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Introduction to E-Business

This presentation handout supports the “Introduction to eBusiness”


slide presentation.

Learning Outcomes
The objectives of this training module are to provide:
• Overview of eBusiness
• eBusiness Terms
• Who uses eBusiness
• Statistics on eBusiness
• Examples and Benefits of eBusiness applications by Victorian businesses

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What is eBusiness?
eBusiness presents a broader dimension of eCommerce as it represents the use of electronic technology,
especially web and other network technology, for business.

eBusiness represents:

1. A range of online tools and processes that transform a company’s value proposition by using
sophisticated data warehousing to target customers more effectively, networks to link companies with
suppliers, distributors and other business partners; and flexible organisational infrastructures that
adapt to change.

2. A way for companies to participate as part of a larger networked community of providers, each
bringing specialised skills and new levels of performance to an e-market place.

Notes on What is eBusiness?


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Useful eBusiness Terms
Business-to-Business (B2B)
Interaction between businesses either in an established supply chain, or with trading partners. The ability to
electronically link your business with that of your suppliers could lead to faster restocking times, lower stock
levels, and lower costs. If you have been considering engaging in business-to-consumer e-commerce, give
some thought also to ways in which you could lower costs or increase your efficiency by engaging in
business-to-business e-commerce.

Business automation
A contact manager, job activity and job tracking system that allows fast and flexible communications with a
mobile workforce.

Content Management System


A software package that creates and maintains content on a website by providing a set of tools for creating,
editing and publishing the webpages and directories that makes up a website.

eCRM (electronic Customer Relationship Management)


An integrated sales, marketing and service strategy that is used to identify, attract and retain an
organisation’s customers through innovative Internet technology.

eMarketplace (electronic marketplace)


An online trading forum where companies buy and sell products and services using different trading and
purchasing mechanisms, including catalogues, auctions, reverse auctions, requests for quote (RFQ) and
requests for tender (RFT).

eProcurement (electronic procurement)


A business-to-business (B2B) purchasing system that offers electronic purchase order processing and
enhanced administrative functions for buyers and suppliers.

Extranet
An intranet partially accessible to authorized outsiders. Whereas an intranet resides behind a firewall and is
accessible only to people who are members of the same company or organisation, an extranet provides
various levels of accessibility to outsiders.

Intranet
A worldwide network of computers that facilitates data communication services such as remote login, file
transfer, electronic mail, newsgroups and the World Wide Web.

Local Area Network (LAN)


A network of computers communicating over short distances in restricted areas, such as a campus of a
university. Many LANs have connections to larger networks.

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M-Commerce
The use of a wireless terminal, such as a mobile phone or personal digital assistant (PDA), and a network to
access information and conduct transactions that result in the transfer of value.

Online networking
Uses Internet, intranet and extranet technology to collaborate amongst certain groups of users, such as
employees or partners.

Notes on Useful eBusiness Terms


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Who uses eBusiness?


71% access and use online catalogues 51% receive payments for products and
that lists products/prices services
69% pay for products and services 45% take orders for products and
65% place orders for products and services
services
Source: Sensis/ Yellow Pages EBusiness report, July 2004

Notes on Who uses eBusiness?


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Which Industry sectors are Buying Over the Internet?

Connected to Look for Place Pay


Internet Information Orders
All Business 86% 76% 56% 59%
Manufacturing 84% 74% 51% 54%
Building/Construction 78% 65% 48% 47%
Wholesale Trade 88% 75% 54% 55%
Retail Trade 77% 70% 57% 55%
Transport/Storage 86% 76% 48% 69%
Business Services 97% 89% 63% 74%
Finance and Insurance 96% 86% 71% 71%
Health/Community Services 89% 69% 74% 45%
Personal Services 85% 73% 54% 56%
Hospitality 83% 72% 62% 61%

Base = All Businesses


Source: Sensis Business Index, Sweeney Research May 2004

Which Industry sectors are Selling Over the Internet?

Connected to Take Orders Receive


Internet Payment
All Business 86% 39% 44%
Manufacturing 84% 36% 47%
Building/Construction 78% 23% 40%
Wholesale Trade 88% 46% 48%
Retail Trade 77% 42% 51%
Transport/Storage 86% 50% 43%
Business Services 97% 42% 49%
Finance and Insurance 96% 31% 36%
Health/Community Services 89% 26% 36%
Personal Services 85% 48% 36%
Hospitality 83% 53% 32%

Base = All Businesses


Source: Sensis Business Index, Sweeney Research May 2004

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Which types of Business customers use the Internet?

All Small & Medium Size Mainly Sell to


Business
Mainly Sell to Total Sell to Small Medium
Business Business
Local – Same city or town 60% 85% 62% 39%
Elsewhere in State 11% 55% 10% 15%
Interstate 21% 54% 20% 34%
Overseas 5% 36% 5% 6%

Base = Use eCommerce


Source: Sensis Business Index, Sweeney Research May 2004

How does Australia’s use of the Internet compare to overseas?


84% of adult (16 years and over) persons in Australia had Internet access in the 3rd Quarter 2003,
compared to:

• 89% in Sweden • 67% in Germany


• 81% in the US • 63% in France
• 80% in the UK • 62% in Spain
• 79% in the Netherlands • 60% in Italy
• 74% in Hong Kong • 52% in Brazil

Australia is one of the leading countries in the world in terms of Internet infrastructure, penetration and use.

Australians are major adopters of Information Economy-enabling technologies such as the Internet,
computers and mobile phones.

Source: Australian Federal Department of Communications, Industry, Technology and the Arts.

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How has Australia’s use of the Internet changed?

