The Internet and E-Business

The Internet and E-Business
Chapter 5 The Internet and E-Business Opening Case: Pinterest: Billboards for the Internet

Chapter Five Overview SECTION 5.1 – BUSINESS & THE INTERNET
Introduction Web 1.0: Disruptive Technology The Internet and World Wide Web—Business Disruptors E-Business Basics Advantages of E-Business E-Business Models Organizational Strategies for E-Business E-Business Benefits and Challenges SECTION 5.2 – WEB 2.0 & BEYOND Web 2.0 The Future—Web 3.0 Accessing Internet Information New Trends in E-Business: E-Government & M-Commerce In the past few years, e-business seems to have permeated every aspect of daily life. In just a short time, both individuals and organizations have embraced Internet technologies to enhance productivity, maximize convenience, and improve communications globally. This chapter focuses on the disruptive technology, the Internet, and e-business processes that are changing the nature of the buyer-seller relationship, the role of information technology (IT), and organizational structures and tasks. The chapter also discusses the opportunities and advantages found with developing e-businesses. Specific relationships have been developed in the chapter between disruptive technologies and e-businesses.

Learning Outcomes Explain the differences between disruptive technologies and sustaining technologies. Explain how the Internet and the World Wide Web have evolved over the years and disrupted traditional ways of doing business. Describe how an organization’s various departments can use e-business to increase revenues or reduce costs, and how organizations can measure e-business success. Compare the four types of e-business models. Describe the benefits and challenges of Web 2.0, and the new trends happening in e-business today. A detailed review of the learning outcomes can be found at the end of the chapter in the textbook in the section headed, “Summary of Key Themes”.

BUSINESS AND THE INTERNET
SECTION 5.1 BUSINESS AND THE INTERNET CLASSROOM OPENER GREAT BUSINESS DECISIONS – Edwin Land Develops the Polaroid Camera In 1937, Edwin Land started a company that made a polarizing plastic and named it Polaroid. The business boomed. Land was taking family pictures on his vacation in 1943 when his three-year-old daughter asked why they had to wait so long to see the developed photographs. Land was struck with the idea of combining the polarization technology with developing films. By 1950, Land had a camera that produced black-and-white images and by 1963, he released a camera that produced color pictures. The Polaroid camera took off and by the late 1960s, it was estimated that 50 percent of American households owned one.

Web 1.0: Disruptive Technology
How can a company like Polaroid go bankrupt? Digital Darwinism Implies that organizations which cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction Disruptive Technology A new way of doing things that opens new markets and destroys old ones Sustaining Technologies Provides improved products in an established market 5.1 Have students suggest ways that technology has changed the way we do things from their parents’ time. Answers could include on-line banking, shopping, research for essays, watching movies at home, buying books. Ask students to explain how some companies adapted and which companies didn’t. Banks, most big retailers and libraries added on-line ordering to improve their method of service delivery. Blockbuster did not. Amazon was the demise of many independent bookstores.

Disruptive versus Sustaining Technologies
Expected Returns on Disruptive and Sustaining Technologies 5.1 Divide students into groups and assign a company to each. Have them identify the key offering from each company. What was the innovation each brought to the market that was sustaining or disruptive? Figure 5.1

Companies That Capitalized on Disruptive Technologies 5.1 Company Disruptive Technology Apple iPod, iPhone, iPad Charles Schwab Online brokerage Hewlett-Packard Microprocessor-based computers, inkjet printers IBM Minicomputers and personal computers Intel Low-end microprocessors Intuit Digitized accounting software Microsoft Operating system software Oracle Database software Sony Transistor-based consumer electronics Divide students into groups and assign a company to each. Have each group describe how the innovation changed the market and what kinds of companies or processes became obsolete. Figure 5.2

The Internet & the World Wide Web
ARPANET A bomb-proof communications network Operated by the U.S. Department of Defense & academia Difficult to access and operate Internet Global public network of computer networks Data is transmitted by use of Protocols: standards specifying format and transmission rules World Wide Web Global communications application using the Internet Uses HTTP protocol to link resources anywhere on the Internet 5.2 CLASSROOM EXERCISE Where the Internet Really Started Ask students, “How did the Internet (really) get started.” A few responses might include: Al Gore (“Information Superhighway”), or the Department of Defense (ARPANET), or even Bill Gates (Microsoft). For many people, the Internet is the epitome of cutting-edge technology. However, in the nineteenth century, the first “online communications network” was already in place - the telegraph! In addition, at the time, it was just as perplexing, controversial, and revolutionary as the Internet is today. In essence, the telegraph was the first incarnation of the Internet. Ask students to “Imagine an almost instantaneous communication system that would allow people and governments all over the world to send and receive messages about politics, war, illness, and family events. The government has tried and failed to control it.” Was it the Internet? Nope, the humble telegraph fit this bill way back in the 1800s. The parallels between the now-ubiquitous Internet and the telegraph are amazing, offering insight into the ways new technologies can change the very fabric of society within a single generation. Emphasize the history of the telegraph: Begin with the funny story of a mile-long line of monks holding a wire and getting simultaneous shocks in the interest of investigating electricity, and ending with the advent of the telephone (this is the true scenario). Discuss the early “online” pioneers: Samuel Morse, Thomas Edison, and a seemingly endless parade of code-makers, entrepreneurs, and spies who helped ensure the success of this communications revolution. With the invention of the telegraph, the world of communications was forever changed. The telegraph gave rise to creative business practices and new forms of crime. Romances blossomed over its wires. In addition, attitudes toward everything from newsgathering to war had to be completely rethought. The saga of the telegraph offers many parallels to that of the Internet in our own time, and is a remarkable episode in the history of technology.

