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Dean’s Seminar: The Future of e-Business in the New Millennium Ned C. Hill, Dean Marriott School of Management Brigham Young University Management Society Houston April 2001
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BYU Update u Increased enrollment (27,000 to 29,000) u Summer visiting student program u Growth in physical facilities u Growth in online courses (over 200) u Continuing education (50,000 students) u Influence throughout the world China Inventions Languages
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Marriott School Update à Faculty—125 (20 new this year!) à Students (MBA) –International 17% –Women21% –Bilingual70-80% –GMAT average 670 à Placement à Web site marriottschool.byu.edu
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Recognition v MBA Finance #9 in world (Financial Times) v Accounting (MS/BS) #3 in U.S. v Steve Albrecht—top award from AICPA v Undergraduate Bus Mgmt ranked #31 v MBA in second 25 in Business Week & USNWR v #1 for value v MISM program #20 by ComputerWorld v Entrepreneurship program #18 by Success v “#1 Stone Cold Sober School in U.S.” Princeton Review
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Curriculum v Strong functional area, e.g., Finance, Accounting, Marketing v Infuse throughout curriculum: t e-Business t Globalization t Entrepreneurship v Solid foundation of ethical behavior, work ethic, Gospel principles
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International Outreach l China—designing MPA, MBA and certificate programs in Sichuan/Ningxia; microenterprise l Mexico—employment, certification l Argentina—designing EMBA program l Peru—helping congress l Honduras—HELP project l Australia—joint executive education, conferences l ISSP students—125 so far
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Annual Management Conference w June 28-30, 2001 w Leadership and e-Business w 600-700 attended last several years w To register: marriottschool.byu.edu
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The Future of e-Business in the New Millennium Outline What’s wrong with the old paradigm? What is e-Business? How large is the market? How e-Business change business processes? What does e-Business mean for you?
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e-Business: Road to Fabulous Wealth! Just add an “e” to a business process or a “.com” to a company. Without obeying well-accepted economic principles, you will magically create wealth beyond your fondest dreams. X
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e-Business Changes... Information flows Internal and external processes Relationships Power BUT, it does not change need for… Quality products Excellent service Cost effective delivery Valued relationships
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What’s Wrong with the Old Paradigm?
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The Paper-based Commercial Transaction Seller Buyer Mail Carrier Banking System Request for Quote Quote Purchase Order Invoice Bill of Lading Check and Remittance Advice Check
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Keying in the Paper World Keying Postal System Seller’s Computer System Buyer’s Computer System
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What’s Wrong with this Picture? t Labor intensive t Slow t Error prone t Uncertain t Excessive inventory (and cash) t Bottom Line: IT’S EXPENSIVE
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What Can We Do? Option 1: Make paper work harder Option 2: Get rid of the paper altogether
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Definitions of e-Business To most people: “The selling of products and services using the Internet.” More powerful definition : The use of computer and communication technology to facilitate the information exchange between two parties in a transaction.
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Map of e-Commerce All Electronic All Paper/ Manual EDI, FEDI, FTP Traditional Paper/Manual Transactions FAX MICR, OCR, ICR, Bar Coding Cell Phones Internet, E-mail, E-trade
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Payment and Remittance Advice An e-Commerce Transaction Seller Buyer Carrier Banking System Request for Quote Quote Purchase Order Invoice Bill of Lading Goods
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Manual Processes in an e-Commerce World Keying Computer Network (VAN, Internet) Seller’s Computer System Buyer’s Computer System Translation P.O. Invoice RA F.A.
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Changes Due to e-Business è Lower personnel costs è Reduced error rates è Faster cycle time è Improved customer service è Reduced inventory è Fewer stock-outs è Reduced paper handling costs è Faster payments è Better control over information è Potentially creates entirely new markets
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Online Households From Net Profit by Peter S. Cohan Million
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Web Ad Revenues From Net Profit by Peter S. Cohan $ Million
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Business Through the Web Est. from the U.S. Department of Commerce $ Billion
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Size of e-Business Market Billions of dollars, projected for 2003
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Cost Curves u Labor costs u Paper costs u Building costs vs. u Computer costs u Telecommunication costs
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Time Required to Download the 32 Volume New Encyclopedia Britannica ¬ 1200 bps modem……………………..… 28 days ¬ 9600 bps modem………………….…… 3.5 days ¬ 28.8 Kb modem……………………….. 28 hours ¬ Basic Rate ISDN…………..……….… 6.3 hours ¬ T-1 line…………..…….……….….. 31 minutes ¬ T-3 line…………..……………….… 1 minute ¬ Optical Fiber (OC-3)…….…….…. 17 seconds ¬ Optical Fiber (OC-12)…….……... 4.7 seconds ¬ Optical Fiber (new technology).....005 second
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e-Business Impacts Everything e-Business Finance Accounting Marketing Strategy Operations Systems Supply Chain HR
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Example 1: Bergen Brunswig Paper System Pharmacist Bergen Brunswig Order Manual Processing Delivery Payment
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Example 1: Bergen Brunswig e-Business System Pharmacist Bergen Brunswig Order Automated Processing Delivery Payment Capture bar code on shelf label PC consolidates entire order Order transmitted over Internet Warehouse is automated Delivery is within 5 hours
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Example 1: Bergen Brunswig What Changed? t Sales function à Role of salesperson à Information channel t Order fulfillment processes à Manual to automated t HR focus à Compensation issues à Hiring & training t Customer relationships à Responsibility for order initiation/errors à Service level
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Example 2: Daimler-Chrysler Vendor Relationships under e-Business Chrysler Supplier Purchase Order Delivery e-Payment e-Material Release e-Delivery Order e-Advanced Ship Not.
