GLOBAL MANAGEMENT OF E- BUSINESS & E-COMMERCE Chang-Yang Lin, Ph.D. Professor and Coordinator Computer Information Systems Program Eastern Kentucky University

GLOBAL MANAGEMENT OF E-BUSINESS & E-COMMERCE

Chang-Yang Lin, Ph.D.Chang-Yang Lin, Ph.D.

Professor and CoordinatorProfessor and Coordinator

Computer Information Systems ProgramComputer Information Systems Program

Eastern Kentucky UniversityEastern Kentucky University

Chang-Yang LinChang-Yang Lin

EKU BusinessEKU Business 22

Global Management ofE-Commerce and E-Business

E-Commerce and E-BusinessE-Commerce and E-Business Practices of IT ManagementPractices of IT Management E-Business Planning and Information ResE-Business Planning and Information Res

ource Planningource Planning Global E-Business IssuesGlobal E-Business Issues The Challenge: Some Concluding RemarkThe Challenge: Some Concluding Remark

ss



E-Commerce & E-Business

E-CommerceE-Commerce: : the buying the buying & selling, marketing & & selling, marketing & servicing, and delivery & servicing, and delivery & payment of products, payment of products, services, and information services, and information over the Internet, over the Internet, intranets, and extranets intranets, and extranets between an enterprise between an enterprise and its prospects, and its prospects, customers, suppliers, and customers, suppliers, and other business partnersother business partners

E-BusinessE-Business: : the use of Inthe use of Internet technologies to inteternet technologies to internetwork and empower burnetwork and empower business processes, e-comsiness processes, e-commerce, and communicatiomerce, and communication and collaboration within n and collaboration within a company and with its cua company and with its customers, suppliers, and otstomers, suppliers, and other business stakeholdersher business stakeholders



E-Commerce & E-Business



Source: Nat’l Academic Press, http://books.nap.edu/books/0309051797





A 12% sales A 12% sales declinedecline

An inability to ship An inability to ship complete orders to complete orders to some retail some retail customerscustomers

An increase in An increase in typical delivery typical delivery times from 5 days times from 5 days to 12to 12

A 29% increase in A 29% increase in year-to-year year-to-year inventory costsinventory costs

Strained customer Strained customer relations and relations and major market-major market-share lossesshare losses

The Results of Hershey’s ERP Failure



Enterprise Resource Planning (ERP)

• ERP: Integrated cross-functional software that reengineers manufacturing, distribution, finance, human resources and other basic business processes of a company to improve its efficiency, agility, and profitability

• Vendors

• SAP R/3

• PeopleSoft

Reasons for implementing an ERP system

• To integrate applications and data to support decision-making needs

• To force business process reengineering

• To give the firm the competitive advantage to survive



M an ag in g B u s in essan d IT s tra teg ies

M an ag in g A p p lica tion D eve lop m en tan d Tech n o log y

M an ag in g th eIT O rg an iza tion

IT M an ag em en t



The E-Organization:

Organization structureOrganization structure

• NetworkedNetworked

• Cisco maintains a Cisco maintains a strong web of strategic strong web of strategic partnerships & systems partnerships & systems integration with integration with suppliers, contractors, suppliers, contractors, and assemblersand assemblers

LeadershipLeadership

• Everyone is a leaderEveryone is a leader

• 40+ acquisitions become 40+ acquisitions become autonomous business autonomous business unitsunits

KnowledgeKnowledge

• SharedShared

• the suppliers’ the suppliers’ production processes production processes are pulled by Cisco’s are pulled by Cisco’s demanddemand

• a save of $500 million a save of $500 million from supply chain from supply chain management, online management, online technical support, technical support, software distributionsoftware distribution



The E-Organization:

• Alliance

– create new value and outsource uncompetitive services

– Ally with competitors, customers, and suppliers

– 50% of customer orders that come in over its website are routed electronically to a supplier who ships directly to the customer

• Governance

– Internal and external

– Cisco’s rapid acquisitions process

– Cisco’s ability to integrate its acquisitions quickly into the family

• People and culture– Delegated authority;

collaboration expected and rewarded

– Turnover (Cisco: 6.7%; industry: 18%)



Managing IT Organization:

• Hire IS professionals who can flexibly integrate new IT and business competencies

• Evolving workgroups organized around emerging IT-intensive business initiatives

• IT funding typically based on value proposition around business opportunity related to building services for customers. IT project inseparable part of business initiative