Guiding the Internet No one entity operates the Internet
Setting Standards and Guidelines Internet Engineering Task Force (IETF) Protocol Engineering and Development Internet Architecture Board (IAB) Defines the configuration of the Internet infrastructure Provides broad directions to the IETF Internet Engineering Steering Group (IESG) Technical management of IETF and Internet standards process 5.2 As the ARPANET moved from control by the US military, the Internet, as it became known, and its standards task force, IETF, moved over to control by the US federal government. However, since 1993, the IETF has been operated by and international non-profit Internet Society.

5.2 World Internet Growth and Penetration Canadians spend more time on-line than any other nation in the world or so says the Canadian Internet Registration Authority, CIRA. Students would enjoy reviewing Canadian Internet usage statistics by accessing Figure 5.3

Mobile Penetration 5.2 World Mobile Broadband Subscriptions Penetration & Growth Smart phone has grown to 45% penetration in the Canadian Market. See Figure 5.4

Mobile Penetration 5.2 World Mobile Broadband Subscriptions Penetration & Growth Have students note to fairly linear growth in the Developed World and the almost exponential growth in the developing world. Gartner, one of the world’s leading information technology research and advisory company publishes statistics on global device penetration at See Figure 5.4

Internet as a Business Disruptor
E-Business Changes Due to Technology 5.2 Industry Business Changes Due to Technology Auto AutoTrader.ca is Canada’s largest used car market. Publishing Lulu.com provides self-publishing Education & Training Education is moving on-line. 50% of doctors will be maintaining their skills through on-line training. Entertainment Billions of downloads from music sites. Television series and movies streamed through HULU and Netflix. Retail On-line annual compound growth at 10%. Travel By mid-2013, 57% of travel sales were done on-line. Ask students what other traditionally “bricks and mortar” businesses have gone on-line. Answers may include Grocery Gateway, e-textbooks, and real estate. Even if traditional businesses have not disappeared, how has this changed their business processes? See Figure 5.5 for more details

Growth of the World Wide Web
The Web is the medium for publishing information on the Internet and serves as a platform for the electronic economy. 5.2 Reasons for Growth of the World Wide Web CLASSROOM EXERCISE The 13 Most Embarrassing Web Moments The Internet is the most efficient information distribution system ever known. But if you're not careful, it's also the perfect way to embarrass yourself in front of the entire world. Figure 5.6

Development of the WWW Primarily text-based until 1991
Two innovations that established the WWW of today: Tim Berners-Lee Developed HTML markup language that allowed links to other Internet resources to be built into a Web page Created the first web page with instructions on setting up a browser & a web server Marc Andreessen Developed Mosaic, browser software Digital Divide Identifies the social and economic disadvantage to those without Internet technology versus those who have it 5.2 takes students to a screen shot of Tim Berners-Lee’s original web site.

Internet’s Impact on Information
5.2 Easy to Compile Faster to search, organize, and track information on customers, suppliers and partners. Increased richness Greater breadth and depth of information can be transferred between business and customers. Increased Reach The number of people businesses can communicate with all over the world has risen dramatically. Improved Content The ability to get dynamic and relevant information so that buyers can make informed decisions and sellers differentiate themselves from the competiton. Ask students what other traditionally “bricks and mortar” businesses have gone on-line. Answers may include Grocery Gateway, e-textbooks, and real estate. Even if traditional businesses have not disappeared, how has this changed their business processes? See Figure 5.7 for more details

E-Business E-commerce E-Business
The buying and selling of goods and services over the Internet E-Business The conducting of business on the Internet including not only buying and selling, but also serving customers and collaborating with business partners 5.3 In June, 2014, Google spend $555 million acquiring Dropcam, an in-home surveillance company whose customers can access their thermostats, fire alarms, intrusion detectors etc. from their smart phones. Have students access to find out why this this e-commerce direction is of so much value to Google.

E-business Basics Overview of Industries Using E-Business 5.3
CLASSROOM EXERCISE E-business Business Ask your students to list the types of companies they want to work for when they graduate List the companies on the board and categorize them by industry Assign each industry to a group, or assign the industry to each individual depending on the company they want to work for, and have the students research how the different industries are using e-business Manufacturing and Retail: RFID, online payments and orders, sales via the Internet, customer service via the Internet Financial: online banking, online mortgages, online loans Telecommunications: Voice over the Internet (VoIP) Healthcare: digital hospitals, pharmacy orders via the Internet Travel: online reservations, Travelocity, Expedia Figure 5.8

Advantages of E-Business
Information Reach Expand the number of people a business can target Information Richness Increase the depth and breadth of details in communications Mass Customization Provide a range of features in standard products that can be altered to customer specifics Personalization Understand customers sufficiently to provide not only products but ways of doing business specifically suited to them 5.3 Have students offer examples of each of the terms above. Purchasing new cars is an excellent example of Mass Customization. The make and model might be the same for all buyers of a certain type of car but the type of seat, radio, no. of doors, etc. can be customized to suit the buyer. Companies that open themselves to Crowd Sourcing are looking to Personalize their offering, service, promotions and/or methods of delivery.

