EC and the Virtual Corporation Session 2
So What is Electronic Commerce? TECHNOLOGIES (TOOLS) METHODOLOGIES (PROCESSES) that enable ELECTRONIC FUNDS TRANSFER ELECTRONIC DATA INTERCHANGE ELECTRONIC BULLETIN BOARDS ELECTRONIC CATALOGS E-MAIL BAR CODING INTERNET / WWW CONTINUOUS ACQUISITION AND LIFE-CYCLE SUPPORT JUST IN TIME VENDOR MANAGED INVENTORIES
Elements of EC Defined Communications: the delivery of information, products services, or payments via telephone lines, computer networks, or any other means Business Process: the application of technology toward the automation of business transactions and workflows
Elements of EC Defined Service: a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery Online: provides the capability of buying and selling products and information on the Internet and other online services
EC Defined Key Elements of our definitions: -EC is NOT just technology -Technology applied to a business problem so that information is captured and exchanged in digital or electronic formats.
A Framework for Electronic Commerce This is my Model for this course What value is a model? A model is only valuable when it helps us to explain (and maybe predict) reality
Internet Framework Zwass Products & Electronic Auctions Services Marketplaces Brokerages Products & Systems Remote consumer svcs Supplier-customer links Services Enabling Services Electronic Catalogs E-money, Authentication Secure Messaging EDI, Email, EFT Infrastructure Hypermedia, Object Mgt WWW, JAVA Public/Private Com Internet, VANS Wide-area Telecom PSTN
Framework for Electronic Commerce What are the key elements of the Whitehouse’s position on EC? Private Sector leadership Avoidance of undue restrictions - taxation? Content? Legal environment based on contract law Recognition of unique qualities of the Internet Facilitation of global E-commerce Do you agree? What would you expect from candidates in 2000?
Network Economy The law of inverse pricing & the law of generosity? The best keeps getting cheaper Most valuable things free? Is this true? The ultimate free market economy? If so, how does a firm compete? The net, by its very nature is hostile to profit margins. The net is relentlessly efficient…hard-pressed to win and sustain any lasting competitive advantage - WSJ 7/23/98
A Model for E-business Stakeholders Employees Internal Business Partners Supply Chain Mgt Enterprise Resource Planning External Knowledge Applications Enterprise App Integration Management Control Administration Control Customer Relationship Mgt Selling Chain Mgt Figure 4.11 page 103 Customers, Resellers
Why has the Internet Emerged as a Business Platform?
Graphical and Intuitive: Easy NavigationPoint & Click IntuitiveUser Friendly Structured Information Easy access to value-added content Mass Medium Status
Interactive: User-based InteractionsReal-time responsiveness Decision MakersInteractive, intelligent help Additional FunctionalityNew user interactions Sophisticated ProgrammingJava and Active-X controls
Collaborative: Real Time CommunicationsUniversal application DiscussionsMulti-user chatting Video Conferencing2--way, real time, MS NetMeeting Supports “Groupware” Calendars, scheduling
Intelligent: Powerful Search ToolsCustomized information retrieval Intelligent Agentsrobots, spiders, artificial intelligence Ultimate one-to-one Marketing Targeted ads, direct marketing Track Behavior Collect and analyze user information
Multimedia: Video-based Content Approaching a TV-quality medium Audio-based Content“Streaming” media Animations Supporting simulations “Virtual Reality” 3-D tours of parts buildings or autos
Other Characteristics ... Consolidates Other Applications Email, FTP, Multimedia. SecureEncryption, certificates Universal Becoming the worldwide standard Reliable and Scalable Infrastructure is maturing rapidly now that it is “mission critical”
Some Key Internet Stats Phenomenal Growth Rate
Some Key Internet Stats Fastest Growing Medium Ever
Some Key Internet Stats Users are More Experienced www.cc.gatech.edu/gvu/user_surveys/
Some Key Internet Stats Users Spend More Time On the Net
Some Key Internet Stats “The Internet is no longer just affluent white males techies. The Internet looks like America -- a cross section of the population.” CBS Newscast June, 1999
Some Key Internet Stats North American Net Users - 67% The rest of the World - 33% http://www.euromktg.com/globstats/index.html
Some Key Internet Stats Worldwide Internet Growth
Summary of Stats As of May 1999 - 171 million globally >50% in US and Canada US & Canada have higher level of Internet Participation on per capita basis In US growth has occurred more rapidly at higher income levels Digital divide has increased 1994-97 Lower income countries have lower access rates Mexico 100 million - 1 m access to a computer - 10% of those Internet Implications?
What business models do we find on the Internet?
Emerging Internet Models Business-Consumer Business-Business Product Based www.amazon.com www.mercata.com www.officemax.com www.boeing.com Physical www.Estamps.com www.bluemountainarts.com www.wsj.com www.photodisc.com Digital Service Based www.peapod.com www.etrade.com www.fedex.com www.expedia.com Traditional www.roboshopper.com www.ebates.com www.netseminar.com www.yesmail.com Digital
Product Based Physical Business-Consumer www.amazon.com www.mercata.com www.cdnow.com www.dell.com Candidates for success: Compete based on: Products that are generally well known to the buyer that typically don't require the buyer to sample. Good for generic products - books, cds, foods and also specialty products that the buyer may already know and like. Includes catalogs and electronic malls. Selection Ease of Use Immediate Availability
Product Based Physical Business-Business www.officemax.com www.boeing.com www.partnet.com www.thesealman.com Candidates for success: Compete based on: Selection Availability Ease of Use Reduce Seller's cost Products that buyers know and routinely purchase. Includes any products that the buyer can select and order with minimal or no personal interaction with the seller. These are often parts or catalog items that the buyer needs to support business operations. Office supplies, equipment parts and accessories are examples.