June 2000 June 2003


Businesses with PCs 76% 83%
Businesses with Internet access 56% 71%
Businesses with website 16% 23%
Internet access by large businesses 95% 99%
Internet access by medium businesses 83% 91%
Internet access by small businesses 65% 81%
Internet access by very small bus. 50% 65%
Large businesses with website 68% 80%
Medium businesses with website 46% 51%
Small businesses with website 24% 33%
Very small bus. with website 9% 15%
Businesses* receiving online orders 15% 19%
Businesses* ordering online 18% 39%
Bus.* accessing government services 44% 71%

E-commerce revenue AU$5.1 $24.3


billion billion

*among businesses online.

Source: Australian Bureau of Statistics, Nielsen//NetRatings and US Census

Notes on Who uses eBusiness?


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Examples of eBusiness

Label Manufacturer Uses the Internet to increase export sales by allowing agents and distributors
from all over the world to see the latest designs, place orders and manage their
account.

Olive Farmer Listing of products on the website for sale as well as providing an online
shopping facility for a network of other olive farms.

Restaurant No website is required to benefit from wireless technology and handheld digital
assistants taking orders from tables which are electronically sent to the kitchen.

Pottery Importer A content management system allows up to date products, pricing and gallery
events timetable to be published internally, reducing costs of external website
development.

Recruitment Implementation of an online process automated system using an Application


Consultants Service Provider model to streamline job applications process.

Notes on Examples of eBusiness


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Examples of eBusiness
Farm Machinery Entering hundreds of agricultural machinery equipment online ensures stock
Dealer availability is more timely recorded across multiple dealer locations and
marketed more effectively to rural customers.

Wholesale Dental Instant online ordering using handheld digital assistants for 24 sales
Distributor representatives provides greater efficiency in the supply chain and provides
management with a real time contact management tool.

Motorcycle Tourism Using streaming video on a website to show not tell visitors about the motorcycle
Operator service being offered utilises the advantages offered by an increasing number of
broadband internet connections.

Horse Transporter The Internet provides a critical document management system to keep owners
and trainers of horses flown to and from Melbourne informed of their progress.
The Intranet provides a way for all offices to share information and reducing
communication costs.

Building Company The use of an electronic customer relationship management tool assists in the
job scheduling, workflow process and accountability of projects in the building
industry.

Notes on Examples of eBusiness


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8
E-Business Infrastructure Requirements
This presentation handout supports the “E-Business Infrastructure
Requirements” slide presentation.

Learning Outcomes

The training objectives of this module are to provide information on:


• Equipment and infrastructure necessary to conduct eBusiness
• Webhosting: Benefits and Pricing
• Selecting an Internet Service Provider
• Broadband Internet Access
• Internet Security Software
• Privacy Policy and Spam Act 2003

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Web Hosting
Most Australian websites are hosted on a dedicated web server at the external web hosting provider’s
location. The benefits of a web hosting provider include:

• Domain Name Services – including website name registration, website forwarding, providing multiple
email accounts and domain name protection services.

• Storage and Backup – of the website and files including databases and email lists.

• Server Speed and Reliability – of the website is important as people are accessing your business
website from computers around the world. It is important that a website is always accessible and remains
uninterrupted by power failures and server faults.

• Management Information – Web hosting companies should provide access to real-time website traffic
statistics which will allow your business to evaluate and monitor the number of visitors, time spent
viewing and which country the visitors originate from.

• Security – Webhosting companies have systems and processes in place which reduce the risk of a
security breach on your website (such as viruses and hackers).

• Technical Support – Time is money and hence you should check to ensure that your web hosting
company has a dedicated technical support team to answer questions and solve technical problems via a
telephone and or an email support centre.

• Advanced Solutions – To provide a full range of solutions including managed services across various
office locations, shopping cart e-commerce technology, secure servers, content management systems,
database hosting and wireless services.

• Pricing - Website hosting is a competitive industry and fees typically range from $20 to $100 per month.
The difference in price relates to the amount of Megabyte Disk Space, the monthly data transfer per
month, number of email addresses and whether there is e-commerce and database connectivity.

Notes on Web Hosting


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Selecting an Internet Service Provider
There are over 500 Internet Service Providers (ISP) in Australia. Before selecting your Internet Service
Provider, be aware that they differ on location, price, support and additional services.

• Location – Often rural dial-up customers need to consider long distance call rates and whether the
Internet Service Provider has broadband in your business area.

• Price - The following websites allow you to type in the telephone number and it will return a list of Internet
Service Providers who provide broadband access in that area along with pricing information
www.ispchoice.com.au
www.whirlpool.net.au

• Internet Tool Kit - The Australian Communications Authority has developed a "tool kit" at
http://www.toolkit.aca.gov.au which provides comprehensive information outlining important factors to
consider when shopping for an Internet service and questions to ask Internet service providers (ISPs).

Notes on Selecting an Internet Service Provider


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Broadband Internet Access
There are several types of connection for businesses to subscribe to:

• Narrowband - a narrowband connection to the Internet through a telephone line, normally through a 28
or 56 kilobytes per second speed modem.

• ISDN (Integrated Services Digital Network) - a system of digital phone connections that allows one line to
handle several applications at once (e.g. videoconferencing, facsimile, telephone and computer).

• Broadband - A permanent, high-speed connection between your computer and an ISP that does not use
a dedicated telephone line. Broadband means a high-speed Internet connection that is, at the very least
128kbps, which is almost three times the speed of a narrowband 56kbps dial-up connection. Most
broadband services are available at speeds of 256kbps, 512kbps, 1500kbps and even faster. There are
three main technologies used to deliver broadband:
Cable – The television cable network is used to connect to the Internet.
ADSL – The existing telephone wires are used to send information to/ from your computer and ISP
Satellite - A satellite dish sends and receives signals to your computer.

