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  • 7
  • What is the Slide saying….. The Enterprise market is divided into four segments: -- Global 3000 companies -- Mid-Market companies -- Small business -- SOHO – Small Office/Home Office Market (Not depicted in the figure). This segment also contains Micro business - a self-employed person who has no paid employees. According to IBM’s definition: an SMB is a company with 100 to 5000 employees. Key Message : So far in e-business, most of the effort, investment and automation have taken place in the large companies. We are now entering a phase of e-business where the focus is shifting to SMB markets. The reason for this is rather simple: unless the SMB suppliers and partners are E-enabled, it is becoming harder for the large firms to get a ROI on their e-business investments. Transition to next slide : Let us look at the broad technology changes affecting the SMB Market.
  • Notes _________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ ________________________________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________
  • Transcript

    • 1. Digitization: Moving From Vision to Execution Ravi Kalakota CEO E-Business Strategies November 2002 Continuous Change Process Digitization Interconnectedness
    • 2. E-Business Strategies
      • Research and Process Consulting
        • Fast-Cycle, Practical and Focused Research
        • Process Design and ROI Modeling
        • Executive Education and Consulting Firm
      • Publish Research in the form of Books
      Scanning + Thinking + Doing = Expertise 1995 1996 1999 2001 2002 E-Business M-Business C-Business
    • 3. EBS Research Perspective…
      • In the 1950s, they said TVs would make movies go out of business, they were wrong.
      • In the 1970s, they said VCRs would put movie theatres out of business, they were wrong
      • In the 1990s, they said Online Shopping would put the stores out of business, they were wrong
      • In the 2000s, they are saying that e-marketplaces are going to put suppliers and procurement managers out of business, they were wrong!!
      Change is Evolutionary Not Revolutionary
    • 4. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 5. Cascading S-Curves 80’s 90’s 00’s Mainframe Minicomputer (30 years) E-commerce E-business (7 years) Time % Adoption PC Client-Server (15 years) GROWTH MATURITY INNOVATION Mobile Solutions Web Services Grid Computing (?) Macro-Level Structural Change is a Constant… Technology Models The Technology Cycles are Cascading – The pressure on Execution and ROI is/will be incredible
    • 6. Technology Economics The Macro-Level: Phases of Innovation Time Demand / Visibility Tech Trigger Slope of Profit Slope of Despair Slope of Hype Consolidation Boom Bust Hype Peak
    • 7. Technology Economics Following the Innovation Curve Where are these on this curve? A) E-commerce (e.g., Amazon.com) B) E-procurement – Digital Markets C) Wireless Technology Time Demand / Visibility Tech Trigger Slope of Profit Slope of Despair Slope of Hype Consolidation Boom Bust Hype Peak A B C D
    • 8. Technology Economics E-Business is about Change Management
      • Managing Change -- Requires recognition of the attitude likely during the life cycle
      Time Attitude + _ Idealism Commitment Despair Usage Value Awareness Anger Frustration
    • 9. Technology Economics B 2 B Diffusion: Consider the following Pattern '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Time Demand / Visibility Tech Trigger Technology Investment Curve B 2 B Adoption Curve As a CEO, at what point do you become serious? Innovators Early Adopter Early Majority Late Majority Laggards
    • 10. Diffusion: Technology <-> Business Alignment '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 Time Demand / Visibility Tech Trigger Technology Hype Curve Process & Application Infrastructure build out Key Alignment Question: How to time Process and IT investments?