Product Based Digital Business-Consumer www.Estamps.com www.bluemountainarts.com Candidates for success: Compete based on: Products that can be delivered electronically. Examples include software or content based products such as reports, articles, or books. Can include anything that can be digitized, including drawings, pictures, plans, etc. May be subscription based. Often offer limited information for free and charge a fee for more indepth coverage. Uniqueness Availability
Business-Business Product Based Digital www.wsj.com www.photodisc.com Candidates for success: Compete based on: Immediate Delivery Timeliness of Information Uniqueness Ease of Use Products that can be delivered electronically. Includes reports, newsletters, advice, expert opinions, statistics, software, photographs, audio, video and other multimedia.
Service Based Business-Consumer Traditional www.peapod.com www.etrade.com www.cybermeals.com www.remax.com Candidates for success: Compete based on: Migration of some aspect of delivering traditional services to the Internet. The service is typically not new. In fact, the service is understood completely. It is the ordering or delivery of the service via the Internet that is the key. This works best where the buyer does not need to be educated about your service. They are likely to understand what you offer. Services that the customer likes to control - banking, stock trading, etc. Convenience Speed of Delivery Reduction of Cycle Time Control
Business-Business Service Based Traditional www.fedex.com www.expedia.com www.usps.com Candidates for success: Compete based on: Cycle Time Reduction Cost Reduction Control Migration of some aspect of delivering traditional services to the Internet. The service is typically not new. In fact, the service is understood completely. It is the ordering or delivery of the service via the Internet that is the key. This works best where the buyer does not need to be educated about your service. They are likely to understand what you offer. Gives buyer control.
Service Based Business-Consumer Digital www.roboshopper.com www.ebates.com www.altavista.com www.compare.com www.ebay.com www.pricewatch.com Candidates for success: Compete based on: Reduction of Cycle Time Unique value proposition Entirely new services made possible by the Internet. Services that make the buyer a more productive user of the Internet such as search engines or software agents. Services that would not be possible without the Internet. Services that create a new market like auction sites.
Service Based Digital Business-Business www.netseminar.com www.yesmail.com Candidates for success: Compete based on: Entirely new services made possible by the Internet. Services that make the buyer a more productive user of the Internet such as search engines or software agents. Services that would not be possible without the Internet. Services that create a new market. Cycle Time Reduction Cost Reduction Unique value proposition
Approaching the Web Processes Fulfillment Settlement Workflow Transactions Database Queries Payments Funds Transfers Interactivity Increasing Functionality Registration Games Forms Publishing Advertising Marketing Information Time or Maturity David Kosiur, “Understanding Electronic Commerce”, p. 107, Microsoft Press: 1997
Understanding the Infrastructure
The BIG Picture More on the Backbone Later
Telephony 101 The Internet is built “on top” of the Public Switched Telephone Network Also called an overlay network LEC View Last Mile Local Loop Local Loop Slowest portion of the network
Telephony 101 Hierarchy of Central Offices Total Network is PSTN IXC View Digital CO’s now the norm Circuit Switching The Internet is a Packet Switched Network
Transmission Media Acceptable for Voice - analog signaling Unshielded Twisted Pair Millions of miles in place Not optimal for data communications Copper Wire Copper wire inside shielded cable Capable of handling very high frequencies Dozens of 6 MHz channels on single cable Coaxial Cable
Transmission Media Media of Choice Uses frequencies a million times higher Speeds as high as 9.6 gbps Now being used with cable Fiber Wireless Microwave, synchronous, low-orbit Iridium, Globalstar - LEO Eliminates need for wire infrastructure Complete mobility
Internet: End-End Difficult to buy a machine that can’t exploit the features of the Internet What about Network PCs? NY Times article on Sun 8/31/99 http://navigators.com/internet_architecture.html Russ Haynal
Internet: End-End Access Options: Dial up Access 56 Kbps ISDN 128 Kbps T1 Circuit 1.54 Mbps ADSL 3-6 Mbps Ethernet 10 Mbps Satellite 10-100 Mbps Cable Modem 30-40Mbps T3 Circuit 45 Mbps Fiber OC-192 9953.28 Mbps
Internet: End-End Usually located in a CO
Internet: End-End This provides you access to the services of the ISP
Internet: End-End This is the Internet Backbone UUNET Worldcom (MCI) SONET Synchronous Optical Network Expected to be the standard for next 2 decades Hierarchical scheme OC - 192 fastest 9953.28 Mbps Equal to 5376 x 24 voice circuits
Internet: End-End Step 1: Client and Server establish tcp/ip connection Step 2: Client issues a request which includes a URL Step 3: Server issues a response Step 4: Server terminates the connection