1. The Digital Firm: E-Commerce & E-Business Chapter 4

2. October 1, 2001Information Systems for Management2 E-Commerce vs. E-Business E-Commerce –Transactions between organizations or individuals E-Business –Internal business processes

3. October 1, 2001Information Systems for Management3 Figure 4-1 Distribution Savings on E-Goods is Dramatic E-commerce Savings by Category Traditional SystemInternet Percent Savings Airline Tickets$12$1.5087% Banking$1.62$0.2088% Bill Payment$3.33 - $4.80$1 - $1.6070% - 67% Term Life - Insurance Policy$600 - $1 050$300 - $5250% Software$22$0.30 - $0.97% - 99% Source: The Industry Standard. This version is in CN $. Internet technologies can radically reduce transaction costs.

4. October 1, 2001Information Systems for Management4 New Business Models The Internet changes everything! –Do you agree? Why? Changing Economics of Information –Information asymmetry reduced –No longer a trade-off between: Richness (depth & detail; personalization) Reach (broadcast medium) Internet Business Models (Table 4.1) –Are all of these new? If not, name some non-Web examples?

5. October 1, 2001Information Systems for Management5 Terms to Know Dynamic pricing –Based on real-time interactions –Is it fair? Ethical? Banner ads –Double-click –Nuisance –Permanent pop-up Portal –Do you use a portal? Which one? –Types of portals (internal, commercial, industry) Syndicator (Screaming Media) Pure-play Clicks & mortar

6. October 1, 2001Information Systems for Management6 Categories of E-Commerce Business-to-business B2B Business-to-consumer B2C Consumer-to-consumer C2C Mobile commerce M-commerce

7. October 1, 2001Information Systems for Management7 Customer-Centric Retailing Direct sales over the Web –Disintermediation: eliminates intermediary, such as insurance broker, retail store, etc. Interactive marketing & personalization –Customer relationship management –Cookies –Web personalization modifies pages based on customer’s history at that site or path through the site M-Commerce –Notification of nearby restaurants, stock prices Customer self-service reduces costs –Web-based or call centre

8. October 1, 2001Information Systems for Management8 B2B Fast growing, highest volume Web sales –Replacing EDI (EDI moving to Web, using XML) –Access to more information for purchasing, etc. Electronic hub –On-line marketplace –One interface instead of many to reach many suppliers or customers Exchange –Bid-ask system –Vertical (serve one industry): COVISINT –Horizontal (serve many industries): maintenance, repair, operating (mro.com) –Branded (multiple buyers & sellers linked through a branded site): China’s cwhkt.com

9. October 1, 2001Information Systems for Management9 COVISINT Major competitors working together Purpose: Reduce costs Method:Force suppliers to bid for orders together over the Web –Analytical tool to weigh competing bids based on quality, price, delivery date Carrot: Save suppliers money, too (one entry- point for auto mfr. trading) Customer Advisory Council of suppliers Use other exchanges through Covisint Lack of communication with suppliers

10. October 1, 2001Information Systems for Management10 E-Commerce Payment Systems Methods –Credit card –Digital cash (s/w enabling exchange w/other e-cash users or retailers) –Digital wallet stores credit card, e-cash, & owner info –Smart card –Electronic cheques –Electronic billing (Canada Post) –Person-to-person (PayPal, Yahoo!’s PayDirect) –Micropayments (less than $10; Qpass) –Security: covered in later chapter

11. October 1, 2001Information Systems for Management11 Intranets Benefits –Connectivity (even outside the firm) –Tied to internal corporate systems (up-to-date info) –Interactive applications (e.g., training) –Scalable –Web interface (no training to use) –Low start-up costs –Reduced info. Distribution/paper costs

12. October 1, 2001Information Systems for Management12 Intranet Applications Collaboration –Links diverse groups to work on a project –Virtual groups, projects, etc. All functional areas

13. October 1, 2001Information Systems for Management13 Unproven Business Models garden.com pets.com webvan.com MyKidsBenefit.com

14. October 1, 2001Information Systems for Management14 Business Process Change Requirements Not enough to go Web-based Prepare for best/worst case scenarios –Hardware, software, capacity, security, etc. –Distribution Integration across boundaries wherever needed

15. October 1, 2001Information Systems for Management15 More Channel Conflicts –Cannibalize one area of your business to feed another Legal Issues –When is a transaction over? –What geographic location’s laws, customs govern? Security & Privacy –Vulnerable open systems –Data capture for “unintended” purposes

16. October 1, 2001Information Systems for Management16 Status of Canadian E-Commerce Higher % CDNs use Internet than US Lower % CDNS buy on Internet than US 2000 –95 000 jobs due to Internet –CDN $28 billion in sales –20% CDN sales were to consumers; rest to business Cannibalization of CDN sales by US –Amazon, Yahoo!, AOL, MSN, Expedia, Travelocity,

17. October 1, 2001Information Systems for Management17 Barriers to E-Commerce in Canada Among businesses not selling on Internet: –56% goods/services don’t lend themselves to Web –36% prefer current business model –14% cited security issues –10% cited lack of skilled employees to build Web site –9.6% “customers aren’t ready to buy on-line” Conservative investor culture Conservative populace & business community (“Fast Forward: Accelerating Canada’s Leadership in the Internet Economy v.2.0”)

18. October 1, 2001Information Systems for Management18 Boo.com What happened? Did they try to do too much? Be everything to all people? What should they have done? When? Was the business model good? Implemented well? What about technical problems? Whose fault?