    • 11. The Perfect Storm: Continuous Innovation Innovation Fatigue Portals 1994 1997 2000 ERP B2C B2B SMB Challenge: How to Time Technology Investments and Prioritize Execution Mobile Wireless Web Services 2001 2002
    • 12. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 13. E-business Target Market E-business Priority #1 -- Small and Mid-Size Business (SMB) Market Segment Small-Office Home Office Customer Revenues < USD 5m High-end Global 3000 Customer Revenues > USD 2 Bln Mid-market Customer Revenues USD 50 - 750m Small-business Customer Revenues < USD 50m Large Firms Customer Revenues USD 750 – 2 Bln
    • 14. Why are We Interested in Process Digitization? Widely Believed Hypothesis: We Are in Between Two Productivity “S” Curves Quality BPR MRP CRM Performance X-Apps & Web Services C- Business E-commerce – B2C & B2B 1990 1995 2000 2005 Efficiency outside the Firm Time Efficiency inside the Firm
    • 15. Where Are We Today? Phases of e-business Increasing Customer & Business Value Internal Integration
      • Features • Web Enabling applications
      • Integration with existing processes and systems
      • • Customer self-service
      PHASE 3
      • Features
      • B2B Transactions
      • Optimized Procurement
      • Supply chain optimization
      • Advanced personalization
      • Mobile Enterprise
      Value Networks PHASE 4 Web Publishing
      • Features
      • • Web Site
      • Marketing information
      • Brochures
      PHASE 1 E-business Transactions
      • Features • Sales Efficiency
      • Web commerce • Interactivity & Fulfillment
      • Personalization
      • Mobile Commerce
      PHASE 2 PHASE 5 Inter-Enterprise Integration
      • Features
      • XML-based Industry-specific process models
      • Collaborative Business Solutions
      • Build to Order Supply Chains
      • Advanced Mobile Enterprise
      E-commerce E-business C-Business Efficiency inside the Firm Efficiency outside the Firm
    • 16. E-commerce Requires Back-office Integration S T AKEHO L DE R S E M P L O Y E E S Customers, Resellers Suppliers, Distributors, Partners Integrated Infrastructure & Integrated Application Architecture
    • 17. Enterprise Resource Planning Logistics Production Distribution Customer Relationship Management Marketing Field Sales Customer Service S T AKEHO L DE R S E M P L O Y E E S Customers, Resellers Suppliers, Distributors, Partners
    • 18. Enterprise Resource Planning Logistics Production Distribution Customer Relationship Management Marketing Field Sales Customer Service S T AKEHO L DE R S E M P L O Y E E S Customers, Resellers Suppliers, Distributors, Partners Supply Chain Management Portals
    • 19. Customer Relationship Management Marketing Sales Customer Service Portals Supply Chain Management Enterprise Resource Planning Logistics Production Distribution Business Intelligence Enterprise Application Integration S T AKEHO L DE R S E M P L O Y E E S Customers, Resellers Suppliers, Distributors, Partners
    • 20. Stkeholders Customer Relationship Management Marketing Sales Customer Service Portals Supply Chain Management Enterprise Resource Planning Logistics Production Distribution Business Intelligence Enterprise Application Integration Administrative Control HRMS / BMS / ORMS Finance/Accounting/Auditing Management Control S T AKEHO L DE R S E M P L O Y E E S Customers, Resellers Suppliers, Distributors, Partners
    • 21. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 22. Integration of Inter-Enterprise Processes Company Processes Market Processes Portals Private Exchanges/Hubs Public Marketplaces Consortiums Inter-Enterprise Apps C-Business Processes
    • 23. Inter-Enterprise Framework Employee Channel Integration Financial Channel Integration Multi-Channel Integration B2B - Supply Chain Integration Labor & Benefits Markets Financial & Investor Markets Consumer & Reseller Markets Suppliers & Logistics Markets
    • 24. Inter-Enterprise Framework Employee Customer CRM Financial SCM Supplier Organization Financial & Investor Markets Suppliers & Logistics Markets Consumer & Reseller Markets Employee Channel Integration Financial Channel Integration Multi-Channel Integration B2B - Supply Chain Integration Labor & Benefits Markets
    • 25. Employee Financial SCM Supplier Organization Financial & Investor Markets Suppliers & Logistics Markets Employee Channel Integration Financial Channel Integration B2B - Supply Chain Integration Customer CRM E-sales Consumer & Reseller Markets Multi-Channel Integration Labor & Benefits Markets Inter-Enterprise Framework
    • 26. The Integration of Customer-Facing Channels Corporation With Multiple Sales Channels & Customer Touch-Points Customer Market End User Branding Partners OEM/ Reseller Distributors Credit Card Institutions Marketing Partners Distributor Field, Branch Offices OEM Reseller Direct Sales Force Call Center/VRU E-mail, Web, Mobile Catalog ATM/Kiosk
    • 27. Inter-Enterprise Framework Employee Customer CRM Financial Organization Financial & Investor Markets Consumer & Reseller Markets Employee Channel Integration Financial Channel Integration Multi-Channel Integration ERP SCM PLM Supplier Suppliers & Logistics Markets B2B - Supply Chain Channel Integration Labor & Benefits Markets
