teams – rapid cycle design and problem-solving encourages
• Business models for e-commerce
greater flexibility of temporary teams for specific jobs working in looser

types of relationships. Implementing the communications infrastructure

to support this is a new key to competitive advantage.

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The e-business environment

items for strategic monitoring? B2B and B2C models

Figure 2.1 The environment in which e-business services are provided Figure 2.2 B2B and B2C interactions between an organization, its suppliers and
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e-business for business studies spring 2010

new industry structure & new organisational forms

(automobile industry; selz & klein, hicss 1998 ea)

strong control car producer weak control

traditional sales virtual market independent

national sales auto web car super
organisation info dealers stores
new distribu
virtual tion outlets
local dealers showroom service independent
dealers
‘intermediary’

customer
Figure 1.2 Examples of transaction alternatives between C and Band G organizations
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Transaction alternatives between

businesses and consumers Disintermediation

Figure 2.4 Disintermediation of a consumer distribution channel showing

(a) the original situation, (b) disintermediation omitting the wholesaler, and
Figure 2.3 Transaction alternatives between businesses and consumers (c) disintermediation omitting both wholesaler and retailer
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Reintermediation
Example – Vauxhall

Figure 2.7 Reintermediation process: (a) original situation, (b) reintermediation

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e-business for business studies spring 2010

Example - Kelkoo Portals

Q1. Define portal

Q2. Is a search engine the same as a portal?

Q3. Is a search engine the same as a directory?

Q4. List search engines / portals you use and explain why

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Types of portal
Type of portal Characteristics Example
Access portal Associated with ISP Freeserve (www.freeserve.net)
Meta services
Horizontal or functional Range of services: search engines, Yahoo! (www.yahoo.com)
portal directories, news recruitment, Excite (www.excite.com) Lycos
Search engines personal information management, (www.lycos.com)
Portal shopping, etc.

Directories Vertical May cover a single function e.g.:

– news
Moreover (www.moreover.com)
SciQuest (www.sciquest.com)
‘A gateway to – industry sector

information News aggregators Geographical (region, May be: Yahoo! country versions
country, local area) – horizontal Countyweb
resources and – vertical (www.countyweb.com)
MR aggregators
services’ Marketplace May be:
– horizontal
CommerceOne
(www.commerceone.net)
– vertical PlasticsNet (www.plastics.net)
Comparers – geographical
Media type Voice portal Verizon VoiceGear
(www.voicegear.net)
Exchanges Wireless portal Vodafone Vizzavi
(www.vizzavi.com)
martin smits, Tilburg University 40 Streaming media portal Silicon
(www.silicon.com)

Importance of portals
Rank Property Unique
visitors
Reach in
%
Ave time Location of trading
1 MSN 7,924,421 47.0 00:39:24 Place of purchase Example of sites
2 Microsoft 6,910,303 40.9 00:09:48
3 Yahoo! 6,196,878 36.7 00:32:27 A. Seller controlled v Vendor sites, i.e. home site of organization selling products, e.g.
www.del.com.
4 Google 5,935,960 35.17 00:15:47
5 AOL Time Warner 5,083,892 30.1 00:18:55 B. Seller oriented v Intermediaries controlled by third-parties to the seller such as distributers
and agents, e.g. Opodo (www.opodo.net) represents the main air carriers.
6 Wanadoo (Freeserve) 4,853,630 28.8 00:13:09
7 British Telecom 4,145,338 24.6 00:20:22 C. Neutral v Intermediaries not controlled by buyer’s industry (e.g. industry net
www.commerceone.com).
8 Amazon 3,757,606 22.3 00:12:58
9 BBC 3,399,175 20.14 00:17:28 v Product specific search engines (e.g. CNET (www.computer.com)).

10 Ask Jeeves 3,270,176 19.4 00:11:09 v Comparison sites, e.g. Barclay Square/Shopsmart
(www.barclaysquare.com).
Nielsen//NetRatings – top 10 domains web properties in the UK (June 2000 measurement period, at home panel),
September 2002 (http://epm.netratings.com/uk/web/NRpublicreports.toppropertiesmonthly). Data for other countries v Auction space, e.g. uBid (www.ubid.com).
available at: www.mediametrix.com http://www.nielsen-netratings.com/hot_off_the_net_i.jsp)
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M.T. Smits; lecture 1 7

e-business for business studies spring 2010

Trading arrangements
Commercial (trading) mechanism Online transaction mechanism of Nunes et al.

1. Negotiated deal
(2000)
Negotiation – bargaining between single seller and
Business model
Example: Can use similar mechanism to auction as buyer. Continuous replenishment – ongoing
on Commerce One(www.commerceone.net) fulfilment of orders under pre-set terms
2. Brokered deal Achieved through online intermediaries offering
Timmers (1999) defines a ‘business model’ as:
Example: Intermediaries such as Screentrade auction and pure markets online
(www.screentrade.co.uk)
3. Auction Seller auction – buyers’ bids determine final price
Examples: C2C: E-bay (www.ebay.com) of sellers’ offerings. Buyer auction – buyers request An architecture for product, service and
B2B: Industry to Industry
(www.assetauctions.freemarkets.com)
prices from multiple sellers. Reverse – buyers post
desired price for seller acceptance
information flows, including a description of the
4. Fixed price sale Static call – online catalogue with fixed prices various business actors and their roles; and a
Example: All e-tailers Dynamic call – online catalogue with continuously
updated prices and features description of the potential benefits for the various
5. Pure markets
Example: Electronic share dealing
Spot – buyers’ and sellers’ bids clear instantly business actors; and a description of the sources
6. Barter Barter – buyers and sellers exchange goods.
of revenue.
Example: www.intagio.com and According to the International Reciprocal Trade
www.bartercard.co.uk Association (www.irta.com) barter trade was over
$9 billion in 2002.
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Business models
Reverse auction example
• Through 2001 there were over 512 online auction bidding
events processed for DaimlerChrysler on vendor supported
portal Covisint (www.covisint.com) amounting to
approximately €10 billion. That is a third of their total
procurement volume. In May 2001, DaimlerChrysler
staged the largest online bidding event ever, with an order
volume of €3.5 billion in just four days. As well as savings
in material purchasing prices, DaimlerChrysler also
reduced throughput times in purchasing by 80 percent

Figure 2.11 Alternative perspectives on business models

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Revenue models
• Visit the Global Composites site and explore the different
opportunities for revenue generation (see the Business
Directory for company listings). You should include
current and future possiblities for revenue generation.

• Global Composites (www.globalcomposites.com) is a

business-to-business intermediary providing resources for
over 10,000 professionals in the composites industry.More
than 2000 companies are listed

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M.T. Smits; lecture 1 8