C H A P T E R

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The Internet and Enterprise Performance
How do you know how to take full advantage of the
Internet when you dont know what it really is?
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Example

• Things are heatin up

Disintermediation
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Concern Infrastructure

• Britannica
• WU
• Nobodys stupid here Bob
• AOL

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Business Models
Business
Business
Business
C2C C2C2 C2B B2C B2B B2B2
PTP
D2C
EDI
B2B
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Business to Businesse-Commerce (B2B)
GE TPN
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GE-TPN (e-Purchasing)
Data cleaning and organization
Payment
Item
Buyer
Supplier
TPN
EDI
Parts
Order
catalog
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GE-TPN (e-Purchasing)

• TPN PostSourcing (pre-buys)RFP/RFQ clearing
  house
• TPN MarketplaceDay to day buying (MRO)Access
  through Ariba Oracle Commerce One

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Business to Businesse-Commerce

• Ariba Technologies
• Operating Resource Management System
• Commerce One Inc.
• C1 BuySite (proxy catalog)
• C1 SupplySite (multimedia catalog)
• REOS (real-time online system)
• American Management Systems
• PD Web
• Elekom Corp
• Elekom Procurement System

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e-Commerce
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e-Commerce

• Catalog
• Auction
• Exchange
• Barter

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e-Commerce
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Competitive (Value Chain)
Support activities
c Dr. Thomas A Browdy
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AOL Example
Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE
TECHNOLOGY R D
PROCUREMENT
INBOUND
OPERATIONS
OUTBOUND
MARKETING SALES
SERVICE
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Secondary Effects

• Britannica Encyclopedia
• Reno
• Wall Mart and Amazon
• Economics

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What the Internet Can Do

• CommunicationsMediaCoordinationPersonal
• Distribution
• Education
• Business

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Terms, Rival Theories, Rules
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Internet, Intranet, Extranet

• Internet ARPANET
• Intranet Efficiencies, open architecture,
  multi-media capability
• Extranet Partnerships, open architecture,
  BPR/core competencies

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Disintermediation
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Infomating
Filling the job with information in such a way
that the normal interactions with people and
equipment are appreciably changed. The results
are more abstraction, more alienation, and a
feeling of being disjointed from the work
environment.
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Infomediation

• Integrating functional delivery units in the
  supply chain through information exchange
  efficiencies.
• Vertical or horizontal integration through
  partnerships and alliances.
• Market coordinationReduction of
  rivalry.Increased market efficiencies

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Network Externalities

• FinanciallyAchieving liquidity in the market
• MarketBroad penetration
• PhysicallyPrevailing product presence
• ProductHaving the dominant product

A situation in which the price somebody is
willing to pay to gain access to a network is
based solely on the number of other people that
are currently using it. Fax machines and the
Internet are prime examples. The more people used
the service, the more others were willing to buy
in.
At the cusp of a substantial innovation a great
deal of effort (money time, marketing thrust) is
made to become the dominant player. This is
particularly important in the .com world since
entry barriers are so low and the foothold is
fleeting unless it is very large.
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Disinter-remediation

• Utilize knowledge derived from transactions to
  add value for the customers as well as producers.
  A process that produces cybermediaries.

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Rival Theories

• Organizations should get smallerCoordination of
  core competenciesFast / quick changes
  necessaryProject teams / swat teamse-lancersEc
  onomies of scale overcome by costs of
  coordination
• Organizations should get biggerBack to the
  futureHistory likes thick organizationsPower
  and dominance commands marketsYahoo,
  eBayIncumbents, once established, dominate

The network effect Scale more manageable Lock-in
customers Yield management
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Additionally

• Stickiness
• Drag-factor

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Rules

• Competitors may be partners and / or digital
  rivals.
• Digitizable products eventually are produced at
  a margin of zero (practically speaking).
• Technology infrastructure mattersIntegrationScal
  e

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Terms

• Disintermedeiation
• Infomating
• Disinter-remediation
• Cybermediaries
• B2Bx2x
• Network externalities
• Stickiness
• Drag factor

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The end