The Long Tail 5.3 Because E-businesses are not limited by shelf space, they can offer a far wider selection of products that may suit only a few customers. CLASSROOM OPENER Chris Anderson – The Long Tail Video Chris Anderson, the editor of WIRED (not to be confused with the curator of TED, who has the same name), explores the four key stages of any viable technology: setting the right price, gaining market share, displacing an established technology and, finally, becoming ubiquitous. To demonstrate this trajectory, Anderson explores the evolution of the DVD player as it passes through each of these four tipping points, then offers specific examples of current trends in technology -- ranging from DNA sequencing to the hybrid -- to illustrate each stage of the game. Figure 5.9

Business Value of Disintermediation 5.3 One of the first casualties of disintermediation of music distribution was Sam the Record Man. At the retail store’s peak it had 140 stores across Canada, making it the largest music distributor in Canada. In 2001 due to stiff competition, especially from on-line downloads, Sam closed his doors. Canadian Press reported that the owners stated, “their decision reflects the increasing impact of technology on the record industry.” Figure 5.10

Opening New Markets Intermediaries Disintermediation Reintermediation
Agents, business or software which provides an infrastructure to bring buyers and sellers together Disintermediation Occurs when business use the Web to connect directly to customers and by-pass intermediaries Reduces costs & often improves responsiveness Reintermediation The addition of entities into the value chain to improve the business process Cybermediation The creation of new types of intermediation as a result of the Internet and the World Wide Web 5.3 Have students sketch out a distribution chain including manufacturer, distributor, wholesaler, retailer and customer. Then have students identify a manufacturing business and have them discuss the pros and cons of disintermediation. The more intermediaries that are cut from the distribution chain, the lower the product price. Dell “reintermediated” when it decided to sell its PCs through Walmart having led the way years before in direct-to-consumer sales. What advantage do your students think Dell achieved by Reintermediation?

E-Business Forms 5.3 Figure 5.11
Ask students to provide commercial examples of each of the following. Why might they prefer to use the on-line delivery of these goods and services versus the face-to-face model? Why might they not? Figure 5.11

Further Advantages of E-business
5.3 Reducing Costs Business processes that take less time and human effort. Improving Operations Communications customized to meet consumer needs and available 24/7. Improving Effectiveness— Web sites must increase revenue and new customers and reduce service calls Interactivity metrics measure E-business success: number of repeat visits, times spent on site and number of pages viewed among other activities. Reducing Costs—Consider making a reservation for concert tickets on Ticket Master or the Shaw or Stratford Festival. Patrons can choose seats, purchase tickets and receive tickets all without human intervention. Improving operations—Segmentation can be achieved through different paths for different types of customers through the web. Most Canadian sites offer the choice of English or Francais, thus, providing service according to customer language of choice. Canadian banking sites offer a multitude of language options. Cross-marketing efforts lever the loyalty of customers from one business for another: Associate(Affiliate) programs allows a business to generate commissions or referral fees when a customer visiting its site clicks on to another merchant’s Web site. A Banner Add is a box running across a Web site that advertises the products and services of another business. Browser/buyer behaviour is added by: Tracking click-throughs which count the no. of people who visit a site. A Cookie is a small file depositied on a hard drive by a Web site to collect information about a customer and their browsing habits. Some marketing activities are unique to the Web: A Pop-up ad is a small Web page containing an advertisement that appears outside of the current Web site. Viral Marketing takes “word-of-mouth” advertising to a vastly wider leverl. Web site or web users pass on marketing messages to other Web sites or users. Imagine the word-of-mouth impact of a rock star putting a product message on Facebook. Even ordinary individuals reach many family members and friends who have similar buying profiles. CLASSROOM EXERCISE Viral Marketing Video Clip From Spam to Viral Marketing from John Cleese One B2B marketer used a lot of silliness to increase its web traffic tenfold and generate thousands of sales leads starting a viral phenomenon which went from a wacky idea to revenue-generating success. Great John Cleese video on the backup trauma institute. I like to use this video when introducing IT Architectures. This is also one of the first examples of a successful viral marketing campaign. An online ad (often called banner ad) is a box running across a web page that is often used to contain advertisements. The banner generally contains a link to the advertiser’s website. Web-based advertising services can track the number of times users click the banner, generating statistics that enable advertisers to judge whether the advertising fees are worth paying. Banner ads are like living, breathing classified ads. A pop-up ad is a small web page containing an advertisement that appears on the web page outside of the current website loaded in the web browser. A pop-under ad is a form of a pop-up ad that users do not see until they close the current web browser screen. Associate programs (affiliate programs) allow businesses to generate commissions or royalties from an Internet site. For example, a business can sign up as an associate of a major commercial site such as Amazon. The business then sends potential buyers to the Amazon site using a code or banner ad. The business receives a commission when the referred customer makes a purchase on Amazon. Viral marketing is a technique that induces websites or users to pass on a marketing message to other websites or users, creating exponential growth in the message’s visibility and effect. One example of successful viral marketing is Hotmail, which promotes its service and its own advertisers’ messages in every user’s notes. Viral marketing encourages users of a product or service supplied by an ebusiness to encourage friends to join. Viral marketing is a word-of-mouth type advertising program. Mass customization is the ability of an organization to give its customers the opportunity to tailor its products or services to the customers’ specifications. For example, customers can order M&M’s with customized sayings such as “Marry Me.”

