Electronic Commerce and Business Communications

1
Electronic Commerce and Business Communications

• Ian Miles
• PREST, CRIC
• Ian.Miles_at_man.ac.uk

2
Main Topics

• Business Communications intra- and inter-
  organisational
• Types of communication
• EDI and B2B Electronic Commerce
• Retail e-commerce

3
Forecasting Business Communications - from 1979
4
Fax versus Email

• Messages initially (and often still) very plain
  text
• Stored in mailbox, read on-screen or printed
  out
• Computer skills, access to terminals ISPs
  required
• Data manipulable
• Viruses!

• Handwritten, typed, drawn
• Delivered as hard copy
• Telephone numbers, available skills
• No new subscriber service
• Require data re-entry

5
Executives and IT
1998 UK study (FT 25/2/98) 100 senior executives
in UK 35 were nonusers or novices, 40
intermediate users.
6
Fax versus Email

• Incremental to Phone service
• Pages scanned as dots, slow transmission
• Little organisational change
• Rapid diffusion after equipment costs reduced
  (Japanese push)

• Computer to computer exchange of symbols, more
  radical change
• Accurate, cheap and fast for business use
• Less tangible
• Advanced facilities emerge
• Critical mass issues -gtintrafirm use

7
Communications

• INFORMATION ACCESS - e.g. databases. Interrogate
  electronically stored material.
• INTERPERSONAL INTERACTION - e.g. letters.
  Exchange information with other people.
• TRANSACTIONS - e.g. ordering, booking, paying.
  Data Interchange for typically limited and highly
  structured purposes.

8
E-Commerce in the E-World
9
What do we mean by E-Commerce? (1)
C2C????
10
B2B gt B2C
gt90
11
B2B

• Already important, considerable activity in
  establishing electronic markets
• Changing business models price reduction,
  logistics, strategic partnerships
• Liable to have considerable implications for
  location and facilities, for SMEs
• Regulatory issues - antitrust, level playing
  fields

gt90?
12
What do we mean by E-Commerce? (2)
13
Many definitions of EDI,

• generally defined as
• the inter-firm computer-to-computer
  communication of trade documents in a standard
  format that permits the automatic handling of
  transactions
• (Sokol, 1989 Kühn Pedersen, 1995).

Electronic Data Interchange
14
DTI report - EDI involves computer- to-
computer exchange of structured data between two
or more companies, sent in a form that allows
automatic processing, with no manual
intervention. It is relevant to any business that
regularly exchanges information such as client or
company records, but is especially relevant when
they send and receive orders, invoices,
statements and payments. EDI remains the
dominant term in the UK for electronic trading,
although some people consider the term electronic
data interchange to be too narrow to describe the
full potential of electronic trading. Electronic
Commerce (EC) encompasses techniques such as PC-
based fax and e- mail, as well as EDI.
15
The Business Case - Operational Benefits
Source DTI

• Precision timing much faster greater control
  24 hour trading advanced notification and early
  warning in supply chain.
• Improved cashflow Savings in inventory
  management, lower stock holding, lower working
  capital fast authorisation of payments.
• Financial savings costs of postage, paper and
  administration.
• Data accuracy less risk of errors.
• Improved accountability and document tracking
  Software will give a full audit trail for an EDI
  message.

16
The Business Case - Strategic Benefits
Source DTI

• Competitive advantage image customers with EDI
  tend to reduce the number of suppliers they use.
• Closer trading relationships trading partner
  have to gain a deeper understanding of the
  others needs and practices.
• Increased customer satisfaction prompter
  deliveries, fewer delays, fewer mistakes.
• Simpler business processes improved levels of
  efficiency and competitiveness.
• More effective use of personnel staff freed from
  time- consuming processes like reconciling orders
  and invoices.

17
Ecommerce history

• 1960s automated transfer of large routine
  transactions in auto industry
• Late 1960s communities TDCC (Transportation
  Data Coordinating Committee), SWIFT (the Society
  for Worldwide Interbank Financial
  Telecommunication)
• First Value Added Networks (VANs) offer computing
  and data transmission services
• 1980s first major expansion of EDI, government
  promotion and intergovernmental standardisation
  efforts
• mid 1990s - still only c 100,000 EDI users
• 2000 - Dot Com fever and crisis

Very truncated!
18
Problem for Proponents

• Why has uptake been so much slower than forecast?
• Why are so many SMEs reluctant?
• Why has the Web been associated by such a
  helter-skelter?
• Is it really changing things - and if so, how?

