Electronic Commerce: Trends and Opportunities

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Electronic CommerceTrends and Opportunities

• The Evolution of Interorganizational Systems
• IOS Evolution ay American Hospital Supply and
  American Airlines
• Evolution and Revolution Introduction of the
  Internet
• Learning from the Past While Creating the Future
• Lesson 1 Build Internal Capabilities
• Lesson 2 Penetrate Quickly and Leverage the
  Community
• Lesson 3 Exploit the Economic Value of
  Information

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Incremental Innovation _at_ American Hospital Supply

• Early inventory automation
• Punch cards
• Extension to customer site
• Improved accuracy
• Better inventory management
• Reduced delivery times
• 200 hospitals
• Free card readers

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Incremental Innovation _at_ American Hospital Supply

• Evolution to ASAP System
• PC terminals
• Direct links to AHSC computers
• Integrated suppliers into the chain
• Benefits
• By mid 1980s
• 11M in order processing productivity benefits
• 4M in incremental sales
• Est. 74M 10 year NPV in 1980

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American Airlines

• Evolution of SABRE and Apollo Systems
• DOJ Intervention
• Channel Management
• Ready for e-Commerce
• Shift to 3rd party network
• Internet has eroded opportunities for firms to
  gain proprietary advantages thru channel
  management

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Introduction of the Internet

• Timeline
• Growth in Internet Users
• 19M Households in 1996
• 127M 2001
• Big Stories
• Amazon
• 16M in 1996 148M in 1997 3.12B 2001

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EDI vs. Internet
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Lesson 1 Build Internal Capabilities

• AHSC and AA / United Examples
• Even if you outsource it, must understand it
• Prototyping / Pilot Projects
• Commitment and Execution

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Lesson 2 Penetrate Quickly and Leverage the
Community

• Initial jockeying for market position / share
• Sustainable business models needed
• Combining products and services
• Intuit
• Schwab
• Portals

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Models
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Lesson 3 Exploit the Economic Value of
Information

• Reusable
• Can be sold without transferring ownership
• Can be consumed without being depleted
• Customizable
• Can be presented in different forms
• Can be broken up and reconfigured
• Time-Valued
• Inherent time value can be exploited
• Value can degrade (or increase) over time
• Productized
• Can be used to create new products and services
  or enhance the value of existing ones

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Examples

• AHSC and AA
• Internet Securities
• Amazon

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Information Arbitrage Evolution on the Web

• Information Broker
• Identify unfilled need for high-value info
  content that is difficult to access
• Build a community of interest between suppliers
  and customers
• Penetrate quickly thru giveaway strategies
• Deliver Value to all parties initialy thru
  linkages, info collection and categorization, and
  transaction coordination

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Information Arbitrage Evolution on the Web

• Content Specialist
• Collect info on market transaction
• Privacy concerns
• Create org. capabilities to make sense of info
  and use it to add value to products and services
• Distribute value to all members of the community

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Information Arbitrage Evolution on the Web

• Electronic Market Facilitator
• Build a web of alliances to extend scale and
  scope of community
• Develop interactive tools to establish closer
  links with community members and to facilitate
  linkages among community members
• Develop intelligent agents
• Build org. capabilities to deepen commitment and
  loyalty of all community members