Types of E-Business Marketing Initiatives
Activity Description Associate (affiliate program) Provides commissions or referral fees when a customer at one site clicks through to a link to another merchant’s site. Banner Ad A box running across the top of a website advertising the products and services of another business. Click-through A count of a visitor to a site when the visitor clicked on an advertisement linked to the advertiser. Cookie A small file deposited in the browser’s computer. Cookies perform legitimate services to foster transactions. Others illegally track customer activities without their permission. Pop-up Ad A promotional web page appears in front of the current site. Pop under appears after the original web page is closed. Viral Marketing Word-of-mouth advertising. 5.2 Have students provide examples of each activity listed here. See Figure 5.12 for more details

Marketing via E-Business
Clickstream Data can observe the pattern of customer navigation through a site. Analysis can provide information on: 5.3 Clickstream Data Metrics The ultimate outcome of any advertisement is purchase. Have students suggest how they can use clickstream data metrics to convert browsers into buyers. Figure 5.13

Metrics Measuring Website Success
5.3 CLASSROOM EXERCISE Measuring Metrics Break your students into groups and assign each group one of the four categories: Visitor metrics Exposure metrics Visit metrics Hit metrics Have your students assign the various metrics to each category explaining how each metric can be used to help an organization improve its operations. Ask your students to share their answers with the class Figure 5.14

Basic E-Business Models
Are approaches to conducting business on-line. 5.4 Also included in basic e-business models are G2C, government to consumer and B2G, business to government and G2B, government to business. G2C can involve a wide variety of activities including passport requests, entitlement payments and providing information. B2G involves selling to government, among other things and G2B taxing business but also providing business with services. Figure 5.15

E-business Models 5.4 B2B: Applies to businesses buying from and selling to each other over the Internet. B2C: Applies to any business that sells its products or services to consumers over the Internet. C2B:Applies to any consumer that sells a product or service to a business over the Internet…examples: eBay, Kijiji The demand for C2B e-business will increase over the next few years due to customers’ desire for greater convenience and lower prices C2C: applies to any consumer that sells a product or service to other consumers, eBay, Kijiji One of the most successful C2C business model is C2C Communities which are sometimes used for consumer to consumer financial transactions. Communities of interest - People interact with each other on specific topics, such as golfing and stamp collecting Communities of relations - People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts Communities of fantasy - People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan Students could also be made aware that the Canadian government and provincial governments led the way in providing service to Canadians and others around the world. G2G, G2B, G2C represent this activity. B2G represents suppliers to the government and C2G could describe the increasingly popular on-line income tax payment. Figure 5.16

Business-to-Business E-Marketplace Advantages
On-line access to data: Shipping date, delivery date, shipping status Electronic marketplace or e-marketplace Interactive communities provide a central market for multiple buyers and sellers Provide market efficiencies by automating relationships between buyers and sellers 5.4 E-auctions are a successful e-market activities Forward Auction—Seller offers to many buyers who bid and the highest bid wins. Reverse Auction—Buyer specifies product or service and lowest seller bid wins contract. Figure 5.17

Forms of B2C Operations 5.4 Figure 5.18
Have students discuss the advantages of the three different forms of operation with respect to initial investment, operating costs, delivery costs, promotion etc. Have students consider whether one type of operation is more suited to a specific type of retailing than another. Figure 5.18

Types of C2C Communities
C2C applies to sites where consumers interact with each other over the internet. Offering goods and services as on eBay Web-based discussion forums or chat rooms. Community of Interest where people interact on the basis of specific topics Communities of Relations where people come together to share life experiences: cancer patients, car enthusiasts Communities of Fantasy where people create imaginary environments 5.4 See Figure 5.19 for more details on Types of C2C communities. Have students provide examples of each type of C2C. Many students are involved with creating their “dream teams” in football or hockey. Have them share their fascination. Ask students to talk about other imaginary activities they play out on-line.

Organizational Strategies for E-business
Marketing/Sales Direct selling, earliest type of e-business Now integrating 360-degree rotating product view, interactive customization of products and live video streaming Customer Service Use of traditional and interactive communication tools connects the consumers in the way they prefer Cost per on-line contact can approach zero Challenge is privacy and consumer protection 5.4 Have students provide examples of their favorite shopping web sites and help them analyze the components that make them most effective. Go to and demonstrate live video streaming. Have students count the number of special offers per page and the different ways they are delivered to catch browser’s attention. Most students bank on-line. Have students assess banking customer service in terms of security, ease of access, responsiveness, convenience and effectiveness. What kinds of banking service would students not do on-line? Why not? Could all banking services be done on-line?

Consumer Financial Services
Encompass facilitating payments and sales of financial products and services. 5.4 Types of Online Consumer Payments Financial Cybermediary A web-based company facilitating payments on-line. Electronic Funds Transfer (EFT) Mechanism for sending payment from a chequing or savings account. Electronic bill presentment and payment (EBPP) System sends bills over the Web. Facilitates payment with a click of a button. Digital Wallet Software for secure transactions and includes transactions information such as delivery date. What are the advantages of on-line payment systems? Disadvantages? See Figure 5.20 for more details

Financial Services for Business
Electronic Data Interchange (EDI) Computer to computer data exchange Provided through a VAN (value-added network), private network providing high capacity data exchange Financial EDI (financial electronic data exchange) Standard process for business-to-business payments 5.4 See Figure 5.21 for more details.

Electronic Trading Network
Support business-to-business provide network services, information exchange, improved security and guaranteed service levels. 5.4 Diagram of an Electronic Trading Network As electronic trading networks expand their reach and number the number of Internet businesses grow, so will the need for managed trading services. Figure 5.22

Procurement E-procurement Maintenance, Repair & Operations (MRO)
Relate to running the business, not primary inputs to operations Often processing these purchases cost more than the value of the purchase E-procurement B2B purchase and sale of supplies over the Internet Direct computer-to-computer links with suppliers Electronic catalogue reduce cost of search & ordering 5.4

E-Business Benefits Figure 5.23 5.4
What do you think are the competitive services offered by Electronic Trading Networks? A recent report has concluded that the providers of Electronic Trading Networks (ETN) are most competitive over, and often share different opinions on, three areas of ETN services: Speed of implementation Services provided, including overall service and integration management Product applicability to small and medium-size enterprises Figure 5.23

E-Business Challenges
Protecting Consumers Against unsolicited communication, illegal or harmful goods, insufficient information, cyberfraud Leveraging Existing Systems Integrating systems across business to avoid duplicate functionality and maintain performance & reliability. Providing Security Against accidental or malicious misuse without restricting flexibility. Protecting privacy and ensuring continuous service. Adhering to Taxation Rules As e-business expands new policies and law must be established. 5.4 See Figures 5.24 and 5.25 for details.