    • 28. Integrating Multiple B2B Supply Chains Company Information & Applications Supply Market Auctions Outsourced Manu- facturing Logistics Partners Indirect Materials Suppliers Direct Materials Suppliers Finished Goods Delivery Manufacturing or Configuration Warehousing In-bound Logistics Auctions Management Order and Transaction Management Planning and Scheduling Sourcing and Contracts Collaborative Design
    • 29. Organizing a B 2 B Application Infrastructure Bunch of Fragmented Applications -- Increasing complexity ($$$)
    • 30. Organizing a B 2 B Infrastructure – Categorize Apps Increasing Integration and Process Focus
    • 31. Organizing a B 2 B App Infrastructure – Group by Core Processes Partner Facing Employee Facing Supply Chain Facing Supplier Relation Facing
    • 32. Organizing a B 2 B App Infrastructure – Supplier Facing Platforms VALUE-ADD E-MARKETPLACE SERVICES Applications E-MARKETPLACE FUNCTIONALITY Supplier Facing Service Platform Operations Web Services Integration Process Integration Support Customer Support Financial Services Fulfillment and Logistics Services Hosting Support Catalog Services Content Services Order-to-Cash Management Pricing Catalog Management Strategic Sourcing Transaction Management Services Multi-Contract Management Business Intelligence Call Center Help-Desk Off-Line Support Adoption ERP CRM Financials SCM Order Fulfillment Logistics Management
    • 33. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 34. Historical Perspective: Changing Process Priorities C-commerce, e-business, Business Outsourcing, SCM, CRM Digitization of Business Processes Late 1990s to 2000s Business Process Re-engineering, SCM, Six Sigma Process Re-Engineering Mid to Late 1990s VMI, System Outsourcing, Customer Satisfaction, ERP Process Improvement Early 1990s Just-in-Time, Zero Inventory, Kanbans and CIM Lean Manufacturing 1980s TQM, Zero Defects, Statistical Process Control (SPC) Quality 1970s Method Focus
    • 35. Types of B2B Process Integration Wave 4: Wave 3: Wave 2: Enable Commodity Management (Strategic Sourcing) Automate Transactions (Enable Processes) Streamline Supply Chain (Process Optimization) Wave 5: Supply Chain Visibility Asset Tracking & Management Strategic Issue: What is the focus of the B2B digitization effort? Wave 1: Automate Communication (EDI Connectivity)
    • 36. Key Processes in B 2 B Search & Select RFQ & Availability Workflow Authorization Order Flow Receiving Order Tracking Warehouse Pick, Pack Supplier Fulfillment Flow Billing Invoicing Payment (Net 30) Financial Reporting Payment Flow Logistics Ship Purchase Order Customer Service Backward Integration Returns and Auctions
    • 37. Integrating Order Management PO CRM SCM ERP Process PO Send PO Customer Send PO Supplier Process Sales Order Public process Public process Private process (Company-specific ) Private process (Company-specific ) Customer Supplier Receive PO Acknowledge Send PO Acknowledge Send PO Response Close Receive PO Request Select Supplier Generate RFQ Send RFQ Select RFQ Response Send PO Close Send PO Receive PO Response Send PO Response Acknowledge Receive PO Send PO Response Receive PO Response Acknowledge Receive PO Check Customer Check Credit Check Availability Create Sales Order Receive PO Acknowledge Send PO Acknowledge Send PO Response Fulfillment Login Select Supplier Select from Contract Generate PO Approve PO Send PO Fulfillment Send PO Receive PO Response Send PO Response Acknowledge Receive PO Send PO Response Receive PO Response Acknowledge Receive PO Check Customer Check Credit Check Availability Create Sales Order ERP
    • 38. Where we are going… Hybrid Process Digitization
      • Integration of Click and Brick
      • Process Synchronization is Work-In-Progress
      • Brick & Mortar
      • Slow paper based processes
      • Legacy Investments
      • Bureaucratic Processes
      • Fragmented Service payments, fulfillment, returns
      • Changes & modifications)
      • Web
      • Immediacy
      • Customization
      • Content
      • Personalized Transactions
      • One Stop Service
      Click -n- Brick Processes Multi-Channel Infrastructure To successfully control a B2B process, you need to DIGITIZE the process
    • 39. Hybrid Process Digitization… “Brick, Click and Flicks”
      • Introducing a new process variable is confusing
      • Cross-cutter Process are very hard to design and build
      • Brick & Mortar
      • Paper based
      • IVR/Call Center Invested
      • Tradition and Jurisdiction
      • Employee Centric Constant changes
      • Web
      • Speed
      • Customization
      • Content
      • Personalized Transactions
      • One Stop Service
      Click -n- Brick n- Flicks Multi-Channel Infrastructure
      • Mobile
      • Real-time
      • Process optimized to device
      • Personalized Transactions
      To successfully control a B2B process, you need to DIGITIZE the process
    • 40. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 41. Few Organizations Execute Strategy Well
      • “ Strategy has never been more important”
        • Business Week
      • “ In the majority of failures – we estimate 70% – the real problem isn’t (bad strategy)…. It’s bad execution.”
