Information Systems A Business Approach

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Information SystemsA Business Approach

• E- Business

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The E-Business Revolution

• E-business is profoundly different from
  traditional business
• Websites provide 24-7-52 access in a convenient
  manner
• The Web has a global reach
• The number of Internet users is increasing and
  forms a large global market
• Companies can deal directly with customers
• Companies can make significant savings by using
  the Web
• There is a transfer of costs and power to the
  customer

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Types Of E-Business Systems

• Business to consumer B2C
• primarily using the Internet for selling,
  marketing and increasing brand image
• Business to business B2B
• primarily using extranets ( or EDI systems using
  proprietary networks), and more recently in
  Electronic Marketplaces
• Business to employees
• primarily using intranets for document
  management, information dissemination, automating
  procedures etc.

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Tradition vs Opportunism
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7 Reasons Why Dot.com Companies Fail
Dot.com businesses interact with customers almost
completely on-line. They have experienced a high
level of failure why?

• They operate in market sectors with too much
  offline competition
• Short term perspectives
• Undisciplined growth in relation to staffing
• Unrealistic revenue projections
• Lack of management experience
• Underestimating the cost of creating a new brand
  image
• On the Internet the customer is king
• However the Web offers tremendous potential for
  doing business
• but good business sense is still required!
• Adapted from Ralph Wilson
  (www.wilsonweb.com)

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E-Business Models And Strategies

• E-Business models may be classified according to
  functionality (what the Web site does) or revenue
  stream (how the Web site makes money)
• For example, Australias Telstra offers three
  E-Commerce packages
• Electronic brochure with ordering and
  transactions via traditional means
• Electronic Brochure and ordering system with
  payment via traditional means
• Electronic Brochure with ordering and payment
  system (sales system)

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E-Business Models And Strategies

• Examples of Web site functions are
• Advertising model,
• brochure or catalogue model,
• content model (providing information), after
  sales service model
• retail or sales model . of course these can be
  combined
• Examples of Web site revenue streams include
• Retail sales, subscription (membership), sale of
  advertising space, commission on each transaction

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Components Of E-Business Models

• A business model could be considered to have many
  features
• Organisational Structure
• Organisational Management
• Distribution Channel
• Marketing approach
• Partnerships and alliances
• Revenue stream
• Effective business models must consider most (or
  all) of the components - e.g. not just marketing.

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Marketing On The Web

• The Web can be used for
• brand name or image marketing
• product catalogues
• product related information
• The benefits of the Web for marketing are
• Many customers can be informed at once (email and
  Web site)
• Large amounts of information can be communicated
  cheaply (email and Web site)
• Customers can interact with the content or system
  (they are in control)
• Content can be personalized
• A Web site can be used to facilitate customers to
  customer communication and can lead to the
  development of on-line communities

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Retailing on the Web

• On-line retail (transaction) systems are common
  and usually supplement traditional retail
  channels
• Convenience is a major advantage for many
  customers
• The Web can be used innovatively to retail by
  using
• on-line auctions
• reverse auctions (where the customer says what
  they are prepared to pay and the retailer decides
  whether to accept it)
• The Web is very effective for the sale of digital
  goods such as downloadable music or software
• Traditional goods can still be sold on-line -
  lighter goods are thought to be more cost
  effective for the retailer (for
  distribution/delivery) but even groceries can be
  bought on-line

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Customer Service Support

• The Web can be used to improve customer service
  and support
• Customer support is often much cheaper to provide
  on the Web than by telephone
• After sales support can inform the customer how
  to use and care for the product for example,
  getting the best out of a digital video camera
• Collaborative e-commerce has developed to meet
  the needs for real-time customer care such as
  on-line chat with a travel consultant

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B2B E-Commerce

• There has been a huge take up rate of companies
  managing their supply chains via
• Extranets
• Electronic Data Interchange (EDI)
• An extranet can be used to integrate a company
  with its suppliers so that data is exchanged more
  effectively between them (via the Internet)

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B2B E-Commerce

• The integration of systems in B2B e-commerce
  leads to
• Paperless invoicing
• More reliable data and information (e.g. on stock
  levels)
• Faster and better data exchange (e.g. product
  designs accessed on the Web)
• Difficulties in adapting to a virtual supply
  chain are both technical and organisational
• B2B e-commerce requires trust between
  organisations and confidence in each others
  systems

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Virtual Supply Chain
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Classifying E-Market Places

• An electronic marketplace is a Web based
  environment where buyers are matched with
  suppliers
• E-marketplaces are different to extranets or
  virtual supply chain management systems since any
  member can supply any other member with products,
  materials or services

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Classification of E-Marketplaces

• The following factors are useful in
  classification of e-marketplaces
• Vertical/Horizontal (market sector)
• Geographic coverage
• Size of companies involved
• operating model - laissez faire provides
  information to the seller but does not support
  negotiation, mediated has the market as an active
  intermediary between buyer and seller supporting
  transactions
• Delivery model - standalone (not part of an
  application) or embedded in one or more
  applications (transactions must be online)
• Private (limited access) or public (universal
  access)

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E-Market Places
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Virtual Organisations

• Virtual corporations form structures which are
  made up of several organisations but which appear
  to be a single organisation to the customer
• Virtual organisations need to share data,
  information and knowledge, and leverage IT to a
  large extent
• Virtual organisations tend to be less formal than
  non-virtual ones and more flexible in their
  operations
• Virtual organisations may only exist for a short
  period of time for example to complete a
  project

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Strategic E-Business Concepts

• Creative destruction - radical transformation may
  not be possible without destroying existing
  business processes
• Channel conflict arises when there is
  competition between aspects of the business such
  as when the on-line channel takes customers away
  from off-line buying (especially when there is no
  overall gain)
• Disintermediation when intermediaries in the
  distribution chain are by-passed
• Reintermediation - occurs as intermediaries
  reposition themselves on the Web

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Avoiding Channel Conflict
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Global Markets

• Companies can take advantage of the global market
  that the Internet has created
• Even one person operations (depending on the
  business) can develop global projects
• Time zones, climate changes etc. are no longer
  barriers. However local legal frameworks can pose
  problems
• A global strategy needs to consider differences
  in culture, language, and distribution mechanisms

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Developing A Global E-Commerce Strategy

• The following are essential
• local market knowledge and global dissemination
  of company ethics
• projects should proceed only if they yield value
  to customers, shareholders and employees -
  strategic alliances are vital
• market globally but take local factors into
  account
• operations and technology should be sourced from
  the most cost effective supplier irrespective of
  location
• Research and development and knowledge sharing
  should be encouraged
• Personnel management - where appropriate staff
  should be moved to geographic locations where
  they can share and acquire knowledge

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Summary

• The Internet provides companies with
  opportunities to increase revenue and reduce
  costs also convenient for customers
• While strategy is important in E-business,
  opportunistic technology driven approaches are
  often successful
• E-business models can be used to market and sell
  products, support customers and deal with
  suppliers
• E-Marketplaces are revolutionising the way in
  which companies acquire products and services
• The Web poses a threat to intermediaries but may
  provide opportunities for reintermediation