E-Business Transformation: The Taiwan Experiment

1. E-Business Transformation: The Taiwan Experiment Su-Houn Vandy Liu Chung-Yuan Christian University vandy1020@yahoo.com.tw

2. Where is Taiwan ?

3. Topics • Information service as a core Delivery • Value and Value Proposition • e-Business Strategy • Business Model Development • Operation issues in e-Business • Business Re-engineering • Internet as a Tool for Digital Opportunity • Looking for the Future

4. Information service as a core delivery • What is ICT • Internet, Wireless network, Digital Phone… • When she is making a phone call ! • Your wife used to say: Is Mr. Liu still there ? • Now she says: Where are you ? • She will says: Why are you there ? • OK! Husbands will have a miserable life because of the ICT development. • But, So What ! • ICTs not only make change to those who make use of them • ICTs are changing your world

5. Business as usual ? • May be not ! • We are frogs in a heating water • Selling of CD records hit its historical low • Almost 50% sells has disappeared • Must be someone has stolen from us Why people still want to buy CDs ?

6. eBusiness Transformation? • Business 1.0 • A “Me Too” Enterprise • Protected by geographic barriers • Always try to keep their competitors away from them

7. eBusiness Transformation? • Business 1.0 • A “Me Too” Enterprise • Protected by geographic barriers • Always try to keep their competitors away from them • Business 2.0 • An Enterprise that is “Unique” • Protected by its competence or resources • Always try to cluster with their competitors to create the Network Effect Only 72 Baguettes per day

8. Value and Value Proposition • Selling Your Cake on the Net

9. Eslite Book StoreIts Myth and Mystery The World’s Biggest Bookstore : Eslite Books • Buy books from Eslite is more expensive • Eslite encourage their customers to read their books in the store • Most Eslite stores locate in districts that were considered too expensive for a book store to survive • But, Eslite is the most profitable chained bookstore in Taiwan What’s the difference ?

10. e-business is a chain-reaction that cause a co-evolution Traditional Book Store Eslite Book Store

11. Customers Recognize Satisfy FeedBack Value Proposition Create Deliver Businessman Business Model Implement Value Proposition • Ladies never ever buy any cosmetics • They are buying their beauty and youthhood

12. Customers Recognize Satisfy FeedBack Value Proposition Create Deliver Businessman Business Model Implement Value Proposition • Value proposition for bookstores • In Traditional Bookstores, they say: • We sell books • We are Distribution Channel • In Eslite Books, it says • We also provide relaxation • In an elegant but cheaper way Books + Relaxation

13. e-Business Strategy • Conducting Business Transactions through the Internet and the Web • The nature of the transaction ! • Value Creation Producer Retailer Customer

14. The case from Taiwan’s garment industry • Nan-Wei Textile & Garment is a famous Taiwanese garment manufacturer. • Nan-Wei received orders from Wal-Mart and other garment sellers from US and other developed country • Nan-Wei invest garment factory globally, including China, Mexico and even Swaziland in Africa • Orders manufacturing on certain garment factories (e.g. Taiwan) can delivered quicker than other factories • Orders manufacturing on certain garment factories (e.g. Swaziland) can be cheaper than other factories • No factory (even China) can be both quick and cheap What is the customers really want ? Quick Delivery or Cost-Down ?

15. Production Schedule Delivery Orders Working Orders Delivery Global Logistic System in Nan-Wei • Nan-Wei Competes Globally with Information Technology • Nan-Wei’s Global Logistic System? Wal-Mart Nan-Wei Factories Shipper

16. Change Your Business Model • What is a Business Model • A broad plan for what products or services a company plans to sell and how it plans to earn its revenue • A way to fulfill your value propositions and earn your profit. http://www.i-part.com.tw/

17. Reducing error and improving qualityAdvantech • Advantech is one of the leader of the industrial computer industry. • Over one million industrial computers installed all over the world make maintenance a nightmare for Advantech and its sales partners • Can we build up a configuration DB for those industrial computers Since we are selling these ind. computers, we have to deal with their users.

