Lecture 3 E-Business and E-Commerce PDF

Announcement Lab Assignment1 (under “Lab Assignment” in the Moodle) - Is in the moodle site during week 4 lab. - This is a closed book individual quiz. - This quiz comprises 5 questions similar to the lab exercise. - In each question, you need to write the text answer clearly. -...

Announcement Lab Assignment1 (under “Lab Assignment” in the Moodle) - Is in the moodle site during week 4 lab. - This is a closed book individual quiz. - This quiz comprises 5 questions similar to the lab exercise. - In each question, you need to write the text answer clearly. - The total time allowed is 50 minutes for the quiz. - Based on the lecture and lab contents allocated for weeks 1-3. - Students must attend the lab for the quiz. - So study and be prepared. Lecture 3: E-Business and E-Commerce ISIT224 Management Information Systems Lecture Outline E-Business Information systems (IS) and business processes IS for management and linkage of the enterprise IS in collaboration and social business E-Commerce E-Commerce, digital markets and digital goods M-Commerce in business  E-Business: learning objectives What are business processes? How are they related to information systems? How do systems serve the different management groups in a business, and how do systems that link the enterprise improve organisational performance? Why are systems for collaboration and social business so important, and what technologies do they use? What is the role of the information systems function in a business? What are business processes? Business processes Logically related set of activities/steps that define how specific business tasks are performed. Involves the flow of material, information and knowledge among the participants in business processes. May be tied to functional area or be cross-functional Note that every business is a collection of business processes. What are business processes? The performance of a business firm depends on how well its business processes are designed and coordinated A company’s business processes can be a source of competitive strength if they enable the company to innovate or to execute better than its rivals. Business processes can also be liabilities if they are based on outdated ways of working that impede organizational responsiveness and efficiency. Business processes may be assets or liabilities efficiency, quality, customer satisfaction, cost Examples of functional business processes Manufacturing and production Assembling the product Challenge yourself: open Sales and marketing questions Identifying customers Selling the product Finance and accounting Creating financial statements which of this business Managing accounts receivable processes is an asset Managing accounts payable and which is a Human resources liability? Hiring employees Paying staff salary Order fulfillment: A cross-functional business process How Information System Improves Business Processes Increasing efficiency of existing processes – Automating steps that were manual Enabling entirely new processes o Changing flow of information – Replacing sequential steps with parallel steps – Eliminating delays in decision making – Supporting new business models How do systems serve the different management groups? Transaction processing systems – Serve operational managers and staff – Perform and record daily routine transactions necessary to conduct business Examples: sales order entry, payroll, shipping – Allow managers to monitor status of operations and relations with external environment – Serve predefined, structured goals and decision making A Payroll TPS Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Management Information Systems Serve middle management Provide reports on firm’s current performance, based on data from TPS Provide answers to routine questions with predefined procedure for answering them Typically have little analytic capability How Management Information Systems Obtain Their Data from the Organisation’s TPS Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Sample MIS Report Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Decision support systems Serve middle management Support nonroutine decision making – Example: What is the impact on production schedule if December sales doubled? May use external information as well TPS / MIS data DSS could be model driven or data driven Executive Support Systems Support senior management Address nonroutine decisions – Requiring judgment, evaluation, and insight Incorporate data about external events (e.g., new tax laws or competitors) as well as summarised information from internal MIS and DSS Example: Digital dashboard with real-time view of firm’s financial performance How do systems that link the enterprise improve organisational performance? To answer this question, we will need to understand enterprise applications. Enterprise Applications Systems for linking the enterprise Span functional areas Execute business processes across the firm Include all levels of management There are four major enterprise applications: – Enterprise systems – Supply chain management systems – Customer relationship management systems – Knowledge management systems Enterprise Application Architecture Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Enterprise Systems Collect data from different firm functions and store data in single central data repository Resolve problems of fragmented data Enable: – Coordination of daily activities – Efficient response to customer orders (production, inventory) – Decision making by managers about daily operations and longer-term planning Supply Chain Management (SCM) Systems Manage firm’s relationships with suppliers Share information about: – Orders, production, inventory levels, delivery of products and services Goal: – Right amount of products to destination with least amount of time and lowest cost Customer Relationship Management (CRM) Systems Provide information to coordinate all of the business processes that deal with customers – Sales – Marketing – Customer service Help firms identify, attract, and retain most profitable customers Knowledge Management Systems (KMS) Support processes for capturing and applying knowledge and expertise – For example, how to create, produce, and deliver products and services Collect internal knowledge and experience within firm and make it available to employees Link to external sources of knowledge Network resources used to increase