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What is E-Business and

Does it Still Matter
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Introduction

 “It is not the strongest of the species that survive, nor the most
intelligent, but the one most responsive to change”

Charles Darwin

 “If you’re not changing faster than your environment, you are
falling behind”

Jack Welsh, CEO of GE

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What is E-Business?
Where do we draw the line?

 Before we define what e-Business - and e-Commerce - is or isn't,

first let us following scenarios.
 Buy a piece of new software from the internet , the entire process is
conducted electronically, including payment and delivery – is this e-
Business (or e-Commerce)? Everyone will agree that the answer is yes.
 Buy a book from Amazon.com and find a book you want. Given the
distribution is done physically, would this be e-Business or e-
Commerce?
 Buying a new car, You search the Internet for product features best
deals. Then you print out the best deal and take it to the local car
dealer and demand the same offer. You then conclude the deal with
the local dealer, would you consider this e-Business or e-Commerce?
 Where we draw the line?
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What is E-Business?
Where do we draw the line?

 The way we define the concept will have significant implications for
the total size of e-Business activities.
 This is perhaps one major reason for the vastly different statistics and
forecasts on the size of e-Business in various contexts.
 It has been said that measuring the size of e-Commerce and e-
Business is like measuring a rubber band - the result depends on how
far you stretch it.
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What is E-Business?
Where do we draw the line?

 From a business perspective, this is a significant issue.

 For example, in the UK many people conduct desk research
through the Internet when choosing a mortgage.
 However, once they have found one or several acceptable deals, rather
than completing the transaction online most people will then visit either a
bank branch or an independent personal financial adviser to confirm the
details of the deal and then complete the transaction in person or by
phone.
 For a bank or building society, the Internet channel is perhaps not
profitable since only a tiny percentage of customers complete the
transaction online.
 However, people who have researched product information
through the Internet are much more likely to complete a deal than
someone just walking into a branch without such preparation.
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What is E-Business?
Where do we draw the line?

 According to some banks and building societies we have studied in

the UK,
 the chance of concluding a deal increases from
 one in twenty for those who did not undertake any research
 to one in three for those who have studied product information
beforehand via the Internet.
 So the significance of the Internet in selling mortgages cannot be
underestimated.
 Even though, strictly speaking, the Internet channel itself is perhaps
not profitable, it significantly increases the conversion rate in the
branches and on other channels.
 Closing down the Internet channel for mortgages (because of its low
profitability) will affect the profitability of other channels.
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What is E-Business?

 E-Business was a phrase first coined by IBM in its advertising

campaign in the 1990s.
 It was defined as 'the transformation of key business processes
through the use of Internet technologies'.
 Today, e-Commerce is commonly defined as electronic transactions
conducted by business partners, which can be both organizations
and individuals.
 In contrast, e-Business is much broader, referring not only to buying
and selling, but also to servicing customers, collaborating with
business partners, and conducting electronic transactions within an
organization.
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What is E-Business?

 Jelassi and Enders defined e-Business as the use of electronic means

to conduct an organization's business internally and/or externally.
 They specifically emphasized the inclusion in their definition of
internal e-Business activities, including the linking of an organization's
employees with each other through an Intranet to improve
information sharing, facilitate knowledge dissemination and support
management reporting.
 E-commerce is regarded as a subset of e-Business. which deals with
the facilitation of transactions and selling of products and services
online, either via the Internet or via any other telecommunications
network.
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What is E-Business?

 Jelassi and Enders defined e-Business as the use of electronic means

to conduct an organization's business internally and/or externally.
 They specifically emphasized the inclusion in their definition of
internal e-Business activities, including the linking of an organization's
employees with each other through an Intranet to improve
information sharing, facilitate knowledge dissemination and support
management reporting.
 E-commerce is regarded as a subset of e-Business. which deals with
the facilitation of transactions and selling of products and services
online, either via the Internet or via any other telecommunications
network.
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What is E-Business?

 such definitions are, however, not universally accepted.