Business ValueVisioning

Business Strategiesand Models

IT Strategiesand Architecture

Application Developmentand Deployment

InformationInformationResourceResourcePlanningPlanning



Information Resources Planning Process

ASSESS INFO ASSESS INFO USE & USE &

MANAGEMENTMANAGEMENT

VISION: HOW VISION: HOW BUSINESS BUSINESS

SHOULD USE SHOULD USE INFOINFO

INFORMATION INFORMATION ARCHITECTUREARCHITECTURE

IS IS STRATEGIC STRATEGIC PLANPLAN

IS IS OPS PLAN & OPS PLAN & BUDGETBUDGET

ASSESS ASSESS BUSINESSBUSINESS

VISION FOR VISION FOR BUSINESSBUSINESS

BUSINESS BUSINESS STRATEGIC PLANSTRATEGIC PLAN

BUSINESS OPS BUSINESS OPS PLAN & BUDGETPLAN & BUDGET



Information Resource Planning

Assessment of Current Information Assessment of Current Information ResourcesResources

Information Vision & Information Information Vision & Information Technology ArchitectureTechnology Architecture

Strategic & Operational Strategic & Operational ISIS Plans Must Plans Must Move Toward Desired ArchitectureMove Toward Desired Architecture



Information Resources Assessment

Critical Evaluation of Inventory of Critical Evaluation of Inventory of Hardware, Software, PeopleHardware, Software, People

Looks at Quality of ResourcesLooks at Quality of Resources Helps Meet Business Needs of Helps Meet Business Needs of

OrganizationOrganization

ExampleExample



Information Vision & Architecture

Information Vision: Information Vision: Written Written expression of desired future for expression of desired future for information use & managementinformation use & management

Technology Architecture: Technology Architecture: Description of how information Description of how information resources should be deployed to resources should be deployed to achieve the information visionachieve the information vision



Assessing the OrganizationAsk these questions:

Do key executives understand the impact Do key executives understand the impact of IT on the company’s competitive of IT on the company’s competitive position?position?

Do they understand what is possible with Do they understand what is possible with current and forthcoming technologies?current and forthcoming technologies?

Do they know how the capabilities and Do they know how the capabilities and economics of IT will change the way the economics of IT will change the way the business is operated and managed?business is operated and managed?

Does the company have the right balance Does the company have the right balance between innovation and managing scarce between innovation and managing scarce technology resources?technology resources?



Assessing Current Information Resources

Measure Use and AttitudesMeasure Use and Attitudes Review Review ISIS Organizational Mission Organizational Mission

• Information Vision: A mission can best be Information Vision: A mission can best be defined by delineating the reasons for having an defined by delineating the reasons for having an IS function. Each reason is classified under one IS function. Each reason is classified under one of the following categories:of the following categories:

• Efficiency: Efficiency: Uses minimum resources to do its jobUses minimum resources to do its job

• Effectiveness: Effectiveness: Helps users spend time doing right Helps users spend time doing right thingsthings

• Competitiveness: Competitiveness: Helps ensure organization’s Helps ensure organization’s competitive positioncompetitive position



Examples of Information Resources Assessment

A single IS does not exist in our organizationA single IS does not exist in our organization Substantial potential exists for cleaning up the automation Substantial potential exists for cleaning up the automation

of existing work processesof existing work processes Significant gaps exist in automation of the value-added Significant gaps exist in automation of the value-added

process in our companyprocess in our company There is a perception that the IS organization is not a There is a perception that the IS organization is not a

company-wide support organizationcompany-wide support organization Except for the last year and a half, IS appears to have been Except for the last year and a half, IS appears to have been

a stepchild of senior managementa stepchild of senior management There is a significant perception among the user population There is a significant perception among the user population

that IS is not particularly responsive to their needsthat IS is not particularly responsive to their needs



IS personnel seem dedicated to IS and the companyIS personnel seem dedicated to IS and the company The level of user training and support is substantially The level of user training and support is substantially

below needs and expectationsbelow needs and expectations While the workload in IS is heavy at times, current While the workload in IS is heavy at times, current

staffing levels should be sufficient to meet current staffing levels should be sufficient to meet current expectationsexpectations

The Internet is not used extensivelyThe Internet is not used extensively

Additional issues:Additional issues: Hardware; Network infrastructureHardware; Network infrastructure Databases; Software applicationsDatabases; Software applications

Examples of Information Resources Assessment (continued)



CREATING INFORMATION VISION

Speculate: How will competitive Speculate: How will competitive environment change?environment change?

Current System: Can it do future Current System: Can it do future job?job?

Identify Changes: How must Identify Changes: How must ISIS change to allow company to take change to allow company to take advantage of future environment?advantage of future environment?



