03.02.2003 MS kap. 3 1

IT strategy – eBusiness (ch. 3 + more)

IT strategy Business Process Reenginering

(extended) eBusiness

03.02.2003 MS kap. 3 2

IT revolution IT for most administrative functions Standards and technology for

integrating systems Big effects Requirements:

High formalization level Symbolic tasks

03.02.2003 MS kap. 3 3

Examples

FunksjFunction Before Now Bank Personal visit, phone,

the bank employee used the terminal, paper

The customer does the job

Industry paper based B2B, B2C

Administration Memos, binders, e-mail, Intranet

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Strategic use of IT

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Our textbook Focus for different editions

End user computing (1986) Strategic advantages (1989) Reengineering (1993) Internet, intranet and extranet (1997) eBusiness (2001)

Note: All areas are important today, the textbook has just focused on the ”hot” topic of the year

03.02.2003 MS kap. 3 6

Important trends: Flow of money go digital and automatic Point of sale terminals JIT, ERP XML will be important for B2B, in addition to EDI Digitalization (sound, pictures, books, etc) Distributed work will be more common Electronic cooperation between organizations (B2B) Reorganizations will occur often

03.02.2003 MS kap. 3 7

But: We have to be aware of the

fundamental limitations: Formalization Standards Largest effect where everything is symbolic

Other limitations: Technical Cultural Social Security

03.02.2003 MS kap. 3 8

Real possibilities := theoretical possibilities - constraints

Teoretical possibilities

ConstraintsConstraints

Constraints

Real possibilities

Real possibilities

Real possibilities

Real possibilities

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BPR: Internally BPR, ”Business Process Reengineering” Sucess- (and fiasco-) criteria:

growth and expansion better than reduction both internal and external actors

(employees, customers, suppliers) driven by management use of technology to drive change goes

seldom well IT offers possibility, but shall not drive Good understanding of technology is

important

03.02.2003 MS kap. 3 10

BPR BPR ”hot” in the middle of the nineties,

replaced by eBusiness today (also in our textbook).

BPR ios important, especially due to the possibilities offered by the Internet and Web.

Internet and Web offer the possibility of radical change

- and in this respect has much in common with BPR

03.02.2003 MS kap. 3 11

BPR: Revulsion Start with a blank sheet, do everything from start (Hammer

and Champy). Revolutionary approach (30-50% chance of success) Analysis:

Starting again we can use today's technology in implementing business processes

but, should we also demand that customers or suppliers change their processes dramatically?

and to we have the complete overview when we redesign

and what about the problem of moving from one system to a completely new?

and then, should we relax until the next revolution comes along?

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Ford Motor Company

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BPR: Evolution Continuous improvement (TQM - Total

Quality Management) Risk: changes may only be superficially,

nothing is done with the more deeper structures

Conservatism, complacency, etc. is there to stop fundamental changes

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Case: Prudence Insurance New ways of selling insurance Improved customer contact ”profiling” of customers IT system with all customer data Implemented office to office, got

experience as the work progressed, enthusiasm, knowledge

An experienced sales manager in charge – enjoyed much respect in the organization

More sales, more commission, improved customer contact

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Case: insurance Other companies used the same package It worked for some, not for others Factors to fail:

Laissez-faire approach Only supported by head office It was up to the agents themselves if they wanted to

use the new method No training

Moral: Implementation is important It is not easy to copy others successes

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BPR: Choices

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eBusiness B2E - Business-to-Employee B2C - Business-to-Consumer (B2C =

B2E) B2B - Business-to-Business

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B2E Intranet Links to Internet ”best practices” Common functionality (database

access, ordering of office supplies…) Replaces paper. can be accessed from everywhere Standard technology (browsers etc)

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Case: Microsoft “Human Relations” system:

Health plan Stock options Pension plans salary Office supplies.

Intranet Integrated with ERP (SAP R/3) Reduced costs for material etc. by 75-90% Replaced more than 200 paper forms Saved $1 million each year In addition, reduced workload for employees in addition

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B2C The “terminal” is given to the customer Intermediates can be removed The customer is given direct access to

data and functions maybe a better service for reduced

costs Revolution!