 For example, Turban et al. defined e-Commerce find e-Business
interchangeably, to include transactions both within and between
organizations.
 In this book, a broad definition of e-Business is adopted, which
encompasses all internal and external electronically based activities
and processes - private and public sectors. E-commerce is part of e-
Business, which focuses on electronic commercial transactions
between and amongst organization and individuals.
What is E-Business? … continued 11

‘E-business is all about time cycle, speed, globalization, enhanced

productivity, reaching new customers and sharing knowledge
across institutions for competitive advantage’

-- Lou Gerstner, ex CEO of IBM

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What is E-Business … continued.

 Not just about dot com’s and Internet only companies

 Transform existing businesses through the Internet and related
technologies
 Integration within and between organisations – break down barriers
and boundaries
 Enabling new possibilities – new ways of doing business - not possible
in the past
 Origin go back several decades
 A wealth of knowledge already available - through large research
programmes
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ICTs and Business
Transformation
 There have been numerous studies on the evolution of ICTs and the
associated business transformation in various contexts
 Different from corporate networks which are largely proprietary in
nature and private in their usage, a large part of the Internet is an
open, public communications infrastructure, and it enables
organizations to develop the capabilities needed to improve the
flows of information and business intelligence amongst all their
stakeholders.
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ICTs and Business
Transformation
 A company can now exchange information with any customer,
supplier or business partner without the need to establish and
maintain costly proprietary networks.
 In particular, with the rapid reduction in costs, the Internet is
increasingly becoming a public infrastructure and even small and
medium sized enterprises (SMEs) and individuals have increasing
access to the vast resources and capabilities embedded in it.
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E-business and E-commerce

 Electronic business or e-business is the use of ICT to improve business

(from the use of email to facilitate administrative procedures in
buying and selling through the Internet).

Electronic commerce or e-commerce is where business transactions

take place via electronic communication networks, especially the
Internet.
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E-business vs. E-commerce

 The main difference between them is that e-commerce defines

interaction between organizations and their customers, clients, or
constituents. On the other hand, e-business is broader term that also
encompasses an organization’s internal operations.
 Electronic commerce describes the buying and selling of products,
services, and information via computer networks including the
Internet,
 where e-Business describes the broadest definition of EC. It includes
buying and selling of products and services, servicing customers,
collaborating with business partners, and conducting other intra-
business tasks.
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E-business vs. E-commerce

Three alternative definitions of the relationship between e-business and e-commerce

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E-Business concepts..

E-business defined from the following perspectives:

 Communications: delivery of goods, services, information, or

payments over computer networks or any other electronic means

 Commercial (trading): provides capability of buying and selling

products, services, and information on the Internet and via other
online services
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E-Business concepts..

 Business process: doing business electronically by completing

business processes over electronic networks, thereby substituting
information for physical business processes

 Service: a tool that addresses the desire of governments, firms,

consumers, and management to cut service costs while improving
the quality of customer service and increasing the speed of service
delivery
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E-Business concepts..

 Learning: an enabler of online training and education in schools,

universities, and other organizations, including businesses

 Collaborative: the framework for inter and intra organizational

collaboration

 Community: provides a gathering place for community members to

learn, transact, and collaborate
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Dimensions of e-business/e-commerce

 Pure vs. Partial: based on the degree of digitization of:

- Product
- Process
- Delivery agent
 Traditional commerce: all dimensions are physical
 Pure e-business: all dimensions are digital
 Partial e-business: all other possibilities include a mix of digital
and physical dimensions
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The boom and burst of the
Internet bubble

 The evolution of e-Business since the mid-1990s has been well

documented.
 Jelassi and Enders used the theory by Carlota Perez on
technological revolution to analyze the evolution of e-Business.
 They found that the evolution of e-Business followed a similar cycle
to other technological revolutions in the past.
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The boom and burst of the
Internet bubble

 Perez divided a technological revolution into two consecutive

periods - the installation period and the deployment period,
 Jelassi and Enders used this framework to analyze the evolution of
e-Business. Using data from Nasdaq (National Association of
Securities Dealers Automated Quotations) and many real-life
examples,
 Jelassi and Enders classified the evolution of e-Business into four
periods,
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The boom and burst of the
Internet bubble