Who uses Broadband?

How do you currently access the Total Small Medium


Internet? Business Business
Dial up Modem 55% 58% 20%
Cable Modem 14% 14% 18%
ADSL 10% 9% 15%
Broadband 8% 7% 11%
ISDN 7% 7% 21%
Digital Subscriber Line 4% 4% 9%
Wireless connection 1% - 1%
Satellite 1% 1% 1%
Can’t say 1% 3% 8%

Base = Businesses connected to the Internet


Source: Sensis Business Index, Sweeney Research May 2004

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Broadband offers the following advantages to business:

• Faster Uploads and Downloads – Allowing business to send and receive plans, documents and images
with their associates as well as share large files quicker than mailing or faxing.

• Affordability - High-speed broadband packages (at speeds of 256kbps, 512kbps and 1500kbps) start from
around $29.95 (with download limits from 200mb) and go up, depending on the ISP, from $30 through to over
$100 per month depending on the speed and the limit of data you can download in one calendar month.

• Speed - It is typically 10 to 30 times faster than dial up.

• Constant Internet Access - Provides a constant Internet connection, thereby avoiding redialling the
connection.

• Reliability –there are fewer drop outs and no engaged signals.

Notes on Broadband Internet Access


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Internet Security
Internet Security Software – software which combines antivirus and firewall software and often includes anti-
spam and other security and productivity features.

Anti-Virus Software – Over 50,000 computer viruses are registered globally and they spread typically by
email attachments, Internet downloads, shared disks, CD-ROMs and other sources. In order to protect your
computer and the information held on it, anti-virus software is recommended. A virus is any computer
program written to damage computer systems (e.g. erases your vital files).

Firewall - A Firewall prevents unauthorized access to or from a private network by examining each message
and blocking those that do not meet the specified security criteria.

• Firewalls can provide many levels of security.


• Firewall use does require some skill, so seek technical advice to set up your firewall to suit your needs —
see your ISP or computer retailer.
• Some firewall software comes in shrink-wrapped boxes and can be purchased from a computer retailer or
software dealer. Other firewall software can be directly downloaded from the World Wide Web. Set your
firewall to update itself automatically.

Trusting the Internet: A Small Business Guide to E-security


The National Office for the Information Economy has published a guide, Trusting the Internet: A Small Business
Guide to E-security, which can help you understand the key issues of Internet security —
http://www2.dcita.gov.au/ie/publications/2002/07/trusting_the_net
This report overviews critical questions that every Australian business with an online presence need to know:

• How do I set up a secure website?

• How do I tell if I'


m completing a secure transaction?

• How do I protect my company from viruses?

• How do I make sure my passwords are appropriate and secure?

• How do I make sure my PC is secure?

• How do I choose the best authentication system?

Notes on Internet Security

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Privacy Policy

The Privacy Amendment (Private Sector) Act 2000


In December 2000 the Privacy Amendment (Private Sector) Act was passed through Federal Parliament.
This amends the Privacy Act 1988 which previously applied primarily to federal public sector agencies.

Under the changes to the Privacy Act, a set of National Privacy Principles (NPPs), which describe minimum
standards for the handling of personal information apply to the private sector. These principles relate to the
manner in which personal information may be collected and used, and to whom it may be disclosed. The
NPPs require that businesses which use personal information be open about their information practices and
maintain the accuracy of the personal information. As a result of the amendments, the Privacy Act applies to
the private sector as well as the public sector.
The amendments generally do not apply to businesses with an annual turnover of $3 million or less, unless
those businesses choose to '
opt-in'or conduct particular types of business.

You should conduct your own detailed research and/or seek legal advice before finalising a privacy policy.
These notes are for your general guidance only.

More information is available at www.privacy.gov.au

Privacy Policy - While every Australian organisation website will need a slightly different privacy policy, the
following elements are important to include:

• Legal statement - A statement that the website will not collect or disclose any personal information
without first obtaining user approval, unless required to do so to satisfy legal obligation
• Data sharing - An outline of the circumstances under which the personal data might be shared with
others
• Log files - Information on what log file information (such as the addresses of visitors to the website)
is stored by the website
• Email addresses - Provisions regarding how email addresses submitted to the website will be used.

Notes on Privacy Policy


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The Spam Act 2003
Spam Act 2003
The Spam Act says that unsolicited commercial electronic messages are prohibited and that commercial
email messages must not be sent without:
- The consent of the recipient
- Accurate information about the sender of the message; and
- A functional way for the message’s recipients to indicate that they do not wish to receive such
messages in the future – that they wish to unsubscribe.

Messages covered include email, short message service (SMS) and Instant Messaging (IM).
If a business is found to have breached the Act, a court may impose a penalty of up to $220,000 for a single
day’s contravention.

Spam Act 2003: A practical guide for business


The Australian Government has prepared this guide to provide practical information about the Spam Act and
guidance on steps that may be taken to assist in complying with it. The report can be downloaded from
http://www.aca.gov.au/consumer_info/spam/informationforbusiness.htm

Notes on Spam Act 2003


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Smart Tips and Demystifying eBusiness Myths
This presentation handout supports the “Smart Tips and Demystifying
eBusiness Myths” slide presentation.

