CHAPTER 3 EBUSINESS

1. Business Driven Information Systems 2e CHAPTER 3 EBUSINESS

2. SECTION 3.1 BUSINESS AND THE INTERNET

3. Amazon.com • The “worlds biggest (virtual) bookstore” turned the industry upside down. • There are no physical stores • Comments and recommendations of buyers are captured, customer traffic is monitored all in an effort to evaluate buying and selling patterns and the success of promotions • It’s more than just a website, it’s an intelligent, global digital business. • Personalized recommendations • Online customer reviews • 1-click ordering • Amazon marketplace where customers sell their own items

4. DISRUPTIVE TECHNOLOGY • How can a company like Polaroid go from $60 share in 1997 to $.08 a share in 2002 and eventual bankruptcy? They had a 50% market share with their instant camera. • Using Porter’s Five Forces, they may have seen two threats: one-hour film processing and digital cameras • 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

5. Disruptive versus Sustaining Technology • What do steamboats, transistor radios, and Intel’s 8088 processor all have in common? • Disruptive technology – a new way of doing things that initially does not meet the needs of existing customers but tends to open new markets • Sustaining technology – produces an improved product in an established market that customers are eager to buy

6. Disruptive versus Sustaining Technology

7. Disruptive versus Sustaining Technology

8. Disruptive versus Sustaining Technology • Disruptive technologies: • Disruptive technologies redefine the competitive playing fields of their respective markets • Disruptive technologies tend to open new markets and destroy old ones • Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies • Sustaining technologies: • Sustaining technologies tend to provide us with better, faster, and cheaper products in established markets • Sustaining technologies virtually never lead in markets opened by new and disruptive technologies

9. Disruptive versus Sustaining Technology • The Innovator’s Dilemma - discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders • Xerox, IBM, Sears and DEC all listened to their existing customers and invested aggressively in technology but still lost their dominant positions in the market. • Too much emphasis on satisfying the current needs of their customers rather than looking to meet the customers’ future needs

10. Companies that Capitalized on Disruptive Technology

11. The Internet – Business Disruption • One of the biggest forces changing business is the Internet • Was this always the case? • Organizations must be able to transform as markets, economic environments, and technologies change • Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology

12. The Internet – Business Disruption • There were 1 billion Internet users in 2005 • How will 2 billion additional Internet users change the competitive landscape for businesses over the next few years? • Greater access to a larger number of customers • More competitors • Location and distance becomes a smaller factor for businesses

13. The Internet – Business Disruption Estimates predict more than 3 billion Internet users by 2010

14. The Internet – Business Disruption Estimates predict more than 3 billion Internet users by 2010

15. The Internet – Business Disruption Estimates predict more than 3 billion Internet users by 2010

16. The Internet – Business Disruption • The Internet has had an impact on almost every industry including: • Travel • Entertainment • Electronics • Financial services • Retail • Automobiles • Education and training

17. The Internet – Business Disruption • The Internet has had an impact on almost every industry including: • Travel Travel site Expedia.com is now the biggest leisure-travel agency, with higher profit margins than even American Express. Thirteen percent of traditional travel agencies closed in 2002 because of their inability to compete with online travel. • Entertainment The music industry has kept Napster and others from operating, but $35 billion annual online downloads are wrecking the traditional music business. U.S. music unit sales are down 20 percent since 2000. The next big entertainment industry to feel the effects of e-business will be the $67 billion movie business. • Electronics Using the Internet to link suppliers and customers, Dell dictates industry profits. Its operating margins have risen from 7.3 percent in 2002 to 8 percent in 2003, even as it takes prices to levels where rivals cannot make money.

18. The Internet – Business Disruption • Financial services Nearly every public e-finance company left makes money, with online mortgage service Lending Tree growing 70 percent a year. Processing online mortgage applications is now 40 percent cheaper for customers. • Retail Less than 5 percent of retail sales occur online. eBay is on track this year to become one of the nation’s top 15 retailers and Amazon.com will join the top 40. Wal-Mart’s e-business strategy is forcing rivals to make heavy investments in technology. • Automobiles The cost of producing vehicles is down because of SCM and Web-based purchasing. eBay has become the leading U.S. used-car dealer, and most major car sites are profitable. • Education and training Cisco saved $133 million last year by moving training sessions to the Internet, and the University of Phoenix online college classes please investors.

19. What Was This Technology? • “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.”

20. What Was This Technology? • It was the humble telegraph • 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. • 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 news gathering 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. • The telegraph was eventually replaced by another disruptive technology. What was it?

