e-Business

1
e-Business e-Government Future requirements
for trading information
Presentation to the Ordnance Survey Terra
Future Conference 20 September 2005
Prof. Jim Norton Senior Policy Adviser UK
Institute of Directors Former Director UK
Cabinet Office PIU e-Commerce team www.profjimnor
ton.com
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Issues to be covered

• Setting the scene - technological performance per
  unit cost continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• The 8 Cs of e-business.
• A novel use for geographical information?
• Some final thoughts.

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The second half of the chessboard
Original idea George Gilder at the
Cato-Brookings Institution conference "Regulation
in the Digital Age," held in Washington D.C. on
April 17-18, 1997.
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The cost-performance of electronics doubles every
18-24 months (Moores Law)
33 Doublings
Source Analysys
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Moores Law in ActionIntel Microprocessors
2T/18
Source Intel Silicon Image
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Opto-electronics follow the same path (Moores
Law operates in telecoms, too)
32 Doublings
Source Analysys
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Gigabit Ethernet installed base growth
Millions
Source IDC Silicon Image
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The cost-performance of magnetic storage doubles
roughly every 18months
26 Doublings
Source Silicon Image
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Magnetic disk costs (3.5 platters)
Source IDC Silicon Image
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Coopers law for wireless
43 Doublings
Coopers Law, (after ArrayComm Chairman, Martin
Cooper), states that the number of conversations
(voice and data) conducted over a given area, in
all of the useful radio spectrum, has doubled
every two and a half years for the last 105
years, ever since Marconi discovered radio in 1895
Source ArrayComm
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But we have seen this before in the context of
the telegraph
Source Tom Standage, The Economist, The
Victorian Internet
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The first half of the chessboard has already
delivered some surprises
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Mobility will drive the second half of the board
.welcome to the world of m-business
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We are drowning in data.
Where is the life we have lost in living? Where
is the wisdom we have lost in knowledge? Where is
the knowledge we have lost in information? T S
Eliot, Choruses from The Rock, 1934
And a codicil for the 21st century Where is the
information we have lost in data?
The World produces more than 2 Exabytes (2
Billion Gigabytes) of unique information per
year, more than 250 Megabytes for every man,
woman and child on earth
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HG Wells prophetic vision of the future, The
Shape of Things to Come, 1933

• It is remarkable to note how long mankind was
  able to carry on without any knowledge
  organisation whatever. Nor was there any
  conception of the need of a permanent system of
  ordered knowledge, continually revised, until the
  20th century was nearing its end. To those of
  an earlier age our Fundamental Knowledge System
  with its special stations everywhere would
  have seemed incredibly vast.

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Issues to be covered

• Setting the scene - technological performance per
  unit cost continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• The 8 Cs of e-business.
• A novel use for geographical information?
• Some final thoughts.

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We have moved on from where this all started
With acknowledgement to the UK Office of the
e-Envoy
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A cartoonist sums it up beautifully
With acknowledgement to Roger Beale at the
Financial Times - 13/3/01
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With acknowledgement to Roger Beale at the Daily
Telegraph...
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Why is e-Business important?
The e-business scope compass
When I took a look at Boeings interaction costs
and discovered that e-enabling the business could
save as much as 50, I became an instant
believer Phil Condit Chairman CEO The Boeing
Company - 2001
The e-business scope compass source Mohanbir
Sawhney - Kellogg Management School Northwestern
University Chicago
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Developing enterprise integration is a long climb

• The further we climb up this ladder the more
  inter-working of disparate systems is required
  across both organisational and corporate
  boundaries.
• Now perhaps we need to climb it again to
  integrate online real-time geographical
  information
• UK has a significant advantage given the quality
  of information available

