M INFORMATION SYSTEMS 4TH

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E B U S I N E SS : E L E C T R O N I C
3
CHAPTER
BUSINESS VALUE
One-hour film processing and digital cameras both contributed to the demise of Polaroid, a solid company that had
an innovative technology and a captive customer base. The dilemma that faced Polaroid is a dilemma that most
organization face – the criteria an organization uses to make business decisions for its present business could
possibly create issues for its future business. Essentially, what is best for the current business could ruin it in the
long term.

In the past few years, ebusiness seems to have permeated every aspect of daily life. In just a short time, both
individuals and organizations have embraced Internet technologies to enhance productivity, maximize
convenience, and improve communications globally. This chapter focuses on the disruptive technology, the
Internet, and ebusiness processes that are changing the nature of the buyer-seller relationship, the role of
information technology (IT), and organizational structures and tasks. The chapter also discusses the opportunities
and advantages found with developing ebusinesses. Specific relationships have been developed in the chapter
between disruptive technologies and ebusinesses.

▪ SECTION 3.1 – WEB 1.0 - EBUSINESS

• Web 1.0: Disruptive Technology

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 • The Four Ebusiness Models
• Ebusiness Tools for Connecting and Communicating
• The Challenges of Ebusiness
•
▪ SECTION 3.2 – WEB 2.0 – BUSINESS 2.0
• Web 2.0: Advantages of Business 2.0
• Networking Communities with Business 2.0
• Business 2.0 Tools for Collaborating
• The Challenges of Business 2.0
• Web 3.0: Defining the Next Generation of Online Business Opportunities

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 S E C T IO N 3 . 1
W E B 1 . 0 - E B U S I N ES S

What do steamboats, transistor radios, and Intel’s 8088 processor all have in common? They are all disruptive
technologies. Disruptive technologies redefine the competitive playing fields of their respective markets.
Disruptive technologies tend to open new markets and destroy old ones. Sustaining technologies tend to provide
us with better, faster, and cheaper products in established markets, but virtually never lead in markets opened by
new and disruptive technologies.

LEARNING OUTCOMES
Learning Outcome 3.1: Compare disruptive and sustaining technologies, and explain how the Internet and
WWW caused business disruption.
Disruptive technologies offer a new way of doing things that initially does not meet the needs of existing
customers. Disruptive technologies redefine the competitive playing fields of their respective markets, open new
markets and destroy old ones, and cut into the low end of the marketplace and eventually evolve to displace high-
end competitors and their reigning technologies.

Sustaining technologies produce improved products customers are eager to buy, such as a faster car or larger
hard drive. Sustaining technologies tend to provide us with better, faster, and cheaper products in established
markets and virtually never lead in markets opened by new and disruptive technologies.

The Internet and WWW caused business disruption by allowing people to communicate and collaborate in ways
that were not possible before the information age. The Internet and WWW completely disrupted the way
businesses operate, employees communicate, and products are developed and sold.

Learning Outcome 3.2: Describe ebusiness and its associated advantages.

Web 1.0 is a term to refer to the World Wide Web during its first few years of operation between 1991 and 2003.
Ebusiness includes ecommerce along with all activities related to internal and external business operations such
as servicing customer accounts, collaborating with partners, and exchanging real-time information. During Web
1.0, entrepreneurs began creating the first forms of ebusiness. Ebusiness advantages include expanding global
reach, opening new markets, reducing costs, and improving operations and effectiveness.

Learning Outcome 3.3: Compare the four ebusiness models.

Business-to-business (B2B) applies to businesses buying from and selling to each other over the Internet.
Business-to-consumer (B2C) applies to any business that sells its products or services to consumers over the
Internet.
Consumer-to-business (C2B) applies to any consumer that sells a product or service to a business over the
Internet.
Consumer-to-consumer (C2C) applies to sites primarily offering goods and services to assist consumers
interacting with each other over the Internet.

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The primary difference between B2B and B2C are the customers; B2B customers are other businesses while B2C
markets to consumers. Overall, B2B relations are more complex and have higher security needs; plus B2B is the
dominant ebusiness force, representing 80 percent of all online business.