            • “ Why CEO’s Fail”, Fortune Magazine
      • “ Less than 10% of strategies effectively formulated are effectively executed”
              • Fortune Magazine
      Execution is the Problem, Not Technology! E-Business Execution is not very effective! Well-Known Fact
    • 42. Focus, Focus, Focus Facing Reality – Focus on Execution Objective Description What is your Focus?
      • Reducing costs
      • Decreasing rework
      • Shortening processing time
      • Fixing specific errors
      Strategic Improvement
      • Enhancing supply chain efficiencies
      • Web enabling strategic operations
      • Decreasing time to market
      • Improving customer satisfaction
      Process Improvement
      • Changing the rules of the game
      • Creating a customer focus
      • Abandoning old ways of doing business
      • Major culture change
      Business Transformation Rhetoric Reality
    • 43. The Trade-Off: Innovation vs. Efficiency Technology Customers Revolutionary (Best of Breed) Evolutionary (Integrated) Listen to Existing Users Lead Users Early Adopters
      • Management
      • Eliminate Risk
      • Efficiency Focus
      Innovation New Services Process Efficiency Innovation and Growth were the Drivers of B2B
    • 44. Innovation AND Efficiency Does Your Operating Model Enable Both? Technology Customers Revolutionary (Best of Breed) Evolutionary (Integrated) Listen to Existing Users Lead Users Early Adopters Leadership -- Take Risk - Strategic -- Innovation Focus
      • Management
      • Eliminate Risk
      • Efficiency Focus
      Operating Model Innovation Diffusion Model Linking Innovation and Efficiency is Tricky
    • 45. Old B 2 B Model: Before the Bubble Burst (1998 – 2001) Strategy Execution Speed
      • E-Business
      • SRM
      • SCM
      • ERP
      • Mobile
      • Branding
      • Prototype
      • Implementation
      • Market Share
      One Initiative at a time – Very little Integration
    • 46. New B 2 B Model: After the Bubble Burst (2002 - ?) Strategy E-Business Execution Management
      • E-Business
      • Multi-Channel
      • Supply Chain
      • E-Procurement
      • ROI and Profitability
      • Change Management
      • Blueprint Planning
      • Process Design
      • Performance Metrics
      Execution
      • Prototype
      • Implementation
      • Integration
      • Project Management
      Multiple Initiatives consolidating – Need Coordination
    • 47. Versioning… As the target shifts so the aim Management goal: Manage Uncertainty The Changing Environment makes it almost impossible to execute
    • 48. New Workforce Competencies An e-Marketplace Example
      • Digitization
      • Web Enabling the key business processes
      • (Catalog Search -> Order)
      • Low-Touch commodity products
      • High-Touch Complex products
      • Need to Build a new portfolio of workforce competencies
      • Digitize a part of the relationship (Order only)
      • Fulfilment needed Call-Center contact
      • Commodity Products
      • Complex Products
      • High Touch
      Ideal State Real World Prior to “E” Full Customer Self-Service (Click) Partial Customer Self-Service (click+Call) Combination of Web+call+ Sales Person Sales Person + Distributor Model (Brick)
    • 49. The Big Picture Management, Not Technology is the Problem The E-business Landscape – Outside The Firm Reality Check - Where Are We? Technology Economics B2B -- Business Process Design Challenges Key Takeaways The E-business Landscape – Inside The Firm
    • 50. B 2 B Mega-Trends Relentless Time Compression Continuous Space Compression Continuous Change New Solutions
      • Org. Structure
      • Business Model
      • Technological
      • Business cycles are shorter
      • Real-time
      • Customers demand patterns are unpredictable
      • Global is local is personal
      • No supply chain boundaries -- visibility
    • 51. B 2 B is Constantly Evolving
      • Structural changes will not go away -- Big Changes take 10+ years
      • Incumbents will be an important part of the market’s evolution – Laws of economics still apply
      • Process Focus is emerging – Infrastructure is the means to the End
      • Internet connectivity does not equal Integration
      Sky and Water I, M. C. Escher Are you ready for digitization?
    • 52. EBS Long-term Vision Technology Continuously Transforms Business Processes E-Business Strategies www.ebstrategy.com E-mail: ravi@ebstrategy.com Phone: 678-339-1236 x 203 Better Faster Cheaper

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