From E-Commerce to E-Business The Convergence of Business and Technology

1. e From E-Commerce to E-BusinessThe Convergence of Business and Technology John A. Foster Principal E-Business Architect Eastman Kodak Company john.foster@kodak.com From E-Commerce to E-Business

2. Key Questions • Did e-commerce start with the Internet and the Web? • What’s the difference between “e-commerce” and “e-business”? • If the Web is so great, why did all those companies fail? • Are web services the next big thing in e-business? From E-Commerce to E-Business

3. Electronic Commerce (narrow definition) “Conducting business transactions through ‘market-facing systems’.” CUSTOMERS Order-to-Cash Delivering services on-line Selling products on-line Procurement EDI orders from customers Purchasing goods and services electronically SUPPLIERS From E-Commerce to E-Business

4. Pre-Sales PARTNERS Providing product information to prospective customers Commercialization Exchanging engineering drawings with partners EMPLOYEES Benefits Administration Reviewing and updating benefits information Post-Sales Customer self-help Electronic Commerce (expanded definition) electronic business “Conducting business through ‘market-facing systems’.” CUSTOMERS Order-to-Cash Delivering services on-line Selling products on-line Procurement EDI orders from customers Purchasing goods and services electronically SUPPLIERS From E-Commerce to E-Business

5. The Beginning of E-Commerce 1980s B2B B2C B2E System to Individual Phone System Automation Phone System Automation Phone System Automation 1980s System to System Electronic Transactions 1980s From E-Commerce to E-Business

6. … and the Supporting Technologies B2B B2C B2E System to Individual IVR IVR IVR 1980s System to System EDI 1980s From E-Commerce to E-Business

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

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

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

10. Evolution to E-Business 1990s B2B B2C B2E System to Individual Phone System Automation Phone System Automation Phone System Automation 1980s Marketing Info Customer Self-service Marketing Info E-Tailing Employee Self-service 1990s System to System Electronic Transactions 1980s Customer Relationship Mgmt 1990s From E-Commerce to E-Business

11. … and the Supporting Technologies B2B B2C B2E System to Individual IVR IVR IVR 1980s Internet/Web Internet/Web Intranet/Web 1990s Internet/Web System to System EDI 1980s Internet/XML 1990s From E-Commerce to E-Business

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

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

14. Internet Web Applications Browser Web server The ubiquitous web browser Commerce application server Data servers Make core systems accessible by apps on app server Middleware Translator Core Business Systems From E-Commerce to E-Business

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

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

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

18. New Tools for the Old Economy • Tremendous tools for “old economy” companies to apply to business processes. From E-Commerce to E-Business

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

20. Network Challenge: Systems Development • Product software development and information systems development are becoming intertwined from to Product Software Information Systems From E-Commerce to E-Business

21. C 0 2 4 6 7 Business Hypothesis Business Development Planning Business Development Business Start-Up Business Building A B C D New Business Development Phases Challenge: Commercialization • Product commercialization must become business commercialization Innovation Phases Commercialization Phases Opportunity Selection Discovery & Innovation Definition Design Implementation Mfg./Operations Implementation Production From E-Commerce to E-Business

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

23. Likely Winners NOT ? From E-Commerce to E-Business

24. Web Services – the Future? 2000s B2B B2C B2E System to Individual IVR IVR IVR Internet/Web Internet/Web Intranet/Web Internet/Web System to System EDI Internet/XML Web Services Web Services Web Services From E-Commerce to E-Business

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

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

27. Core Services Who does this service? Deploy Service • Directory Services • UDDI Requestor Provider Request Service Deliver Service From E-Commerce to E-Business

28. Define business and business terms • Directory Services • UDDI • other • 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 Requestor • Who does this service? • Products • Price Deploy Service • Directory Services • UDDI Provider Request Service Deliver Service From E-Commerce to E-Business

29. Summary • E-business has been around for 20+ years, but the opportunities have been accelerated by the Internet and the web. • Business is still business • The Internet hasn’t changed that – though for a while many thought it might have. • Web services may be the “next big thing”, but EDI, IVR, etc. will probably still be around. From E-Commerce to E-Business