ICS321 IBM205 Management Information Systems

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ICS321 / IBM205 Management Information Systems

• Dr. Ken Cosh
• Lecture 12

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Review

• The internet,
• Global network of networks
• HTML and internet structure
• Developing the Internet
• Progression towards Broadband
• Faster Cables
• The last mile
• Routing Efficiently
• Caching

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Today

• Business on the internet
• Key Business Models
• Business Model Evolution

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Traditional Business Models

• The Value Chain
• 2 key Roles
• Producer
• Build products / services to meet market need.
• Distributor
• Link buyers to sellers.

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Network Business Models
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Network Business Models

• Businesses built on a networked infrastructure
• Producers
• Focused Distributors
• Portals
• Businesses providing the networked infrastructure
• Infrastructure Producers
• Focused Infrastructure Distributors
• Infrastructure Portals

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Producers

• Designers Makers of products services.
• Manufacturers
• Service Providers
• Educators

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Producers - Manufacturers

• E.g. Ford / Proctor and Gamble
• Design, produce distribute physical products.
• Effect of network - streamline, integrate
  co-ordinate physical production lines, within
  firm and extending to customers

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Producers - Service Providers

• E.g. American Express, Singapore Airlines
• Provide Services
• For physical services (car rental, restaurants
  etc.) same effect as manufacturers
• For information based services (finance etc.)
  digitise service delivery

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Producers - Educators

• E.g. Harvard University, Virtual University
• Create and deliver online education programs
• A new business line opened up by networked
  economy, moving from face to face education.

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Focused Distributors

• Provide products and services related to a
  specific industry
• Retailers
• Market Places
• Aggregators
• Infomediaries
• Exchanges

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Focused Distributors - Retailers

• E.g. ToyRus.com, Staples.com
• Assume control of inventory, set a non-negotiable
  price with consumer and sell physical products
  online.
• Revenues - products / service sales
• Costs - procurement, inventory management, order
  fulfillment, customer service.

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Focused Distributors - Marketplaces

• E.g. E-loan, Insweb
• Sell products and services at a non-negotiable
  price, without taking control of inventory
• Revenues - commissions, transaction fees.
• Costs - lower stock procurement, control costs,
  but costs of integrating systems with suppliers

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Focused Distributors - Aggregators

• E.g. Autoweb
• Provide information on goods and services for
  sale by others, without directly enabling buyers
  and sellers to link
• Revenues - Referral fees, Advertising, when
  customers remain online for purchase.
• Costs - site etc.

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Focused Distributors - Infomediaries

• E.g. Internet Securities
• Unites sellers and buyers of information. There
  is no physical product, so the transaction is
  completed online.
• Revenues - subscription fees.
• Because of low barriers of entry, some provide
  analytical tools etc.

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Focused Distributors - Exchanges

• E.g. Ebay, FreeMarket
• No set price, simply linking buyers to sellers of
  goods and services.
• Transaction fees, Consulting fees.

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Portals

• Portals are gateways allowing access to a
  variety of information and online services.
• Horizontal Portals
• Vertical Portals
• Affinity Portals

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Portals - Horizontal Portals

• E.g. AOL.com, Yahoo! Quicken.com
• Provide gateway access to a vast array of content
  and services, and have range of tools for
  locating information.
• Revenues from advertising and links with ISPs.

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Portals - Vertical Portals

• E.g Covisint, WebMD
• Provide a deep content in specific areas, e.g.
  automobiles, or health-care. Places to do
  business, learn, shop and communicate.
• Revenues can come from a variety of different
  business models, such as advertising and referral
  fees, or sales revenues.

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Portals - Affinity Portals

• E.g. Ivillage.com, Realtor.com
• Provide deep content targeted specifically at
  certain market segments.

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Infrastructure Producers

• Designers and manufacturers of technology,
  hardware, software, solutions and services.
• Equipment/component manufacturers
• Software firms
• Custom Software and Integration service providers

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Infrastructure Producers - Equipment Component
Manufacturers

• E.g. IBM, Sony, Lucent, Intel etc.
• Design, manufacture distribute computer and
  network hardware.
• Revenues come from sales
• Costs come from traditional manufacturing costs

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Infrastructure Producers - Software Firms

• E.g. SAP, Siebel, Oracle Microsoft
• Design, produce and distribute OS and software.
• Revenues from product sales and service charges
• Costs through traditional manufacturing channels.

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Infrastructure Producers - Custom Software
Integration Service Providers

• E.g. Accenture, Scient
• Provide Consultation and custom system
  development and integration service
• Revenues follow traditional model, where
  companies demand individual requirements.

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Focused Infrastructure Distributors

• Enable technology buyers and sellers to conduct
  business.
• Infrastructure Retailers
• Infrastructure Marketplaces
• Infrastructure Aggregators
• Infrastructure Exchanges

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Focused Infrastructure Distributors -
Infrastructure Retailers

• E.g. CompUSA, Egghead
• Control inventory, set a non negotiable price to
  sell physical products online.
• Revenues from sales
• Costs from procurement and inventory costs

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Focused Infrastructure Distributors -
Infrastructure Marketplace

• E.g. Ingram Micro, Tech Data
• Sell Hardware and Software without taking control
  of inventory at a negotiable price.
• Revenues come from commissions and transaction
  fees
• Costs come from linking to supplier databases etc.

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Focused Infrastructure Distributors -
Infrastructure Aggregators

• E.g Cnet.com, ZDNet
• Provide information on products and services sold
  by others. Enabling product reviews and
  technical support

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Focused Infrastructure Distributors -
Infrastructure Exchanges

• E.g. Converge
• Auction new and used electronic equipment,
  computers, software etc.

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Infrastructure Portals

• These provide consumers and business access to a
  variety of networks, computing and application
  hosting services. Many firms rent cyberspace
  from infrastructure portal players
• Horizontal Infrastructure Portals
• Vertical Infrastructure Portals

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Infrastructure Portals - Horizontal
Infrastructure Portals

• E.g. ISPs (AOL), NSPs (AtT, BT), data centre
  outsourcing (IBM), web hosting (Digex).
• Provide a gateway to access a variety of network
  facilities, and hosting services.
• Revenues from subscriptions, maintenance fees

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Infrastructure Portals - Vertical Infrastructure
Portals

• E.g. IBMs Business Solutions.
• Host and maintain software solutions, enabling
  companies to operate online. ASPs.
• Revenues through hosting and maintenance fees,
  consulting fees etc.

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Business Model Evolution
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Amazon.com

• Product Enhancement
• Enhanced online e-retailing capability. For
  instance, personalised wish lists, greetings
  cards, wireless devices etc.
• Product Expansion
• To begin with books, then music, DVDs, videos
  etc.

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Amazon.com

• Business Model Extension
• Amazon auctions
• Marketplace Extension
• Drugstore.com, weddingchannel.com,
  greenlight.com, carsdirect.com, imdb.com
• Market Exit
• Living.com bankrupsy.

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Amazon.com