The ladder of e-business initiatives, source
Mohanbir Sawhney - Kellogg Management School
Northwestern University Chicago
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Resolution of the Solow productivity paradox
Policy-makers and economists have long debated
the role of information and communications
technology (ICT) in the economy.  The traditional
view in the 1980s and 1990s was that its impact
was limited.  This was well characterised by the
Solow Productivity Paradox that "you can see the
computer age everywhere but in the productivity
statistics".  A confluence of new evidence based
on analysis of US economic performance in the
late 1990s demonstrates a strong inter-dependence
and that ICT has had a substantial impact on
GDP. 
This view has been supported by research by the
EC that lies behind the claim by Erkki Liikanen,
Commissioner for enterprise and information
society, in October 2003 that "there is more and
more evidence that the adoption of ICT is a key
to productivity growth. In the US, it has been
unusually robust, and has spread to the wider
economy."
Innovation in ICT has a transformational impact
on productivity and growth - in the US, ICT
produced an estimated one percentage point
increase in yearly GDP growth in the late 1990s. 
Evidence and reasoned argument point to this
productivity and growth improvement continuing
for many years to come.  Applying the same logic
to the European economy, ICT could increase our
future GDP growth rate from 2 per cent to 3 per
cent.  ICT can do to our economy in the 21st
century what railroads did in the 1800s and
electricity in the 1900s. 
Source Andrew Heaney of Spectrum Strategy
Consultants and Brian Williamson of Indepen,
"Reaping the Telecoms Dividend" January 2004.
Quoted in the Financial Times 18 Feb 2004
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Integration of ICT systems with suppliers
Whilst many companies now routinely interact
online with suppliers (e.g. to order or pay for
supplies or to track orders, only 20 have so far
moved to tighter integration such as automated
call off of orders
Source Business in the Information Age,
International Benchmarking Study 2004 Page 85 UK
Department of Trade Industry / Booz Allen
Hamilton http//www2.bah.com/dti2004
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Integration of ICT systems with customers
Similarly, whilst many companies now routinely
interact online with customers (e.g. to accept
orders and payments or to allow orders tracking,
only 23 have so far moved to tighter integration
such as automated replenishment of supplies.
Source Business in the Information Age,
International Benchmarking Study 2004 Page 86 UK
Department of Trade Industry / Booz Allen
Hamilton http//www2.bah.com/dti2004
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Issues to be covered

• Setting the scene - technological performance per
  unit cost continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• The 8 Cs of e-business.
• A novel use for geographical information?
• Some final thoughts.

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Dramatic growth of broadband connections in UK
There were 8.096M broadband connections in the UK
at the start of June 2005. Connections are still
being added at more than 60,000 per month
Source UK Ofcom Communications market update
Aug 2005
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Broadband impact on e-business processes
Source UK Broadband Stakeholder Forum
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What quantifiable benefits are we seeing from
business use of broadband access?
84.3 of respondents cite productivity
improvements from broadband access. 64 of
respondents see a direct link between broadband
and increased profits.
Source UK/IoD Policy Unit survey on broadband
access Oct 2004
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Many respondents believe that broadband access
brings very significant business benefits
Better and faster RD.
Better information for decisions
Can now do jobs we would not have contemplated
four years ago.
Couldnt do business without it.
Improved communications with/for outworkers
Transforms way of working.
Quick access to worldwide web with huge increase
in use at low fixed monthly cost.
Speed and ability to work anywhere in the World
Source UK/IoD Policy Unit survey on broadband
access Oct 2004
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What measures do you take to protect your home
(or home office) PC against viruses and other
security threats?
There are still significant vulnerabilities with
10 of respondents not using a firewall and 23
not regularly installing security updates
Source UK/IoD Policy Unit survey on broadband
access Oct 2004
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New models from Grid Computing and ASP?
I suggest that processing will move into the
network (along the model long highlighted by Sun
and Silicon Image) where it can be fully and
professionally protected. This will leave very
thin clients (screen scrapers) only at the edge
with little if any processing to
infect. Software, processing and storage will be
available on a pay per use basis - e.g.
Application Service Provision (ASP). Recent
research in the UK by IoD/Dell suggests that SMEs
are now much more willing to consider an ASP
model
This model powered by broadband access will
greatly benefit small business
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Issues to be covered

• Setting the scene - technological performance per
  unit cost continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• The 8 Cs of e-business.
• A novel use for geographical information?
• Some final thoughts.

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Eight key landmarks to navigate by

• Customers
• Creativity
• Co-operation
• Commitment
• Charging
• Competition
• Culture
• Cost

The eight Cs of e-business strategy...
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Customers - serving them better...

• Outsourcing cost to customers yet improving their
  satisfaction.
• Developing one to one marketing based on
  detailed customer profiles.

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Outsourcing cost to the customer.Dell
Source http//www1.euro.dell.com/content/default.
aspx?cuklensgen
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Outsourcing cost to the customer.Jali
Source http//www.jali.co.uk
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Outsourcing cost to the customer.Jali
Source http//www.jali.co.uk
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Outsourcing cost to the customer.Jali
Source http//www.jali.co.uk
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Cost - driving it down through new approaches

• Pushing stock holding elsewhere in the supply
  chain.
• Increasing competition among sub-contractors
• Enhancing logistics
• Gaining cash flow at the expense of suppliers

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The chemicals sector as an example...