21. EVOLUTION OF THE INTERNET • The Internet began in the late 1960s as an emergency military communications system operated called the ARPANet by the Department of Defense • Gradually the Internet moved from a military pipeline to a communication tool for scientists to businesses • Internet – computer networks that pass information from one to another using common computer protocols • Protocol – standards that specify the format of data as well as the rules to be followed during transmission

22. EVOLUTION OF THE INTERNET

23. EVOLUTION OF THE INTERNET1969 - 1972

24. Evolution of the World Wide Web • Two events changed the history of the Internet • On August 6, 1991 Tim Berners-Lee built the first Web site using HTML and HTTP • Marc Andreesen built and distributed Mosaic • World Wide Web (WWW) – a global hypertext system that uses the Internet as its transport mechanism • Hypertext transport protocol (HTTP) – the Internet standard that supports the exchange of information on the WWW

25. INTERNET ≠ WWW • People often interchange the terms Internet and the World Wide Web, but these terms are not synonymous • The Internet is a global public network of computer networks that pass information from one to another using common computer protocols • The World Wide Web is a global hypertext system that uses the Internet as its transport mechanism • The World Wide Web operates on the Internet

26. Evolution of the World Wide Web

27. Internet’s Impact on Information • Easy to compile - Searching for information on products, prices, customers, suppliers, and partners is faster and easier when using the Internet. • Increased richness - refers to the depth and breadth of information transferred between customers and business. • Businesses and customers can collect and track more detailed information when using the Internet.

28. Internet’s Impact on Information • Increased reach - refers to the number of people a business can communicate with, on a global basis. • Businesses can share information with customers all over the world. • Improved content - A key element of the Internet is its ability to provide dynamic relevant content. • Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition.

29. Evolution of the World Wide Web • The Future of the Web • The Semantic or Intelligent Web • http://news.bbc.co.uk/nolavconsole/ukfs_news/hi/newsid_5010000/newsid_5018400/nb_wm_5018452.stm • http://news.bbc.co.uk/nolavconsole/ukfs_news/hi/newsid_5010000/newsid_5014600/nb_wm_5014644.stm • http://www.ted.com/talks/tim_berners_lee_on_the_next_web.html

30. ***Evolution of the World Wide Web • How can each of these file formats improve business?

31. Evolution of the World Wide Web • The Internet makes it possible to perform business in ways not previously imaginable • It can also cause a digital divide • Digital divide – when those with access to technology have great advantages over those without access to technology

32. Evolution of the World Wide Web • People living in the village of Siroha, India, must bike five miles to find a telephone. • For over 700 million rural people living in India, the digital divide was a way of life, until recently. • Media Lab Asia attempted to sell telephony and e-mail services via a mobile Internet kiosk mounted on a bicycle, which is known as an “info-thelas.” • The kiosk has an onboard computer equipped with an antenna for Internet service and a specially designed all-day battery. • Over 2,000 villages had purchased the kiosk for $1,200, and another 600,000 villages were interested

33. Infothela – Media Lab Asia

34. One Laptop Per Child • One Laptop Per Child http://laptop.org/en/index.shtml It's an education project, not a laptop project.” Nicholas Negropontehttp://olpc.com/videos.html • The goal: To provide children around the world with new opportunities to explore, experiment and express themselves http://www.youtube.com/watch?v=rpRRivQgpjc&feature=channel • OLPC is a non-profit organization providing a means to an end—an end that sees children in even the most remote regions of the globe being given the opportunity to tap into their own potential, to be exposed to a whole world of ideas, and to contribute to a more productive and saner world community.

35. One Laptop Per Child

36. WEB 2.0 • Web 2.0 - a set of economic, social, and technology trends that collectively form the basis for the next generation of the Internet

37. WEB 2.0 • A more mature, distinctive medium characterized by user participation, openness, and network effects. • Although the term suggests a new version of the Web, it refers to changes in the ways software developers and end-users use the Web as a platform. • 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 that new platform.”

38. WEB 2.0 • More than just the latest technology buzzword, Web 2.0 is a transformative force that is propelling companies across all industries toward a new way of doing business. • Those who act on the Web 2.0 opportunity stand to gain an early-mover advantage in their markets. What is causing this change? Consider the following raw demographic and technological drivers: • One billion people around the globe now have access to the Internet. • Mobile devices outnumber desktop computers by a factor of two. • Nearly 50 percent of all U.S. Internet access is now via always-on broadband connections.

39. WEB 2.0 • Combine these drivers with the fundamental laws of social networks and lessons from the Web’s first decade, and you get Web 2.0, the next-generation, user-driven, intelligent Web: • In the first quarter of 2006, MySpace.com signed up 280,000 new users each day and had the second most Internet traffic of any web site. • By the second quarter of 2006, 50 million blogs were created—new ones were added at a rate of two per second. • In 2005, eBay conducted 8 billion API-based Web services transactions.