Learning Outcome 3.4: Describe the six ebusiness tools for connecting and communicating.
As firms began to move online, more MIS tools were created to support ebusiness processes and requirements.
The ebusiness tools used to connect and communicate include email, instant messaging, podcasting, content
management systems, videoconferencing, and Web conferencing.

Learning Outcome 3.5: Identify the four challenges associated with ebusiness.
Although the benefits of ebusiness are enticing, developing, deploying, and managing ebusiness systems is not
always easy. The challenges associated with ebusiness include identifying limited market segments, managing
consumer trust, ensuring consumer protection, and adhering to taxation rules.

CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Edwin Land Develops the Polaroid Camera
In 1937, Edwin Land started a company that made a polarizing plastic and named it Polaroid. The business
boomed. Land was taking family pictures on his vacation in 1943 when his three-year-old daughter asked why
they had to wait so long to see the developed photographs. Land was struck with the idea of combining the
polarization technology with developing films. By 1950, Land had a camera that produced black-and-white images
and by 1963, he released a camera that produced color pictures. The Polaroid camera took off and by the late
1960s, it was estimated that 50 percent of American households owned one.

CLASSROOM EXERCISE
Disrupting the Classroom
Break your students into groups and ask them to identify the primary differences between disruptive and sustaining
technologies, along with several current examples of each

Disruptive technologies:
• Disruptive technologies redefine the competitive playing fields of their respective markets
• Disruptive technologies tend to open new markets and destroy old ones
• Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace
high-end competitors and their reigning technologies

Sustaining technologies:
• Sustaining technologies tend to provide us with better, faster, and cheaper products in established markets
• Sustaining technologies virtually never lead in markets opened by new and disruptive technologies

CLASSROOM EXERCISE
VIDEOS TO START YOUR DISCUSSIONS
• WEB 2.0 The Machine Is Using Us
http://www.youtube.com/watch?v=6gmP4nk0EOE

• WEB 2.0 How Stuff Works

http://computer.howstuffworks.com/web-20.htm

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CLASSROOM EXERCISE
Video Interview: Sir Tim Berners-Lee
20 years ago, Tim Berners-Lee invented the World Wide Web. For his next project, he's building a web for open,
linked data that could do for numbers what the Web did for words, pictures, video: unlock our data and reframe the
way we use it together.

The Next Web Video

http://www.ted.com/talks/tim_berners_lee_on_the_next_web

At TED2009, Tim Berners-Lee called for "raw data now" — for governments, scientists and institutions to make
their data openly available on the web. At TED University in 2010, he shows a few of the interesting results when
the data gets linked up.

The Year Open Data Went Worldwide

https://www.ted.com/talks/tim_berners_lee_the_year_open_data_went_worldwide

CLASSROOM EXERCISE
The Day I Turned Down Sir Tim Berners-Lee
Imagine it's late 1990, and you've just met a nice young man named Tim Berners-Lee, who starts telling you about
his proposed system called the World Wide Web. Ian Ritchie was there. And ... he didn't buy it. A short story about
information, connectivity and learning from mistakes.

The Day I Turned Down Sir Time Berners-Lee

http://www.ted.com/talks/ian_ritchie_the_day_i_turned_down_tim_berners_lee

CLASSROOM EXERCISE
Where the Internet Really Started
Ask students, “How did the Internet (really) get started.” A few responses might include: Al Gore (“Information
Superhighway”), or the Department of Defense (ARPANET), or even Bill Gates (Microsoft).

For many people, the Internet is the epitome of cutting-edge technology. However, in the nineteenth century, the
first “online communications network” was already in place - the telegraph! In addition, at the time, it was just as
perplexing, controversial, and revolutionary as the Internet is today. In essence, the telegraph was the first
incarnation of the Internet.

Ask students to “Imagine an almost instantaneous communication system that would allow people and
governments all over the world to send and receive messages about politics, war, illness, and family events. The
government has tried and failed to control it.” Was it the Internet? Nope, the humble telegraph fit this bill way back
in the 1800s. The parallels between the now-ubiquitous Internet and the telegraph are amazing, offering insight
into the ways new technologies can change the very fabric of society within a single generation.

Emphasize the history of the telegraph:

• Begin with the funny story of a mile-long line of monks holding a wire and getting simultaneous shocks in the
interest of investigating electricity, and ending with the advent of the telephone (this is the true scenario).
• Discuss the early “online” pioneers: Samuel Morse, Thomas Edison, and a seemingly endless parade of code-
makers, entrepreneurs, and spies who helped ensure the success of this communications revolution.

