Technology and Standards Watch Day February 7 2001 The Big Bang Diana G. Oblinger, Ph.D....

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Technology and Standards Watch Day February 7 2001Technology and Standards Watch Day February 7 2001

The Big BangThe Big Bang

Diana G. Oblinger, Ph.D.

Kenan-Flagler Business SchoolUniversity of North Carolina at Chapel Hill

Senior Fellow, EDUCAUSE Center for Applied Research

Diana G. Oblinger, Ph.D.

Kenan-Flagler Business SchoolUniversity of North Carolina at Chapel Hill

Senior Fellow, EDUCAUSE Center for Applied Research

Only the paranoid survive….

– Andy Grove

Only the paranoid survive….

– Andy Grove

Traditional vs. Net-economy

• Stable, predictable• Rely on geography• Protect markets• Averse to failure• Economies of scale• Positioning• Long-range planning

• Free-for-all• Movement• Cannibalize markets• Failure is expected• One-to-one• Value migration• Real-time execution

Traditional Economy Net-Economy

Hartman & Sifonis, 2000Hartman & Sifonis, 2000

Born on the Web Companies

The Big Bang

• e-companies emerged in the late 1990s

• Analogous to the “big bang”

• Net-generation companies are now coalescing into distinct constellations of products and services

Eduventures, 2000Eduventures, 2000

Categories of e-business

• e-commerce

• e-learning

• e-care

• e-procurement

e-commercee-commerce

Definition of e-commerce

• Transactions involving individuals or organizations

• US students spent $700 million for online purchases in 2000

• Estimates are that student purchases will exceed $14 billion by 2002

• Transactions involving individuals or organizations

• US students spent $700 million for online purchases in 2000

• Estimates are that student purchases will exceed $14 billion by 2002

Oblinger & Katz, 2000Oblinger & Katz, 2000

edu.com

• Competing for student e-commerce market• Deep discounts on brand-name products for

college students– computers

– software

– banking services

– phone and Internet services

– credit cards

– textbooks

UVentures.com

• Universities selling intellectual property online

• Hope to supplement research funds

• New online intellectual marketplace

• Designed to connect buyers and sellers, online

• Similar to models such as Autobytel.com

e-learninge-learning

Size of Education MarketSize of Education Market

The US currently spends $740 billion per year on

education...

... more than is spent on national defense

… more than the GDPs of Spain, Canada or Brazil

Moe, 1999

The US currently spends $740 billion per year on

education...

... more than is spent on national defense

… more than the GDPs of Spain, Canada or Brazil

Moe, 1999

Worldwide Academic vs. Corporate Education Market

1997-20021997-2002

International Data Corporation, 1999International Data Corporation, 1999

19971997 19981998 19991999 20002000 20012001 20022002

Billion $Billion $

20002000

40004000

60006000

80008000

1000010000

1200012000

YearYear

Academic

Corporate

Academic

Corporate

Growth of e-learning• Universities with aggressive programs are seeing

growth rates of 200-1000%• Partnerships between “non-traditional” providers and

universities are increasing• Over 5,000 competitors offer all types of e-learning;

no single competitor has more than a 5% market share

• Last year, over 100 e-learning portals entered the market

Oblinger, 2000Oblinger, 2000

UNext.com

• Provides online business education through Cardean

• Uses Internet technologies to create learner-centric, highly personalized and interactive environment

• Academic partners: Columbia, Chicago, Stanford, London School of Economics, Carnegie Mellon

Hungry Minds

• Online learning portal that aggregates courseware from academic institutions and corporate training firms

• Over 37,000 online courses; more than 160,000 subscribers

• Academic partners: UC Berkeley, UCLA, Maryland, WGU, Jones International, U Mass-Lowell

Business ModelsBusiness ModelsBusiness Model Description

e-Commerce The sale of products and services over the Web; reseller agreements

Advertising The sale of advertising space on a Web site

Seat License The licensing of content or software on a per-use basis (e.g., license an entire library of courseware)

Subscription The sale of e-Learning services via periodic payment

Pay for use The sale of specific e-Learning products and services (e.g., purchase a specific course title)

Direct Marketing/Data Collection The sale of customer lists and market data

Enabling Services The sale of e-Learning development and delivery services, such as Web hosting, performance monitoring, professional services (e.g., content customization)

