Comp1503 E-Business/E-Commerce History and Trends

Daniel L. Silver, Ph.D.

Theme
To thrive in the e-commerce world, companies need to structurally transform their internal foundations to be effective. They need to integrate their applications into a potent e-business infrastructure.
from the E-Business: Roadmap for Success by Dr. Ravi Kalakota

2001

Daniel L. Silver

Outline
History of E-Commerce/E-Business Effects of E-Commerce/E-Business Trends effecting E-Commerce/E-Business The Rules of E-Business Constructing the E-Business Architecture

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History of E-Commerce

ARPAnet created in 1969 (evolved to TCP/IP) Personal computers exploded in 1981

Processing power increases, cost decreases

LANs and WANs became requirements in 1980s The Internet was of significant size by mid 1980s WWW started in 1990 with HTTP and HTML General browser technology created in 1993 (used HTTP, ftp, gopher, and .gif and .jpg images) Search engines soon followed (AltaVista, Lycos)
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History of Internet Growth

B.C. Novelty Utility Ubiquity

Users,sites, traffic,revenue

1992 1993 1994 1995 1996 1997 1998 1999 2000

Experimental Build-out Mainstream awareness Real applications Useful, safe, fun Transparent Omnipresence

Reid, 1997

History of E-Commerce

Businesses transformed Internet technologies into intranets, extranets to solve integration problems Object Oriented Programming (Java) and the Web provide new client-server paradigm Audio (.wav), video (.mpg), animation (Flash) standards Broadcast and Push technologies, e.g. PointCast Portals, intelligent web agents, personalization General telecom (audio, video) over IP Wireless Internet access (cell phones and PDAs) pervasive computing

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Key Technologies Enabling E-Commerce Evolution

Decreasing cost of increasingly more powerful hardware GHz processors, Mb nets,GB drives Integration of voice, data, image, video data Distributed database methods Graphical user interfaces (GUI) Communications (TCP/IP, HTTP) protocols and content/ publication (HTML, XML) standards Object oriented methods (Java, J2EE, ORB) Lightweight electronics for mobile IT (Palm, RIM, Pocket PC)
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Business Evolution on Web

Processes Transactions
Functionality

Web-enabled applicatons

Interactivity
Dynamic web pages

Publishing
Static web pages
Time or Maturity
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Effects of E-Commerce
Spam Bandwidth load shift Work load time shift Work place shift Play time shift Growth of on-line virtual communities Privacy challenges / new privacy products

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Effects of E-Commerce

Promises of wealth creation beyond your wildest dreams seemed unbelievable well it was!! Reducing TV consumption? Dynamic and free content Uncharted legal issues Reinforcing media / converging media Access to commodities such as prescription drugs without normal levels of control

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Effects of E-commerce

Credit card fraud Tax avoidance Many new copyright issues Free access to information
How to save a life (CPR, FirstAid, choking)

Accuracy of information sources in question Hacking and computer viruses Shifting barriers of competition Disintermediation and reintermediation
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Where has E-Commerce Had the Greatest Impacts?

Postal service Real estate Communications Radio / TV Finance (banks) Entertainment Travel agents Stock brokers

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What do all these Businesses have in common?

Information = $ Time = $ Client self-service is acceptable
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Pre- dot.com Crash 8 Rules of E-Business

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2.

3.

4.

Technology is the cause and driver, it is no longer an after thought Information collection, integration and timely dissemination is the business Outdated business processes must go or your business will die Create flexible outsourcing that excites customers
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Pre- dot.com Crash 8 Rules of E-Business

5.

6.

7.

8.

E-Commerce means: the cheapest, the most familiar or the best Enhance the entire experience around the product (selection, order, receipt, service) Promote reconfigurable business models to meet customer needs The tough task: Align business strategies and processes fast, right, and all at once
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Before the dot.com Crash

1995-2000 $125B in financial capital sunk into the new dot.com companies from venture capitalists and later mutual fund holders The vision was an easily accessible world-wide market that was self-regulated The extraordinary profits would go to first movers the new intermediaries The first E-Commerce period was driven by goldrush fever Few real objectives, few business plans, few winners
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Reasons for the dot.com Crash

Corporate America was rebuilding their internal business systems in 1999-2000, when this completed Crash! Huge competition in the telecomm. Industry caused revenue to Crash! Xmas 1999 showed that E-Comm shopping was not really that popular Crash! Re-valuations of IT companies (dot.coms) Crash!

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Lesson from the dot.com Crash

From technology perspective E- !

Ramp-up from 1000s to 1000000s of users A solid technological base

From business perspective -Commerce?

Only ~ 10% of dot.coms survived
Remember eToys.com, Furniture.com

Yet B2C sales growing at ~50% per year Users have learned to use the web for information about products and services
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Trends effecting E-Commerce/E-Business

Consumer Trends
Speed of Service, Self-Service (empowerment) Integrated solutions, not piecemeal products

Service/Process Trends
Convergence of sales and service Long-term Customer Relationship Management Flexible fulfillment and service delivery

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Trends effecting E-Commerce/E-Business

Organizational Trends
Brand not capital: contract JIT manufacturing Retain the core, outsource the rest Increase process visibility (to customers, suppliers) Employee retention, cont. learning/innovation

Technology Use Trends

Enterprise wide applications, use middleware for integration Integrate voice, data, video comm. channels Handheld and wireless an explosion !

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Five Major Predictions for the E-Commerce Future

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2. 3. 4.

5.
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E-Commerce technology take-up will continue to grow by ~50% until about ~2006 and more after that. E-Commerce prices will rise to cover real costs of doing business on the web E-Commerce profits will rise to meet levels of bricks and mortar stores Major players will become the experienced Fortune 500 companies who have been watching (eg. WalMart, Sears, JC Penny, the Gap) The number of successful dot.coms will further reduce and adopt clicks and bricks strategies
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Constructing the E-Business Architecture

The New Era of Cross-Functional Integrated Applications

Middleware Procurement Management Supply Chain Management

Enterprise Resource Knowledge Planning Management Selling Customer Chain Relationship Management Management
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Constructing the E-Business Architecture

The New Era of Cross-Functional Integrated Applications

CRM = Customer Relationship Management ERP = Enterprise Resource Planning SupCM = Supply Chain Management SellCM = Selling Chain Management PM = Procurement (Operational Resource) Management Middleware = Integration Applications KM = Knowledge Management (DW/Analytics)

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Constructing the E-Business Architecture

CRM = Customer Relationship Management

Marketing, Sales, Service

ERP = Enterprise Resource Planning

Forecasting and Planning Purchasing and Material Management Inventory Management Finished Product distribution Accounting and Finance
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Constructing the E-Business Architecture

SupCM = Supply Chain Management

Market demand Resource and capacity constraints Real-time scheduling

SellCM = Selling Chain Management

Product Customization Pricing, Contract and Commission Management Quote and Proposal Generation Promotions Management
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Constructing the E-Business Architecture

PM = Procurement Management
Office Supplies, Business Travel, Entertainment, Service contracting, IT h/w, s/w and networking

KM = Knowledge Management (DW/Analytics)

Data Warehousing Business Analytics (data mining) Executive Info Systems, Decision Support Systems

Middleware = Integration Applications

e.g. SAP (ERP) to SAS (KM)

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The E-Business Architecture

Partners, Suppliers

SupCM

PM

Employees

ERP

KM

Stakeholders

Middleware SellCM CRM

Customers, Distributors
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Question

In Groups of 2 or 3 answer the following:

What do you predict to be the most significant new trend (paradigm) in E-Business / E-Commerce? Who will be affected the most by this trend?

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THE END