Learning Outcomes
The objectives of this training module are to provide insights and smart tips and demystifying eBusiness
myths on:
• Developing your website using Content Management Systems
• Supply Chain Management and Online Process Automation
• Online and eMarketing
• Buying and Selling online
• Broadband Infrastructure Requirements
• Approaching Export
• Wireless and Mobile Applications
• Knowledge Management (Using Intranets)
• Electronic Customer Relationship Management
• eSecurity and Trust

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Developing your Website (Content Management Systems)
Utilize your existing website in Content Management System
By implementing a content management system, you may wish to move your existing website content into
the new system. Although a content management system offers a template for your website, be sure to use
your existing content, images, pictures and files. You don’t have to start afresh and develop completely new
materials!

Avoid high external rates for content changes


By implementing a content management system, you can remove the higher costs of simple updates to your
website that external contractors or web developers can charge. Instead, the content management system
will allow you or a member of your organisation to enter changes into a friendly interface avoiding the need to
understand how to use website publishing programs.

REFERENCE CASE STUDIES REFERENCE eNOTES


Northcote Pottery www.northcotepottery.com.au eNote 5: Website Development
Anglesea Online www.anglesea-online.com.au eNote 7: Writing for the Web

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Supply Chain Management/ Online Process Automation


Remove steps in repetitive processes!
Internet technology can remove repetitive steps in a process or create more time/cost effective way to
achieve a repeated task. This can be as simple as creating web based forms that initiate another task or
produces a report or automatic calculations of payments to more complex applications involving online
inventory, tracking and workflow management capabilities.

Incorporate customers and suppliers access in the design


Supply chain management systems typically allow clients access to your manufacturing process, stock
control, warehousing/logistics or distribution process in order to make the ‘supply of stock or service’ more
efficient. Be sure to design your system with customer’s feedback not only in the design phase but throughout
the development period. Gaining feedback is very important to meet the needs of your customers and
suppliers.

REFERENCE CASE STUDIES


Supply Chain Management Online Process Automation
Rocket www.rocket.com.au Hallis www.hallis.com.au
Sundowner Motor Inns www.sundownermotorinns.com.au AUR Food Right Supermarkets

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eMarketing
Search Engines
Increasingly, small and medium sized businesses are advertising on Internet search engines by purchasing
“keywords” which relate to their business product or service. When people type these key words (for
example, ‘plumber’, ‘car dealer’, ‘newsagent’, etc) into a search engine, such as www.yahoo.com.au or
search.ninemsn.com.au, the return list of results will feature the business who sponsored or paid for that
keyword higher in the results ranking!

Email Marketing is simple


A simple and cost effective method of promoting your online business is to collect your client email addresses
by asking them to join or ‘opt in’ to an email newsletter. Email newsletters are written very easily and the
complete list of contacts can be sent using a standard email program by creating lists that segments of your
database belong to.

REFERENCE CASE STUDIES REFERENCE eNOTES


Stuck On You www.stuckonyou.biz eNote 9: E-Commerce Marketing
MWT Australia www.mwtaustralia.com eNote 10: Making Search Engines work

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Buying and Selling Online


Clearly state Warranty and Refund policies
With more businesses now selling their products and services securely online by accepting online credit card
transactions, a smart tip is to ensure that your terms and conditions are clearly displayed on the website and
comply with all Australian federal, state and territory laws. Similarly, warranty and refund policies are
important to online shoppers, particularly those who are buying from overseas and require this information.

Look for Testimonials and Customer Service email


To provide a level of comfort the organisation you are buying from online is going to fulfill your online order to
your satisfaction, look for a customer feedback or written testimonials on the website. Furthermore, you may
send an email requesting further information which will test the level of customer service offered – which can
be very important following the purchase if you need service and other information!

REFERENCE CASE STUDIES REFERENCE eNOTES


The Coffee Company www.coffeecompany.com.au eNote 12: Selling Online
Clearstream Olive Farm www.clearstreamolives.com eNote 13: Buying Online

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Broadband Infrastructure Requirements
Demonstrate your business with streaming video
The reduction in price of broadband means that more Internet users can easily download streaming video
clips on websites. To increase the number of ‘lookers to bookers’ on your website, you may provide a
streaming video clip of your business product being demonstrated. Similarly, services are intangible and hard
to demonstrate. Therefore, streaming video can show your services being consumed and people can ‘see
your service’ easily via their broadband connection.

Reduced broadband prices


With monthly broadband Internet access falling below the $30 per month mark, be sure to check on the
availability of it in your area. In order to upgrade from a dial-up Internet connection, you will most likely only
need a broadband or satellite modem. Many of the Internet Service Providers subsidise the costs of the
upgraded modem into monthly payments so there is no upfront cost for your business to bear.

REFERENCE CASE STUDIES REFERENCE eNOTES


HD Chauffeur Rides www.harleyrides.com.au eNote 3: Setting up on the Internet
Hanging Rock Winery www.hangingrock.com.au eNote 7: Make Search Engines work

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Approaching Export
Provide access to a currency converter
If you are selling your products to overseas customers from your website, you may wish to provide the
currency of the $ symbol as overseas customers may think it is a different currency to Australian dollars. You
may wish to provide a link to a currency converter to assist international visitors to your website in calculating
the figure in their own currency before buying.

Tracking for Fulfillment


Most of the international courier and logistics companies such as DHL (www.dhl.com), TNT (www.tnt.com)
and Federal Express (www.fedex.com) provide a tracking number that people who purchase your product
online can enter via their website to see exactly where their product is geographically whilst in transit. This
service provides customers with an added degree of trust and will assist in your business approaching export
sales.

