What Is EBusiness

1
What Is E-Business?

• Stephen W. Liddle
• Director, Rollins Center for eBusiness
• Associate Professor, Information Systems
  Department
• Marriott School, Brigham Young University
• 18 January 2006

2
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!

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My History in Technology

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

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Our Book
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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

• Moores Law
• Metcalfes Law (Network Effect)
• Disruptive Technology

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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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Price Declines in Computers
12.1 Decline
100
50
26.2 Decline
10
0
1993
1999
1987
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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

• Internet time is faster
• So traditional cycles are shorter
• 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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Implications for E-Business

• In the Internet age, communication is
  increasingly more effective and rapid
• Thus feedback loops iterate more quickly
• So platform monopolies will continue to be
  common
• Windows
• Palm OS
• Web (HTTP, CGI, etc.)

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Implications (cont.)

• Businesses need to understand and manage network
  effects
• Examples
• Suns Java effort
• Microsofts successful take-over of the browser
  market
• Microsofts current .NET initiative
• IBMs Java Linux stances are instructive

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Disruptive Technology

• Disruptive technology displaces an entrenched
  technology not because it performs better, but
  because it provides an overall better value
• Results from innovations that 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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Freidmans Thesis

• From Wikipedia.org
• Friedman believes that the extreme
  interconnectedness that is at the heart of
  globalization has in essence "flattened" the
  world, leveled the playing field, and allowed
  anybody, anywhere, to participate in the world
  economy.
• (filed under The World Is Flat, Sep. 2005
  since replaced by new Wikipedia content)

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10 Flatteners

• 11/9/89 (The walls came down and the Windows went
  up)
• 8/9/95 (Netscape went public)
• Work flow software (applications talk)
• Open-sourcing (communities self-organize,
  collaborate)
• Outsourcing (think Y2K)
• Offshoring (running with gazelles, eating with
  lions)
• Supply-chaining (eating sushi in Arkansas)
• Insourcing (UPS does logistics)
• In-forming (ask Google)
• The steroids (digital, mobile, personal, virtual)

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Convergence

• All the flatteners have converged on a web
  platform
• People and organizations are developing skills to
  leverage the flatteners, adapt to flat world
• The scale is now billions of individuals making
  horizontal connections

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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

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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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Rollins Center for eBusiness

• Come build your résumé by working with the
  eBusiness Center
• 574 TNRB
• http//ebusiness.byu.edu
• ebusiness_at_byu.edu
• 422-2815

Recruiting Meeting Wednesday, Jan. 25, 710 TNRB,
3-4pm