40. WEB 2.0 Timeline of Web 1.0

41. Mashups • Web mashup - a website or web application that uses content from more than one source to create a completely new service • The Web version of a mashup allows users to mix map data, photos, video, news feeds, blog entries and so on. • Content used in mashups is typically sourced from an Application programming interface (API) - a set of routines,protocols, and tools for building software applications • Mashup editor - WSYIWYGs (What You See IsWhat You Get) for mashups

42. Mashups • http://www.programmableweb.com/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). • This amusing viral video casts the Iraq war alliance between George W. Bush and Tony Blair in a whole new light. Created by Johan Söderberg for a Swedish television program called 'Kobra,' this parody synchs up images of Bush and Blair singing Diana Ross and Lionel Richie's breathless ballad "Endless Love." Their war may have gone horribly awry, but their hearts still beat as one. http://politicalhumor.about.com/od/bushvideos/youtube/bushblairlove.htm

43. THE FUTURE – WEB 3.0 • Think of Web 1.0 as a library which serves as a source of information which you can not add to or change. • Web 2.0 is more like a big group of friends and acquaintances. • You can still use it to receive information, but you also contribute to the conversation and make it a richer experience. • Its structure is geared for humans for whom it’s easy to see a web page understand what it's all about. • A search engine might be able to scan for keywords, but it can't understand how those keywords are used in the context of the page.

44. THE FUTURE – WEB 3.0 Tim Berners-Lee's vision of the future Web is called the Semantic Web. Computers will scan and interpret information on Web pages using software agents. These software agents will crawl through the Web, searching for relevant information. They'll be able to do that because the Semantic Web will have collections of information called ontologies. An ontology is a file that explains how things are related It’s hard work to define a complete ontology and update it when needed. That’s a challenge to Web 3.0

45. THE FUTURE – WEB 3.0 Web 3.0 will use the Internet to make connections with semantic information. A Web 3.0 search engine could find not only the keywords in your search, but also interpret the context of your request. See http://computer.howstuffworks.com/web-30.htm Semantic web encompasses the following: Transforming the web into a database An evolutionary path to artificial intelligence The realization of semantic web and SOA Evolution toward 3D

46. THE FUTURE – WEB 3.0 Transforming the Web into a Database • The first step toward a Web 3.0 is the emergence of the data-driven Web as structured data records are published to the Web in formats that are reusable and able to be queried remotely. • The full semantic Web stage will widen the scope such that both structured data and even what is traditionally thought of as unstructured or semi-structured content (such as Web pages, documents, email, etc.) will be widely available in common formats.

47. THE FUTURE – WEB 3.0 An Evolutionary Path to Artificial Intelligence • Use artificial intelligence that can reason about the Web in a quasi-human fashion • IBM and Google are implementing new technologies that are yielding surprising information, such as predicting hit songs by mining information on college music Web sites. • Collaborative filtering services like del.icio.us, Flickr, and Digg that extract meaning and order from the existing Web and how people interact with it.

48. THE FUTURE – WEB 3.0 The Convergence of the Semantic Web and Service Oriented Architecture (SOA) • SOA is a collection of services that communicate with each other – e.g., passing data from one service to another or coordinating an activity between one or more services • Companies have longed to integrate existing systems in order to implement information technology support for business processes that cover the entire business value chain. • The main drivers for SOA adoption are that it links computational resources and promotes their reuse. • Enterprise architects believe that SOA can help businesses respond more quickly and cost-effectively to changing market conditions. This style of architecture can simplify interconnection to—and usage of—existing IT (legacy) assets.

49. THE FUTURE – WEB 3.0 Evolution Toward 3D • Another possible path for Web 3.0 is toward the three-dimensional vision championed by the Web3D Consortium. • This would involve the Web transforming into a series of 3D spaces, taking the concept realized by Second Life further. This could open up new ways to connect and collaborate using 3D shared spaces. • http://secondlife.com/whatis/?sourceid=0909-sergoog-slSecondLife-wisl&gclid=CM73hpXzn6ACFctY2godyFhHZg

50. Second Life • IBM - Two IBM Academy of Technology inworld events were not only extremely successful, but also saved hundreds of thousands of dollars in travel and meeting costs. Plus, the 300+ team members also had the opportunity to meet, socialize, and network. • The National Oceanic and Atmospheric Administration (NOAA) NOAA has used Second Life as a marketing channel to reach new audiences in new and meaningful ways. In fact, 40 percent of visitors to NOAA in Second Life reported that they hadn’t heard of the organization prior to their Second Life visit and 94 percent recommended that NOAA expand their virtual presence. • Northrop Grumman Corporation (NGC) has established a sophisticated five region presence in Second Life that enables the company to simply and inexpensively prototype products, conduct simulations, and train employees in environments that would be prohibitively dangerous, expensive, or even impossible in the physical world. • The Open University Open University, based in the UK, enable their students the flexibility of learning in Second Life with their extended virtual world campus. • Loyalist College Case Study: Loyalist College in Canada massively improves test scores and training outcomes using Second Life.