John A. Foster, 2002 From E-Commerce to E-Business 1 From E-Commerce to E-Business The Convergence of Business and Technology John A. Foster Principal E-Business Architect Eastman Kodak Company

©John A. Foster, 2002From E-Commerce to E-Business 2 Key Questions n Did e-commerce start with the Internet and the Web? n Whats the difference between e-commerce and e-business? n If the Web is so great, why did all those companies fail? n Are web services the next big thing in e-business?

©John A. Foster, 2002From E-Commerce to E-Business 3 Electronic Commerce (narrow definition) Conducting business transactions through market- facing systems. EDI orders from customers Selling products on-line Delivering services on- line Purchasing goods and services electronically Procurement Order-to-Cash CUSTOMERSCUSTOMERSCUSTOMERSCUSTOMERS SUPPLIERS

©John A. Foster, 2002From E-Commerce to E-Business 4 Electronic Commerce (expanded definition) Conducting business through market-facing systems. EDI orders from customers Selling products on-line Delivering services on- line Purchasing goods and services electronically Procurement Order-to-Cash Providing product information to prospective customers Customer self-help Pre-Sales Post-Sales Exchanging engineering drawings with partners CommercializationPARTNERS Reviewing and updating benefits information Benefits AdministrationEMPLOYEES CUSTOMERSCUSTOMERSCUSTOMERSCUSTOMERS SUPPLIERS electronic business

©John A. Foster, 2002From E-Commerce to E-Business 5 The Beginning of E-Commerce B2BB2CB2E System to Individual System to System Electronic Transactions Phone System Automation Phone System Automation Phone System Automation 1980s

©John A. Foster, 2002From E-Commerce to E-Business 6 … and the Supporting Technologies B2BB2CB2E System to Individual System to System EDI IVR 1980s

©John A. Foster, 2002From E-Commerce to E-Business 7 The Elements of EDI n A strength of EDI is its transport & infrastructure u But it came with a price Purchased transport highly reliable very secure Standard documents EDI standards very extensive Expensive EDI ANSI X12 ISO 9735 UN/EDIFACT Private network VANs Vocabulary Transport Some middleware commonly purchased map from one standard to another Middleware Brokers, translators, maps Infrastruc- ture

©John A. Foster, 2002From E-Commerce to E-Business 8 Private Network Electronic Data Interchange Enterprise A Middleware Translator Translator Enterprise B EDI standard documents Connect with private network Translate documents

©John A. Foster, 2002From E-Commerce to E-Business 9 Core Business Systems Middleware Translator Public Phone Network IVR System Data servers Telephone Integrated Voice Response Applications Corporate Phone Network Install specialized system Connect to phone network Make core systems accessible by IVR system

©John A. Foster, 2002From E-Commerce to E-Business 10 Evolution to E-Business B2BB2CB2E System to Individual System to System Electronic Transactions Customer Relationship Mgmt Phone System Automation Employee Self-service Phone System Automation Marketing Info E-Tailing Phone System Automation Marketing Info Customer Self-service 1980s 1990s 1980s 1990s

©John A. Foster, 2002From E-Commerce to E-Business 11 … and the Supporting Technologies B2BB2CB2E System to Individual System to System EDI Internet/XML IVR Intranet/Web IVR Internet/Web IVR Internet/Web 1980s 1990s 1980s 1990s

©John A. Foster, 2002From E-Commerce to E-Business 12 The Elements of Internet E-Business n Many choices, but also more challenge and responsibility Core set of base standards Must address security … and redundancy and … HTML for presentation XML for content representation Inexpensive ??? Internet A few XML vocabularies cXML (Ariba) xCBL (CommerceOne) RosettaNet ebXML https, https, SSL, ftp Firewalls, PKI Vocabulary Transport Many options built or purchased Infrastruc- ture Middleware (RPC, MOM, msg. brokers, TP monitors) Web servers, app servers, routers ISPs

©John A. Foster, 2002From E-Commerce to E-Business 13 Internet System to System Enterprise A Middleware Translator Translator Enterprise BInternet XML documents Connect with Internet Add robustness, redundancy, security Connect with other enterprise Translate documents

©John A. Foster, 2002From E-Commerce to E-Business 14 Core Business Systems Middleware TranslatorInternet Web server Commerce application server Data servers Browser Web Applications The ubiquitous web browser Make core systems accessible by apps on app server

©John A. Foster, 2002From E-Commerce to E-Business 15 Internet economy poses opportunities and threats … n Transform traditional business models using IT as enabler u Compression of time & space 30% of BancAmericas online customers are outside of traditional geographic area Adaptec reduces manufacturing cycle from 12 to 8 weeks, slashing $10M in inventory costs Always open u Friction reduction creating new sources of economic value Intermediation premium (e.g. brokers fee) Manual sourcing by fax and phone Cost of brick & mortar n But adding market turbulence u The Internet will change everything.

