Week 11:
Electronic Commerce and
Crowdsourcing
MIS5001: Management Information Systems
David S. McGettigan
Adapted from material by Arnold Kurtz, David Schuff, and Paul Weinberg
Agenda

Prior Lecture Recap

Electronic Commerce

Crowdsourcing

Next Week
2
Prior Lecture Recap
Prior Lecture Recap
Role of the CIO




Most Time Spent
 Collaborating with CXOs
 Making Strategic Decisions
 Working on Strategic Business Planning
Obstacles to Success
 Overwhelming Project Backlog and Requests
 Ability to Execute Remains a Top Concern
 Focus on Cost Cutting
Opportunities
 Using IT to Enable / Standardize Business Processes
 Measuring Success and Proving Business Value
A Modern CIO
 Deputies Run Operations
 Focus on Strategy and Execution
Source: www.cio.com: “State of the CIO”
4
eBusiness
I think the Internet is uniquely suited to this free market idea:
that everyone on the Internet that exchanges the traffic back
and forth, big or small, we all need each other.
Pete Ashdown, Utah Geek Dinner Speech, 08-22-06
founder and CEO of Utah 's first independent and oldest Internet service provider, XMission
Internet: Features and Business Value
Copyright 2006
Prentice Hall
All rights reserved
Management Information Systems
Managing the Digital Firm
(Ninth Edition)
6
Internet: Creation of New Markets
Copyright 2004
The McGraw-Hill Companies, Inc.
All rights reserved
Management Information Systems
for the Information Age
(Fourth Edition)
7
Business to Consumer (B2C)

E-tailer - an Internet retail site.

Pure plays - Internet retailers without a physical store.

Clicks–and-mortar retailers - both an Internet presence
and one or more physical stores.

M-commerce - describes e-commerce conducted over a
wireless device such as a cell phone or PDA.
Copyright 2004
The McGraw-Hill Companies, Inc.
All rights reserved
Management Information Systems
for the Information Age
(Fourth Edition)
8
B2C - Key Success Factors

Product Type



Marketing Mix



Search Engines
Online and Offline Ads
Execution


Commodity
Digital
Customer Service
Monitor Competition and
Threats

Cyveilance Corp
9
B2C – Competition
Ford Motor Example
10
B2C – Threats
Ford Motor Example
11
B2C – Search Engines
Ford Motor Example
12
B2C – Search Engines
Best Buy Example
13
B2B – Corporate Purchasing

Direct materials - used in production in a
manufacturing company or for retail sales.

Indirect materials - necessary for running a
corporation, but do not relate to the primary
business activities.

Electronic data interchange (EDI) - computer-tocomputer transfer of transaction information.
Copyright 2004
The McGraw-Hill Companies, Inc.
All rights reserved
Management Information Systems
for the Information Age
(Fourth Edition)
14
B2B – Indirect Materials
www.staples.com
www.boise.com
What is the difference in these business models?
15
B2B - Commerce

B2B marketplaces Internet-based services that
bring together buyers and
sellers.

Reverse auction - the
process in which a buyer
posts its interest in buying a
certain quantity of items,
and sellers compete for the
business by submitting
successively lower bids until
there is only one seller left.
Copyright 2004
The McGraw-Hill Companies, Inc.
All rights reserved
Management Information Systems
for the Information Age
(Fourth Edition)
16
C2C – Classic Example
17
C2B – Lesser Known … More Academic
18
The Role Of E-Government

E-Government describes the
application of ecommerce
technologies in
governmental
agencies.
Copyright 2004
The McGraw-Hill Companies, Inc.
All rights reserved
Management Information Systems
for the Information Age
(Fourth Edition)
19
Learning from the Mistakes of Others

Furniture.com closes
doors, lays off most of
staff

Pets.com latest highprofile dot-com disaster

Food.com lays off half its
staff; execs step down

WebMD to lay off 1,100
workers
The worst crime against working
people is a company which fails
to operate at a profit.
Samuel Gompers, 1908
20
Significant Successes?
The following was the status of well
known firms in 2003. Where are they
now?





Expedia.com – 13% of
traditional travel agencies
closed down
Dell – pricing below
competition with an 8% margin
Lending Tree – growing at
70% per year
WebMD – expanded model to
include claim processing
Napster – success or failure?
Source: Business Week: May 12, 2003
21
Crowdsourcing
Crowdsourcing is channeling the experts desire to solve
a problem and then freely sharing the answer with
everyone.
Henk van Ess (writer / reporter)
22
Crowdsourcing

Crowdsourcing is the act
of outsourcing tasks,
traditionally performed
by an employee or
contractor, to a large
group of people or
community (a crowd),
through an open call

Benefits:





Problems can be explored at comparatively little cost, and often very
quickly.
Payment is by results or even omitted
The organization can tap a wider range of talent than might be present in its
own organization.
By listening to the crowd, organizations gain first-hand insight on their
customers' desires.
The community may feel a brand-building kinship with the crowdsourcing
organization.
Source: Wikipedia and YourEnccore.com
23
Crowdsourcing

Drawbacks:


Added costs to bring a project to an acceptable conclusion.
Likelihood of failure:




lack of monetary motivation, too few participants, lower quality of
work, lack of personal interest in the project, global language
barriers, or difficulty managing a large-scale, crowdsourced
project.
Difficulties maintaining a working relationship with
crowdsourced workers throughout the duration of a project.
Susceptibility to faulty results caused by targeted, malicious
work efforts.
Examples:

Entertainment (web videos), scientific (problem solving),
academic (wikipedia)
Source: Wikipedia and YourEnccore.com
24
TopCoder

Describe the basic business model of
TopCoder.

Compare and contrast the TopCoder
software development process to traditional
software development methods. When would
you use which?

How can other firms apply design principles
of the TopCoder process to other domains?
25
Next Week
Google