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John A. Foster, 2002
From E-Commerce to E-Business 1
From E-Commerce to E-BusinessFrom E-Commerce to E-BusinessThe Convergence of Business and TechnologyThe Convergence of Business and Technology
John A. FosterPrincipal E-Business Architect
Eastman Kodak Company
john.foster@kodak.com
©John A. Foster, 2002 From E-Commerce to E-Business 2
Key QuestionsKey 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?
©John A. Foster, 2002 From E-Commerce to E-Business 3
Electronic Commerce (narrow Electronic Commerce (narrow definition)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
CCUUSSTTOOMMEERRSS
SUPPLIERSSUPPLIERS
©John A. Foster, 2002 From E-Commerce to E-Business 4
Electronic Commerce (expanded Electronic Commerce (expanded definition)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
CommercializationPARTNERSPARTNERS
Reviewing and updating benefits information
Benefits AdministrationEMPLOYEESEMPLOYEES
CCUUSSTTOOMMEERRSS
SUPPLIERSSUPPLIERS
electronic business
©John A. Foster, 2002 From E-Commerce to E-Business 5
The Beginning of E-CommerceThe Beginning of E-Commerce
B2B B2C B2E
System to Individual
System to System
ElectronicTransactions
Phone SystemAutomation
Phone SystemAutomation
Phone SystemAutomation
1980s
1980s
1980s
©John A. Foster, 2002 From E-Commerce to E-Business 6
… … and the Supporting Technologiesand the Supporting Technologies
B2B B2C B2E
System to Individual
System to System
EDI
IVRIVRIVR 1980s
1980s
©John A. Foster, 2002 From E-Commerce to E-Business 7
The Elements of EDIThe Elements of EDI
A strength of EDI is its transport & infrastructure But it came with a price
Purchased transport• highly reliable• very secure
Standard documents• EDI standards• very extensive
ExpensiveEDI• ANSI X12• ISO 9735• UN/EDIFACT
Private network• VANs
Vocabulary
Transport
Some middleware• commonly purchased• map from one standard to
another
Middleware• Brokers, translators, mapsInfrastruc-
ture
©John A. Foster, 2002 From E-Commerce to E-Business 8
Private Network
Electronic Data InterchangeElectronic Data Interchange
Enterprise A
MiddlewareTranslatorTranslator
MiddlewareTranslatorTranslator
Enterprise B
EDI standard documents
Connect with private networkTranslate documents
©John A. Foster, 2002 From E-Commerce to E-Business 9
Core Business SystemsCore Business Systems
MiddlewareTranslatorTranslator
Public Phone Public Phone NetworkNetwork
IVR System Data servers
Telephone
Integrated Voice Response Integrated Voice Response ApplicationsApplications
Corporate Phone
Network
Install specialized systemConnect to phone network
Make core systems accessible by IVR system
©John A. Foster, 2002 From E-Commerce to E-Business 10
Evolution to E-BusinessEvolution to E-Business
B2B B2C B2E
System to Individual
System to System
ElectronicTransactions
Customer RelationshipMgmt
Phone SystemAutomation
Employee Self-service
Phone SystemAutomation
Marketing InfoE-Tailing
Phone SystemAutomation
Marketing InfoCustomer Self-service
1980s
1990s
1980s
1990s
1990s
©John A. Foster, 2002 From E-Commerce to E-Business 11
… … and the Supporting Technologiesand the Supporting Technologies
B2B B2C B2E
System to Individual
System to System
EDI
Internet/XML
IVR
Intranet/Web
IVR
Internet/Web
IVR
Internet/WebInternet/Web
1980s
1990s
1980s
1990s
©John A. Foster, 2002 From E-Commerce to E-Business 12
The Elements of Internet E-BusinessThe Elements of Internet E-Business
Many choices, but also more challenge and responsibility
Core set of base standardsMust address security… and redundancy and …
HTML for presentationXML for content representation
Inexpensive ???InternetA few XML vocabularies
• cXML (Ariba)• xCBL (CommerceOne)• RosettaNet• ebXML
https, https, SSL, ftpFirewalls, PKI
Vocabulary
Transport
Many optionsbuilt or purchasedInfrastruc-
ture
Middleware (RPC, MOM, msg. brokers, TP monitors)
Web servers, app servers, routersISPs
©John A. Foster, 2002 From E-Commerce to E-Business 13
Internet System to SystemInternet System to System
Enterprise A
MiddlewareTranslatorTranslator
MiddlewareTranslatorTranslator
Enterprise B
InternetInternet
XML documents
Connect with InternetAdd robustness, redundancy, security
Connect with other enterpriseTranslate documents
©John A. Foster, 2002 From E-Commerce to E-Business 14
Core Business SystemsCore Business Systems
MiddlewareTranslatorTranslator
InternetInternetWeb server
Commerce application server
Data servers
Browser
Web ApplicationsWeb Applications
The ubiquitous web browser
Make core systems accessible by apps on app
server
©John A. Foster, 2002 From E-Commerce to E-Business 15
Internet economy poses opportunities Internet economy poses opportunities and threats …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.”