18. Advantech • After Advantech implemented its global configuration DB, their sales partners always complained the record is not correct. • But, those record are inputted by sales partners themselves • How to convince them to maintained the record ? • Maintenance parts inventory should be Advantech’s responsibility • Service charges will punish those sales partners that fail to maintain accurate configuration record

19. Advantech • With accurate configuration DB • A Structured Relationship was developed • Customer-centric • ePlatform service provider • Active Service • Effective Preventive Maintenance • New Product Marketing

20. Advantech • 2006, Business Weekly Names Advantech Second in "Best 100 Companies in Transformation" • Advantech has actively transformed its brand image, from “Your ePlatform Partner” to “Trusted ePlatform Services.” • Corp. Mission, 2006 • Advantech will no longer limit itself to simply being a hardware provider, but will offer integrated solutions and services, in order to nurture long-term partnerships with all its customers.

21. Operation issues in e-Business

22. Increasing speed of businessTaiwan Direct Shipment • Taiwan’s Notebook ＆ PC Industry • Overseas Buyers (Brand) • Dell, HP, IBM (Lenovo) , NEC, SONY … • Taiwan Companies (OEM Manufacturer) • Quanta, FIC, ACER, Asus, Delta…

23. What is Taiwan Direct Shipment • Dell want to skip the physical flow. And concentrate on the information flow Information Information DELL Shipment Quanta Computer End Customers

24. What is Taiwan Direct Shipment • 95-5 Project • 95% of the TDS order delivered in 5 days • 98-3-0 Project • 98% of the TDS order delivered in 3 days with 0% defect Information Information DELL TDS Shipment Quanta Computer End Customers

25. Business Process for TDS • Project Objectives • Increasing speed of business • Information transparency • All partners in the TDS must know what it should know instantly • Hierarchy-Clan-Market • Auto dispatching the information • Item number interchange • Digital nerve system

26. TDS Hub • Eliminate unnecessary sequential jobs Customers Dell TDS Hub Bank Quanta Suppliers Logistic Parties

27. Partnership Process for TDS • An fulfillment plan was generated after an order was entered the TDS system • Every partner have to guarantee its job will be finished on time • Available TO Promise (ATP) • Express delivery • Monitoring system • fulfillment plan work as a baseline for the monitoring system • Any bias will cause an alarm and request for amendment

28. System Architecture for TDS

29. Business Process Re-engineering • Why we want to change our business process ? • Because it is not serving your customer • Customer-Centric Vs. Product-Centric • Because it is serving the wrong customer • You treat your bad customer too good • But treat your good customer badly • Because the way you are doing is not efficient • It cost you too much but the customer still un-satisfy

30. Fortune Motors • Customers want to save their money on car repair • SO Fortune Motor install a centralized car repairing factory on suburban of Taipei • It can be cheaper because the economic of scale • But eventually fail to compete with small repair shop located in downtown • Because they are more convenience • Too bad…

31. Fortune Motors • We now provide truly reliable car repairing • With prompted service • Strategic partners • They used to be a car washer who clean up your car for you • Now they will take care of your car for you • You can sure that you car will be ready before you need it • It is reliable and convenience with no extra charges

32. Internet as a Tool for Digital Opportunity • Enabling hundreds of thousands of Taiwan micro businesses to use the internet and e-commerce in their business operations. • Although broadband internet penetration has reached most rural areas, most of these micro businesses are still not active or sophisticated users of information technology and the internet compared to larger businesses. • The project has staged a nationwide campaign to significantly bridge the digital divide to these underprivileged SMEs.

33. 1.1 million strong, SMEs constitute 90% of all businesses in Taiwan. 800,000 (73%) are micro-enterprises, employing 20 or less people. A total of 6 million people are employed by SMEs, working an average of 10 or more hours a day. Taiwan SMEs are known for their ability to quickly respond to market changes and seize new opportunities. Taiwan’s SMEs and their Roles in Our Society Just like the hummingbirds that working for pollination, our SMEs is also a critical enabler in our economic eco system. They have to works very hard to take flight and must constantly seek out sustenance to support its fast pace and development.

