Presentation on theme: "Digitizing the Business: e-Business Patterns"— Presentation transcript:
1 Digitizing the Business: e-Business Patterns Chapter ThreeDigitizing the Business: e-Business PatternsThe E-Business material shall at all times remain the property of E-Business Strategies, Inc. No license under any trade secrets, copyrights, or other rights is granted by this Agreement or any disclosure of Confidential Information hereunder. Any such permitted copies will be considered Confidential Information. Confidential Information of E-Business Strategies, Inc. may not be copied or reproduced by the Recipient without E-Business Strategies, Inc. prior written consent.
2 The Structural Foundation Pure-E “Digital Products” Table of Contentse-Business Patterns:The Structural Foundatione-ChannelClick-and-Bricke-Portale-Market MakerPure-E “Digital Products”
3 e-Business Patterns: Structural Foundation In dynamic market environment, manager’s challenge is how to tell forest from treesAre we investing in the right business opportunity?Are these opportunities ever going to be useful?Are we using the right business model to attack these opportunities?The Scoop: New, Web-enabled firms eating into large, old-economy companies’ businessesSo: Managers of old-economy companies need right support tools to make strategic moves, allocate scarce resources, and manage risk
4 e-Business Patterns: Structural Foundation But: Choosing target strategy complexTo move online, large brick-and-mortar corporations either swallow a startup or go at it alone. Which is the right approach?Implication: With focus shifting from physical to digital assets, managers must monitor macroeconomic and customer trendsTo trigger new e-business structural designsResulting new business models form the basis for next gen corporate strategic planningSadly: Many companies still not taking the digital world seriously
5 e-Business Patterns: Structural Foundation Bottom line: We are still in early stages of the e- Business revolutionThere have been and will be moments of extreme optimism; also moments of extreme pessimismWhat is certain is that it is creating opportunities for companies willing to adaptFor others, it represents a destabilizing threat to the status quo of business-as-usualWhen all is said and done, we’ll find big corporate winners join ranks of premiere companies in the worldAim of this chapterHelp identify winnersDiscuss characteristics leading to their successAnalyze discernible patterns for better understanding
6 Going Digital First step in identifying an e-business leader Look at companies asking the innovative questions that are transforming the rules of today’s business gameWhen innovative companies change the types of strategic questions that they ask themselves, the result is business revolutionIn 1970s, the Japanese posed new questions and changed rules of the Auto industryNot gas-guzzlers, how do we create fuel-efficient cars?Not cars that break down, how can we create a high-quality car with few manufacturing defects?Not piles of “just-in-case” inventory, how can we create a “just-in-time” inventory process?
7 Going Digital In mid 1980s, it was Wal-Mart Not what business are we in, what business should we be in?Wal-Mart turned from retailer into supply chain expertOffered right product mix at right storeIn mid 1990s, it was new entrants who rose to challenge almost every leading companyQuestions about customer and business model, not processes, thus challenging sentiment of early 1990s among leading companiesAOL vs. CompuServe and ProdigyDell vs. Compaq and IBMEMC vs. IBM and StorageTekSun Microsystems vs. HP and Silicon Graphics
8 Going DigitalIn the 2000s, the questions for today’s business leader will be on the speed with which his/her firm implements e-business solutions powered by recent innovationsHow fully digital can we make our customers’ experience?Our supply chain?Our internal operations and processes?Intuit transformed from a stand-alone PC-based business model into an online financial services portal when the Internet emerged to threaten it’s business
9 Going DigitalStartups continue to shape the direction of today’s business by taking advantage of recent technological innovationsE-Business can change the way companies interact with customers, communicates, sells, purchases, manufactures, and develops productsAsking a new question not only produces new answers but also reinvents the gameResult: a cost advantage that’s not 10 percent better than competitor’s but rather many fold.
10 Analyzing the Environment e-Business PatternsThe structural foundation sets the new rules of the gameWhat is the new opportunity based on certain customer and market trends?What are the macro-economic drivers of the business change?Which digital technologies are going to dominant your industry?What models are better suited to take advantage of new business opportunities?What business processes need to change?How do you move from existing model to an e-model reflecting your firm’s organizational readiness?What are the challenges management must face when executing the new business model?e-Business ModelsThe strategic framework allows you to compete in the gamee-Business DesignsA specific strategy for what you need to do in the marketplaceWho are your target customers?What is your value proposition?How do you make money?How to finance the company?How do you get and retain customers?How to attract and retain talented people?