REFERENCE CASE STUDIES REFERENCE eNOTES


Stuck On You www.stuckonyou.biz eNote 12: Selling Online
Clearstream Olive Farm www.clearstreamolives.com eNote 13: Buying Online

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Wireless and Mobile Applications
SMS is a simple mobile application
The Short Messaging Service (SMS) has in recent years experienced explosive growth as a form of business
communications. The 160 character text messages that are on average charged by telecommunications
carriers at $0.25 cents each, can allow you to send out reminders to clients about payments, forms to lodge,
upcoming events as well as staff reminders, instructions and memos!

Wireless Devices increase customer time


The introduction of personal digital assistants which are handheld devices that hold customer and product
details has allowed businesses to increase productivity and sales where staff are out of the office and in front
of customers. Being able to process customer orders, record stock inventories or customer service reports
when in the field or at a client’s premises has provided increased sales for many Australian businesses.

REFERENCE CASE STUDIES REFERENCE eNOTES


Ivoclar Vivadent www.ivoclarvivadent.com.au eNote 19: Telecommunications
Paesano Restaurant

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Knowledge Management (Using Intranets)


Intranets bring together branch offices
Intranets use Internet technology to provide an internal network for an organisation. Intranets allow branch
offices and remote users to access information such as staff news, company policies, internal job vacancies,
footy tipping scores and internal telephone directories. Many companies now use an Intranet website - similar
to a staff notice board, except it is online!

Intranets help workflow


Intranets can reduce the time spent looking for internal information, assist in a more efficient workflow and
documentation process. It allows your organisational members to create online procedures that can minimize
printing and faxing or other paper based manual processes.

REFERENCE CASE STUDIES REFERENCE eNOTES


International Racehorse Transport www.flyirt.com eNote 11: Web Portals
eNote 18: Application Service Providers

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Electronic Customer Relationship Management
eCRM is not costly
Many small and medium sized businesses still keep their customer details and works or progress reports in
spreadsheets and equally believe that customer relationship management software is prohibitively expensive.
Software packages such as ACT (www.acttoday.com.au), Goldmine and Maximizer (www.maximizer.com.au)
allow you to import customer lists from spreadsheets and increases the functionality – to help you better
manage your business.

Attend User Groups


Most of the electronic customer relationship management software companies in Australia hold regular
monthly meetings that are free to attend. They provide businesses with the opportunity to see demonstrations
of software, hear from other businesses on how they utilise the software to enhance their client contact
management and understand how to construct groups as well as generate management reports.

REFERENCE CASE STUDIES


McKenzie Consulting www.mckenzie-group.com.au
Networx Events www.networxevents.com.au

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eSecurity and Trust


Keep your Anti-Virus Software current
Unlike most software packages that you purchase for your business, anti-virus software needs constant
updating. With the increases in computer viruses, most anti-virus software vendors are now including online
updates that are automatically downloaded from their server to your computer when they become available.
Prior to purchasing anti-virus software for your business, be sure to check updates are included!

Website Privacy Polices


If you are collecting details from visitors to your website, it is important to clearly display on your website a
privacy policy. There are various websites that will help you construct a privacy policy which you may wish to
post on your website. For more information, please visit www.privacy.gov.au

REFERENCE CASE STUDIES REFERENCE eNOTES


Networx Events www.networxevents.com.au eNote 16: Security

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22
Understanding eBusiness Costs
This presentation handout supports the “Understanding eBusiness
Costs” slide presentation.

So what’s it all about?


This guide to ‘Understanding eBusiness Costs’ can be used in conjunction with the Do it Yourself eBusiness
Analysis section of these training materials. It will assist you provide an indication of the various costs that
might be incurred in buying e-commerce and eBusiness related products and services, to develop and extend
your online initiative. Note that the costs given are only estimates, and while as accurate as possible, may
not reflect the prices you actually pay. Prices were current at the time of compilation in August, 2004. Be sure
to check for current prices whilst planning your eBusiness initiatives.

Learning Outcomes
The objectives of this training module are to provide insights and approximate cost guides for:
• Establishment and Start up costs
• Developing your website using Content Management Systems
• Operating Costs
• Buying and Selling online
• Security Internet Software
• Electronic Customer Relationship Management
• Wireless and Mobile Applications
• Online Advertising and eMarketing

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

23
Establishment and Start Up Costs*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Computer, modem (often internal), printer and • $2,000 - $3,000


scanner (recommended)*
• Software:
o Word processor • $300 - $500
o Web browser, e-mail software • Free, usually included with computer
• Telecommunications - extra telephone line • $200
• Dial up account with ISP, 1 e-mail address • $19.95 upwards per month
• Broadband account with ISP, 1 e-mail address • $30.00 upwards per month

• Domain name (www.yourbusiness.com.au) From $66 to $140 for 2 year registration


• Domain name (www.youbusiness.com) From US$9 for 1year registration

Website hosting at ISP: • $25 upwards per month


o 25 Megabyte Disk Space
o 2 Gigabyte traffic per month
o 1 mailbox
o SSL Access/ Database access
o Detailed site statistics

* Costs indicated are based on new goods. Good second hand equipment may be sourced, however this
should only be done in consultation with an experienced computer user or technician.