Business Model Description

e-Commerce The sale of products and services over the Web; reseller agreements

Advertising The sale of advertising space on a Web site

Seat License The licensing of content or software on a per-use basis (e.g., license an entire library of courseware)

Subscription The sale of e-Learning services via periodic payment

Pay for use The sale of specific e-Learning products and services (e.g., purchase a specific course title)

Direct Marketing/Data Collection The sale of customer lists and market data

Enabling Services The sale of e-Learning development and delivery services, such as Web hosting, performance monitoring, professional services (e.g., content customization)

Source: U.S. Bancorp Piper JaffraySource: U.S. Bancorp Piper Jaffray

Other for-profit e-learning ventures

• Quisic (University Access)

• Pensare

• Provant

• Caliber

• SmartForce

• Headlight.com

• OnlineLearning.net

Kentucky Commonwealth Virtual University

• KCVU is a “utility company” for educational institutions

• View and understand certificate and degree opportunities

• Admissions, registration and financial aid applications online

• Online classes• Advising, bookstores, library and study groups

online

e-caree-care

Definition of e-care

• Using the Web to deliver information, support, services and decision-making aids– assistance in clarifying student career or goals– enrolling employees in human resources

programs– update personal information (e.g., address)– answering Frequently Asked Questions (FAQs)

Rationale

• Most individuals ask the same questions over and over

• Question repeat rates are often 50% to 70%

• Telephone inquiry: $25 - $30

• Web inquiry: $2 to $3

Changes in Student Services

Type of serviceType of service Access methodAccess method

Automatically triggered with-out interventionby the student

ProactiveProactiveServiceService(70%)*(70%)*

Student requests for counsel/guidance or referredby a generalist

Special ServiceSpecial Service(10%)(10%)

Student accessestechnology andcompletestransactions on-line

Self ServiceSelf Service(70%)*(70%)*

General ServiceGeneral Service(20%)(20%)

Student requestspersonal assistance

PriceWaterhouseCoopers, 1999PriceWaterhouseCoopers, 1999*`Estimated 70% of all transactions could be handled through combined use of automatic service or self service.

High touchHigh touch

High techHigh tech

Help deskHelp desk

Phone bankPhone bank

KioskTouch tone

Internet/WWW EFT

Self-help center

EFTEFT EDIEDI ImagingImagingMailingsMailings

Smarthinking.com

• Provides online, real-time academic support for students

• Online writing lab• Real-time math study sessions• Tutoring• Plans to provide

– independent study resources– learning analysis

Tutor.com

• Leading provider of educational referral services on the Internet

• Independent tutors and instructors register on National Registery

• Virtual classroom application includes text chat and whiteboard

• Database of 13,000 tutors & educators• $1 connection fee and 10% of overall transaction

e-procuremente-procurement

Definition

• Using digital technology for paperless procurement– EDI (electronic data interchange)– digitally process transactions– order management– inventory control

• Electronic payments reduce paperwork and cut costs Oblinger, 2000Oblinger, 2000

Rationale

• Eliminate paper bills– traditional paper bill costs $0.90 in postage and

processing– online services can cut cost to $0.30 or $0.50

• Improve efficiency– reduced cycle time– faster processing– reduced error rate Oblinger, 2000Oblinger, 2000

Commonfund Treasury

• Creates an online purchasing system

• Paperless systems reduce transaction costs– Traditional requisition costs $150 to process– e-procurement costs $10 - $15

• Efficiencies and price discounts could lead to an additional 10% savings

• U Penn, CSU Fullerton, UCLA

FreeMarkets.com• Creates online auction markets• Suppliers bid for clients’ business• Working with Pennsylvania state government

FreeMarkets has:– conducted 9 online auctions

– items ranged from construction to telecommunications to license plates

– $10 million in savings on procurement volume of $98 million

Comparative Shopping

• The Internet is a perfect place to compare prices

• For example, shopping for CDs:– 5 bricks-and-mortar stores per hour– 50 online suppliers– with a shopping agent, exposure to 500

suppliersHartman & Sifonis, 2000Hartman & Sifonis, 2000

Net-Generation CompaniesNet-Generation Companies

Net-Generation Companies

• Online admission applications– Embark– CollegeNet– XAP

• Campus-based portals– Campus Pipeline– Jenzabar.com– Studentonline.com

• Online procurement– CommerceOne

– Ariba

– FreeMarkets

• Online course delivery– WebCT

– Blackboard

– Convene

– eCollege

Net-Generation Companies• Supplemental content providers

– PinkMonkey.com– CliffNotes.com– Thinkwell.com– InstantKnowledge.com– Versity.com