E-Business Security Methods
Encryption Scrambles information into a secure form requiring a decoding key to enable reading. Secure Socket Layer (SSL) Creates a secure and private connection between sender and receiver and encrypts the information Identified by a URL beginning with https Secure Electronic Transaction (SET) Encrypted information sent over a secure connection Enables customer authentication for credit card purchases 5.4 See Figure 5.26 for more details

Benefits & Challenges of Revenue Models
5.4 Figure 5.27

OPENING CASE QUESTIONS Pinterest – Billboard for the Internet
Do you consider Pinterest a form of disruptive or sustaining technology? Describe the e-business model and revenue model for Pinterest? What is open source software and how could Pinterest take advantage of it? OPENING CASE STUDY QUESTIONS Pinterest – Billboard for the Internet Do you consider Pinterest a form of disruptive or sustaining technology? It is most likely that students will consider the technologies disruptive, but they need to justify their answers. Most students will justify this by explaining that these technologies have not been around long enough to be sustaining. Looking at recent history other versions of the technologies, such as MySpace have not been sustaining technologies. Describe the e-business model and revenue model for Pinterest. **Please note the answer to the below might change over time as the companies change the way they operate. Pinterest Revenue Model - Advertising Fees E-business Model - C2C 3. What is open source software and how could Pinterest take advantage of it? An open system consists of nonproprietary hardware and software based on publicly known standards that allows third parties to create add-on products to plug into or interoperate with the system. Thousands of hardware devices and software applications created and sold by third-party vendors interoperate with computers, such as iPods, drawing software, and mice. Source code contains instructions written by a programmer specifying the actions to be performed by computer software. Open source refers to any software whose source code is made available free (not on a fee or licensing basis as in e-business) for any third party to review and modify. Business 2.0 is capitalizing on open source software. Mozilla, for example, offers its Firefox Web browser and Thunderbird software free. Mozilla believes the Internet is a public resource that must remain open and accessible to all; it continuously develops free products by bringing together thousands of dedicated volunteers from around the world. Mozilla’s Firefox now holds over 20 percent of the browser market and is quickly becoming a threat to Microsoft’s Internet Explorer. How do open source software companies generate revenues? Many people are still awaiting an answer to this very important question.

SECTION 5.2 WEB 2.0 AND BEYOND Data Warehousing CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Jeff Bezos Decides to Sell Books over the Internet Jeff Bezos owns 41 percent of Amazon and is estimated to be worth over $900 million. Bezos graduated from Princeton and was the youngest Vice President at Banker’s Trust in New York. Bezos had to make a decision to stay and receive his 1994 Wall Street bonus or leave and start a business on the Internet. “I tried to imagine being eighty years old, looking back on my life. I knew that I would hardly regret having missed the 1994 Wall Street bonus. But having missed being part of the Internet boom – that would have really hurt,” stated Bezos. The first books ordered through Amazon were dispatched in the fall of 1994 (personally packaged by Bezos and his wife). Amazon.com is now the biggest bookstore on the planet. It is the exemplar of electronic business.

Web 2.0 Economic, social, and technology trends forming the basis for the next generation of the Internet Refers not to a new WWW but to how it will be used by software developers and end users Changes initiated by: Billions of people who have access More mobile devices than laptops Wide availability of broadband 5.5 Web 2.0’s vast disruptive impact is just the beginning. According to Tim O’Reilly, “Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on the new platform.”

Web 2.0 The Move from Web 1.0 to Web 2.0 Figure 5.28 5.5
This figure displays the move from Web 1.0 to Web 2.0. Ask students for examples of Web 2.0 applications that they have used. Change includes the move from computers to hand-held devices, the 90% penetration of broadband connections to homes with the Internet, and the impact of social media—750 million Facebook users and the 350 billion tweets sent over the past 5 years. Figure 5.28

Mashups Website or Web application that uses content from more than one source to create a completely new product or service Application programming interface (API) Set of routines or protocols for building software applications Mashup editor Allows users to mix data from a wide range of sources 5.5 Application programming interface (API) - A set of routines, protocols, and tools for building software applications. Mashup editors are WSYIWYGs (What You See Is What You Get) for mashups. They provide a visual interface to build a mashup, often allowing the user to drag and drop data points into a Web application Have students look up a few of the following web sites that have taken advantage of Mashups. 1001 Secret Fishing Holes: Over a thousand fishing spots in national parks, wildlife refuges, lakes, campgrounds, historic trails etc. (Google Maps API). 25 Best Companies to Work For: Map of the 100 best U.S. companies to work for as rated by Fortune magazine. (Google Maps API). Album Covers: Uses the Amazon API and an Ajax-style user interface to retrieve CD/DVD covers from the Amazon catalog (Amazon eCommerce API). Gawker: A handy mashup for keeping up with celebrity sightings in New York City. Readers are encouraged to as soon as the celeb is spotted (Google Maps API). Gigul8tor: Provides a data entry page where bands can enter information about upcoming gigs and venues. Gigul8tor displays a list of possible locations depending on the venue engine and enters event information right into Eventful in an interface designed just for bands. It shows how different user interfaces could be built in front of Eventful with mashup techniques. GBlinker: A Google pin wired to a serial port so it flashes when arrives. OpenKapow: Offers a platform for creating Web-based APIs, feeds, and HTML snippets from any Web site, taking mashup possibilities way beyond the move than 300 APIs offered on ProgrammableWeb. The Hype Machine: Combines blog posts from a set of curated music blogs with Amazon sales data and upcoming events. The Hype Machine tracks songs and discussion posted on the best blogs about music. It integrates with iTunes to take customers right from the Web page to the track they are interested in. If the customer prefers buying through Amazon, The Hype Machine figures out what CD page to display.

