What is E-Business and does it matter? Definitions and Emerging E-Business ModelsProfessor Feng LiThe Business SchoolUniversity of Newcastle upon TyneE-Mail: Feng.li@ncl.ac.uk

Feng Li, 2006

What is E-Business?Where do you draw the line? Software; BookCarMortgageMeasuring E-Business depends on how far you stretch the rubber band!

What is E-Business?E-Commerce electronic transactions conducted by business partners (narrow definition)E-Business: buying and selling, servicing customers, collaborating with business partners, and conducting electronic transactions within an organisationsTurban, Efraim, David King, Jae Lee and Dennis Viehland (2004) Electronic Commerce: A Managerial Perspective 2004. Pearson Prentice Hall, New Jersey

What is E-Business? 2E-Commerce as digitally enabled commercial transactions between and amongst organisations and individualsE-Business refers primarily to the digital enablement of transactions and processes within a firm, involving only the information systems under the control of the firm E-Business are those activities other than buying and selling via electronic channelsLaudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, Boston

What is E-Business 3For this module, a broad definition of E-Business is adoptedIt encompasses all internal and external electronically based activities and processes. E-commerce is part of E-Business, which focuses on the electronic commercial transactions between and amongst organisations and individuals

What is E-Business? continuedE-business is all about time cycle, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage

-- Lou Gerstner, ex CEO of IBM

What is E-Business continued.Not just about dot coms and Internet only companies Transform existing businesses through the Internet and related technologies Integration within and between organisations break down barriers and boundariesEnabling new possibilities new ways of doing business - not possible in the pastOrigin go back several decades A wealth of knowledge already available - through large research programmes

Dot Com Crash End of E-Business?

Underlying rapid growth has never stopped even during the dot com crashThe Web has become an increasingly important part of consumers' everyday lives - shopping, banking, amusing, education Part of mainstream business culture, fulfilling its promise as a medium that can connect consumers and enterprises and cut red tape from transactions Pure plays versus multi-channels - Web sites are necessary for any business - even if the online arm loses moneyE-Commerce still only a small section of the economy (e.g. e-commerce < 5% of retailing) big bang yet to comeNot the end the fun has just started !

E-Business: ClassificationBusiness to Business (B2B)Business to Consumers (B2C)Consumer to Consumers (C2C)Consumer to Business (C2B)E-Government (B2G, C2G etc.)Intra-Organisation E-BusinessOthers P2P etc.

Why E-Business? Why Now?Demand Pull The New EconomyInformation economy - Information content & labour over 60% New economics of information Technological Push the ICTs RevolutionConvergence of computing, telecom & mediaExponential growth of the Internet Mobile communicationsRapid development of the InternetMass, public infrastructureIndividuality, interactivity, mobility & consumer experiencesGovernment Initiatives & TargetsOthers

Context for E-BusinessAll industries became information-intensive Information and communication are crucial to success of industrial & commercial operations Fast growing ICTs & information industries Profound Impacts on what activities locate where, how territories administered, markets served, linkages maintained between customers & suppliersNeed for new strategies, business models & organisational designs

E-Business ModelsE-Shops web marketing or a shop (B2C)E-Procurement E-tendering & procurement of goods and servicesE-Shopping Centres/E-Malls a collection of E-shopsE-Auctions E-implementation of bidding mechanisms

E-Business Models .. continuedVirtual Communities members with common interestsCollaboration Platforms tools & infor. environment for members to collaborateThird-Party Marketplaces leaving web marketing to third partyValue-Chain Integrators

E-Business Models .. continuedValue-Chain Service Providers support part of value chain (e-logistics, e-payments)Information Brokerage, Trust and other services business information and consultancy; trusted third party servicesOthers (e-betting/gambling; syndication )

Implications of E-Business: Fundamental and Pervasive transformationNew strategy & business modelsNew organisational designs New inter-organisational relationsNew work organisation and new ways of Working Others

Organisational implicationsTwo ways to beat competition and succeed in the market:Product/service innovationsOrganisational/managerial innovationsOrganisational innovations essential to efficiency and competitivenessInternet enables new organisational designs/new ways of doing business often in ways impossible in the pastWithin AND between organisations the entire value/supply chain/network

De-Construction of Integrated BusinessesWhat does your company really do?Customer relationship business - scopeProduct innovation and commercialisation businesses - speedInfrastructure management businesses - scaleUnnatural Bundle everything operate at sub-optimal level

Customer RelationshipDriven by scope economyCustomer service-oriented cultureCustomisation developing relationship with them and understand their needsOffer as many products as possible to maximise selection for customersTailor bundles of products and services to capture a larger share of wallet

Product Innovation & CommercialisationDriven by speed the faster the betterUsing all possible distribution channels to reach customersOrganisational culture geared to attract and retain creative talentsOperations tailored to serve the needs of creative talents for breakthrough innovations

Infrastructure ManagementDriven by scale economy pumping as many products through it as possible Full utilization of facilities & low cost operationsCulture cost reduction & standardisation

Already Happening ...Transformational outsourcingJ.P. Morgan - IBM will take over most of the bank's computing operations - $5bn over 7 yearsFord spin off Visteon computing on demand deal with IBM - $2bn over 10 yearsTelecom Italia HP will provide IT management services worth 225 million euros, or about US$243 million over 5 yearsOther functions and entire business processes increasingly being outsourced too

Organisational Design: When is Virtual Virtuous?Not all the smart people work for you - market gives you access to themInternal capability vs. partnersShort-term vs. long-termAutonomous vs. Systemic innovations Integrated companies vs. SMEs

Web/Cluster StrategyWebs clusters of companies consolidate around a particular technologyExamples Intel/Microsoft; SAPs integrated solutions; Spread risk, increase flexibility, enhance innovation, reduce complexityConditions - technological standard & increasing returnsShapers and adapters choose your role Grow market share vs. grow the pieUnbundling & outsourcing

Internet Banking:Cheap channel VS new business model?Internet as a new cheap convenient distribution channelNew entrants challenge the integrated banking modelDe-construction of the integrated banking processesFuture scenarios?