Information Services is responsible for a wide variety of Information Services is responsible for a wide variety of computing systems and services for the people of computing systems and services for the people of corporation. In this role, the department:corporation. In this role, the department:

Provides a secure location for housing and accessing the Provides a secure location for housing and accessing the official electronic data records of the companyofficial electronic data records of the company

Maintains shared computer processing capacity and Maintains shared computer processing capacity and support for file maintenance and information reportingsupport for file maintenance and information reporting

Manages a corporate data network that delivers services Manages a corporate data network that delivers services to departmental servers and individual workstations to departmental servers and individual workstations linked to its data centerlinked to its data center

Provides integrated IS development for departments in Provides integrated IS development for departments in order to advance organizational strategiesorder to advance organizational strategies

IS Mission Statement – An Example



In order to meet the challenges outlined within the company In order to meet the challenges outlined within the company Vision Statement and support the strategic objectives and Vision Statement and support the strategic objectives and values of our company, the mission of Information Services values of our company, the mission of Information Services is to provide reliable information, data, and computing is to provide reliable information, data, and computing services to all clients, both within and, where appropriate, services to all clients, both within and, where appropriate, outside of the company.outside of the company.

To accomplish this role, it will be necessary to To accomplish this role, it will be necessary to exercise leadership in identifying new management tools exercise leadership in identifying new management tools based on evolving IT that enables management to increase based on evolving IT that enables management to increase their effectiveness in operating and managing the business. their effectiveness in operating and managing the business. The department’s ultimate objective is the development of The department’s ultimate objective is the development of an integrated information infrastructure and associated an integrated information infrastructure and associated services required to facilitate the decision-making process.services required to facilitate the decision-making process.

IS Mission Statement – Another Example



ELEMENTS OF IT ARCHIETCTURE

Technology ComponentTechnology Component

• HardwareHardware

• SoftwareSoftware

• NetworkNetwork

• DataData Human ComponentHuman Component

• PersonnelPersonnel

• Values/CultureValues/Culture

• Management SystemManagement System



STRATEGIC IS PLAN

Set of Long Range Goals Which Document Movement Set of Long Range Goals Which Document Movement Toward Information Vision & ArchitectureToward Information Vision & Architecture

Associated Major Initiatives to Achieve GoalsAssociated Major Initiatives to Achieve Goals Development Steps:Development Steps:

• Set ObjectivesSet Objectives

• Conduct Internal & External AnalysisConduct Internal & External Analysis

• Establish Strategic InitiativesEstablish Strategic Initiatives

• Critical Success FactorsCritical Success Factors

• Analyze Competitive ForcesAnalyze Competitive Forces

• Value Chain AnalysisValue Chain Analysis



VALUE CHAIN ANALYSIS

ACTIVITIES THAT ADD VALUE FOR THE ACTIVITIES THAT ADD VALUE FOR THE CUSTOMERCUSTOMER

PRIMARY ACTIVITIES (PRODUCT):PRIMARY ACTIVITIES (PRODUCT):

• INBOUND LOGISTICSINBOUND LOGISTICS

• OPERATIONSOPERATIONS

• OUTBOUND LOGISTICSOUTBOUND LOGISTICS

• MARKETING & SALESMARKETING & SALES

• SERVICESERVICE



OPERATIONAL IS PLAN

Precise set of short term projects to be Precise set of short term projects to be executed by IS department & user-executed by IS department & user-managers in support of strategic IS planmanagers in support of strategic IS plan

LONG TERM: LONG TERM: Two-to-three years, project Two-to-three years, project definition, selection, prioritization. Based definition, selection, prioritization. Based on anticipated changes in businesson anticipated changes in business

SHORT TERM: SHORT TERM: One year, linked to annual One year, linked to annual budget. Focuses on completing current budget. Focuses on completing current projects, beginning new ones. Immediate projects, beginning new ones. Immediate hardware, software, staffing needshardware, software, staffing needs



Benefits ofInformation Resources Planning

Better IS Resource Allocation Communicates with Top Management Helps Vendors Creates Context for Decisions Achieves Integration & Decentralization Evaluates Options Meets Management Expectations



Outline of an Operational IS Plan

• Mission

• Environment of IS: information needs of the various user groups and of the corporation as a whole

• Objectives of IS Department

• Constraints on IS Department: the limitations imposed by technology in general and the constraints imposed by the resources within the company (financial, technological, personnel)

• Long-Term Systems Needs

• Short-Range Plan: a detailed inventory of present projects and systems, and a detailed plan of projects to be developed or advanced during the current year