Web 3.0, the Semantic Web Provides a way of describing relationships between web pages so that machines understand the meaning of hyperlinked information Transforming the web into a database Emergence of a data-driven web where structured records can be reusable and queried remotely Allows unparalleled information sharing because communication forms and files have common formats 5.5 Transforming the web into a database Semantic web is a highly technical and sophisticated undertaking. Its objective is to immensely improve knowledge resources available to everyone. One way to think about the semantic web compared to our current web is to consider that when a human looks at a web page, he or she can understand if she or he is reading a description of a pet or the price of a dress or the temperature outside. People can relate information to other information and take action. A machine reading a web page marked up in HTML, as they are today, sees only characters. It attaches no meaning to the characters but is able to select them only if they match search criteria. The Semantic web could enable machines to relate diverse inputs and choose a course of action. Access In a database, the data that is stored is identified individually, in a sense, given specific meaning. Selecting data that is related is easier because the relationships have been made apparent. Turning the web into a database would allow sufficient context and meaning to be associated with detailed data resources found within web pages. Much more data would be available but better selections in response to searches would be performed by machines that could integrate vast amounts of related data and “understanding the meaning” of our searches better. An Evolutionary Path to artificial intelligence Have students explore the topics of Neural Networks and Expert Systems. In what way is the “thinking” modeled by these methodologies related to the networks and data transmission on the Internet?

Web 3.0, the Semantic Web An Evolutionary Path to artificial intelligence Learning systems (artificial intelligence) use large data sets to make predictions, discover new patterns in behaviour and provide insight into problem diagnosis The Realization of the Semantic Web & SOA SOA (service –oriented architecture) is a collection of digital on-line services that communicate with each other. Goal is to integrate existing systems in order to support end-to-end business processes across the value chain Evolution to 3D Multi-dimensional data visualization Supports 3D graphics, animation, physical simulations and real time communication, among others 5.5 Service Oriented Architecture is comprised of self-contained, independent applications distributed over the Internet by means of Web services software application, performing specific functions such as confirming a reservation, processing an on-line application, providing information or any of thousands of automated, repeated, business tasks. Service providers register with a Service Directory. Service Requesters query the Service Directory. The advantage to business is that the organization can make use of a service without building the necessary application themselves. Competition among service providers improves the offering and reduces its cost over time. Evolution toward 3D Visit to view advances in the delivery and integration of interactive 3D data over networks. CLASSROOM EXERCISE Finding the Best Career For 2020 As robots take over the workforce using DSS and EIS to make decisions for us and virtual worlds become our new reality what will work look like in 2020? Ask your students to research the Web and find the hot growth areas for jobs and what their ideal career would look like in 2020. • Top Fastest Growing Jobs by 2020 • 11 Careers Expected to Grow the Fastest by 2020 • Forbes – Best Jobs in 2020

Accessing Internet Information
Four tools for accessing Internet information: Intranet Internalized portion of the Internet Protected from outside access, for employees’ use Host a variety of internal information & resources Extranet An intranet that is available to strategic allies from their sites Often used when there are shared initiatives Portal Password protected web site Offers links to a broad array of resources Kiosk Publicly accessible computer Often designed for a specific purpose 5.5 Which access methods does your school provide? Intranet – student or faculty and staff sites such as Blackboard or D2L (Desire to Learn) Extranet – Direct access to external resources like the city library or specialty private libraries. Portal – a place where students or faculty and staff can access all of their applications such as registration, billing, grades, Blackboard or WebCT, and Kiosk – places around the campus where students can logon to the Internet If your college does not provide each type of access why might it want to start? What benefits can be added to your school through the use of kiosks or portals?

E-government Models Uses strategies & technologies to improve services and communication with the citizen-consumer 5.5 Have students access the following to see the on-line relationships between business and government: C2G – hamiltoncatch.org B2G – lockheedmartin.com G2B – canadabusiness.gc.ca G2C – servicecanada.gc.ca G2G – aupe.org Figure 5.29

E-government Extended E-business Models Figure 5.31` 5.5
Have students review the extensive services provided through Figure 5.31`

M-Commerce Ability to purchase goods and services through a wireless Internet-enabled device. 5.5 M-Commerce Technology Overview Have students go through the diagram step-by-step to ensure understanding. is a good lay person source for information on wireless technology. Figure 5.30

Social Media & Business
Growth of social media makes it a viable medium for communication Business host their own Facebook & Twitter and other social media sites Trustworthiness of messages judged by viewers by: transparency Engagement Profit Advantages: Social customer support Provide leadership Drives reputation 5.5 Students can go to Dave Fleet’s web page and check out the six important shifts for social media in 2012, CLASSROOM EXERCISE AMNESTY INTERNATIONAL TURNS TO SOCIAL MEDIA Social media users are to be given the chance to raise money for a hard-hitting Amnesty International campaign against Shell. The U.K. branch of the 50-year-old organization announced over the weekend that it is to use its Twitter, Facebook, and MySpace accounts to bring in cash to run a full-page newspaper ad next Tuesday, May 18, the day of Shell's AGM. Ask your students to read the article and discuss the following: What are the advantages of using social networking for raising funds for non-profits? What are the disadvantages of using social networking for raising funds for non-profits?

