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Class 2

Electronic Commerce/Business

Asper School of Business9.613 Using Information Technology

Part-Time MBA, December 2001Instructor: Bob Travica

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Outline

• Concept of E-Commerce/Business

• E-Commerce as Strategic IS Management

• E-Commerce Domains

• Evolution of E-Commerce

• Business-to-Consumer (B2C) E-Commerce

• Business-to-Business (B2B) E-Commerce

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• “E-commerce” & “E-business” used interchangeably -- choose your term; mine: e-commerce, external character (skip the intranet part in the textbook!)

• Definition: E-commerce refers to conducting business transactions electronically. Instances:

- Buying & selling on the Web/Internet- Buying, selling, & running joint projects through other computer networks- Exchanging & managing trading documents with EDI

Concept of E-Commerce/Business

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• E-Commerce is a matter of strategic management of information systems in terms of technological changes, management implications, costs, benefits

E-Commerce as Strategic IS Management

Organization

Customer/Client(Individual or

Organizational)

SupplierOrganization

1

3

PartnerOrganization

2

1: Electronic Supply Chain2: Web storefront3: Extranet-supported Alliance & Consortia

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E-commerce Domains

• Business-to-Consumer - B2C (Web storefronts; e.g.: Chapters.com)

• Business-to-Business - B2B - Buying & selling: Electronic supply chain & e-marketplaces (e.g.: McDonnell Aerospace, Covisint; EDI networks between

Gillette & suppliers) - Partnering in joint projects

• Consumer-to-Consumer - C2C (e.g., e-auctions)

• Other

Our focus

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• E-commerce boom from 1993 on (but, EDI since 1960s!):- graphical browser to Web (textual was already in place)- increased consumer access to Internet - business interest in Internet- government regulations- “easy money” (market bubble)- globalization (consumer markets, sourcing, money markets)

• Bonanza to bonazza (calm sea) since 1999 in B2C; • B2B continues

Evolution of E-Commerce

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B2C E-commerce

Scope

Benefits

Costs

IS Issues

• Smaller part of e-commerce

Firm perspective:- Global reach- 24/7 operations- Direct marketing- Efficiencies (orders, customer profiling…)- Customization effects

Customer perspective:- Increased selection- Price comparison - Competitive pricing (reverse auctions)- Lower transaction costs

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Scope

Benefits

Costs

IS Issues

B2C E-commerce

Firm perspective:

- Technology (overhaul,

problems - next slide)

- Delivery, Logistics

- Payment

- Legal boundaries

- Competition increase

- Brand-making costs

- Intellectual property

Customer perspective:

- IT have-nots

- Privacy (marketers’

spamming)

- Payment

- Recourse

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• Internet dependability and bandwidth

Scope

Benefits

Costs

IS Issues

• Internal Users (personnel) & External Users (customers)

• Technology innovation needed continually:- on the front-end- in integrating front-end with accounting, inventory, purchasing, marketing systems- in interfacing with external delivery, logistics, payment systems

• Data security systems (vs. virus menagerie & sniffing)

B2C E-commerce

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B2B E-commerce

Scope

Benefits

Costs

IS Issues

• Larger part of e-commerce

• Buyer, Seller, Partner benefits:

- Larger market- Savings from efficiency in supply chain- Dynamic pricing (auctions)- 24/7 operations (e-marketplaces)- Linking production processes and core competences (partners in project)

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Scope

Benefits

Costs

IS Issues

B2B E-commerce

• Technology

• Volatile business relationships

• Losses from increased competition & dynamic pricing

• Legal boundaries (Covisint)

• Costs of intermediaries (e-marketplaces)

• Costs of private networks

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Scope

Benefits

Costs

IS Issues

B2B E-commerce

• Technology innovation needed continually:- on the back-end- in integrating back-end with accounting, inventory, purchasing systems- in interfacing with trading parties, e-marketplaces & payment systems

• Data security systems (firewall, digital signature, encryption/decryption keys)

• Internet dependability and bandwidth

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Summary

• E-Commerce is a strategic issue in IS management

• B2B e-commerce is here to stay; B2C will have

place• Costs & benefits from e-commerce demand careful

analysis• IS issues of E-Commerce are complex and demanding