11 Focusing on the Whole Picture Begins as a Channel, But Extends to Total Transformation of BusinessE-Portal(B2C)e-ChannelPure EE-Market-Makers (B2B)Click and BrickBasic efficiency, effectiveness enhancements as the selling becomes E-enabledSelling goods/servicesPayment/settlement enhancementsTraditional business transferred to the NetRise of new intermediariesNew forms of supply chain integrationConsolidation/ transformation of intermediary industryCustomer Expects “E” everywhereFundamental re-design of businessNew structures to allow market making, trading and virtual warehousing
12 The Structural Foundation Pure-E “Digital Products” Table of Contentse-Business Patterns:The Structural Foundatione-ChannelClick-and-Bricke-Portale-Market MakerPure-E “Digital Products”
13 Table of Contents e-Channel Transaction Enhancement e-Channel Compressione-Channele-ChannelExpansione-ChannelInnovation
14 Transaction Enhancement Augments or replaces the old transaction methodHome DepotIn most cases, does not alter other aspects of the processSometimes, more technically savvy companies may gain business from other firms, thereby altering the identify of players in the channelDellGapConsumerManufacturerElectronic Transaction
15 E-Channel Compression Eliminates redundant steps in the channelWhen value added by channel is less than cost of the channelCisco partner/reseller “always on” e-channelsSouthwest eliminated the ticketing agent “link” by moving information sharing and transaction processing onlineOnline stock tradingAmazon.comXConsumerManufacturerElectronic Transaction with Disintermediation
16 Electronic Transaction, Metamediation E-Channel ExpansionLengthens the legacy channelCounterintuitive? Inefficiencies in the marketplace can make this approach a necessityInfomediariesCarpoint in automotive marketIntuit in financial servicesVstore.comConsumerManufacturerElectronic Transaction, Metamediation
17 E-Channel InnovationPioneering new channels to satisfy and to anticipate unmet and potential customer desiresE-StampGiven the high stakes, companies everywhere want to make it easier and more enjoyable for customers to do business with themIn every industry, customer base is fragmented into multiple segments, each with its own behavior and needsDiversity of customer tastes and needs has led to a revolution in where, when and how customers buy the products and services they seekWinner will take all!
18 The Structural Foundation Pure-E “Digital Products” Table of Contentse-Business Patterns:The Structural Foundatione-ChannelClick-and-Bricke-Portale-Market MakerPure-E “Digital Products”
19 The Click-and-Brick Pattern Brick and mortar + Click and order = Click and BrickThe C&B pattern allows an existing offline business to profit from partnering with an emerging online presence.Charles SchwabEstablished retailers are creating new C&B patterns.Land’s EndA new variation in C&B strategyAmazon.com and Toys “R” UsBrick & MortarLocalized inventoryIn-store shopping experienceImmediacy (try, buy, take home)Service (returns, repairs, exchanges)ClickInfomediationSpeedDirect, one-to-one experiencePersonalized contentAutomation (assistants, alerts)Click & Brick
20 Why the Click-and-Brick Pattern Physical stores offer convenience and personal serviceOrder online but return at store for an exchangeEstablished retailer’s clout should procure higher-quality merchandise for its Web sites than a start upExceptions: commodity items, ex. booksEfficient branding of Web sites through store frontsEstablished retailers’ storefronts are living, 3-D billboardsTraditional retailers have serious cost advantagesSpend half as much to acquire each new customer as do Web-only retailers
21 WebvanDiscuss with Ravi the purpose and nature of this case, now that Webvan is out of this business
22 Management Challenges Lack of merchandise selection on siteLack of communication and mgmt collaboration between the Web site and store staffs and separate channels for fulfilling orders and resolving customer and process problemsHiring second-tier talent to staff the Web sitesContinuing to invest millions of dollars on Web commerce initiatives w/o generating a positive ROI (return on investment)
23 The Structural Foundation Pure-E “Digital Products” Table of Contentse-Business Patterns:The Structural Foundatione-ChannelClick-and-Bricke-Portale-Market MakerPure-E “Digital Products”
24 The e-Portal Pattern Portals are “Killer” apps of e-business An intermediary or middleman offering an aggregated set of services for a specific well-defined group of usersYahoo! Organizes collections of news, search and communication services for consumersE-Bay, E-Loan, and E*Trade for business activities related to auctioning, loan financing, and stock trading, respectivelyPortals occur when new players succeed in positioning themselves between customers and suppliersCustomer focused, enter chain to address specific customer dissatisfaction with current way of doing businessEither add value-added services to market channel or decrease transaction costs of customer/supplier relationship