With the invention of the telegraph, the world of communications was forever changed. The telegraph gave rise to
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creative business practices and new forms of crime. Romances blossomed over its wires. In addition, attitudes
toward everything from news gathering to war had to be completely rethought. The saga of the telegraph offers
many parallels to that of the Internet in our own time, and is a remarkable episode in the history of technology.

CLASSROOM EXERCISE
Finding Innovation
Innovation, new ideas, and new technology are exciting. It is currently estimated that everything we know
technically will represent 1 percent of all technology in 2050. Break your students into groups and ask them to
search the Internet for the most exciting form of innovation that is going to hit our market and change our lives over
the next ten years. Have your students present their findings to the class and offer a small prize to the winner.

A few examples include:

• Computers that offer smells, click on a perfume and the scent permeates from your computer, movie theatres
will offer smells that correspond to the movie
• Electronic toilets – analyze output and let you know if you getting sick days before the cold actually hits. Great
for rest homes and hospitals
• Planes the size of small ships that offer shopping and restaurants

CLASSROOM EXERCISE
First Movers that Flopped
The right technology at the wrong time. Ask your students to research the Internet and find products that failed.
This exercise can result in some extremely funny products.

CLASSROOM EXERCISE
The 13 Most Embarrassing Web Moments
The Internet is the most efficient information distribution system ever known. But if you're not careful, it's also the
perfect way to embarrass yourself in front of the entire world.
http://www.pcworld.com/article/127823/EmbarrassingMoments.html

CLASSROOM EXERCISE
The Web’s Most Useful Sights
You have lots of stuff to get done. And these next-generation services can help with everything from wrangling
passwords to throwing a party. Have your students research the Internet for lists of the most useful websites and
ask the following questions.

• Will these sites be useful in Web 2.0?

• How will these sites be different in Web 2.0?

CLASSROOM EXERCISE
48 HOUR MAGAZINE
That sound you hear, of thousands of writers, designers and photographers banging their heads against the wall to
the beat of a ticking clock? That's the sound of 48 Hour Magazine, a publication that aims to go from inspiration to
execution in 48 hours and begins....now. Ask your students to discuss the following:
▪ What are the limitations of “old media”?
▪ How are the editors of a 48 Hour Magazine using technology to overcome these limitations? How are they
going to validate the news and its sources?

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 ▪ What are the advantages and disadvantages of the 48 Hour Magazine’s business model?
▪ If you had $50,000 would you invest in the 48 Hour Magazine? Why or why not?

CORE MATERIAL
The core chapter material is covered in detail in the PowerPoint slides. Each slide contains detailed teaching notes
including exercises, class activities, questions, and examples. Please review the PowerPoint slides for detailed
notes on how to teach and enhance the core chapter material.

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 S E C T IO N 3 . 2
WEB 2.0: BUSINESS 2.0

Section 3.2 discusses different business departments (student majors) and how the Internet and ebusiness is
affecting each major. This is a great opportunity for instructors to discuss how learning about technology can
impact people’s careers and help them achieve success. Opening student’s eyes to how technology can help them
in their marketing, finance, accounting, and other careers can even help students become more engaged in the
course and perhaps elect IS as their major or minor.

LEARNING OUTCOMES
Learning Outcome 3.6: Explain Web 2.0, and identify its four characteristics.
Web 2.0, or Business 2.0, is the next generation of Internet use—a more mature, distinctive communications
platform characterized by new qualities such as collaboration, sharing, and free. Web 2.0 encourages user
participation and the formation of communities that contribute to the content. In Web 2.0, technical skills are no
longer required to use and publish information to the World Wide Web, eliminating entry barriers for online
business. The four characteristics of Web 2.0 include content sharing through open sourcing, user-contributed
content, collaboration inside the organization, collaboration outside the organization.

Learning Outcome 3.7: Explain how Business 2.0 is helping communities network and collaborate.
A social network is an application that connects people by matching profile information. Providing individuals with
the ability to network is by far one of the greatest advantages of Business 2.0. Social networking is the practice of
expanding your business and/or social contacts by constructing a personal network. Business 2.0 simplifies the
way individuals communicate, network, find employment, and search for information.