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Example 2: Daimler-Chrysler ] Inventory management t Just-in-time possible ] Invoiceless pay (“Evaluated Receipt Settlement”) ] Quality control moved back to supplier ] Close cooperation necessary ] Tolerance for errors is much lower ] Result? Inventory Reduced by $1,000,000,000
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Four Stages of Web Involvement t Stage 1: “Brochure” –One-way information broadcast –Lowest cost, easiest to maintain –A holder for your place in e-commerce t Stage 2: “Basic Transactions” –Offer basic transactions: orders, payment –Requires significant maintenance, real-time processing –May compete with existing business avenues
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Four Stages of Web Involvement t Stage 3: “Complete Business Partnership” –Multiple transactions with customers –Integrated functionality –Builds customer loyalty, long-term relationships –Involves major funding commitments t Stage 4: e-Market Participation
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Four Stages of Web Involvement Stage 1 Stage 2 Stage 3 Cisco: Product Info.Design OrdersStatus Customer serviceDelivery Payment LandsEnd: Catalog Orders WSJ: News Stage 4 NASDAQ: Multiple buyers Multiple sellers
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e-Marketplaces Automated Matching Rules Buyer Seller Record keeping, reporting, etc. Banking Regulatory Agencies Regulatory Agencies Internet-based Marketplace
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Should My Company Go on the Web? ü Do we have $100,000 to $200,000 to invest in launching a Web site? (And are we willing to invest in maintaining it?) ü Are our competitors involved in the Web? ü Do our customers demand Web services? ü Do we have customer service opportunities that could be improved via the Web? ü Is a significant portion of our customer base under the age of 30? ü Do we want to be in business 2-5 years in the future?
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Suggestions on Entering e-Business < Keep your focus on creating value for your customer--don’t get lost in the technology < Use e-Business to improve processes and information flow--don’t pave over old cow paths < Develop customer loyalty by providing multiple services that add value < Partner when necessary to widen your ability to provide services
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Want to Find an Internet Business Opportunity? Hint: Study Possible Timelines t Consumer shopping t Applying to college t Buying a house t Booking a flight t Checking out a book from a library Also ask: Will this add value? And will people pay for it?
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Be Careful of e-Business Negatives e-Business… t Demands technologically sophisticated staff— make sure you have them (or can obtain other services) t Demands constant attention to keep up web sites t May alienate some customers t May alienate some employees—e.g., ubiquitous contact with the office t Will lead to problems if you overlay technology onto a poorly designed information system t May create security issues t May create audit control problems
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Rollins Center for e-Business £ Faculty development £ Curriculum enrichment £ Research £ Public awareness £ Partnerships with e-Businesses
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General Course Map for e-Business Foundation Technologies: Networking, Data Bases, Programming Overview of e-Business Overview of e-Business Application to Functional Areas: Finance, Marketing, Operations, HR, Government, etc. Application to Functional Areas: Finance, Marketing, Operations, HR, Government, etc. Strategy and e-Business Strategy and e-Business Enter
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Using e-Business within the University t Applications -- Internet t Course Registration -- Internet t Purchase of Supplies -- Internet t Phone Bills -- EDI t Grade Transcripts -- EDI t Travel Arrangements -- Internet t Alumni Relations X Publications -- Internet X Communications -- e-Mail t Internal Communications -- MS Outlook t Correspondence Courses -- Internet/CD Rom
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Examples of Computer-Assisted Courses AccountingReplaces lectures Rat LabDecreases costs Chemistry LabAllows experiments LanguagesAdaptive learning MusicVisualizing Bach AccountingRepetitive drills Course Key Feature
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References on e-Business F Evans and Wurster, Blown to Bits: How the New Economics of Information Transforms Strategy, Harvard Business School Press, 2000 F Tapscott, et al, Digital Capital: Harnessing the Power of Business Webs, McGraw Hill, 2000 F Shapiro and Varian, Information Rules: A Strategy Guide to the Network Economy, Harvard Business School Press, 1999 F Kalakota and Robinson, e-Business: Roadmap for Success, Addison Wesley, 1999 F Naisbitt, High Tech, High Touch, Broadway Books, 1999 F Friedman, The Lexus and the Olive Tree, Anchor Books, 2000 F Nicholas Negroponte, Being Digital, Knopf, 1995-- one of the most insightful commentaries on the Information Age
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Conclusions w Technology is changing the business (and the educational) paradigm w But e-Business is not a cure-all—just another tool (and a very powerful one) w Most changes are beneficial—some are detrimental w Learn all you can about e-Business w You will be doing e-Business sooner or later-- might as well get started now!
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e-Business Changes Curriculum u Some create separate programs –Easier to transition--don’t have to change other classes –Lots of new material to cover –But “e-business” is going away!?! u Better to integrate e-business into existing courses –More faculty have to upgrade –But better for students in the long run
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Graduate Program at BYU Networking Databasee-Business Application Management Development Networking Databasee-Business Application Management Development Introduction to e-Business Introduction to e-Business Strategy and e-Business Strategy and e-Business Enter Functional areas can experiment here Special Topics Special Topics Brand Mgmt and e-Business Brand Mgmt and e-Business Internet Marketing Internet Marketing Treasury Mgmt. & e-Business Treasury Mgmt. & e-Business Lecture Series Lecture Series Existing New Existing New Existing
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