25 Table of Contents e-Portal Eyeball Aggregators Or Superportals Auction Portalse-PortalMegatransactionPortals
26 Eyeball Aggregators or Superportals Attract and direct consumer traffic with free content and service offeringsDeliver customers to retailers for a fee (advertisement based or % of transaction)Retailers leery of superportalsDisintermediation, especially of repeat buyersYet the mass buying power of superportals considerableForcing online retailers to bid for a superportal’s businessMedia NetworkCommerce PortalCommunications PortalSticky Content (GeoCities Acquisition)Content PortalSearch Engine
27 Auction PortalsEnable buyers and sellers to engage in transactions across geographic and demographic boundariesMore than just marketplacesUnique community of collectors and hobbyistsSimilarity with traditional auctionsHighest bidder winsWhat is differentOnline auction does not have the physical merchandiseeBay
28 Megatransaction Portals Category killersLock up portal real estate and create a critical mass of customersTravelocity in online travel and Hoovers for financial newsOnline travel services portalsKilling traditional agenciesReduced agent commissions; Consumers’ acceptance of paperless transactions; Ease of use of completing online transactionsExpect to see consolidation and integration in online travelExpedia offers airline tickets, hotel rooms, air/hotel packagesTravel services portals to consolidate along two segmentsFull-service and off-price discountKeys to successAutomation of the look-to-book processChannel synchronization
29 The Structural Foundation Pure-E “Digital Products” Table of Contentse-Business Patterns:The Structural Foundatione-ChannelClick-and-Bricke-Portale-Market MakerPure-E “Digital Products”
30 The e-Market Maker Pattern Online intermediary, connects disparate buyers and sellers within a common vertical industryEliminates channel inefficiencies; aggregates offerings from many sellers or matches buyers and sellersBuyers: lower purchasing costs; reach new suppliersSuppliers: lower sales cost; reach new customersRevenue models:% of transaction, subscription, mark-up
31 The e-Market Maker Pattern Major role for e-Market makers in industries with these characteristics:Large market sizeFragmented supply chainUnrecognized vendor or product differentiationHigh information-search costsHigh product-comparison costsHigh workflow costs
32 The Pure E-Digital Products Pattern New innovations in s/w, h/w and communications placing digital content at center of businesssoftware, music, video, newsdigital goods produced, delivered, consumed and licensed electronicallydelivery of digital goods already changing; delivery as a serviceGrowth of digital products due toproliferation of Internet devicescheap and abundant availability of bandwidthinexpensive PCs, more free PC programsindustry standardization of APIsXML permitting interface between data and speech and other systems
33 The Pure E-Digital Products Pattern 3 types of entrepreneurial activity characterize digital-goods markethigh-quality end user technologies, services and productss/w and h/w platformsdistribution infrastructure
34 High-Quality, High Speed Content to Consumers: Digital Music Internet altered how music will be distributed“Collapse of the middle” patternArtists bypassing major labels to reach audience directlyBusiness as usual will soon mean no business at all for many of the industry’s middlemenNew companies and peer-to-peer technologies emerging to meet needs of the digital music download business: MP3.com, Napster, Gnutella, Pointera
35 New Platforms for Digital-Media Delivery Market for delivery of Internet services through handheld devices new and evolving rapidlyPDAs and mobile phonesWAP standard emerging for delivery of Internet- based services to mass-market wireless phonesWML for Internet apps and content for wireless phonesNext gen mobile delivery systems include voice browsers and speech-recognition systemsTellMe and HearMe
36 New Infrastructure Services for Digital Content Delivery New infrastructure services required to support faster content distributionContent delivery or congestion mgmt servicesDigital Island and Akamai TechologiesCaching servicesInktomi and CacheFlowOutsourcing servicesExodus or Level 3Supported by different business modelsContent delivery vendors paid by Web site owners but
37 E-Business Strategies, Inc. x201FaxThe E-Business material shall at all times remain the property of E-Business Strategies, Inc. No license under any trade secrets, copyrights, or other rights is granted by this Agreement or any disclosure of Confidential Information hereunder. Any such permitted copies will be considered Confidential Information. Confidential Information of E-Business Strategies, Inc. may not be copied or reproduced by the Recipient without E-Business Strategies, Inc. prior written consent.The E-Business material may not be re-sold. It is intended to be used solely for the purpose of accompaniment of the E-Business 2.0 Roadmap for Success book in an instructional manner.
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