BMKT 315 Introduction to e-Business

Part I -- How did we get here?Introduction to e-Business

What is e-business?Any business carried out in electronic formConnecting electronically to your business

stakeholders

What is e-business?E-business is the strategic use of

technology, particularly the Internet, to integrate and streamline the business processes, enterprise applications, and organizational structure of a business and create a high performance business model

Term will probably become redundant within 10 years as all businesses will be “e-businesses”

Evolution of e-business

Evolution of e-business

“If you’re not an e-business by 2000, you won’t be in business by the year 2001” – Technology Sales Pitch, 1999

In many ways fear of being left behind sparked the “.com gold rush”

“If you’re an e-business in 2001, you’re lucky to be alive!” – Technology Sales Pitch, 2001

“… For a small fee, we’ll show you how to truly leverage the technology we hyped up and sold to you in 1998.” – Technology Sales Pitch, 2001

Why did the Internet market crash?

Main reasons for “.com” crashNot enough customers comfortable using the

Internet… this meant companies had to spend a disproportionately high percentage of their budgets on marketing (e.g. 40-50% instead of usual 5% for traditional business)

Information technology costs very high… many people incorrectly assumed setting up e-commerce sites would be cheap (e.g. virtual inventory, virtual office)

This combination was a killer for many businesses (not enough customers and revenues and huge infrastructure costs)

How can you separate the hype from reality?!

People usually overestimate the short term of impact and underestimate the long term impact of technology

E-Business has really just started…

Evolution of e-business

What’s different than “.com” timesCustomers now comfortable using the Internet… e.g. 70-

80% Internet penetration rate in North America… companies can spend less on marketing

Information technology costs have decreased… instead of using EDI, people are using VPN (virtual private networks).

While revenues are still challenging to acquire, it’s a lot better than .com times & companies have fine-tuned their modelsGoogle has figured out how to earn revenues from

advertising… Companies that had difficulty with profits such as PayPal

have since been acquired by players like eBay with solid revenues

Signs that the “times are a changing” can be seen with these examples from the music industryMadonna’s new contract shows importance of Web-based channelsRadiohead challenges traditional distribution approaches

EDI Process

Buyer

Vendor

VAN

Proprietary Format Document

EDI Encode /Decode

EDI Document

EDI Document

Proprietary Format Document

Send/Rcv.

Send/Rcv.EDI Encode /Decode

Proprietary Format Document

ProprietaryFormat document

Document EDIdocument

Proprietary Format Document

EDIdocument

Unique attributes of e-businessSpeed... e.g. crackberry addictsConvenience... e.g. FedEx offloading CSR

costs... and consumers happy to acceptCustomization... e.g. build your own PC at

Dell Redefinition of product value... e.g.

Google docs...free Web-based software supported by ads

Media flexibility... Madonna’s new deal

E-business benefits#1 driver is cost reductionIncreasing salesImproving customer serviceMinimizing competitive pressuresExpanding market reachAddressing user concerns

Integrated systemsInfo systems that are joined together in such a

way that they can easily share data between them

In past, integration was a key part of e-business development costs (connecting system A to B could cost 4x more than the actual systems cost)

Increased trend towards open standards (e.g. XML-based data transfer such as via RSS... Real Simple Syndication)... Integration costs declining

Still really difficult to connect large scale enterprise systems

E-commerce vs. E-businessTransaction“Cash register”Smaller scaleYour individual

projects focuses on e-commerce although there are small scale components of e-business (e.g. Integration with third party websites)

Encompassed much wider space than e-commerce

All electronic connections between business stakeholders

WebsitesIntranetsExtranetsERP SystemsDriven mainly by

cost-savingsYour team project

focuses on e-business

Front Office (interfacing with customers)

Back Office (behind the scenes)

Key Terms -- Introduction to e-Business Electronic data

interchange (EDI)IntranetExtranetIntegrated systemsSystems

integrationTrading exchangeE-businessE-business models

Front-end and back-end of e-business

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