• Contingencies: events that may affect the plan



E-Business Planning Process

Strategy developmentStrategy development Developing strategies that support a Developing strategies that support a

company’s vision, and use IT to create company’s vision, and use IT to create innovative E-Business systems that focus on innovative E-Business systems that focus on business valuebusiness value

Resource managementResource management Developing strategic plans for managing or Developing strategic plans for managing or

outsourcing a company’s IT resourcesoutsourcing a company’s IT resources

Technology architectureTechnology architecture Making strategic IT choices that reflect an IT Making strategic IT choices that reflect an IT

architecture designed to support a company’s architecture designed to support a company’s E-Business initiativesE-Business initiatives



IT Architecture:a conceptual blueprint including the following components

Technology platform The Internet, intranets, extranets, computer systems,

system software, enterprise application software

Data resources operational databases, information databases, data

warehouses, hypermedia databases

Applications architecture including support for developing and maintaining supply

chain applications, ERP, and customer relationship management applications

IT organization



Managing the IS Function

Organizing IT

– More centralized control over the management of the IS resources while serving the strategic needs of its business units

– Separate .com business units

– Outsourcing

– ASP

Technology management

Managing Application development

Managing IS operations– Performance monitors

supply information needed by chargeback systems that allocate costs to users based on the information services rendered

Managing user services

Human resource management of IT



Premiere Technologies, Inc.: ing yl yi Using ASPs

GoalGoal

• Rescue a failing PeopleSoft ERP project without Rescue a failing PeopleSoft ERP project without compromising core business effortscompromising core business efforts

ASPASP:: TransChannel LLC, AtlantaTransChannel LLC, Atlanta SolutionSolution

• Premiere turned the whole project over to the Premiere turned the whole project over to the ASP to manageASP to manage

ResultResult::

• Saving about $3 million over five years by Saving about $3 million over five years by giving the work to TransChannelgiving the work to TransChannel



Mission Statement

• Mission: We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live.

• Values: To achieve our mission, we affirm our values of Integrity, Leadership, Innovation, Performance, Teamwork, Customer Focus, Respect for People, and Community.

• Integrity: We demand of ourselves and others the highest ethical standards, and our products and processes will be of the highest quality.

• Customer Focus: We are deeply committed to meeting the needs of our customers, and we constantly focus on customer satisfaction



Mission Statement

• Respect: We recognize that people are the cornerstone of Pfizer's success, we value our diversity as a source of strength, and we are proud of Pfizer's history of treating people with respect and dignity.

• Performance: We strive for continuous improvement in our performance, measuring results carefully, and ensuring that integrity and respect for people are never compromised.

• Teamwork: We know that to be a successful company we must work together, frequently transcending organizational and geographical boundaries to meet the changing needs of our customers.

• Innovation is the key to improving health and sustaining Pfizer's growth and profitability.



Mission Statement

• Leadership: We believe that leaders empower those around them by sharing knowledge and rewarding outstanding individual effort. Leaders are those who step forward to achieve difficult goals, envisioning what needs to happen and motivating others.

• Community: We play an active role in making every country and community in which we operate a better place to live and work, knowing that the ongoing vitality of our host nations and local communities has a direct impact on the long-term health of our business.



Our Values

• Respect for people that includes our concern for the interests of all people worldwide who touch — or are touched by — our company: customers, employees, shareholders, partners and communities

• Integrity that embraces the very highest standards of honesty, ethical behavior and exemplary moral character

• Excellence that is reflected in our continuous search for new ways to improve the performance of our business to become the best at what we do



Mission Statement

• Mission

– to provide society with superior products and services -- innovations and solutions that improve the quality of life and satisfy customer needs -- to provide employees with meaningful work and advancement opportunities and investors with a superior rate of return.

• Our Values

– Our business is preserving and improving human life. All of our actions must be measured by our success in achieving this goal. We value above all our ability to serve everyone who can benefit from the appropriate use of our products and services, thereby providing lasting consumer satisfaction. .



Our Values (continued)

– We are committed to the highest standards of ethics and integrity. We are responsible to our customers, to Merck employees and their families, to the environments we inhabit, and to the societies we serve worldwide. In discharging our responsibilities, we do not take professional or ethical shortcuts. Our interactions with all segments of society must

reflect the high standards we profess.

– We are dedicated to the highest level of scientific excellence and commit our research to improving human and animal health and the quality of life. We devote our resources to meeting the needs of consumers



Our Values (continued)

– We expect profits, but only from work that satisfies customer needs and benefits humanity. Our ability to meet our responsibilities depends on maintaining a financial position that invites investment in leading-edge research and that makes possible effective delivery of research results.