©John A. Foster, 2002 From E-Commerce to E-Business 16
Market TurbulenceMarket TurbulenceTravel, Brokerage, BooksTravel, Brokerage, Books
Customer Space
(Physical World)
TraditionalTraditionalCompetitorCompetitor
Merrill Lynch
Travel AgenciesLocal Bookstores
Internet Preview TravelAmazon.com
New Customer Space
Internet-Only Competitor
ETrade
Internet
(New Channel)
Sabre, TravelocityBarnes & Noble
Schwab
The The “Actor”“Actor”
MS Expedia
Out-of-Market Out-of-Market CompetitorCompetitor
Intuit
Courtesy: Cisco Systems
©John A. Foster, 2002 From E-Commerce to E-Business 17
The Ultimate ImpactThe Ultimate Impact
The Internet dramatically lowers the cost of communication
Potential Revolutionary Impact
Financial ServicesEntertainmentHealth CareEducation
Government
But:Privacy issuesNeed for additional technology (e.g.
broadband, on-line bill paying)Who controls the information
Likely Incremental Impact
RetailingManufacturing
TravelPower
Why? – physical factors overrule virtualTop of the line web site $15-25MWarehouse & distribution system
$150M
Cou
rtesy: Bu
siness W
eek
©John A. Foster, 2002 From E-Commerce to E-Business 18
NewNew Tools for the Tools for the OldOld Economy Economy
Tremendous tools for “old economy” companies to apply to business processes.
Annual Growth Rate in Nonfarm Business Productivity
0
0.5
1
1.5
2
2.5
3
'80-'85 '85-'90 '90-'95 '95-'00
Source: Bureau of Labor Statistics
An
nu
al g
row
th r
ate
(%) Worldwide B2B Transactions
0
1
2
3
4
'99 '00 '01 '02 '03
Source:Forrester Research Inc.
Tri
llio
ns
of
do
llar
s
©John A. Foster, 2002 From E-Commerce to E-Business 19
Challenge: Process ImprovementChallenge: Process Improvement
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, 2002 From E-Commerce to E-Business 20
Challenge: Systems DevelopmentChallenge: Systems Development
Product software development and information systems development are becoming intertwined
Product Software Information Systems
NetworkNetwork
from
to
©John A. Foster, 2002 From E-Commerce to E-Business 21
Challenge: CommercializationChallenge: Commercialization
Product commercialization must become business commercialization
Discovery & Innovation
DefinitionDesign
ImplementationMfg./Operations Implementation
Production
0Opportunity
Selection
2 4 6 7C
Innovation Phases Commercialization Phases
Business Hypothesis
Business Development
Planning
Business Development
Business Start-UpBusiness Building
DCBA
New Business Development Phases
©John A. Foster, 2002 From E-Commerce to E-Business 22
Why Did the “.com” Companies Fail?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
©John A. Foster, 2002 From E-Commerce to E-Business 23
Likely WinnersLikely Winners
NOTNOT
?
©John A. Foster, 2002 From E-Commerce to E-Business 24
Web Services – the Future?Web Services – the Future?
B2B B2C B2E
System to Individual
System to System
EDI
IVR
Intranet/Web
IVR
Internet/Web
IVR
Internet/WebInternet/Web
2000s
Internet/XML
WebServices
WebServices
WebServices
©John A. Foster, 2002 From E-Commerce to E-Business 25
Web ServicesWeb Services
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 ServicesWSDL, UDDI for service interactionBut … business, security, …
XML-based (e.g. SOAP)Over http, https, …
Vocabulary
Transport
Much the same as for Internet e-BusinessInfrastruc-
ture
Middleware (RPC, MOM, msg. Brokers, TP monitors)Web servers, app servers, routersISPs
©John A. Foster, 2002 From E-Commerce to E-Business 26
Web Services – “ready for prime Web Services – “ready for prime time”?time”?
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
©John A. Foster, 2002 From E-Commerce to E-Business 27
ProviderRequestor
Who does this
service?
Request Service
Deliver Service
Directory Services
-UDDI
Core ServicesCore Services
Deploy Service
©John A. Foster, 2002 From E-Commerce to E-Business 28
Provider
Requestor
Who does this
service?-Products
-PriceDeploy 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” ServicesHelper” Services Define business
and business
terms
Directory Services
-UDDI-other
©John A. Foster, 2002 From E-Commerce to E-Business 29
SummarySummary
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.
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