integration and expedite the flow of information Intranets – Internal company websites accessible only by employees Extranets – Company websites accessible externally only to vendors and suppliers – Often used to coordinate supply chain Why are systems for collaboration and social business so important, and what technologies do they use? What Is Collaboration? Collaboration is the process of two or more people working together within or across organisations to complete a task or achieve a goal. – Short lived or long term – Informal or formal (teams) Growing importance of collaboration – Changing nature of work – Growth of professional work—“interaction jobs” – Changing organization of the firm – Changing scope of the firm – Emphasis on innovation – Changing culture of work What Is Social Business? Social business – Use of social networking platforms (internal and external) to engage employees, customers, and suppliers. Aims to deepen interactions and expedite information sharing. “Conversations” Requires information transparency – Driving the exchange of information without intervention from executives or others Application of Social Business? Business Benefits of Collaboration and Teamwork Investments in collaboration technology can bring about organisational improvements Benefits – Productivity – Quality – Innovation – Customer service – Financial performance Profitability, sales, sales growth Business Benefits of Collaboration and Teamwork Requirements for Collaboration Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Building a Collaborative Culture and Business Processes “Command and control” organisations – No value placed on teamwork or lower-level participation in decisions Collaborative business culture – Senior managers rely on teams of employees – Policies, products, designs, processes, and systems rely on teams – The managers purpose is to build teams Tools and Technologies for Collaboration and Social Business E-mail and instant messaging (IM) Wikis Virtual worlds Collaboration and social business platforms – Virtual meeting systems (telepresence) – Cloud collaboration services (Google Drive, Google Docs, etc.) – Microsoft SharePoint and IBM Notes – Enterprise social networking tools Checklist for Managers: Evaluating and Selecting Collaboration and Social Software Tools Time/space matrix Six steps in evaluating software tools – Identify your firm’s collaboration challenges – Identify what kinds of solutions are available – Analyse available products’ cost and benefits – Evaluate security risks – Consult users for implementation and training issues – Evaluate product vendors The Time/Space Collaboration and Social Tool Matrix Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved  What is the role of the information systems function in a business? 36 The Information Systems Department Often headed by chief information officer (CIO) – Other senior positions include chief security officer (CSO), chief knowledge officer (CKO), chief privacy officer (CPO), chief data officer (CDO) Programmers Systems analysts Information systems managers End users Organising the Information Systems Function IT governance: it is about using IT efficiently and effectively. – Strategies and policies for using IT in the organisation – Decision rights – Accountability – Organisation of information systems function Centralized, decentralized, and so on  End of E-Business. Have a short break!   E-commerce: learning objectives What are the unique features of e-commerce, digital markets, and digital goods? What are the principal e-commerce business and revenue models? How has e-commerce transformed marketing? How has e-commerce affected business-to-business transactions? What is the role of m-commerce in business, and what are the most important m-commerce applications? What issues must be addressed when building an e-commerce presence? Differentiating E-business, E-commerce, and E-government E-business – Use of digital technology and Internet to drive major business processes E-commerce – Subset of e-business – Buying and selling goods and services through Internet E-government – Using Internet technology to deliver information and services to citizens, employees, and businesses E-commerce Today Began in 1995 and grew exponentially; still stable even in a recession Companies that survived the dot-com bubble now thrive The new e-commerce: social, move from desktop to smartphone What are the unique features of e-commerce? Ubiquity – Marketspace is virtual – Transaction costs reduced Global reach – Transactions across cultural and national boundaries Universal standards – One set of technology standards: Internet standards Richness – Supports video, audio, and text messages What are the unique features of e-commerce? Interactivity Information density – Greater price and cost transparency – Enables price discrimination Personalization/customization – Technology permits modification of messages, goods Social technology – Promotes user content generation and social networking Key Concepts in E-commerce: Digital Markets and Digital Goods in a Global Marketplace Internet and digital markets have changed the way companies conduct business Information asymmetry reduced Menu costs, search and transaction costs reduced Dynamic pricing enabled Switching costs Delayed gratification Disintermediation The Benefits of Disintermediation to the Consumer Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Digital Goods Goods that can be delivered over a digital network Cost of producing first unit is almost entire cost of product Costs of delivery over the Internet very low Marketing costs remain the same; pricing highly variable Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.) Types of E-commerce Three major types - Business-to-consumer (B2C) Example: BarnesandNoble.com - Business-to-business (B2B) Example: ChemConnect - Consumer-to-consumer (C2C) Example: eBay E-commerce on mobile platform – Mobile commerce (m-commerce) What are the principal e-commerce business models? Portal  Provides initial point of entry to the web along with specialiased contents and other services.  Examples are Yahoo, Bing, Google E-tailer  Sell physical products online.  Examples are Amazon, Blue Nile Content provider  Generates revenue from providing online digital contents like music, news, photos, etc.  Examples are WJS.com, Gettyimages.com, iTunes.com, Games.com Transaction broker  Processes online transactions for a fee.  