The Digital Firm Soetam Rizky

Before we start…… Organization and IS ? IT implications for organizations ? Consideration while implementing IS : –Resistancy –Political –Culture –Environment

Digital Firm ? General term for organizations that have enabled core business relationships with employees, customers, suppliers, and other external partners through digital networks

Digital Firm ? Achieve greater levels cost savings Competitive advantage Operational performance optimization

Before we continue….. Digital firm must use internet ?

Digital firm and Internet

Internet Technology and the Digital Firm Information technology infrastructure: The Internet provides a universal and easy-to- use set of technologies and technology standards that can be adopted by all organizations. Direct communication between trading partners: Disintermediation removes intermediate layers and streamlines processes.

Internet Technology and the Digital Firm Round the clock service: Web sites available to consumers 24 hours Extended distribution channels: Outlets created for attracting customers who otherwise would not patronize a firm Reduced transaction costs: Costs of searching for buyers declines

So, why must use it ? Information asymmetry: One party in a transaction has more information than the other. The Internet decreases information asymmetry. Increases richness: The Internet increases the depth, detail, and scope of information Increases reach: The Internet increases the number of people who can be contacted efficiently.

Quick Summary IT in digital firms : Internet ease the process IT in digital firms : No intermediate process IT in digital firms : Round the clock services IT in digital firms : Extended distribution and lower cost IT in digital firms : Wider scope and information

Internet Business Models

Virtual storefront: Sells goods or services online (Amazon.com) Information broker: Provides information on products or services (Edmunds.com) Transaction broker: Provides online transaction facility (eTrade.com, Expedia.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com

Internet Business Models Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com Online service provider: Provides online services, including search service. (Google.com, Xdrive.com) Virtual community: Provides an online community to focused groups (Facebook.com, iVillage.com) Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)

Before we continue….. Internet business model is always e- commerce ?

E-Commerce Categories Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com) Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com) Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )

E-Commerce Advantages Customer-centered retailing: Closer and more personalized relationship with customers is possible Web sites: Provide a corporate- centered portal for the consumer to quickly find information on products, services, prices, orders

E-Commerce Advantages Disintermediation: The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain, reducing costs to the consumer Reintermediation: The shifting of the intermediary role in a value chain to a new source, adding additional value to the consumer

Summary Many kinds of internet business models, just pick the most promising one E-commerce: B2B, B2C,C2C E-Commerce advantages: Customer- centered E-Commerce advantages: Reintermediation and Disintermediation Bright Prospect of Digital Firm

Questions / Comments ?