introduction to-ebusiness
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Introduction to e-Business
Part I -- How did we get here?Introduction to e-Business
What is e-business?Any business carried out in electronic formConnecting electronically to your business
stakeholders
What is e-business?E-business is the strategic use of
technology, particularly the Internet, to integrate and streamline the business processes, enterprise applications, and organizational structure of a business and create a high performance business model
Term will probably become redundant within 10 years as all businesses will be “e-businesses”
Evolution of e-business
EDI
•Electronic Data Interchange... Large companies used EDI with suppliers to order and pay for goods
•Very costly and lots of different, incompatible protocols
Internet
•Originally invented as research network and engineered to withstand nuclear attack
•No, Al Gore didn’t invent the Internet
•Doing business on the Internet was considered inappropriate in early years... all marketing had to be done under the radar
•In 1992 I subscribed to the Internet Marketing Newsletter, the first publication that gave tips on how you could “do business on the Internet” despite the cultural norm of “no business”. Hard to believe now there was only one publication offering business advice for the Internet a bit more than 15 years ago...
Evolution of e-business
WWW
•With the growth of the World Wide Web, more and more users of the Internet accepted and expected business to be conducted online
•First stage was “brochure-ware”
•Moved to more dynamic applications and e-marketplaces
Web 2.0
•This is the phase we are in now
•Business modes starting to leverage user community, unique ability of Internet to connect people... i.e. Social networking
•Many see this as “second wave” of .dot com boom
•Successful companies include YouTube, FaceBook, MySpaces, LinkedIn, etc.
“If you’re not an e-business by 2000, you won’t be in business by the year 2001” – Technology Sales Pitch, 1999
In many ways fear of being left behind sparked the “.com gold rush”
“If you’re an e-business in 2001, you’re lucky to be alive!” – Technology Sales Pitch, 2001
“… For a small fee, we’ll show you how to truly leverage the technology we hyped up and sold to you in 1998.” – Technology Sales Pitch, 2001
Why did the Internet market crash?
Main reasons for “.com” crashNot enough customers comfortable using
the Internet… this meant companies had to spend a disproportionately high percentage of their budgets on marketing (e.g. 40-50% instead of usual 5% for traditional business)
Information technology costs very high… many people incorrectly assumed setting up e-commerce sites would be cheap (e.g. virtual inventory, virtual office)
This combination was a killer for many businesses (not enough customers and revenues and huge infrastructure costs)
How can you separate the hype from reality?!
People usually overestimate the short term of impact and underestimate the long term impact of technology
E-Business has really just started…
Evolution of e-business
Web
2.0
•This is the phase we are in now
•Business modes starting to leverage user community, unique ability of Internet to connect people... i.e. Social networking
•Many see this as “second wave”of .dot com boom
•Successful companies include YouTube, FaceBook, MySpaces, LinkedIn, etc.
What’s different than “.com” timesCustomers now comfortable using the
Internet… e.g. 70-80% Internet penetration rate in North America… companies can spend less on marketing
Information technology costs have decreased… instead of using EDI, people are using VPN (virtual private networks).
While revenues are still challenging to acquire, it’s a lot better than .com times & companies have fine-tuned their modelsGoogle has figured out how to earn revenues
from advertising… Companies that had difficulty with profits such as
PayPal have since been acquired by players like eBay with solid revenues
Signs that the “times are a changing” can be seen with these examples from the music industryMadonna’s new contract shows importance of Web-
based channelsRadiohead challenges traditional distribution approache
s
EDI Process
Buyer
Vendor
VAN
Proprietary Format Document
EDI Encode /Decode
EDI Document
EDI Document
Proprietary Format Document
Send/Rcv.
Send/Rcv.EDI Encode /Decode
Proprietary Format Document
ProprietaryFormat document
Document EDIdocument
Proprietary Format Document
EDIdocument
Unique attributes of e-businessSpeed... e.g. crackberry addictsConvenience... e.g. FedEx offloading CSR
costs... and consumers happy to acceptCustomization... e.g. build your own PC at
Dell Redefinition of product value... e.g.
Google docs...free Web-based software supported by ads
Media flexibility... Madonna’s new deal
E-business benefits#1 driver is cost reductionIncreasing salesImproving customer serviceMinimizing competitive pressuresExpanding market reachAddressing user concerns
Integrated systemsInfo systems that are joined together in
such a way that they can easily share data between them
In past, integration was a key part of e-business development costs (connecting system A to B could cost 4x more than the actual systems cost)
Increased trend towards open standards (e.g. XML-based data transfer such as via RSS... Real Simple Syndication)... Integration costs declining
Still really difficult to connect large scale enterprise systems
E-commerce vs. E-businessTransaction“Cash register”Smaller scaleYour individual
projects focuses on e-commerce although there are small scale components of e-business (e.g. Integration with third party websites)
Encompassed much wider space than e-commerce
All electronic connections between business stakeholders
WebsitesIntranetsExtranetsERP SystemsDriven mainly by cost-
savingsYour team project focuses
on e-business
Front Office (interfacing with customers)
Attracting…and keeping
User authentication
Catalog display
Availability
Price comparison
Order taking
Credit check
Back Office (behind the scenes)
Sourcing (finding, pricing, ordering, inbound logistics/receiving, paying)
Outbound logistics/delivery
Billing
Collection
Post-delivery service
Key Terms -- Introduction to e-Business Electronic data
interchange (EDI)IntranetExtranetIntegrated systemsSystems
integrationTrading exchangeE-businessE-business models
Front-end and back-end of e-business
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