19
Communications for electronic trading require

• TRANSPORT for companies to send the data between
  themselves (post, courier, versus telephone
  system, dedicated leased lines, or VANs - 95 in
  UK) The VAN computers act as a sorting house,
  keeping messages in the recipients mailbox for
  retrieval when the recipient dials up the VAN and
  downloads them. If trading partners are connected
  to different VANs, messages can be passed between
  networks. Most VANs offer connections to
  worldwide networks.

INTELLIGIBILITY common language so that the
computers understand the information being sent
(EDI software and protocols - problems of diverse
standards). Each document or must adhere to a
strict set of standards to be successfully
transferred. Most widely accepted in the UK is
TRADACOMS, but, many companies, and certain
industries, have created their own standards
e.g. ODETTE in the car construction industry.
The situation is improving, with the creation of
a universal, international standard EDIFACT (EDI
For Administration, Commerce and Transport). The
main VANs can ensure standards compatibility.
20
Hub-spoke relationships
21
EDI as Service Innovation Bolisani et al

• Design Paradigm issue - rise of the Web
• Configurational Technology range of different
  types of knowledge required
• Network of actors
• Roles of Knowledge-Intensive Business Services in
  Interactive Learning Process
• ILP exchanges of information and coproduction of
  (tacit and explicit) knowledge

22
EDI knowledge(s) are associated with particular
services

• Telecommunication services
• Value added services
• Communication software and EDI translators
• User applications
• Consulting services implementation support.

23
Electronic Commerce and the Internet paper by
Adrian Garcia-Sierra, BT Postgraduate Researcher,
EC Innovation Centre The Internet offers the
greatest potential for electronic commerce known
to date. This is a claim made in the light of the
estimation that "there are less than 100,000 EDI
users world-wide after 40 years or so of
endeavour" (Steel, K 1996 University of
Melbourne), most of whom use Value-Added Networks
(VANs). The Internet, however, continues to see
extraordinarily rapid growth. For example,
computer hosts grew from 4.9 million in January
1995 to 9.5 million one year later, and most of
this growth took place in the commercial sector.
24
New models?

• EDI as business to business B2B
• Web Ecommerce adds consumer -business (B2C),
  consumer-new intermediator - and P2P
  challenges??? (Napster)
• Established businesses new structures (e.g. JIT,
  supply chains) electronic markets new role for
  SMEs?
• New entrants AMAZON.COM exemplar
• Investor uncertainty, market jitters US and
  Europe stock market boom (or bubble)

25
A genie out of the bottle?
26
Different Goals?
Price Efficiency
New Value Added
27
Ecommerce forecasts

• 10m European users in 20003
• Global Market of up to 5 of sales - from 1.4 to
  3.2 trillion in 20003
• Up from 62m market in 2000
• Forrester forecasts
• Xmas 1998 as boom time new Web use problems in
  subsequent years!
• role for SMEs?

28
UK Consumer E-Commerce
FORECASTS From Clicks and Mortar
www.foresight/gov.uk/
These forecasts assume PC/Internet model Broader
estimates 3-18 retail spend by 2005,
500-1500 per household
29
Bricks Clicks
Consumer B2C
What are they good at?
Touch and feel? Human contact? Spatial
community? Familiar (easy . trusted) delivery ?
and transactions
? Search and compare ? 24 hrs, global reach ?
Virtual community Information- and ?
processing- rich / .easy TV shopping?
30
Bricks Clicks
Doing old things better
More/higher quality touch and feel, social
interaction, fun, ease...
Doing new things well
Specialities Reaching the Parts Others Dont a
Local Store in a Fluid World Exploiting new
media (from minimal to high cost) Revitalising
the Physical with the Virtual
31
Some research questions on ECommerce

• What divisions of labour emerging, what roles for
  specialised services?
• What social networks developing to support
  diffusion and development of technology,
  applications, design paradigms?
• What consequences of power relations in EDI
  networks? What scope for interests of smaller
  actors?
• Implications for other service functions?
  Implications and strategies for established
  services?