OPENING CASE QUESTIONS The Case for Business Intelligence at NetFlix
Categorize Pinterest as an example of Web 1.0 (e-business) or Web 2.0. Create a plan for how a startup company could take advantage of Web 3.0 and generate the idea for the next great website that would be similar to Pinterest. Evaluate the challenges facing Pinterest and identify ways the company can prepare to face these issues. How have social networking sites used technology to change how people communicate with each other? OPENING CASE STUDY QUESTIONS Pinterest – Billboard for the Internet Categorize Pinterest as an example of Web 1.0 (e-business) or Web 2.0. Pinterest is an example of Web 2.0 Create a plan for how a start-up company could take advantage of Web 3.0 and generate the idea for the next great website that is similar to Pinterest. Students answers to this question will vary. Be sure to review the arguments they use to support their analysis of their start-up company. A great website to get them thinking about ideas is Evaluate the challenges facing Pinterest and identify ways it can prepare to face these issues. Technology Dependence Many people today expect to be continuously connected, and their dependence on technology glues them to their Web connections for everything from Web conferencing for a university class or work project to making plans with friends for dinner. If a connection is down, how will they function? How long can people go without checking , text messaging, or listening to free music on Pandora or watching on-demand television? As society becomes more technology-dependent, outages hold the potential to cause ever greater havoc for people, businesses, and educational institutions. Information Vandalism Open source and sharing are both major advantages of Business 2.0, and ironically they are major challenges as well. Allowing anyone to edit anything opens the door for individuals to purposely damage, destroy, or vandalize website content. One of the most famous examples of wiki vandalism occurred when a false biography entry read that John Seigenthaler Sr. was assistant to Attorney General Robert F. Kennedy in the early 1960s and was thought to have been directly involved in the assassinations of both Kennedy and his brother, President John F. Kennedy. Seigenthaler did work as an assistant to Robert Kennedy, but he was never involved in the assassinations. Wiki vandalism is a hot issue and for this reason wiki software can now store all versions of a Web page, tracking updates and changes and ensuring the site can be restored to its original form if the site is vandalized. It can also color-code the background ensuring the user understands which areas have been validated and which areas have not. The real trick to wiki software is to determine which statements are true and which are false, a huge issue when considering how easy and frequently wiki software is updated and changed. Violations of Copyright and Plagiarism Online collaboration makes plagiarism as easy as clicking a mouse. Unfortunately a great deal of copyrighted material tends to find its ways to blogs and wikis where many times blame cannot be traced to a single person. Clearly stated copyright and plagiarism policies are a must for all corporate blogs and wikis. These topics are discussed in detail in Chapter 4. How have social networking sites used technology to change how people communicate with each other? Depending on when you review the case these companies could be considered disruptive or sustaining and you’ll want to ensure your students' answers support their decisions.

CLOSING CASE ONE: The Rise and Fall and Rise of Canadian Tire’s Website Ordering
How could Canadian Tire use e-business metrics to monitor its B2C Web site’s performance? What was Canadian Tire’s original strategy for its B2C Web site? Why did this strategy fail? What is Canadian Tire’s current strategy? Why is this strategy more conducive to the Canadian marketplace? Explain the e-business benefits and challenges facing Canadian Tire. The Rise and Fall of Canadian Tire’s Web Site Ordering How could Canadian Tire use e-business metrics to monitor its B2C Web site’s performance? In the original strategy Canadian Tire metrics would have needed to look at customer conversions and sales from the web site, as the goal of the web site was to sell products. With the strategy change in 2009 the metrics needed to change also, by becoming more focused on looking at what customers are doing on the web site, specifically, are they getting the information they need and then going to the stores to purchase the items that they have researched? What was Canadian Tire’s original strategy for its B2C Web site? In a few words, product sales from the web site. Why did this strategy fail? Customers where not purchasing enough off the web to make for a good return on its investment. What is Canadian Tire’s current strategy? Why is this strategy more conducive to the Canadian marketplace? The current strategy is a portal for information where customers can research products, do price comparisons and the like. This is more conducive to the Canadian market since it is hard to sustain an online retail business in Canada because the population is small and geographically dispersed. Explain the e-business benefits and challenges facing Canadian Tire. The major e-business challenge Canadian Tire is facing is the reality of the Canadian marketplace and its relatively small population dispersed over a large geographical area. It is a hard marketplace in which to sustain an online business. The benefit for Canadian Tire with its new strategy is that it allows it to compete in the marketplace in a less expensive way, although measuring the success of the new strategy is challenging because it is difficult to measure the web site's influence on customers' buying behaviour.