• Online libraries– Questia.com– Net.Library.com– ebrary.com

Kidwell, et al., 2000Kidwell, et al., 2000

• Online Textbook Distributors– VarsityBooks.com– Textbooks.com

• Advising and Tutoring– Smarthinking.com– Tutor.com– Degree Navigator

• Learning portals– click2learn.com– Hungry Minds– Ziff-Davis– SmartPlanet.com– Blackboard.com

e-Business Principlese-Business Principles

Why Use IT?

The Economist Business Unit, 1999The Economist Business Unit, 1999

Innovation Values

Net-generation institutions use IT for its innovation value

CompetitiveAdvantage

EfficiencyEfficiency

MarketExpansion

EffectivenessEffectiveness

E-Line

Value Chain Alternative ProvidersValue Chain Alternative Providers

CurriculumDevelopment

ContentDevelopment

Learner Acquisition & Support

Learning Delivery

Assessment &Advising

Articulation Credentialing

Faculties & Departments

Full-ServiceBroker (WGU)

SoftwareAuthoring Tools

(WebCT, eCollege.comAsymmetrix)

StudentServices

Full-ServiceBroker (WGU)

Faculties & DepartmentsColleges & Universities(central administration)

Full-Service Broker (WGU)

University Spin-Offs(OnlineLearning.net, NYU Online)

Educational Publishers

Market ResearchFirms

Software Publishers(CBT Systems, NETG)

Catalogs(SREC, CVU,

LearningEnvironments

(Convene, Lotus,Microsoft,

Blackboard)

Tutoring andTesting Centers(Sylvan, Kaplan

Princeton Review)

TeleconferencingCompanies(Caliber,

One-Touch)

Testing Organizations

(ETS)Online

Applications(XAP,

CollegeEdge, IBM)

Industry AssnStandards Body

(EduCause)

AccreditingAssociations &

LicensingAgencies

Training Companies

Corporate Universities

Educational Management Organizations (U of Phoenix, Open U., Harcort, UNEXT.com)

Training Companies(GP Technologies,

Knowledge Universe)

Corporate Universities

UNC and PwC, 1999

IBM, 1999IBM, 1999

Non-traditional Providers

Traditional Providers Value Nets

Creating a Value Web

Internet Drives Cost Efficiencies

Direct Sales ForceDirect Sales Force $250-400$250-400

Tele CoverageTele Coverage $30-40$30-40

Tele MarketingTele Marketing $3-8$3-8

Direct MailDirect Mail $1-4$1-4

WWW $0.01-0.5$0.01-0.5

Source: Agency SurveyCost-Per-Contact for Various Technologies

Compression

• Transaction costs are reduced

• Time and distance are squeezed out of the equation

• Costs that were assumed fixed are eliminated

“Stickiness”: How to Ensure Repeat Visitors

High Quality Content 75%

Ease of Use 66%

Quick to Download 58%

Updated Frequently 54%

Cutting Edge Technology 12%

Purchasing Capabilities 11%

Customizable Content 10%

Chat and BBS 10%

Other 6%

High Quality Content 75%

Ease of Use 66%

Quick to Download 58%

Updated Frequently 54%

Cutting Edge Technology 12%

Purchasing Capabilities 11%

Customizable Content 10%

Chat and BBS 10%

Other 6%

Source: Forrester ResearchSource: Forrester Research

Technology Enablement

• Utilize standards across the enterprise

• If you can buy it, don’t build it

• Build a technologically smart business organization

• Create a business-smart technology organization

E-business IssuesE-business Issues

e-Business Issues

• Viewing IT as a strategic asset• Adequate, affordable bandwidth• Skills• Consumer protection• Legal framework• Liability• Privacy• Equitable access

Challenges• Values / culture• Nimbleness• Leadership• Focus• Organizational structure

– matrix– partnerships

• Funding• Human resources

All great truths begin

as blasphemies.

– George Bernard Shaw

All great truths begin

as blasphemies.

– George Bernard Shaw

The Big BangThe Big Bang

Diana G. Oblinger, Ph.D.oblinged@bschool.unc.edu

Technology and Standards Watch Day February 7 2001 The Big Bang Diana G. Oblinger, Ph.D....

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