Learning Outcome 3.8: Describe the three Business 2.0 tools for collaborating.
The three tools that harness the “power of the people” for Business 2.0 include blogs, wikis, and mashups. A blog,
or Web log, is an online journal that allows users to post their own comments, graphics, and video. Blog websites
let writers communicate—and reader’s respond— on a regular basis through a simple yet customizable interface
that does not require any programming. A wiki is a type of collaborative Web page that allows users to add,
remove, and change content, which can be easily organized and reorganized as required. While blogs have largely
drawn on the creative and personal goals of individual authors, wikis are based on open collaboration with any and
everybody. A mashup is a website or Web application that uses content from more than one source to create a
completely new product or service. A mashup allows users to mix map data, photos, video, news feeds, blog
entries, and so on to create content with a new purpose.

Learning Outcome 3.9: Explain the three challenges associated with Business 2.0.
As much as Business 2.0 has positively changed the global landscape of business, a few challenges remain in
open source software, user-contributed content systems, and collaboration systems. These challenges include
individuals forming unrealistic dependencies on technology, vandalism of information on blogs and wikis, and the
violation of copyrights and plagiarism.

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Learning Outcome 3.10: Describe Web 3.0 and the next generation of online business.
Web 3.0 is based on “intelligent” Web applications using natural language processing, machine-based learning
and reasoning, and intelligent applications. Web 3.0 is the next step in the evolution of the Internet and Web
applications. Business leaders who explore its opportunities will be the first to market with competitive advantages.
Web 3.0 offers a way for people to describe information such that computers can start to understand the
relationships among concepts and topics.

CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Jeff Bezos Decides to Sell Books over the Internet
Jeff Bezos owns 41 percent of Amazon and is estimated to be worth over $900 million. Bezos graduated from
Princeton and was the youngest Vice President at Banker’s Trust in New York. Bezos had to make a decision to
stay and receive his 1994 Wall Street bonus or leave and start a business on the Internet. “I tried to imagine being
eighty years old, looking back on my life. I knew that I would hardly regret having missed the 1994 Wall Street
bonus. But having missed being part of the Internet boom – that would have really hurt,” stated Bezos. The first
books ordered through Amazon were dispatched in the fall of 1994 (personally packaged by Bezos and his wife).
Amazon.com is now the biggest bookstore on the planet. It is the exemplar of electronic business.

The dot-com boom-and-bust is often compared to the 1849 Gold Rush, and Amazon.com founder Jeff Bezos
offers historical evidence showing how similar they were: from the riches made by pioneers to the media hype that
attracted luckless speculators. But a better analogy can be found in the early days of the electric industry, he
shows us. His conclusion in 2003: "I believe there's more innovation ahead of us than behind us."
http://www.ted.com/index.php/talks/view/id/105

CLASSROOM OPENER
Chris Anderson – The Long Tail Video
Chris Anderson, the editor of WIRED (not to be confused with the curator of TED, who has the same name),
explores the four key stages of any viable technology: setting the right price, gaining market share, displacing an
established technology and, finally, becoming ubiquitous. To demonstrate this trajectory, Anderson explores the
evolution of the DVD player as it passes through each of these four tipping points, then offers specific examples of
current trends in technology -- ranging from DNA sequencing to the hybrid -- to illustrate each stage of the game.
http://www.ted.com/index.php/talks/view/id/72

CLASSROOM EXERCISE
25 Startups to Watch
It's getting crowded on the web 2.0 frontier, but there are still some startups that truly stand out. Business 2.0
Magazine identifies the ones most likely to strike gold in 2007.
http://money.cnn.com/galleries/2007/biz2/0702/gallery.nextnet.biz2/index.html

Looking back at what was cool technology a decade ago is a great way to get your students thinking about how
quickly technology moves. I enjoy discussing the funding for these start-ups as it is easy to see how many didn’t
make it even 10 years. The average funding for enterprise ebusiness start-ups in 2007 was $33 million. It is a
great way to show students how much money is being invested in IT and how difficult it is to sustain. I also like to
reflect on where these startups are today – is what we thought was hot in 2007 still hot? What happened to the
“hot” companies? What companies are hot today? How can you identify new trends? Can your students choose
one new company that they believe will still be around in 2027?