 The first period was before the widespread commercial use of the
Internet, which Jelassi and Enders called the grassroots of e-Business.
 In fact, the commercial application of EDI (electronic data
interchange)
 between 1983 and 1993 the Nasdaq almost doubled from 350 to
700. This period corresponds to Perez's irruption period.
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The boom and burst of the
Internet bubble

 The rise of the Internet, the second period, started in 1995 with the
launch of Amazon.com, which corresponded to the frenzy period in
Perez's technological revolution model.
 great belief in the seemingly unlimited potential of the Internet.
 The Nasdaq rose sharply from under 1,000 in 1995 to well over 4,500
in March 2000!
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The boom and burst of the
Internet bubble

 Many companies ignored business fundamentals in pursuit of rapid

growth and market share, which ultimately resulted in the
spectacular dot.com crash in 2000 and 2001.
 Between 10 March and 14 April 2000, the crash period, the Nasdaq
dropped a 1,727 points (54 per cent), and by the end of 2000 it had
fallen 45 percent.
 This market crash was not unexpected, but the frenzy prior to the
crash and a series of other conditions meant that the momentum
continued until it became unsustainable.
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The boom and burst of the
Internet bubble

 The fourth period, the improving phase, began in late 2000

 All key stakeholders, including investors, have return to business
fundamentals
 since 2002 and 2003, many of the survivors of the dot.com crash
have turned profitable and the stock market has started to recover
steadily.
 The emphasis is no longer on technological innovation but instead
on how to make the technology easy to use, reliable, secure and
cost efficient.
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The duration and scale of internet
bubble

 The beginning of the Internet bubble is difficult to pinpoint because,

since 2000, the Nasdaq has been hit by two major developments.
 One was the 11 September 2001 terrorist attack on the USA, and
 the other was the increasing realization that it is extremely difficult to
translate technological excellence in ICTs into durable profits.
 The main beneficiaries of innovations in ICTs have been business
users, such as Wal-Mart and its shareholders and customers, rather
than the workers, entrepreneurs and financiers of Silicon Valley.
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The duration and scale of internet bubble

 Before moving to the next section, several points need to be

emphasize first is that
 the evolution of e-Business is much more than the rise and fall of
Internet start-ups,
 E-business is perhaps more importantly about enabling companies to
conduct business and main activities and processes and external
relations in ways superior to, and often impossible, in the past.
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The duration and scale of internet bubble

 The underlying rapid growth of the network society and economy,

in terms of the number of people and organizations getting online
and the business volume of e-Commerce. has continued even
during economic downturns.
 The internet has become an increasingly important part of
consumers' everyday lives banking, amusement and education.
 Furthermore, the Internet has become part of mainstream business
culture, fulfilling its promise as a medium that can connect
consumers and organizations and cut red tape from transactions.
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The duration and scale of internet bubble

 The debate on pure plays (internet only companies) versus multi-

channels –remain unresolved
 But today Web sites are necessary for any business -
 Many organizations are leveraging the potential of the Internet to
deliver significant value to their customers and at the same time
being highly profitable.
 E-Commerce still only a small section of the economy (e.g. e-
commerce < 5% of retailing)– ‘big bang’ yet to come
 Not the end – the fun has just started !
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E-Business Classification

 Business to Business (B2B)

 E-business activities between two or more organizations.
 both the private and public sectors, but more recently e-government
 Business-to-consumer (B2C)
 Business that sells products or provides services to end-user consumers
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E-Business Classification

 C2B (Consumer to Business).

 individual selling products or services to organizations
 Consumer to Consumer (C2C):
 consumers sell directly to other consumers via the Internet. The most
prominent example of this is eBay
 C2B2C
 because the transactions between individuals are often facilitated or
enabled by a business in the middle.
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E-Business Classification

 Intra-organizational e-Business:
 includes all internal activities and processes that are enabled by Internet
technologies.
 Government to Business (G2B):
 E-Business activities between government agencies or departments and
business organizations
 Government to Citizens (G2C):
 Electronic communications and information exchanges between
government agencies and individuals or citizens.
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E-Business Classification