CLOSING CASE TWO Hamilton’s GIS-Enhanced Web Site
How is technology being used by the City to support its strategic goals and operations? What barriers likely exist in rolling out these technologies and securing their successful use and adoption? How can the City leverage its GIS functionality for m-commerce? What performance metrics should the City collect to assess the viability and robustness of its maps Web site (map.hamilton.ca)? Its City of Hamilton site (hamilton.ca)? Why would the City want to develop a Web strategy that adheres to broad citizen services delivery guidelines that deal with non-Web channels? Hamilton’s GIS-Enhanced Web Site How is technology being used by the City of Hamilton to support its strategic goals and improve business processes? Hamilton’s GIS technology are helping to improve customer service, aid economic development and help staff members work in a more efficient manner. Some improvements include improve communication and collaboration on issues by staff and constituents. What barriers likely exist in rolling out these technologies and securing their successful use and adoption? Some of the barriers that may exist may be finding financial support and adequate staffing to ensure the site is accurate and updating regularly. Informing the customers of the availability of the service, as well as training customers to use the service, may also be barriers. How can the City of Hamilton leverage its GIS functionality for m-commerce? The City of Hamilton could allow their constituents to pay for services over their cell phones and PDAs. This would allow constituents to receive updates and information and pay for services from anywhere at anytime, 24x7. What performance metrics should the City of Hamilton collect to assess the viability and robustness of its maps Web site (map.Hamilton.ca)? Its super site (my.Hamilton.ca)? Performances metrics might include: The pattern of Web sites visited, including most frequent exit page and most frequent prior Web site Length of stay on the Web site Dates and times of visits to determine customer spending habits Why would the City want to develop a Web strategy that adheres to broad citizen services delivery guidelines that deal with non-Web channels? Some problems that might result from building a single community Web site: Consistency layout, colours, etc. among the different areas Technical problems linking to and accessing information from various databases Ensuring the security of the information regarding personal information of consumers Opinions on this may vary. Some students may see this as an exemplar model to adopt because of the accessibility of the information, the number of updates occurring, the range of information available. Others may feel that the site might be confusing to some. Issues about accessibility for people who either don’t have technical expertise or who do not have access to computers may be raised.

CLOSING CASE THREE eBay – The Ultimate E-Business
What is eBay’s e-business model and why has it been so successful? How has eBay’s strategy changed of the years? eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay? What are the three different types of online auctions and which one is eBay using? What are the different forms of online payment methods for consumers and business? How might eBay’s customers benefit from the different payment methods? Which metrics would you use if you were hired to assess the efficiency and effectiveness of eBay’s Web site? What is eBay’s e-business model and why has it been so successful? eBay began in the C2C space, using the brokerage value model and collecting transaction fees in consumer-to-consumer auctions. Rapid user growth created community, content, and search value streams, which in turn created the critical mass for substantial advertising revenue. B2B followed by offering the Small Business Exchange. In addition, there is nothing that would prevent eBay from licensing its technology in the B2B space, for industry-specific auctions. eBay could potentially expand into the B2C space, providing firms the option of auctioning merchandise directly to consumers using the eBay infrastructure. Finally, while this would be the greatest stretch for eBay, it could choose to move into the C2B space, allowing consumers to “name their own price” for merchandise and services. How has eBay’s strategy changed over the years? The obvious answer is that eBay's first-mover advantage allowed it to dominate the online auction space. eBay also has an excellent reputation for superior customer service. Two priorities dominate eBay's operational strategy: keeping its buyer/seller community happy, and keeping its massive Web site up and running. Consumers flock there because of the great product selection. The result is a juggernaut that has vanquished latecomers, such as Yahoo! Auctions and Amazon Auctions. Both of those operations are still in business, but they have reduced expectations and make relatively small contributions to their parent companies' balance sheets. eBay has long been an e-marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay? Student’s response should refer to critical mass. The so-called "network effect" has bred a critical mass of customers, a group divided into buyers and sellers. Large and small merchants gravitate to eBay because that is where buyers are clustered. What are the three different types of online auctions and which one is eBay using? Electronic auction - sellers and buyers solicit consecutive bids from each other and prices are determined dynamically. Forward auction - auction that sellers use as a selling channel to many buyers and the highest bid wins. Reverse auction - an auction that buyers use to purchase a product or service, selecting the seller with the lowest bid. eBay provides a forward auction where the highest bid wins. What are the different forms of online payment methods for consumers and business? How might eBay’s customers benefit from the different payment methods? Consumer forms of online payments include: Credit card Financial cybermediary - A financial cybermediary is an Internet-based company that facilitates payments over the Internet. PayPal is the best-known example of a financial cybermediary. Electronic check - An electronic check is a mechanism for sending a payment from a checking or savings account. There are many implementations of electronic checks, with the most prominent being online banking. Electronic bill presentment and payment (EBPP) - An electronic bill presentment and payment (EBPP) is a system that sends bills over the Internet and provides an easy-to-use mechanism (such as clicking on a button) to pay the bill. EBPP systems are available through local banks or online services such as Checkfree and Quicken. Digital wallet - A digital wallet is both software and information—the software provides security for the transaction and the information includes payment and delivery information (for example, the credit card number and expiration date). Business forms of online payments include: Electronic data interchange (EDI) - a standard format for exchanging business data. One way an organization can use EDI is through a value-added network. A value-added network (VAN) is a private network, provided by a third party, for exchanging information through a high capacity connection. VANs support electronic catalogues (from which orders are placed), EDI-based transactions (the actual orders), security measures such as encryption, and EDI mailboxes. Financial EDI (financial electronic data interchange) - a standard electronic process for B2B market purchase payments. National Cash Management System is an automated clearinghouse that supports the reconciliation of the payments. Most of e-bay’s customers use PayPal, a financial cybermediary, to purchase and pay for products. PayPal is secure and trustworthy allowing eBay customers to feel safe when performing business online. Which metrics would you use if you were hired to assess the efficiency and effectiveness of eBay’s Web site? eBay could use the following metrics to analyze its Web site. Click-through – to determine how many customers visit the site from another site Banner-ad – to determine how many customers visit the site from a banner ad on another site The average spending per customer The pattern of Web sites visited, including most frequent exit page and most frequent prior Web site Length of stay on the Web site Dates and times of visits to determine customer spending habits Average number of items posted for auction by a customer Average number of items purchased by a customer Number of inactive customer accounts

The Internet and E-Business

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