Introduction to E-business and understanding Business

ITU

Spring 2013

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Goals of the course• The course provides insight into e-business

projects by giving students a high-level understanding for the interplay between organization, e-business concepts, strategies and it solutions.

• After the course, the student will be able to play an active part in development and implementation of e-business initiatives.

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Learning Outcomes• A student who has met the objectives of the course will be able to:

• Define key e-business concepts, strategies, tools, frameworks, theories, methods and technologies

• Identify trends and developments within e-business for different types of enterprises and industries

• Characterize relevant e-business concepts in respect to type of company and industry 

• Analyze a specific company´s organization, culture, strategy, environment and key processes 

• Argue for appropriate choice of e-business concepts for a specific company

• Discuss relevant key issues in managing e-business for a specific company

• Integrate analysis, chosen e-business concepts and theories and discussion on managing e-business - into a coherent academic written business report

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Content• The class combines theory and practical experience

of conducting e-business projects. • We examine different business models and discuss

their potentials and challenges. During the course we work with YOUR cases, that provides better understanding of possibilities and challenges.

• Subjects: organization, teamwork, business models, strategies, new technologies within e-business, and a presentation of new ways to conduct e-business.

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Who am i?• Ulrik Falktoft• Msc.it in e-business from ITU

• Worked since 1998 as independent consultant with business development, strategy, innovation, e-business and more

• External lecturer at CBS and IT-University in perspectives on e-business (EBUSS), knowledge management and learning organizations (Master) and e-business and understanding business (DMD)

• External lecturer at DTU and AAUK in computer-supported communication and distributed co-operation, introduction to e-business and supervising bachelor og and master thesises

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Who are Troels?• Bachelor?• Courses at EBUSS?• Interests?• Thesis?• Other?

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Who are you?• Different programs and/or courses?• Different profiles?• Different nationalities?• Other…?

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Materials and teaching• Textbook

– Dave Chaffey: "E-business and E-commerce Management," 5th edition, Prentice Hall, 2011

• Old Chinese proverb:

- Tell me – and I will forget- Show me – and I might remember- Involve me – and I will understand

• So interactive lectures means:

• I don’t want to talk all day• I expect you to discuss and come with input and questions• You will groupwise work and present as we go along• Not mandatory assignments – possibility for getting feedback

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Groups• We will today make groups• You will be responsible for presenting as we go along

• Groups does not mean that you should slack!• Groups mean participation and collective responsibility• .. If one member fails to deliver - the group is

responsible for providing

• So: act responsible…

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Exam• 2013-05-15: Submit written report (30-50 pages per group)• 2012-06-12/13/14/17/18: Oral exam (probably one or two days)

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Any questions so far?

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I have some questions!

• What is e-business?– Can you come up with examples?

– What is e-commerce?

E-business is..• Marketing, buying, selling, delivering, servicing,

and paying for products , services and information across networks linking an enterprise and its prospects, customers, agents, suppliers, competitors, allies and complementors.

• OR: All aspects of business (using IT)• IT-infrastructure, Internet, 3G /Edge and other

distributed digital technologies

And e-commerce…?

… plus e-management

E-ManagementE-businessE-commerce

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So what is new?• Some say that a e-business revolution is taking

place today• Migration from place to space• Which e-business models will succeed with

current channels to customers?• What are the key challenges facing established

businesses migrating from traditional market place to a combination of place and space?

Collapse of the distribution chain

Grower Transporter$8.00

Wholesaler$12.00

Florist$24.00

Consumer$54.00

Consumer$60.00

Disintermediation of consumer distribution channel

Channel conflicts• Channel conflicts have always existed but they are amplified by

the Internet

• The myth• Elimination of all intermediaries• Easy identification of buyers and sellers - no need for

middlemen

• The reality• The Internet challenges intermediaries• New types of intermediaries have appeared

Dis-, re- and countermediation

Types of intermediaries

• Directories (Yahoo)• Search engines

(Google)• Virtual resellers

(Amazon)• Financial

intermediaries (Nordnet)

• Evaluators (comparison site)

Added value of intermediary• Payment - credit card, letter of credit • Information - news, reports, use flashes; product information • Trust - relationship, certificates, membership• Pricing - auction, fixed pricing, volume discount • Shipping - services, insurance, custom handling • Mall - list of vendors• Community - chat, discussion groups, conferences