©John A. Foster, 2002From E-Commerce to E-Business 16 Market Turbulence Travel, Brokerage, Books Customer Space (Physical World) TraditionalCompetitor Merrill Lynch Travel Agencies Local Bookstores Internet Preview Travel Amazon.com New Customer Space Internet-Only Competitor ETrade Internet (New Channel) Sabre, Travelocity Barnes & Noble Schwab The Actor MS Expedia Out-of-Market Competitor Intuit Courtesy: Cisco Systems

©John A. Foster, 2002From E-Commerce to E-Business 17 The Ultimate Impact n The Internet dramatically lowers the cost of communication Potential Revolutionary Impact Financial Services Entertainment Health Care Education Government But: Privacy issues Need for additional technology (e.g. broadband, on-line bill paying) Who controls the information Likely Incremental Impact Retailing Manufacturing Travel Power Why? – physical factors overrule virtual Top of the line web site $15-25M Warehouse & distribution system $150M Courtesy: Business Week

©John A. Foster, 2002From E-Commerce to E-Business 18 New Tools for the Old Economy n Tremendous tools for old economy companies to apply to business processes.

©John A. Foster, 2002From E-Commerce to E-Business 19 Challenge: Process Improvement n E-Business is like putting a magnifying glass in front of your core processes Legacy Business Operational Processes Legacy Back Office Systems New Business Operational Processes ERP Order to Cash Manufac- turing Procure- ment Finance from to

©John A. Foster, 2002From E-Commerce to E-Business 20 Challenge: Systems Development n Product software development and information systems development are becoming intertwined Product SoftwareInformation Systems Network from to

©John A. Foster, 2002From E-Commerce to E-Business 21 Challenge: Commercialization n Product commercialization must become business commercialization Discovery & Innovation Definition Design Implementation Mfg./Operations Implementation Production 0 Opportunity Selection 2467C Innovation PhasesCommercialization Phases Business Hypothesis Business Development Planning Business Development Business Start-Up Business Building DCBA New Business Development Phases

©John A. Foster, 2002From E-Commerce to E-Business 22 Why Did the.com Companies Fail? n Flawed business model u Companies view the technology as their business, rather than having a business u Lose money on individual transactions Amazon.com loses almost $3 per order on multi-product orders u Lack of control over supply of what they sell Priceline.com u All the good ideas duplicated by established concerns with deep pockets and staying power

©John A. Foster, 2002From E-Commerce to E-Business 23 Likely Winners NOT ?

©John A. Foster, 2002From E-Commerce to E-Business 24 Web Services – the Future? B2BB2CB2E System to Individual System to System EDI IVR Intranet/Web IVR Internet/Web IVR Internet/Web 2000s Internet/XML Web Services Web Services Web Services

©John A. Foster, 2002From E-Commerce to E-Business 25 Web Services n Built on the foundation from Internet e-Business Built on a ubiquitous core – but is it robust enough? New standards – but built on XML. ??? Web Services WSDL, UDDI for service interaction But … business, security, … XML-based (e.g. SOAP) Over http, https, … Vocabulary Transport Much the same as for Internet e-Business Infrastruc- ture Middleware (RPC, MOM, msg. Brokers, TP monitors) Web servers, app servers, routers ISPs

©John A. Foster, 2002From E-Commerce to E-Business 26 Web Services – ready for prime time? n Favorable Signs u Takes component foundation … Reuse culture Semantic agreement u … and leverages Internet technologies http XML n Challenges u Cross-vendor interoperability u Simplicity u Security u Pre- and post-transaction processes Trading partner agreements

©John A. Foster, 2002From E-Commerce to E-Business 27 ProviderRequestor Who does this service? Request Service Deliver Service Directory Services -UDDI Core Services Deploy Service

©John A. Foster, 2002From E-Commerce to E-Business 28 Provider Requestor Who does this service? -Products -Price Deploy Service Request Service Deliver Service Directory Services -UDDI Do we want to do business with them? -T&Cs -Reliability Do we want to do business with them? -T&Cs -Risk Credit Services Evaluating risk Underwriting risk Record activity & settle payment Billing & Payment Services Tax Import/export Helper Services Define business and business terms Directory Services -UDDI -other

©John A. Foster, 2002From E-Commerce to E-Business 29 Summary n E-business has been around for 20+ years, but the opportunities have been accelerated by the Internet and the web. n Business is still business u The Internet hasnt changed that – though for a while many thought it might have. n Web services may be the next big thing, but EDI, IVR, etc. will probably still be around.