REFERENCE eNOTES
eNote 1: Setting up on the Internet eNote 3: Opportunities to Save Money
eNote 2: Finding Information on the Web eNote 4: Web Addresses explained

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

24
Developing your Website*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Website development:
o DIY package (e.g. Frontpage 2000) • $200
o By professional website developer • $500 - $10,000 depending on functionality
• Hosted website ‘solution’ (pre-built, template- • $400 -$900 per annum
driven websites that allow you to control your
own content)
• Training - each basic course per person • $100 -$300

REFERENCE eNOTES
eNote 5: Website Development eNote 6: Essential Website Information
eNote 7: Writing for the Web

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________

Operating Costs*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• ISP fees (for e-mail and web surfing, often • $120 - $500 per annum depending on usage
includes some hosting allocation for a website) • $320 (based on 2 local calls per working day)
• Telephone line rental and calls
• Web site:
o Hosting by ISP • $350 - $450 per annum
o Maintenance & upgrade by developer • $50 - $200 per hour

• Computers & software


o Maintenance & support • $50 - $200 per hour
o Training (per course per person) • $100 - $300
o Administration (staff time cost) • 1 - 2 hours per week for one person

REFERENCE eNOTES
eNote1: Setting up on the Internet

25
Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

E-Commerce - Secure Selling Online*


*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Online shopping cart and e-commerce merchant • From $200 for a off the shelf software system to
technology
• $1,000 to $3,000 for an outsourced system,
there is a monthly fee, set-up fee and or
transaction fee depending on the provider.

• Online credit card payment processing: • From 4% of online revenue


o Bank Internet merchant fees • From 2-4% of online revenue, depending on
o Credit card payment approval & processing volume of transactions
(bank or gateway provider)

REFERENCE eNOTES
eNote 12: Selling Online
eNote 14: Online Credit Card Facilities - FAQ

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

26
Security Internet Software*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Antivirus – 1 user licence of Norton AntiVirus • From $100


• Antivirus – 5 user licence • From $225
• Firewalls: • From $400
• All in one ADSL Modem/Firewall Router • From $250
• ADSL Wireless 11g Firewall/Router • From $350

REFERENCE eNOTES
eNote 16: Security

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________

Electronic Customer Relationship Management*


*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Contact Management Solution software – 1 user


licence of ACT or Goldmine • From $250
• Antivirus – 6 user licence • From $1250
• Quickbooks or MYOB Link to ACT • $320 to $370
• ACT for Palm Operating System • $75

• CRM which integrates with Microsoft Office – 1 • $225 to $1850


user to 5 user licence

REFERENCE eNOTES
eNote 18: Applications Service Providers

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

27
Wireless and Mobile Applications Costs*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• SMS Campaign Manager – 1 user licence of


Bond Wireless • From $400
• SMS to Email Infrastructure software • From $5,000

REFERENCE eNOTES
eNote 19: Telecommunications

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

eMarketing Costs*
*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Search Engine Marketing


• Search engines charge for keyword advertising • From $0.01 cent per word upwards
• Search Engine Optimisation – employing a
range of technical techniques to ensure your • $60 per hour or a flat fee for bulk listings to
website is found ahead of your competitors’. search engines for $200

Prices vary depending on the traffic to a website,


agencies commissions and positioning of the
advertisements. Please note that some websites
require a minimum monthly spend.

REFERENCE eNOTES
eNote 10: Make Search Engines Work for your website

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________

28
eMarketing Costs*

*Prices were current at the time of compilation in August 2004. Be sure to check for current prices whilst
planning your eBusiness initiatives.

• Online Advertising Cost per Thousand (CPM)


Many websites accept paid advertising, on any of a Cost per Thousand (Roman M) impressions (views)
flat, ‘per impression’ (view) or ‘per click’ basis. is the price paid by advertisers to a website to
Advertisements can be plain text, banners, buttons display a banner advertisement one thousand
or ‘pop-ups’. times.
The average CPM is approximately $15 to $35

Cost per Click (CPC)


The price paid by advertisers to acquire a single
customer and occurs when a user clicks on an
advertisement and is transferred to the
organisation’s website.
The average CPC is approximately $1 to $3.

Cost per lead or sale


New technology allows a click on an advertisement
to be traced back to the originating website.
Instead of earnings based on the impression or
click, advertising hosts are paid if that referral
results in an appointment or sale.

Sponsorship
Flat fee – Approximately $100 to $10,000 per
month, depending on the type and popularity of
website or email.

• Email Marketing • From $10 to $100 per month set-up fee or cost
Costs for permission email marketing vary per month fee
depending on the email format and size, the • Set up fees: approximately $250 to $500
quantity of recipients, the level of reporting and
additional services required. Price per email
• From approximately $0.04 to $0.25 for a list of
up to 1,000 subscribers
• Price per email: Approximately $0.01 to $0.15
for a list of up to 40,000 subscribers

• Email software programs can be downloaded


from the Internet from approximately $100

29
Do it Yourself eBusiness Investment Analysis
This presentation handout supports the “Do it Yourself eBusiness
investment Analysis” slide presentation.

This Do It Yourself eBusiness analysis will help you complete a


Business Case for your E-commerce and eBusiness idea.

Learning Outcomes
The objectives of this training module are to provide:

1. Outline of your E-commerce idea - create a reference point to keep you focused on your venture’s
proposed ‘boundaries.’
2. Strengths, Weaknesses, Opportunities and Threats (SWOT) Assessment – Your view of the
intangible ‘value’ that your project will bring.
3. Financial Assessment – Estimates of the costs and financial benefits of the idea. The Financial
Assessment will give you a clear picture of the impact venture, but consider a ‘go / no-go decision’ based
on the entire business case that you have put together.

Note Figures and cost ideas discussed in the workshop session are all estimates.
In order to ensure your eBusiness investment analysis is accurate before making a decision, we recommend
you redo this business case exercise with more accurate and complete information in all three sections,
based on your own research, and using the following tools.