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B2C models Internet only (click) Internet + brick and mortar = brick and click Important questions:

can all services be performed over the Internet? can traditional services be left for others to perform do the customer need both the brick and the click

services?

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B2C advantages Global assess Automatic order handling Automatic dissemination of information,

improved information Symbolic products can be downloaded Better access (24*7*52) Better communication with customers (or the

opposite?) Customer loyalty (?) New products and services Direct marketing

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B2C problems User Interface (may be difficult to use) Takes time Logistics, reverse logistics Unstable customer base (too many

customers) Global regulations (many are selling

only nationally) Competition Information to competitors Can we trust ”dot-coms”?

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Case: Internet shopping Online grocer:

Lose money (IHG) failed (Rema) Big losses

(Webvan, IHG) Distribution costs Formalizing of

products niches?

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case: Stop & Shop

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e-Business model New requirements from customers

”demanding on-demand” simple access customization new services (e.g., for bank to music)

Relations with partners: Remove intermediates (travel agency, bank) Virtual organizations

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Case: Bank More than 50% of all

transactions goes over the Internet

If we do the job ourselves we want something back (as free services)

Internet banks are increasing their customer base

Is a bank a computer?

Ideal application for B2C?

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Case: Travel agency

Still existing? Only a small fraction of customers

use Internet today but in a few years time ideal for brick & click?

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B2B (Business-to-Business) Since 1950 EDI from 1975 VAN (Value Added Networks) XML, XML/EDI Integration of value chains Demand:

Good IT infrastructure Formalized data and services Willingness to think ahead Accept for standards

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XML <?Xml version=”1.0”?> <!doctype address SYSTEM “address.dtd”> <address> <street>2000 Fifth Avenue</street> <city>Pittsburgh</city> <zipcode>PA 15260</zipcode> </address>

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XML: namespaces <item

xmlns:invoice=http://www.acmeinc.com/inv xmlns:delivery=http://www.acmeinc.com/deliv> <invoice:street>P.O.Box 5440 </invoice: street > <delivery: street > 45 Main St</delivery: street >

</item> namespaces define ”scope” for name

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XML: Schema Describe document structure Ideas from programming languages and

databases DOM (Document Object Model) – document

structure description XPath XSL (eXtensible Stylesheet Language) and XSLT

can we transform XML to other forms, e.g., to HTML

An XML structure can be input to a program or a browser

03.02.2003 MS kap. 3 33

XML: way ahead Much optimism (or ”hype”) Slower than expected Is it too complicated? Competition from alternatives (HTML, Excel,

database formats, ASCII) Establishment of standards is a social process Not everybody benefits However: XML will be used

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Electronic markeds

Oil companies (Norway, abroad) Markets for fish, vegetables, etc. COVISINT

Used by Ford, GM, DaimlerChrysler Offer supply services

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Covisint

Covisint is the central hub where OEMs and Suppliers of all sizes come together to dobusiness in a single business environment using the same tools and user interface, plusone user id and password.Covisint has been designed with an emphasis of making information accessible andvisible within a secure online environment. Your information is secure within Covisintand you remain in control of who sees and accesses the information.

Covisint's online tools will enable your company to compress planning cycles andenhance supply chain planning. In doing this, it allows you to directly increase efficiencyand asset utilization, while ultimately realizing greater profits and shareholder valuations.

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A success?

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Some marketplaces seems to work:

BUSINESS/FINANCIAL DESK | July 16, 2001, Monday E-Commerce Report; As the shakeout proceeds, some business-to-business marketplaces show their staying power.

By Bob Tedeschi (NYT) 1313 words Late Edition - Final, Section C, Page 4, Column 1

ABSTRACT - Some business-to-business e-marketplaces are starting to show staying power amid industry shakeout; Pantellos, online utilities industry marketplace, ChemConnect, online chemicals exchange and Intercontinental Exchange, energy trading site, and handful of others have managed to attract buyers and sellers by broadening their service features beyond typical marketplace site; photo (M)

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eBusiness factors

Technology Security Regulations Copyright Online contracts and signing Culture We will return to these issues in book

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