The main functions of markets• matching buyers and sellers• facilitating the exchange of information, goods,

services, and payments• providing a

• Legal• regulatory framework

Marketplace vs. Marketspace

Marketplace• Cash• Checks• Paper documents• Store fronts• Face-to-face meetings

Marketspace• Information becomes digital• Costs of replication and

distribution lowered• Small vs. big company

Motivations for e-business• Huge growth in e-business

• Most people in developed countries have internet access• Estimated size of e-business in the US:

• 2001-2002: 330 billion US$ revenue• 2003-2005: 1 trillion US$ revenue

• Though disintermediation has received a lot of attention , intermediaries account for 20% of the revenue within e-business

• Growth in dot-coms• Operate predominantly in space• Often pioneering and testing new business models

What kind of market models?• There are four basic market models for e-commerce:

• Store front model• Auction model• Portal model• Dynamic pricing model

Store front sites• Combines seller and buyer directly• A single or company web site where products and services are sold • Mechanisms necessary for conducting the sale:

– Browsing online product catalogue– Adding products to shopping chart– Checking out products– Paying online– Physical products are usually shipped directly to customers’ home

address

• An online shopping center where many stores are located– some are merely directories– some provide shared services– some are actually large click-and-mortar retailers (a store that exists

online and in the physical world)– some are virtual retailers

Auction sites• A place for buyers and sellers to negotiate a price for a product• Auctions can be done:

– online or off-line – at public sites (eBay) or at private sites (by invitation)

• Different models– Traditional auctioning (buyers bid)– Reverse auctioning (sellers bid)– Dutch auctioning (price falls constantly)

• Commission paid to the site

Portals• A place where you can find everything• Horizontal portals

– Broad range of information, Yahoo• Vertical portals

– Single area of interest, WebMd.com• Commission from advertisers or percentage of sale

Dynamic price sites• Name-your-price model

– E.g. Peters pris• Comparison pricing model

– E.g. hi-fi priser, Kelkoo• Bartering model

– E.g. Swap.com• Offering free products and services model

– E.g. telephone operators

Some conclusions• Several examples of e-business pioneers will drive traditional businesses to

conduct e-business as well• These traditional businesses will evolve from current business models to a

combination of place and space• E-business often amplify channel conflicts • E-business enables a total reengineering of all internal and inter-

organizational business processes, and will fundamentally challenge industry structures

DOT-com (or DOT-death)• To optimistic prospects around 1999-2001• A lot ordinary businesses that just went electronic did not make

it• Other transformed into new ways of doing their business• And change and transformation - that is the real challenge when

going from ”old” business to e-business

• An example of a good transformation…

The second wave of e-business• Three important characteristics:• Lower, more realistic, stock market valuations

• Existing firms will transform to an e-business model (place and space)• Cheaper , higher quality services

• Distinctions between B2B, B2C and C2C will disappear

The third wave• Cloud, SaaS and last but not least – smartphones (in all shappes

and forms)• What is different from cloud and smartphone apps – something

we didn’t see 10 years ago?

We must still understand business• Way to many business fail when trying to transform into e-

business• That is often because they don’t understand the basics of their

own organization, strategy, culture and leadership• It furthermore takes a new understanding of customers• An how to transform and change – while the environment

change..

Customers

Waves of change

Form groups• Form af group of 6 persons with 4 other Belbin

types• Do a short presentation of each individual• Tell the others is you know that there are days

during these three weeks, where you cannot show up

• Talk about how you individually prefer to do group work (and not about that you may not prefer group work..)

An e-business idea• Think individually about an e-business idea• Present all the ideas in the group• Discuss which ideas you find interesting• It is ok to combine ideas into new ideas• Come up with a e-business concept that all in

the group find interesting

Presentation• Prepare a short presentation of your idea for an

e-business concept for the class

Validate e-business concept• Why is it an e-business concept?• How can you create value on the idea?• Who are the potential customers?• What could be the competition?• Is the technology available or…?

• Desirable – Feasible - Viable

End of day• Use the knowledge you get from the book and

forthcomming chapters, to develop you idea further• Think, reflect, be open to new ideas and perspectives

• Next time: Read chapter 2 and skim chapter 1 to recap

• Remember to use proper references in your presentation. It will help you keeping the overview and it is mandatory in the final report.