34. Target on the Mission Critical Application Collaborate with Private Groups Clusters and Communities Incubating for the Growth and Development of SMEs Lifelong and Full Function Support Link up with local resources E-business Transformation Strategy for the SMEs

35. Incubating Oriented • Building a Platform for Enterprise Start-up and Incubation to support entrepreneurial activity and innovation • SMEs should be in charge of their own project • BGO sell cosmetics through internet • 80% come from overseas Chinese • Smart guys! Right? www.bgo.com.tw

36. Incubating Oriented • In Taiwan, you can buy a bike from a bike shop cheaper then from the Internet ? • How’s this possible ?

37. Target on the Mission Critical Application • They are NOT ready! So Get them ready first • They will never get ready • Demand Driven Vs. Supply Driven • Learning by Doing • Marketing is a Communication process • Internet is a new communication channel • SMEs need to know more about communicate with others through the Internet ?

38. Marketing by Story Telling • Khun-pin was one of the most unlikely movie stars of 2005 in Taiwan. Along with his costars--his wife, two other farmers and a water buffalo--Ng acts exactly as he lives. • The septuagenarian rice farmer goes through his days in Tainan County's Houbi Township for the production of their film The Last Rice Farmers (2005). • The Chinese version of the unexpected hit literally translates to "no rice, be happy," a name derived from Ng's even-keeled outlook on the uncertainty of the harvest.

39. Then, on 2006 • Uncle Khun-pin win on the national rice contest of Taiwan • His rice sell NT$100,000 per Kg on an auction held after the contest • Uncle Khun-pin donate all his NT$1,000,000 bonus

40. A new industry was build after…

41. Clusters and Communities • In its second phase from 2008 to 2011. The project focuses on creating more "digital clusters" among Local SMEs. • A digital cluster means 10 or more SME in the vicinity of a community join together to own and operate a shared website to promote their product and services in the cyber market.

42. Clusters and Communities • Industry-Specific e-Commerce Project

43. Clusters and Communities • SME Supply Chain Management Integration Project

44. Lifelong and Full Function Support • SME Online University • the largest e-learning website in Asia Learning Platform • 24T1 broadband lines • 36Mbps data burst • 457 simultaneous online users • 8000Gb space Learning Platform • Courses: 988 • Members: 372,419 • Attendees: 24.09 million • Visitors: 8.84million Recent Week’s Figures • 1,122 new members • 26,696 members took classes • 75,890 visitors • 210,107 page views 44

45. Lifelong and Full Function Support • Digital Clusters and e-Communities • Virtual Community • Information Center • e Marketplace

46. Lifelong and Full Function Support 23 Local Service Centers Center / Local Associations SME Service Network Mechanism Entrepreneur Volunteers Bank Service Centers Virtual Internet Service www.moeasmea.gov.tw One-Stop Solution Center

47. Link up with local resources • The project recruited about 1000 local IT companies supervised by 12 task forces to deploy the information technology to those targeted micro businesses. • More than 450 community groups have been mobilized to facilitate the our projects

48. Collaborate with Private Groups Green Product Supply Chain Knowledge Network • 24% suppliers reduced cost • Each supplier reduced cost of NT$926K averagely, • and reduced NT$116M in total 1 • 66% suppliers increased manufacturing quality • Each supplier increased manufacturing quality of 44.46% 2 • 19% suppliers increased manufacturing ability • each supplier increased manufacturing ability of NT$1390K, and increased NT$139M in total 3 • 37% suppliers increased product delivery on time • Each supplier increased product delivery on time of 33.65% 4 • 19% suppliers increased revenue • Each supplier increased revenue of NT$1710K averagely, and • increased NT$171M in total 5 • 25% suppliers increased revenue growth • Each supplier increased revenue growth of 16% averagely 6

49. Collaborate with Private Groups OK Convenience Stores Company • e-Learning 2.0 solutions： • such as podcasting and mobile learning to fast identify experts • Results： • Increase the revenue of new promotion and pre-sale 49 49

50. Looking for the Future • The time when we are all cyborgs (cybernetic organisms)