 Internet-enabled activities
 Activities between and amongst other non-business institutions and
individuals
 The terms used to describe such activities include e-Learning or e-Health,..
 There are also many other common terms to describe e-Business
activities in particular domains or sector
 such as e-Music, e-Banking (Internet banking), e-Books, e-Publishing,
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The Context for E-Business:
why E-Business? Why Now?

 that the essence of the Internet and early generations of software

innovations like e-mail was that they allowed groups to work
together more effectively.
 It was not just another one-to-many broadcast medium like
television or a one-to-one medium like the telephone. It did both
those things and also allowed for many-to-many communications -
something that could never be done before outside of physical
gatherings.
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The Context for E-Business:
why E-Business? Why Now?

 this book the phrase information and communications technologies

(ICTs) - rather than information technology (IT) –
 to emphasize the critical importance of not only information but
also the communication and distribution of information over space
and time.
 The need for accurate, up-to-date, relevant information has
created an enormous demand pull for new technologies as well as
new techniques to manage and deploy the most important
resource of the economy (i.e. information) efficiently.
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The Context for E-Business:
why E-Business? Why Now?

 The information and communication capabilities afforded to us by

the Internet technologies, is key to economic and business success.
 A trend to combine the capabilities of Internet technologies with the
content (which happens to be the most important resource in the new
economy)
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The Context for E-Business:
why E-Business? Why Now?
 This still leave the question of 'why now'?
 As with many other technological revolutions, it takes time for the
technology to proliferate and become widely accessible and
affordable.
 More importantly, it is not sufficient just to have the appropriate
technology in place. Managers and workers need to be willing and
able to abandon previous ways of doing things and start using the
new technology in such a way that it actually creates value.
 This takes time and requires a lot of experimenting and fine tuning.
 Only when the development has reached a critical point can the
revolutionary effects be widely felt.
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Context for E-Business

 All industries became information-intensive

 Information – and communication – are crucial to success of
industrial & commercial operations
 Fast growing ICTs & information industries
 Profound Impacts on what activities locate where, how territories
administered, markets served, linkages maintained between
customers & suppliers
 Need for new strategies, business models & organisational designs
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E-Business Models

 E-Shops – web marketing or a shop (B2C)

 E-Procurement – E-tendering & procurement of goods and services
 E-Shopping Centres/E-Malls– a collection of E-shops
 E-Auctions – E-implementation of bidding mechanisms
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E-Business Models .. continued

 Virtual Communities – members with common interests

 Collaboration Platforms – tools & info. environment for members to
collaborate
 Third-Party Marketplaces – leaving web marketing to third party
 Value-Chain Integrators
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E-Business Models .. continued

 Value-Chain Service Providers – support part of

value chain (e-logistics, e-payments)
 Information Brokerage, Trust and other services –
business information and consultancy; trusted third
party services
 Others (e-betting/gambling; syndication ……)
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Implications of E-Business:
Fundamental and Pervasive transformation

 New strategy & business models

 New organisational designs
 New inter-organisational relations
 New work organisation and new ways of Working
 Others …
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Organisational implications

 Two ways to beat competition and succeed in the

market:
 Product/service innovations
 Organisational/managerial innovations
 Organisational innovations essential to efficiency and
competitiveness
 Internet enables new organisational designs/new
ways of doing business – often in ways impossible in
the past
 Within AND between organisations – the entire
value/supply chain/network
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De-Construction of Integrated Businesses

 What does your company really do?

 Customer relationship business - scope
 Product innovation and commercialisation businesses - speed
 Infrastructure management businesses - scale
 Unnatural Bundle – everything operate at sub-optimal level
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Customer Relationship

 Driven by scope economy

 Customer service-oriented culture
 Customisation – developing relationship with
them and understand their needs
 Offer as many products as possible to maximise
selection for customers
 Tailor bundles of products and services to
capture a larger share of wallet
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Product Innovation & Commercialisation

 Driven by speed – the faster the better

 Using all possible distribution channels to reach
customers
 Organisational culture geared to attract and
retain creative talents
 Operations tailored to serve the needs of creative
talents for breakthrough innovations
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Infrastructure Management

 Driven by scale economy – pumping as many products through it

as possible
 Full utilization of facilities & low cost operations
 Culture – cost reduction & standardisation