To assist you, please also refer to:

• Understanding eBusiness Costs handout: summarises costs of E-Commerce and eBusiness related
products and services

• Financial Assessment is available in using the Quick Reckoner - a Microsoft Excel spreadsheet
available from www.mmv.vic.gov.au. Simply type in your own data and it will self-calculate. You can
reuse the spreadsheet to redo the Business Case exercise, to assess any other E-commerce ideas you
have or to evaluate actual results on an annual basis.

• eNotes: contains information to support you through the action planning process

• Case Studies: contain information on e-commerce and eBusiness technology implementations, the
benefits, costs, management insights and results as well as a return on investment. Further information is
available at www.mmv.vic.gov.au/casestudies

We encourage you to seek professional advice in completing any business case, whether they are
preliminary or financial. Use the references in the eNote: eBusiness Assistance or contact Certified Practising
Accountants (CPA Australia) to find your local CPA representative, online at www.cpaaustralia.com.au or call
(03) 9606 9606. Professionals can advise you on cost-benefit analysis, amortization and lease versus
purchase options.

30
1. Project Outline Assessment
What is your E-Commerce or eBusiness idea?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

Describe your E-Commerce or eBusiness project?


How far do you want to go with E-commerce at this stage?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
Examples:
• I want to use email to communicate with customers
• I want to set up a basic website about my business
• I want to revise my website and keep it frequently updated
• I want to sell my products online
• I want to automate internal processes and reduce administrative processes and paper work using
technology
• I want to increase efficiencies in my supply chain with suppliers
• I want to upgrade to broadband to send and receive files quickly
• I want to improve my management of customers
• I want to increase the online marketing and advertising to make my business more visible online
• I want to protect my website from computer virus and increase security measures

What are the key things you need to do?


- Think about the equipment, hardware, software, resources and training you require.
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

31
2. Basic Benefit Assessment (Strengths and Weaknesses)
What overall benefits would you expect from investing in E-Commerce or eBusiness?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
Questions to consider:
• How will e-commerce and eBusiness develop the business?
o New customers or exports

• Improve / impact on how you do business?


o Reduce costs
o Faster, better communications with suppliers
o Access to information that helps you improve your service / understanding of competitors

• What new skills are required?

• Assistance outside the business?


o (Internet support, web developer, application service provider, broadband)

• Marketing benefits?
o Information available on website means sales staff can concentrate on selling
o Cheaper ways of marketing to more potential customers
o Updated product and price lists

• Other benefits?
o Better use of staff and their skills
o Time saved when using email and Internet rather than other means to do business
o Time saved when not traveling to client sites

• Impact on operating and capital expenditure


o Impact on cash flow
o Outsourcing policy

• Any downsides?
o It’ll take too much of my time
o I’m worried about the security of information on my computers
o Will I be able to service my customers just as well as I do now?

32
Opportunity Assessment
How will this project help the business to achieve its aims and develop further?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

Questions to consider:

• How will this help us achieve our business objectives?


o Extend my customer base outside Victoria
o Expand range of services I can offer to customers at low cost
o Increase order processing times
o Increase workflow and speed of product delivery

• Help with new business opportunities?


o Maybe I can offer online services now, rather than always deal with customers face-to-
face
o I can replace offline process with online processes (i.e. online workflow automation,
ordering and banking)
• Any constraints?
o Consider whether your suppliers actually have, e.g. email, broadband, supply chains
o Find out whether you can actually get good technical support locally

33
Threats and Competitor Assessment
Assess the threats from undertaking this project and how you will overcome them?
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

Questions to consider:

• What are the three main threats to your business?


o Customers finding similar products on another (even foreign) website, and buying from them
o New start-up home businesses - low cost to do it, and they can undercut you
o Not getting an early return on investment / Not finding staff with the right skills

• How will E-commerce and eBusiness help to overcome these threats?


o You’ll be able to offer products to a wider market
o Reduce dependency on your current local customer base
o Increase efficiencies of stock ordering, online process automation, faster processing times
o Providing lots of information and advice on your website will help build customer loyalty
o Increasing functionality for external suppliers and distributors via access to your website
o Reduce investment risk by doing project in several less costly stages - seeing some return at
each stage before starting next.

Questions to consider about competitors:

• What are your competitors doing already in E-commerce?


• What E-commerce and eBusiness are they doing?
o Website
o Online product catalogue and frequent updates
o Support their agents with a restricted part of their website
o Online marketing and advertising
• Are these E-commerce and eBusiness initiatives impacting your business?
o Customers prefer to look at product information online
o They can keep their online product catalogues up to date
o Customers like the customer services they’re getting from a website

34
3. Financial Assessment
The following financial tables are for written completion during the workshop. During the workshop, you may
wish to complete the shaded boxes:
Individual costs
Totals

The Quick Reckoner Microsoft Excel version of these spreadsheets is available for you to work through
outside of this workshop.

3.1 Start Up Costs


Equipment $
Computer(s), printer etc. ……..

Software:
(1) ……..
(2) ……..

Telecommunications ……..
(e.g. new dedicated phone line / ISDN/ADSL Line)

Website
Domain name ……..

Site storage at ISP - set up costs ……..

Design and develop website:


- external developer ……..
- internal development ……..
Training
Staff training ……..

Office Expenses
Furniture etc. ……..

Changes to business processes ……..

Marketing of E-commerce (one-off expenses)


Changes to stationery, catalogues, ……..
brochures, packaging etc.

Advertising & promotion ……..

Total Start Up Costs


35
3.2 Revenue from E-commerce Project (Annual)
E-commerce Revenue $
From website sales ……..
Indirect ……..
(e.g. from website promotion,
e.g. sales from web introduction,
e.g. sale of software developed,
E.g. training other businesses, etc.)

Less Cost of Goods Sold


(E.g. costs of supplies, packaging, and delivery
costs, etc.)
……………….. ……..
……………….. ……..