– We recognize that the ability to excel -- to meet society's and customers' needs --

depends on the integrity, knowledge, imagination, skill, diversity and teamwork of employees, and we value these qualities most highly. To this end, we strive to create an environment of mutual respect, encouragement and teamwork -- a working environment that rewards commitment and performance and is responsive to the needs of employees and their families



Global Market Challenges

• Political challenges

– Rules regulating transfer of data

– Restrict/tax/prohibit imports

– Local content laws that specify the portion of the value of a product that must be added in that country

• Geoeconomic challenges

– Too long to fly

– Difficult to communicate in real time

• Cultural challenges

– languages, cultural interests, religions, customs, social attitudes, and political philosophies: managers must be trained and sensitized to such cultural differences

– Differences in work styles and business relationships: teams vs individuals; one leadership vs shared leadership



Global E-Business StrategiesThe Transnational Approach

A business must depend on its A business must depend on its information systems and Internet information systems and Internet technologies to help it integrate its technologies to help it integrate its global business activitiesglobal business activities

A business must develop an integrated A business must develop an integrated and cooperative worldwide hardware, and cooperative worldwide hardware, software, and Internet-based software, and Internet-based architecture for its IT platform.architecture for its IT platform.

ExamplesExamples



Transnational Strategies by

American Express

Tactic: Global customer serviceTactic: Global customer service IT EnvironmentIT Environment

• Global network linked from local branches and local Global network linked from local branches and local merchants to the customer database and medical merchants to the customer database and medical or legal referrals databaseor legal referrals database

ResultsResults

• Worldwide access to fundsWorldwide access to funds

• ““Global Assist” hotlineGlobal Assist” hotline

• Emergency credit card replacementEmergency credit card replacement

• 24-hour customer service24-hour customer service



Transnational Strategies by

Benetton

• Tactic: Global sourcing and logistics• IT Environment

– Global network, EPOS terminals in 4000 stores, CAD/CAM in central manufacturing, robots and laser scanner in their automated warehouse

• Results– Produce 2000 sweaters per hour using CAD/CAM– Quick response (in stores in 10 days)– Reduced inventories (JIT)



Business Drivers for Global E-Business

Global customers

– People who may travel anywhere or companies with global operations

– Global IT can help provide fast, convenient service

Global products

– Products are the same or are assembled by subsidiaries throughout the world

– Global IT can help manage worldwide marketing and quality control

Global operations

– Parts of a production or assembly process are assigned to subsidiaries based on changing or economic conditions

– Global IT can support such geographic flexibility



Business Drivers for Global E-Business

Global resources

– The use and cost of facilities and people are shared by subsidiaries of a global company

– Global IT can keep track of such shared resources

Global collaboration

– The knowledge and expertise of colleagues can be quickly accessed, shared, and organized to support individual or group efforts

– Global IT can support such enterprise collaboration



Global ERP Issues

Gillette

– ERP applications using SAP and PeopleSoft because they automatically create reports in different languages

– Development work is done in Boston, deployment and screen labeling is handled locally to overcome language barriers

Nypro

– Runs an ERP system from eBPCS

– Provides China plants with networked ERP systems

– Put control over ERP data extraction and manipulation in local hands



Key Questions for Global Websites

What content will you translate, and what content will you create from scratch to address regional competitors or products that differ from those in your country?

Should your multilingual effort be an adjunct to your main site, or will you make it a separate site, perhaps with a country-specific domain name?

What kinds of traditional and new media advertising will you have to do in each country to draw traffic to your site?

What are the legal ramifications of having your website targeted at a particular country, such as laws on competitive behavior, treatment of children, or privacy?



Business Managers inInformation Resource Planning Process

Assessing the current environment and proposing ideas Assessing the current environment and proposing ideas for the future computing environmentfor the future computing environment

Being creative in thinking about IT applications and be Being creative in thinking about IT applications and be knowledgeable about her department’s information needsknowledgeable about her department’s information needs

Involving during resource and funding justification Involving during resource and funding justification processprocess

Involving in the process of systems implementation and Involving in the process of systems implementation and trainingtraining

Creating an atmosphere that is conducive to acceptance of Creating an atmosphere that is conducive to acceptance of the new applicationsthe new applications



Success Factors to Implement ERP

• Real commitment from top management

• Conveying this commitment throughout the company

• Sufficient resources devoted to the project including employment of a consulting firm to help implement the ERP system

• Sufficient managerial and IS professional time devoted to the project

• Processes must be changed to conform those prescribed by the ERP package





Documents

GLOBAL MANAGEMENT OF E- BUSINESS & E-COMMERCE Chang-Yang Lin, Ph.D. Professor and Coordinator Computer Information Systems Program Eastern Kentucky University