Strategies for an EC Environment

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Strategies for an EC Environment

• Richard A. Scudder, Ph.D.
• Daniels College of Business
• University of Denver

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Outline of Presentation

• Setting the Context
• Macro Trends
• Surprise-free projections
• Opportunities and Threats
• Conclusions

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Electronic Commerce A Little History

• Traditional EDI and CALS
• Supply Chain Partnerships
• Advent of the Internet
• Advent of the World Wide Web

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How the Web Changed Things

• Its Ubiquitous
• Its Graphic
• Its Global
• Its Free

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Three Key Words

• Chaos
• Confusion
• Leverage

-McCubbrey, 2000
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Chaos

• Rapid Rate of Change
• Multiple Business Models
• Entrepreneurial Frenzy

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Confusion

• Security
• Information Overload
• Technical Infrastructure

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Leverage

• Customers
• Suppliers
• Strategic Outsourcing

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IT Drivers

• Almost all US workers have a networked pc on
  their desk.
• The daily users of Yahoo! outnumber the viewers
  of the most popular show on television.
• 140 million people world-wide can access the
  Internet. By 2005 this will grow to 1 billion.

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Moores Law
1950 2000
2050

• The number of transistors on a chip double every
  18 months. Tenfold increase every five years.

Gordon Moore, Intel
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Moores Law, amended

• Storage space is increasing at an even higher
  rate than chip density doubling every six
  months.
• Communication capacity is exploding. Total
  bandwidth in the US is tripling every year.

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Metcalfs Law

• Utility (number of users) 2
• Each new user adds more than just simple value
• The Internet with millions of users has achieved
  critical mass
• The value of your e-commerce site grows
  exponentially with each new user

Robert Metcalf, 3-com
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IT Strategy
The information superhighway is the wave of the
future.
The strategy of the organization should be linked
absolutely to the Information Technology strategy
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Electronic Commerce Today

• Corporate Production Purchasing
• Corporate MRO Purchasing
• Business to Consumer
• Government to Business, Consumer
• Consumer to Consumer

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EC Techniques

• EDI and CALS
• Electronic Catalogs
• Auctions, Marketspaces
• Intelligent Agents
• Mass Customization
• Disintermediation
• Global Reach

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What is Electronic Commerce?

• It is a Business Issue, not a Technical Issue

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What is Electronic Commerce?

• It is using information technology for
  competitive advantage in spades.

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Using IT for Competitive Advantage

• Surfaced in the early 1980s
• Theorists
• Michael Porter
• Warren McFarlan
• Value Chain
• Five forces model
• Lots of examples

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-Haag 2000
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Talbot Company
-Haag 2000
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Examples Using IT for Competitive Advantage

• American Airlines
• American Hospital Supply
• Merrill Lynch Cash Management Account
• Wal-Mart
• Federal Express
• Singapore

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Common Characteristics

• CEO support and involvement
• Bridged the two-cultures gap
• Creative systems design
• Tended to be inter-organizational systems
• Developed in secrecy

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Whats Different with EC?

• Technological changes are profound
• The pace of change is extremely rapid
• The pace of business is extremely rapid
• New business models are emerging
• If you snooze, you lose!

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Macro Trends

• Most EC will be business to business
• Integration of web to back-end processes
• New ways to relate to supply chain
• Strategic alliances are the norm
• Telecommunications options

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Surprise-free projections

• EC will bring new winners and new losers
• Winners will be bigger winners
• There will be more losers
• Foreign competition will come

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Searching for Opportunities

• Understand the business
• Understand the technology
• Demand creativity
• Look for new ways to relate to customers and
  suppliers
• Remember mass customization, disintermediation
  and global reach
• Hire the children

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Landmines

• Usage drop
• Disinterest
• Community of value fragmentation
• Selling of the Net
• Lockout and Duplication

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An Action Plan

• Think big
• Start small
• Test quickly
• Scale fast
• Diamond Technology Partners, 1999