What Is EBusiness

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What Is E-Business?

• Stephen W. Liddle
• Director, Rollins Center for eBusiness
• Professor, Information Systems Department
• Marriott School, Brigham Young University
• 6 January 2009

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Outline

• My background
• What is e-business?
• Foundational principles
• Moores law
• Metcalfes law
• Disruptive technology
• The world is flat
• How will you respond?

3
Heathkit H-89

• 1979
• Build your computer from a kit!

4
My History in Technology

• BS and then PhD in Computer Science
• Ive developed lots of software (PC, Unix,
  Mainframe, )
• Information Systems faculty at BYU
• Sabbatical, CTO for EnticeLabs

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Our Book
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Why Have an eBusiness Center?

• Our world is increasingly networked and digitized
• The implications are profound
• We want to prepare students to lead in this
  networked and digitized world

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What Is E-Business?

• The use of electronic networks and information
  technology to exchange business information and
  execute transactions
• Broader than e-commerce (buying and selling)

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Fundamental Concepts

• Exponential technology growth (Moores Law)
• Network effect drives standards (Metcalfes Law)
• Disruptive innovation

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Moores Law

• Gordon Moore, co-founder of Intel
• 1965 observation
• Number of transistors doubles every 18-24 months

image from wikipedia.org (filed under Moores Law)
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Moores Law Illustrates
Speed Capacity
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What If We Double Transistors?
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Time Required to Transmit the New Encyclopedia
Britannica

• 1200 bps modem 28 days
• 28.8 kb modem 28 hr.
• Basic rate ISDN 6.3 hr.
• T-1 line 31 min.
• T-3 line 60 sec.
• ATM-SONET (OC-3) 17 sec.
• ATM-SONET (OC-12) 4.7 sec.
• ATM-SONET (OC-48) 1.2 sec.
• ATM-SONET (OC-256) lt 0.2 sec.

DSL, Cable Modem WiFi Fast Ethernet
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Converging Trends

• Increasing computational power
• Increasing storage capability
• Increasing bandwidth
• Decreasing cost per unit
• Increasing connectivity

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Cascading Impact of IT Advances
Increase speed/capacity lower cost
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Pace of Change

• Technology has been changing rapidly for many
  years
• Now business is starting to change just as rapidly

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Theory of Cyberspace Relativity

• Cycles are shorter
• E.g., dont have to wait for snail mail
• Distances between people are smaller
• Communities cross traditional boundaries
• There are still barriers (e.g. cultural)
• The Web never sleeps

• Global audience, active 24 ? 7

X 365
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Network Effect

• Network effect occurs when a product becomes more
  valuable as more people use it
• Telephone network
• World-Wide Web
• Microsoft Windows
• English language

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Network Effect Metcalfes Law

• Robert Metcalfe, founder of 3Com, inventor of
  Ethernet
• Metcalfes Law states that the value of a network
  increases in proportion to the square of the
  number of users (n2)
• The initial cost of a network is large, but the
  incremental cost to add one more user is very
  small

image from wikipedia.org (filed under Metcalfes
Law)
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Network Effect Winner Takes All

• Among competing technologies, winner takes all
  because of feedback on comparative utility
• MS Windows
• Users like to buy Windows because lots of
  developers write software for Windows
• Developers like to write software for Windows
  because lots of users buy it

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Disruptive Innovation

• Disruptive innovations displace entrenched
  technologies
• Not because they perform better
• Because they provide overall better value
• These innovations alter the basis for competition

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Sustaining vs. Disruptive Technology Trajectories
Performance demanded by market
High end
Product Performance
Low end
Time
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Disruptive Technology Examples

• Printing press
• Steam engine
• Railroad
• Telephone

• Courier service (FedEx)
• E-mail
• Plastics
• Cassette tapes

• Cheaper foreign labor

• Dominant companies are slow to transition

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Traditional Management Failure

• Disruptive products are cheaper and simpler (less
  profit)
• Disruptive technologies are first commercialized
  in emerging markets (market seems insignificant)
• Most profitable customers want product
  improvements (cant use disruptive product
  initially)

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Principles of Disruptive Innovation

• Resources come from customers/investors
• Large companies dont grow via small markets
• Cant analyze nonexistent market
• Organizations capabilities define its
  disabilities
• Technology supply often overshoots market demand

Even the best managers have stumbled in the face
of disruptive innovations
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The World Is Flat!?

• The three phases of globalization
• 1.0 Industrial power
• 1492-1800
• 2.0 Multinational companies
• 1800-2000
• 3.0 Individuals empowered
• 2000-present

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Strategies to Meet the Changes

• Ability to
• Add value
• Understand competitive drivers and strategic
  aspects of your business
• Cant just be a technology guru
• Use IT to solve business problems
• Think creatively to provide a competitive edge
• Retool over and over again
• Manage career to maintain quality of life
• Reduce and simplify!
• Note on the millennials
• http//www.cbsnews.com/stories/2007/11/08/60minute
  s/main3475200.shtml

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Information Value Chain
Translating complex information into critical
knowledge.
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Life-Long Learning

• We are awash in knowledge
• Change is rapid and ubiquitous
• The only way to thrive or even survive in
  e-business environment is to continue to learn

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Be Careful

• Technology is a two-edged sword
• Potential pitfalls
• Aimless surfing/too much surfing
• The web is HUGE!
• DC 88118 Seek the best words of wisdom
  (not just any old words)
• How many of you are cruising the web right now
  instead of listening? -)
• Easy access to pornography
• One of the great scourges of our time
• The list is long

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But Tech Solves Problems Too

• RealVictory project
• Combating recidivism through an innovative cell
  phone and web site program
• CP80.org
• Designing protective walls for those who want
  them
• MoreGoodFoundation.org
• Promoting good LDS internet content
• This list is also long