• Bulknet.com Bulk
  chemicals distribution logistics centre.
• CheMatch.com Commodity chemicals
  exchange
• ChemConnect.com Auction site
• Chemdeals.com Trades off excess
  inventory
• Chemdex.com Trades laboratory
  chemicals

• Chem-etrade.com Speciality chemicals
  marketplace
• ChemSource.com Index site
• GlobalBA.com Site that includes
  distributors
• Lotsofplastics.com Trades surplus raw
  plastics
• Chemmerce.com Chinese chemicals marketplace

A darwinian process - all these sites were
operating five years ago. Those in red italic
are now gone or merged.
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Evolution in B2B exchanges (1)
In the B2B space, infomediaries in the guise of
the next generation of trade exchanges will

• change the balance of power in entire sectors by
  aggregating the purchasing and selling power of
  large numbers of small companies
• foster (rather than destroy) supply chain
  relationships for collaborative development,
  innovation and the creation of competitive
  edge
• offer options to manage the risk associated with
  just in time approaches to inventory management

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Covisint represented a key test case
E-business is not about incremental improvement
e-business is a fundamental redesign of the
enterprise. Web sites that offer incremental
solutions for isolated aspects of your business
do not enable you to reap the full benefits.
Covisint will address your entire business, link
you to the entire industry, and provide a
foundation to accelerate you into operating at
Internet speed.
Source www.covisint.com
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Evolution in B2B exchanges (2)
In the B2B space, infomediaries in the guise of
the next generation of trade exchanges will
also

• maintain online registers for the location of
  scarce resources or high value spare parts
• support escrow accounts as part of a payment
  offer in order to transfer payment upon agreed
  fulfilment
• develop anonymised and accurate market
  intelligence based on aggregated actual
  purchasing behaviour
• help to manage exchange rate risks and
• provide real-time on-line credit search for
  accreditation of third parties

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Issues to be covered

• Setting the scene - technological performance per
  unit cost continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• The 8 Cs of e-business.
• A novel use for geographical information?
• Some final thoughts.

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A novel use for geographical information?

• A conundrum The spectrum requirement for UK
  cellular communications services is forecast at
  1270MHz (on a high traffic scenario) by 2015,
  compared to the 540MHz currently assumed to be
  available.
• This is simply not available below the normal
  3GHz limit assumed for mobile communications.
  It will have to be met from spectrum normal
  consider only useful for strictly line of sight
  communications
• An answer? The mobile phone can locate itself
  via GPS. If the mobile phone has access in
  real-time to geographical information (both
  landscape and clutter e.g. buildings), it can
  build a 3D map of its surroundings including
  awareness of the locations of all the available
  cellular base stations. The phone could then
  actively steer beams from its internal antennae
  such that as it approaches a location shadowed
  from one base station it switches to another
• The implication Fixed spectrum could be
  turned into Mobile spectrum - hugely increasing
  its value.

Source Spectrum demand information from Analysys
Mason First Report for the Independent Audit of
Spectrum Holdings - 1st September 2005. The rest
- informed speculation!
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Issues to be covered

• Setting the scene - technological
  cost-performance continues to grow exponentially.
• E-Business is now mainstream business
• Affordable broadband access benefit and curse.
• Can the existing model of highly distributed
  computing be made secure?
• New models from Grid Computing and ASP?
• Some final thoughts.

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Some final thoughts.

• E-business has not gone away! The excess of
  gloom on the downside was just as wrong as the
  earlier excess of hype.
• Normal Darwinian processes have removed from
  the market those who had wacky business plans and
  little common sense
• E-business is now being integrated into
  traditional business, bringing major cost
  savings, service enhancements and new business
  opportunities. Secure interoperability is an
  essential element of these savings and
  improvements
• Affordable broadband access levels the playing
  field between large and small business but,
  combined with the fallibility of small office
  home users, raises major security exposures.
• Real-time access to geographical information
  represents a major new opportunity

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But always remember that major change can
sometimes have unexpected impacts.
Oh dear!
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Questions Answers
Slides can be downloaded from www.profjimnorton.
com/jnordsurv2.ppt