Gross Revenue from E-commerce

3.3 Cost savings from E-commerce (Annual)


Cost Savings from E-commerce $
Marketing materials:
- printing ……..
- advertising ……..
Communications with customers,
suppliers, agents etc.:
- Postage ……..
- Telephone, fax ……..
- Travel ……..
- Meetings ……..

Business improvements, efficiencies,


productivity - staff time savings:
- hours @ $ per hour ……..
- hours @ $ per hour ……..
- Other staff savings ……..
Use of online financial services:
- banking ……..
- customer payments ……..
- supplier payments ……..
- payroll ……..
- other (e.g. reduced bank visits) ……..
Other: ……………….. ……..

Total Cost Savings from E-commerce


36
3.4 E-commerce Operating Costs (Annual)

Operating Costs from E-commerce $


Internet communications:
- ISP fees ……..
- telephone calls ……..

Website:
- hosting by ISP ……..
- site maintenance & updates:
by staff ……..
by external resources ……..
- other ……..
Computers and software:
- maintenance ……..
- software licenses & upgrades ……..
- training ……..
- administration ……..
- other ……..

E-commerce marketing & promotion:


- advertising ……..
- email Newsletter ……..
- new customer services ……..
Total Operating Costs from E-commerce

NET REVENUE FROM E-COMMERCE PROJECT:


Gross Revenue from E-commerce +
Total Cost Savings from E-commerce -
Total Operating Costs from E-commerce ……..

NET REVENUE FROM E-COMMERCE PROJECT


WRITING OFF START UP COSTS IN FIRST YEAR:
Gross Revenue from E-commerce +
Total Cost Savings from E-commerce -
Total Operating Costs from E-commerce -
Total Start Up Costs ……..

AMORTISATION Over Four Years ……..

37
4. Overall Assessment
Consider which box fits you!

Looks good, but It will give us


Not sure, we’ll we need to do significant The only way to
Not for us at this
stay open to some more work benefits, we will go - we start
stage!
options though. before we are start as soon as tomorrow!
sure. possible.

Workshop Notes:
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________

38
Index of where to find more information

Find more about eCommerce and eBusiness from these websites:

Government Information Agencies

Victorian Government

VictoriaOnline
VictoriaOnline is the entry point to online services provided by the Victorian State and Local Governments,
along with Federal Government.
www.vic.gov.au

The Business Channel


Business Channel is an electronic information service designed by the Victorian Government to bring
government agencies and services within easy reach of the business community 24 hours a day, seven days a
week.
www.business.channel.vic.gov.au

Consumer Affairs Victoria


Consumer Affairs Victoria is the Victorian Government agency responsible for enforcing the Fair Trading Act
1999, along with other State legislation regarding business activities.
www.consumer.vic.gov.au

Privacy Victoria
Privacy Victoria is the key body in a system regulating the way Victorian government agencies and local
councils collect and handle personal information.
www.privacy.vic.gov.au

Federal Government

Australian Bureau of Statistics (ABS)


Australia’s primary government statistical agency
www.abs.gov.au

Australian Government Information Management Office


Extensive information on eCommerce, IT and the Information Economy
www.agimo.gov.au

Department of Communications, Information Technology & the Arts (DCITA)


Information about eBusiness, available publications and funding programs.
http://www2.dcita.gov.au/ie/ebusiness

Business Entry Point


The Business Entry Point covers the resources that are available from Commonwealth, State as well as
Territory governments.
http://www.business.gov.au

39
Industry Bodies
Internet Industry Association (IIA)
Australia’s national Internet Industry Association
www.iia.net.au

E-commerce Association of Central Victoria


This website aims to develop opportunities for businesses and the wider Central Victorian community through
research into and promotion of electronic commerce technologies.
www.ecomcv.asn.au

Research Agencies
BitPipe
A complete guide to the latest eBusiness white papers, product literature, webcasts and case studies
http://www.bitpipe.com

eMarketer
Global supplier of e-commerce and eBusiness statistics
www.emarketer.com

Forester Research
US based research agency specializing in the Internet and Information Technology
www.forrester.com

Sensis
Australian supplier of eCommerce and eBusiness reports
http://about.sensis.com.au

News Agencies
eCom-Adviser
An online advisory tool developed to help small and medium size businesses (SMEs) move quickly into the
connected world of e-business
www.ecom-adviser.com.au

E-Commerce Times
Daily information and special reports on small business and eBusiness trends
www.ecommercetimes.com

ClickZ today
News, information and articles on B2B issues, e-commerce and marketing
www.clickz.com

Going Digital
This website features a range of case studies from agriculture to building, retail and transport.
www.goingdigital.com.au

40
Tradegate ECA
Helps to facilitate implementation of e-commerce via agreed national standards and strategies
www.tradegate.org.au

Can’t Find what you are looking for?


Try looking for more information on one of the following Internet Search Engines

http://www.google.com
http://www.sensis.com.au
http://www.goeureka.com.au
http://search.ninemsn.com.au
http://au.altavista.com
http://www.looksmart.com.au
http://www.yahoo.com.au

Disclaimer
These materials are provided for general assistance and information only. Neither APT Strategies Pty. Ltd nor the State of Victoria makes
any representations or warranties (express or implied) as to the accuracy or currency of the information contained in the materials nor
endorses any company or organisation or other web-sites or materials referred to. The State of Victoria does not accept any liability for
any reliance placed on this material, including any liability in negligence for relying on any information in these materials or any products,
services or information which may be provided by the companies and organisations referred to. Copyright State of Victoria 2004.

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