Examples are Etrade.com, Expedia Market creator  Provides a digital market environment for buyers and sellers to meet and transact  Examples are eBay, Priceline.com, Exostar Service provider  Provides applications as a service such as online data storage and backup, photo sharing, etc.  Examples are Dropbox, Google Apps, Photobucket.com Community provider  Provides an online social platform for people of similar interest to share information.  Examples are Facebook, Twitter, Google+ What are the principal e-commerce revenue models? Advertising  Attract visitors with free contents, retain user attention (stickiness) and show them paid advertisement.  Most widely used revenue model  Examples  Google through AdSence (selling ad space), AdWord (selling keywords)- now Google Ad, and DoubleClick now under Google Marketing Platform.  Facebook, Twitter, Yahoo and others Sales  Selling goods, information or services to customers  May rely on micropayment (e.g., iTunes Store)  Examples  Amazon, LLBean.com, Gap.com, iTunes, The Iconic, etc.  Twitter (selling historical data through GNIP) What are the principal e-commerce revenue models? … continue Subscription  Charges (yearly/monthly) subscription fees for access to service or content  Examples  Netflix, Match.com, eHarmony, Wall Street Journal, New York Times Free/Freemium  Offer free services or contents on the basic features and charges for more advanced or special features  Examples  Pandora, Spotify, LinkedIn, Google Drive Transaction Fee  Charges a fee for enabling or processing a transaction  Examples  Ebay auction marketplace, WorldRemit, Forex.com Affiliate  Websites that send visitors to other websites in return for a referral fee (also called lead generation fee)  Examples  Blogs, Epinions, Yelp, MyPoints, etc.  How Has E-commerce Transformed Marketing? Internet provides new ways to identify and communicate with customers. Native advertising (also called organic advertisement) – This is the integration of advertisement with web content Long tail marketing: – delivering product and services to many niche markets Behavioral targeting – Tracking online behavior of individuals Programmatic ad buying – Using computer software to buy digital ads. – It relies on Demand-side platform (DSP): a system that allows buyers of digital ads inventory to manage multiple ad exchange and data exchange accounts through one interface. Examples include Adform, AppNexus, The Trade Desk, etc. Ad exchange: a technology platform that facilitates the buying and selling of media ads inventory from multiple ad networks. Examples are AOL's Marketplace, Microsoft Ad Exchange, OpenX, Smaato. Website Visitor Tracking Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Website Personalization Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved Social E-commerce and Social Network Marketing Social e-commerce based on digital social graph Features of social e-commerce driving its growth – Newsfeed – Timelines – Social sign-on – Collaborative shopping – Network notification – Social search (recommendations) Social media – Fastest growing media for branding and marketing Social E-commerce and Social Network Marketing…continues Social network marketing – Seeks to leverage individuals’ influence over others – Targeting a social network of people sharing interests and advice – Facebook’s “Like” button – Social networks have huge audiences Social shopping sites, e.g. Pinterest Wisdom of crowds Crowdsourcing How Has E-commerce Affected Business- to Business Transactions? U.S. B2B trade in 2015 is $14.6 trillion – U.S. B2B e-commerce in 2015 is $6.2 trillion (43%) Internet and networking helps automate procurement Variety of Internet-enabled technologies used in B2B – Electronic data interchange (EDI) – Private industrial networks (private exchanges) – Net marketplaces Electronic Data Interchange (EDI) Computer-to-computer exchange of standard transactions such as invoices, purchase orders Major industries have EDI standards – Define structure and information fields of electronic documents More companies are moving toward web-enabled private networks – Allow them to link to a wider variety of firms than EDI allows – Enable sharing a wider range of information Electronic Data Interchange Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved New Ways of B2B Buying and Selling Private industrial networks – Also called private exchanges – Large firm using a secure website to link to suppliers and partners – Example is VW Group Supply used by Volkswagen to coordinate with its suppliers Net marketplaces (e-hubs) – Single digital marketplace for many buyers and sellers – May focus on direct goods (used directly for production) or indirect goods (not used directly for production, e.g., office supplies). – May be a vertical marketplace (same industry) or horizontal marketplace (multiple industries) – An example is Exostar providing industry-specific service A Private Industrial Network Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved A Net Marketplace Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved What Is the Role of M-commerce in Business, and What Are the Most Important M-commerce Applications? M-commerce in 2017 is 37% of all e-commerce Fastest growing form of e-commerce Some areas growing at 50% or more Main areas of growth – Mass market retailing (Amazon, eBay, etc.) – Sales of digital content (music, TV, etc.) – In-app sales to mobile devices Location-Based Services and Applications Used by 74% of smartphone owners Based on GPS map services Geosocial services – Where friends are Geoadvertising – What shops are nearby Geoinformation services – Price of house you are passing Other Mobile Commerce Services Financial account management apps – Banks, credit card companies Mobile advertising market – Google and Facebook are largest markets – Ads embedded in games, videos, and mobile apps 55% of online retailers have m-commerce websites What Issues Must be Addressed when Building an E-commerce Presence? Most important management challenges – Developing clear understanding of business objectives – Knowing how to choose the right technology to achieve those objectives Develop an e-commerce presence map – Four areas: websites, e-mail, social media, offline media Develop a timeline: milestones – Breaking a project into discrete phases E-commerce Presence Map Copyright © 2018, 2017, 2016 Pearson Education, Inc. All Rights Reserved The End! 