Deconstruction of Telecom Value NetworksBoundaries increasingly erodedTraditional business model may not longer be sustainableDeconstruction of integrated value chainsThe emergence of new value networksCompeting at multiple fronts

E-Government and E-Public ServicesAfter ecommerce and e-business, the next Internet revolution will be e-government The Economist, 28 June 2000USA - $600billion annual procurement spending EU euro720billion combined Big private sector companies typically achieve 20% saving by procuring onlineSlashing purchasing and fulfilment cycles and lower admin costs by up to 75% and halve stocksPotential to fundamentally change the way people relate to government!

Modernizing government in the UKBetter government, better policy making, better responsiveness to what people want and better public services by reforming the machinery of government in the UK- especially through the use of ICTs information age governmentElectronic service delivery to join up service provision across departmental boundaries, break down silo based delivery networks and allow citizens to interact with government whenever they chooseJoined up working between different parts of government and provide new efficient and convenient ways for citizens and businesses to communicate with government E-Government targets - making 100% of services available electronically by 2005 almost achieved

Emerging issues in E-GovernmentAll existing research shows in the UK joint up government providing joint up services is not happening yet?Public services - People as citizens or customersSo far 85% all public sector IT projects are deemed to be failures (IBM worldwide head of government services) Purposes of E-Government stated and real

Emerging issues in E-Government (2)E-Government and the redefinition of power structure and the buy-in from key stakeholders Strong resistance from those negatively affected The practical feasibility of achieving joint up government ?Potential Conflicts between strategic objectivesefficiency gains could be translated into reduced employment in certain sections of the public sector (as many as 1 in 5 - 800,000!)clash with other strategic objectives of the Government such as full employment an issue that will need to be carefully addressed given that the public sectors are the biggest employers in many regions in the UK

What Next ? Old established corporations will not disappearThe new energetic dot.coms would not necessarily surviveA new class of firms would emerge All organisations need to go through profound changesPrahalad, C K & Venkat Ramaswamy (2004) The Future of Competition. Harvard Business School Press, Boston

What is E-Business? How the Internet Transforms OrganisationsChapter 1. IntroductionChapter 2. What is E-Business and Does It Still Matter?Chapter 9. Emerging E-Business Models in the Network Economy

Suggested ReadingJelassi, Tawfik & Albrecht Enders (2005) Strategies for E-Business: Creating Value through Electronic and Mobile Commerce. Pearson Education Ltd, HarlowFarhoomand, Ali (2005) Manageing (e)Business Transformation: A global perspective. Palgrave Macmillan, Basingstoke Turban, Efraim, David King, Jae Lee and Dennis Viehland (2004) Electronic Commerce: A Managerial Perspective 2004. Pearson Prentice Hall, New JerseyLaudon, Kenneth C & Carol Guercio Traver (2003) E-Commerce: Business, technology and society. 2nd edition. Pearson Addison Wesley, BostonChaffey, David (2002) E-Business and E-Commerce Management. Pearson Education Ltd, HarlowTimmers, Paul (2000) Electronic Commerce: Strategies and Models for Business-to-Business Trading, Wiley, ChichesterRappa, Michael (2004) Managing the Digital Enterprise. http://digitalenterprise.org/index.html Especially chapter 5 - Business Models on the web. http://digitalenterprise.org/models/models.html100s of new books on e-business and e-commerce

Suggested reading 2Cabinet Office (2000) e-governmnent-A strategic framework for public services in the Information Age. London: HMSOLi, F (2003) Implementing E-government Strategy in Scotland: Current Situation and Emerging Issues. Journal of E-Commerce in Organisations 1 (2) April-June 2003:44-65Cornford, J (2004) Understanding the Process of Implementing Electronic Local Government in England - http://www.campus.ncl.ac.uk/unbs/sbi/Project2.asp?ProjectID=3

Readings 3Hagel III, John and Marc Singer (1999) Net Worth: Shaping Markets When Customers Make the Rules. Harvard Business School Press, Boston (Chapter9)Li, Feng (2002) Internet banking in the U.K.: From new distribution channel to new business models. The CAPCO Institute Journal of financial transformation. http://www.capco.com/pdf/j06art10.pdfChristensen, Clayton & Michael Raynor (2003) Innovators Solutions, Harvard Business School Press, Boston (also Christensens earlier book on Innovators Dilemma and latest book Seeing what next?)Zuboff, Shoshana & James Maxin (2004) The Support Economy. Allen Lane, LondonPrahalad, C K & Venkat Ramaswamy (2004) The Future of Competition. Harvard Business School Press, BostonPeters, Tom (2003) Re-Imagine! Dorling Kindersley, London