Pure speed. Interactions and transactions can occur instantly. New products and services can appear, gain market share, and cannibalize their predecessors in a matter of days. Business processes and decision-making must accelerate to “Web time” simply to remain competitive; eBusiness customer don’t tolerate delay. Total access. The Internet obliterates the limits of geography, time, and market reach. Every business and millions of individual consumers are on line. An electronic business can operate 24x7 around the world. Low cost. The economics of electronic transactions are vastly different. There’s less “friction” in connecting buyer with seller and much less overhead in completing transactions. In banking, for example, transaction costs have been reduced for $.70 - $.85 /transaction to $.03 - $.05. Customer control . The customer controls the interaction with suppliers and can readily comparison shop. For many retail sales, the point of transaction shifts from the seller’s store to the buyer’s laptop. Sophisticated buyers demand – and receive – highly personalized and customized products and services. No barriers . Entry barriers have “virtually” disappeared. Small, agile, innovative competitors can design themselves as eBusinesses and grow very fast. Mere size carries less weight. Companies with bricks and mortar and established brands enjoy advantages, but nimbleness isn’t always among them. Interdependence. In electronic markets, all the players in a value chain are interconnected, and the information flow and business processes spanning them must be seamless. A company’s performance relies on that of its many close business partners. Proliferation of business models. There’s no limit in sight to the number of ways to play in electronic markets. We see disintermediation as the inefficiencies of middlemen are squeezed out, and reintermediation as companies launch value-adding brokering services.
What have well established firms done? A few successes and contrasting examples which we will discuss; but in general a lot of analysis, with little action stemming from it as the market changes fast, and the resistance to change grips the existing leadership. Few firms are self starting, most of them needed an event to take action. There is a lot of complacency, and much denial and explanation of why the bulk of the eBusiness world doesn’t really apply to them: “ this is a complex industry, you need scale to enter” pharmaceutical distribution - oops drugstore.com “ we are the dominant player with close customer relationships, steel isn’t like consumer products” - steel - oops eSteel “ we are business to business (or professional) , not retail/consumer” oops, Pfizer Zoloft eCommunity, Reuters, Any medicalInfo.com, most manufacturers... The new players are more than ever looking to solve customer's problems as selflessly as ever before. This type of approach leads to rapid market learnings that help them discover new opportunities and business models. Most firms that have taken action find unexpected benefits that are usually well beyond their initial expectations.
Hierarchy of Web Interactions Start ‘Simple’ and evolve to support strategy Complexity of Implementation Business Value Provided Marketing presence Static pages; searchable site One-way communication Extend to more customers Simple Secured access for external partners Exchange information with customers Multimedia; Database applications Interactive Link business process within supply chain Integration with internal systems Administrative automation Financial transactions Collaborative environments Integrative
eCommerce is a set of technologies, integrated applications, and multi-enterprise business processes that link enterprises and individuals together.
e commerce deals with using the Internet, digital communications and IT applications to enable the buying/selling process.
eBusiness is not only about “technology” or “e-commerce.”
eBusiness involves the continuous optimization of an organization's value proposition and value-chain position through the adoption of digital technology and the use of the Internet as the primary communications medium.
eBusiness is the strategic use of electronic communication and information technologies to accelerate the achievement of organizational goals.
eBusiness Concepts B2C Versus B2B B2C Connecting consumers to information, products, and services they want. Amazon, eTrade, NetFlowers, Mp3 B2B Improving the efficiency of buyer-seller transactions in business markets Cisco, TNTLogistics, e-steel, Dell, e-stamp
Smart people everywhere have global access to information
The 2-3 top players in an industry are likely to come to similar conclusions by looking at the same data
eBusiness is like a Sunday afternoon NFL football game
The ultimate competitive advantage comes from four things: rapid learning, rapid cycle execution, hassle-free partnering processes, and “step-ahead” service models
Survival In The Net Economy Requires . . . Vision Agility Speed Innovation Customer-Focus
Value Chains Move to Value Networks Value Chain Your Company e Alliance Customer Customer Customer Customer Customer Supplier Supplier Supplier Supplier Supplier Suppliers Customers Networked Value Web e Market Suppliers Customers Your Company
The eBusiness Challenge A view of the new eBusiness world
Conventional processes no longer achieve results because their assumptions no longer apply
Rapid change; speed
Parallel Development Paths
Conventional Assumptions eBusiness Environment
The eBusiness Environment More ways that the eBusiness world is truly new
Pure speed : Interactions and transactions can occur instantly. New products and services can appear in a matter of days.
Total access : The Internet obliterates the limits of geography, time, and market reach.
Low cost: The economics of electronic transactions are vastly different.
Customer control : The customer controls the interaction and can readily comparison shop.
Interactivity: The Internet is two-way, individually addressable communication, allowing for interactive, real-time communication with customers, suppliers, regulators, citizens- individual but on a mass scale
Lower barriers : Entry barriers have “virtually” disappeared. Agile eBusiness competitors can grow fast. Size carries less weight.
Interdependence : In electronic markets all the players in a value network are interconnected.
Proliferation of eBusiness models : There’s no limit to the number of ways to play in electronic markets.
Scalability: The Web allows you to grow your capacity or simply respond to a growing number of customers at virtually no incremental cost
eBusiness in Well-Established Companies Overview of Market Learnings (based on research of 50+ Fortune 500 firms)
Few clear-cut examples of success in eBusiness by well established firms (except for high-tech companies), although some traditional firms really “get it”.
Conventional measures of success (revenue, operating margin, and market share) are not the only indicators of success in this new economy.
Big rewards for early entry in order to gain market share & obtain best alliance partners for credibility
An emerging factor in a firm’s ability to form new alliances, create cutting edge partnerships, and close market-dominant acquisitions is the firm’s stock appreciation potential - the new deal-making currency
Customers have broader options (including price comparison, increased competitive offerings, and the ability to self-bundle product and services to uniquely meet their needs).
Innovators are looking beyond their own value chain . Market leaders are deploying multiple, flexible business models in an expanded Value Web in order to provide customer-centric solutions.
Redefining the Value Chain Producers and Verticals in the Agriculture Industry