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CLASSROOM EXERCISE
Comparing Websites Competition
Have students team up with two or three classmates to select and compare websites of two retailers that are in the
same business (as an example jcrew.com vs. abercrombie.com, or amazon.com vs. bn.com). Have students use
the list of "do's and don'ts" from http://webdesignledger.com/tips/20-dos-and-donts-of-effective-web-design
compare the two sites, along with other criteria you might like to add. Have students review the range of
information resources and services used in the sites and the ways in which they are organized, designed, and
presented.

The basic question the groups should attempt to answer is how well the sites support the conduct of ebusiness.
After analyzing the sites, have students compare the strengths and weaknesses of the two sites. Students should
be able to draw a conclusion as to which one they think does the best job of attracting customers to the website
and retaining them once they get there. Also, have students comment on how well they think each site…
• Offers a fast and convenient shopping experience
• Provides access to help or additional information
• Selects desirable products and displays them and describes them in an attractive and easy-to¬ understand
manner
• Describes its method for getting purchases to customers promptly
• Uses online ads, affiliate programs, viral marketing, and email marketing

CLASSROOM EXERCISE
Viral Marketing Video Clip
From Spam to Viral Marketing from John Cleese…
One B2B marketer used a lot of silliness to increase its web traffic tenfold and generate thousands of sales leads
starting a viral phenomenon which went from a wacky idea to revenue-generating success. Great John Cleese
video on the backup trauma institute. I like to use this video when introducing IT Architectures. This is also one of
the first examples of a successful viral marketing campaign. Google “From Span to Viral Marketing John Cleese
Video” as this link keeps changing!

CLASSROOM EXERCISE
EHEALTH: The Doctor Will NOT See You Now
When Janel Wood’s 9-year-old son recently began experiencing migraines, the working mother decided to try a
new company health care program that allowed her to communicate with a doctor through videoconferencing,
voice over IP and instant messaging.
While her son was home for lunch, Wood logged onto a local medical practice’s website and connected via
videoconferencing and IM with the doctor on duty, who then reviewed her son’s electronic medical record, or EMR,
online. The doctor sent Wood links to migraine articles and podcasts and prescribed more hydration for her son,
which worked over time. “I ended up bringing [my son] back to school before missing any classes, which he was
kind of bummed about. It was so quick and efficient,” Wood said. Ask your students to answer the following:
• Do you agree or disagree that telehealth is cold and impersonal?
• What are the advantages of telehealth?
• What are the disadvantages of telehealth?
• What other industries could benefit from this type of technology?

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CLASSROOM EXERCISE
The Ten Most Creative People on Twitter or Instagram
There are so many websites all stating they have the top list of creative people in business, on Twitter, using
Instagram. Ask your students to research the Internet and find such a list for a current application and answer the
following:
• Rank the people in order form greatest to least creative – 1 being greatest
• Which person do you think has the best creative ideas and explain how they are using technology in a new or
creative way.
• Which person has the least creative idea and why?
• What other ways could you use these technologies to innovate your business, service, or product?

CLASSROOM EXERCISE
Finding The Best Career For 2020
As robots take over the workforce using DSS and EIS to make decisions for us and virtual worlds become our new
reality what will work look like in 2020? Ask your students to research the Web and find the hot growth areas for
jobs and what their ideal career would look like in 2020.
• Top Fastest Growing Jobs by 2020
http://www.boston.com/jobs/galleries/fastest_growing_jobs_2020/

• Forbes – Best Jobs in 2020

http://www.forbes.com/2010/04/08/unemployment-google-2020-technology-data-companies-10-economy.html

CORE MATERIAL
The core chapter material is covered in detail in the PowerPoint slides. Each slide contains detailed teaching notes
including exercises, class activities, questions, and examples. Please review the PowerPoint slides for detailed
notes on how to teach and enhance the core chapter material.

REVIEW OR DISCUSSION QUESTIONS

1. What is the different between sustaining and disruptive technology?

A disruptive technology is a new way of doing things that initially does not meet the needs of
existing customers. Disruptive technologies tend to open new markets and destroy old ones. A
sustaining technology, on the other hand, produces an improved product customers are eager
to buy, such as a faster car or larger hard drive. Sustaining technologies tend to provide us
with better, faster, and cheaper products in established markets. Incumbent companies most
often lead sustaining technology to market, but they virtually never lead in markets opened by
disruptive technologies

2. Do you consider the Internet and WWW forms of sustaining or disruptive technology?
The WWW and the Internet are both disruptive technologies.

