E-Commerce Business Process Reengineering Project Management

1. E-CommerceBusiness Process ReengineeringProject Management Management Information Systems MBA Program

2. Marks & Spencer— A New Way to Compete • The Problem • UK-based, upscale, global retailer of high-quality, high-priced merchandise faces stiff competition, since economic slowdown that started in 1999 • Critical success factors • Customer service • Appropriate store inventory system • Efficient supply chain activities

3. Marks & Spencer (cont.) • The Solution • M&S realized that digital era survival depends on the use of information technology in general and electronic commerce in particular • Electronic commerce (EC, e-commerce)—a process of buying, selling, transferring, or exchanging products, services, and/or information via electronic networks and computers

4. Marks & Spencer (cont.) • M & S initiated several EC initiatives, including: • Security • Warehouse management • Merchandise receiving • Inventory control • Speeding up the supply of fashion garments • Collaborative commerce

5. Marks & Spencer (cont.) M&S is working with suppliers to better market products

6. Marks & Spencer (cont.) Information flow through the supply chain is important

7. Marks & Spencer (cont.) • The Results • M & S has become a leader and example setter in retailing, resulting in increased profitability and growth

8. Marks & Spencer (cont.) • What can we learn… • Traditional brick-and-mortar companies face increasing pressures in a competitive marketing environment • A possible response is to redesign operations by introducing a variety of e-commerce initiatives that can improve • supply chain operation • information • from raw materials through production • increase customer service • open up markets to more customers

9. The role of the Internet on organizational change • “Not surprisingly the Internet looms as an infrastructural technology that is enabling the disruption of many industries. Each of the innovations … in the form of a new technology or a new business model is now in the process of disrupting the established order… I believe that the future can be different if managers will recognize these disruptions for what they are and address them.”(C.M. Christensen, The Innovator’s Dilemma)

10. Change Becomes Constant • Change has become both pervasive and persistent • The pace of change has accelerated due to globalization of the economy and technological advancements • What’s driving this? • E-commerce

11. E-COMMERCE TECHNOLOGIES Electronic commerce – the electronic transmission of buyer/seller transactions and related information between individuals and businesses or between two or more businesses that are trading partners Page 239

12. E-Commerce and E-Business • Electronic commerce is the use of technology, in particular the Internet, to conduct business • e-commerce generally refers to buying or selling electronically, usually interactively • e-business refers to conducting business activities, including business to business activities, using electronic communication • e-[you fill in the blank]

13. E-COMMERCE TECHNOLOGIES • Will we see continued growth in e-commerce (Internet) applications? • Consider Metcalfe’s Law: • The value of a network to each of its members is proportional to the number of other users, expressed as (n2 – n) / 2 • There are increasing returns to be gained as more organizations and people use the Web Page 240

14. The Nature of Markets • In a free market economy, transactions take place where the downward sloping demand curve intersects the upward sloping supply curve. • The intersection of these two curves determines both the price and the quantity sold

15. Economics of E-Marketplaces

16. Economics of E-Marketplaces

17. Electronic Marketplaces • What are the functions of markets? • matching buyers and sellers • facilitating the exchange of information, goods, services, and payments associated with market transactions • providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market

18. EC Business Foci • Major types of e-commerce include: • business-to-consumer (B2C) : online transactions are made between businesses and individual consumers • business-to-business (B2B): businesses make online transactions with other businesses • intrabusiness EC: EC conducted inside an organization (e.g., business-to-employeesB2E)

19. Classification of EC by Transactions or Interactions • mobile commerce (m-commerce): • e-commerce transactions and activities conducted in a wireless environment • location-based commerce (l-commerce or LBS):m-commerce transactions targeted to individuals in specific locations, at specific times

20. E-BUSINESS MODELS Atomic Business Models Weill and Vitale proposition: The value propositions of eight business models differ according to the degree to which the following e-business assets are captured online: • Customer transaction – to capture revenue • Customer data – to capture data about customer’s purchasing needs • Customer relationship – ability to influence customer’s behaviors Page 251

21. E-BUSINESS MODELS Atomic Business Models (Based on Weill and Vitale 2001, Straub 2004) Figure 8.6 Business Models and Their E-Business Assets Page 251

22. E-BUSINESS MODELS Atomic Business Models (Based on Weill and Vitale 2001, Straub 2004) Figure 8.6 Business Models and Their E-Business Assets Page 251

23. Online direct marketing Electronic tendering systems (e.g., reverse auction) Name your own price Affiliate marketing Viral marketing Group purchasing Online auctions Product and service customization customization Electronic marketplaces and exchanges Value-chain integrators Value-chain service providers Information brokers Bartering Deep discounting Membership Supply chain improvers Typical Business Modelsin EC

24. Porter’s Competitive Forces Model: How the Internet Influences Industry Structure

25. E-Commerce Considerations • What products and service should we sell electronically? • How should we design our online store? • How do we avoid cannibalizing our existing sales channels? • What incentives should we provide for cooperation between those responsible for traditional and electronic sales and distribution? • How much should we invest in e-commerce? What is the likely return?

27. E-Commerce is Disruptive • Disruptive innovations perturbate existing markets • Simpler • Less Expensive • More functional • Etc.

28. Disruptions or Sustaining Solutions • Innovations can be either disruptive or Sustaining • How does the firm respond? • Does the innovation complement, compete, or replace existing products or services? • What is our business model?

29. In the end, we all need to face change • We can either play as winners or losers • Losers… • Resource dependent so let’s roll on • Small innovations don’t drive big firms forward so who cares • How do we use this new fangled device? I just don’t get it! • Who we are prevents us from changing • Processes • Values • The innovation doesn’t seem to fit our customers’ demand profile, but…

30. In the end, we all need to face change • We can either play as winners or losers • Winners • Find ways to embed projects to adapt innovations to the right customer • Size the projects right! Don’t integrate into the entire firm, start small with an enthusiastic team • Recognize and embrace failure recognizing that it’s the means to finding the right fit • Leverage but don’t rely on the mother ships’ resources • Look for new markets; don’t expect they will fit old models

31. How to respond to Innovations? • The challenge for existing firms faced with innovations is to recognize the potential for innovations that are disruptive or supportive to impact the firm • Much depends on how managers in the firm frame their strategy and business position

32. How to respond to Innovations? • Do we make hard drives or storage devices? • Do we do mail or movies or supply in-home entertainment? • Do we make computers or do we supply customers with technology that meets their needs? • Do we sell newspapers or are we information and content providers?