Electronic Business

ISM3011

What Were Going to do Today

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

Alphabet Soup
ASP
Application service provider
Manages and distributes software applications to users over
a WAN (such as the Internet). Software runs on the ASPs
servers, not the customers.

DSL
Digital subscriber line
Telecommunications network technology that uses existing
twisted-pair cables (the telephone wiring in most homes)
for high-speed connections, typically to the Internet
Last-mile technology

MIS in the Professions Operations

Management
Grand Hyatt
Uses a purchasing/inventory management control software called
Adaco.
Designed to assist businesses in the hospitality industry manage
products that with high obsolescence as well as durable goods.
Streamlines information about purchases, inventory data, and COGS.
The Adaco System provides us with powerful purchasing functionality for
100% of the hotel requirements. The reporting capabilities allow us to
track purchase orders, departmental costs and inventory turnover. Adaco is
easy to use and is one of the major reasons for improved productivity and
customer services in our hotel. Adaco helped us grow as a business,
realized improved profitability, efficiency and strategic direction by
connecting project activities to company financials.
Christina Donath, Profit Improvement Manager
Grand Hyatt Washington
Washington Center, Washington, DC

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

Electronic Business

E-commerce vs. E-business

E-commerce the buying and selling of goods
and services over the Internet
E-business the conducting of business on the
Internet, not only buying and selling, but also
serving customers and collaborating with
business partners
Most people use these
terms interchangeably,
which is usually OK

Why Now?
Why is e-business emerging now?
Take now in a broad sense

Two potential reasons

Convergence
Critical mass

The two are not independent

Convergence
What is convergence?
Coming together of various technologies

Technologies that have converged to enable ebusiness

Digital content
Network access devices
PC speed and storage
Graphical user interface
Network transmission
Data compression (MP3)

Critical Mass
The value of the technology increases with the
addition of each new person using it.
When a technology hits critical mass it may
pull other technologies along with it.

Interoperability
The ability of systems running in different
operating environments to communicate and
work together.
This is a critical issue in e-business
Standards are one way to achieve
interoperability
(Use of translation software called middleware is
another)

Standards
When everyone on a network uses the same
standards, they can interoperate
Protocols
E.g. TCP/IP

Languages
E.g. HTML

Categories of E-business
B2B

C2C

B2C
Business

Consumer

G2C

G2C
Government

G2G

Business Models
How a company generates revenue
Architecture of the business flow of goods/services
Description of benefits for entities involved
Sources of revenue

One of the biggest criticisms of dot-coms is

the lack of viable business models
Without a solid business model, theres little
chance of survival

Business to Business
The largest category by far
Approaches
Exchanges

Catalogue aggregators (Sciquest)

Auction model (IndiaMart Auction)
Market exchange model (Chemconnect)
Barter model (uBarter)

Direct sales

Business to Consumer
Electronic stores (Road Runner Sports)
Traditional catalogue translated to the web

Clicks and bricks (aka clicks and mortar) (Target)

Different levels of integration of web and store activities

On-line auctions (uBid)

Electronic mall (ChoiceMall)
Promotion and customer service sites (Hewlett Packard)
Content and advertising sites (Motley Fool)
Subscription models (Wall Street Journal)
Clubs and communities (Dixie Chicks)

Consumer to Consumer
Auctions and classifieds
eBay is a good example of C2C
They have done a good job of overcoming barriers to
C2C e-business.

Meetings and buddy lists, discussion groups

Where is the business???

Government to Constituent

Information regarding services

Permits and licenses
Portals and welcome mat to visitors
Examples
Seminole County
Orange County
New Zealand

Voting and governance

Impacts of E-business

Economic Efficiency
Reduces cost of carrying out transactions
But, substitutes costs of building and
maintaining the system
Can you point to examples of e-business
increasing efficiency??

Network Effects
Email is more valuable if more people are using
it
Growth can be explosive

2 nodes, 1 connection
4 nodes, 6 connections

3 nodes 3 connections

How many connections with

5 nodes?
6 nodes?
7 nodes?

Operational Efficiency
Extension of Electronic Data Interchange (EDI)
Supply chain management

Raw materials
Parts
Assembly, manufacturing, packaging
Distribution
Retail
Customer

How is this different for intangible goods?

Effects of Operational Efficiency

Disintermediation
Cutting out some of the steps in the supply chain
Theres also reintermediation (new middlemen)
Payment processing; product delivery; trust providers; etc.

Lowering communication costs

May also lower inventories with just in time
deliveries

Enterprise resource planning (ERP) systems

Disintermediation

1st Tier
Suppliers
2nd Tier
Suppliers

Assembly,
Manufacturing,
Packaging

Distributor

Retailer

Customer

Are there dangers to

cutting out these links?

Other Organizational Impacts

Channel conflict
Retailers challenged by manufacturers
Examples

New markets
New products
New competition

Changing Market Structure

Created day trading
Travel industry
Created MP3 enabled music players
What other impacts have e-business technologies
had on the music industry?

Business Models

Categories of Business Models

Brokerage
Bring buyers and sellers together
Examples: eBay, Priceline

Advertising
Provides content and services, generates revenue
through advertising thats mixed with the content
Examples: Google, Yahoo!, Craigslist

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

Categories of Business Models

contd

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

Manufacturer (direct sales)

Manufacturer sells directly to end customer, rather
than through a distributor or retailer
Examples: Dell, Gateway

Affiliate
Offers $$$ to partner site in exchange for driving
traffic to the target site
Examples: Amazon, iTunes, many others

Categories of Business Models

contd

Community
Builds a community of loyal users; revenue is
generated by sales, donations, ads, subscriptions
Examples: My Space, FaceBook, Second Life

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

Utility
Pay as you go charges
Some ISPs, Slashdot

Next Time
Wireless
Emerging technologies