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 3. How has the Internet and WWW created a global platform for business?
As people began learning about the WWW and the Internet, they understood that it enabled a
company to communicate with anyone, anywhere, at any time, creating a new way to
participate in business. The competitive advantages for first movers would be enormous, thus
spurring the beginning of the Web 1.0 Internet boom. Web 1.0 (or Business 1.0) is a term to
refer to the World Wide Web during its first few years of operation between 1991 and 2003.

4. What is the difference between ebusiness and ecommerce?

Ecommerce is the buying and selling of goods and services over the Internet. Ecommerce
refers only to online transactions. Ebusiness includes ecommerce along with all activities
related to internal and external business operations such as servicing customer accounts,
collaborating with partners, and exchanging real-time information. During Web 1.0,
entrepreneurs began creating the first forms of ebusiness.

5. What are the benefits and challenges associated with ebusiness?

Advantages of ebusiness include opening new markets, reducing costs, improving operations,
and improving effectiveness. The challenges of ebusiness include identifying limited market
segments, managing consumer trust, ensuring consumer protection, adhering to taxation
rules.

6. What are the benefits and challenges associated with Business 2.0?
The benefits of Business 2.0 include content sharing through open sourcing, user-contributed
content, and collaboration inside and outside the organization. The challenges of Business 2.0
include technology dependence, information vandalism, and violations of copyright laws and
plagiarism.

7. Explain business models and their role in a company. How did ebusiness change traditional
business models?
A business model is a plan that details how a company creates, delivers, and generates
revenue. Ebusiness opened new avenues for companies to generate revenue and new
business models including B2B, B2C, C2C, and C2B.

8. How can a company use mass customization and personalization to decrease buyer power?
Mass customization and personalization keep customers loyal and coming back thus reducing
buyer power.

9. How does ebusiness differ from Business 2.0?

Ebusiness was the primary business model during Web 1.0 and Business 2.0 represents the
characteristics of collaboration and sharing.

10. What are the differences among collective intelligence, knowledge management, and
crowdsourcing?
Collective intelligence is collaborating and tapping into the core knowledge of all employees,
partners, and customers. Knowledge can be a real competitive advantage for an organization.
The most common form of collective intelligence found inside the organization is knowledge

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 management (KM), which involves capturing, classifying, evaluating, retrieving, and sharing
information assets in a way that provides context for effective decisions and actions.
Crowdsourcing is a form of collective intelligence and includes the wisdom of the crowds.

11. Why is knowledge management critical to a business?

The primary objective of knowledge management is to be sure that a company’s knowledge of
facts, sources of information, and solutions are readily available to all employees whenever it
is needed. Company knowledge is a critical asset and must be managed as such.

12. What are the benefits and challenges associated with wikis?
Wikis are great tools for collaborating but can be changed and updated by any person.
Wikipedia is a great resource for information, however there is no guarantee that the
information is accurate.

13. How do disintermediation, reintermediation, and cybermediation differ?

Intermediaries are agents, software, or businesses that provide a trading infrastructure to
bring buyers and sellers together. The introduction of ebusiness brought about
disintermediation, which occurs when a business sells directly to the customer online and cuts
out the intermediary. Cybermediation refers to the creation of new kinds of intermediaries
that simply could not have existed before the advent of ebusiness, including comparison-
shopping sites such as Kelkoo and bank account aggregation services such as Citibank.

14. What is the semantic web?

The semantic web as a component of Web 3.0 that describes things in a way that computers
can understand. The semantic web is not about links between web pages; rather it describes
the relationships between things (such as A is a part of B and Y is a member of Z) and the
properties of things (size, weight, age, price).

15. How does mbusiness different from ebusiness?

Mobile business (or mbusiness, mcommerce) is the ability to purchase goods and services
through a wireless Internet-enabled device. Egovernment involves the use of strategies and
technologies to transform government(s) by improving the delivery of services and enhancing
the quality of interaction between the citizen-consumer within all branches of government.

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