End-to-End E-Business
Professor Mary J. Cronin
Carroll School of Management
Boston College
June 3, 2004
Objectives and Introductions
• Seminar objectives
– Presentation and discussion of e-business
fundamentals, strategy and current impact
• Insights that will enable better analysis and management of
e-business
• My background
– Over a decade of e-business research and practice
• Publications, teaching, consulting and yes, some dot.com
euphoria and post mortem analysis
• Participant backgrounds
– Experience with e-business
Defining E-Commerce and E-Business
• E-Commerce
– The use of the Internet and the web to transact business
– Digitally enabled commercial transactions between and among
organizations and individuals
• The exchange of value on the Internet or the web
• How about E-Business?
– Strategic use of the Internet for all processes and transactions within a
firm
– The entire world of internal and external electronic and Internet-based
activities related to an enterprise or organization, including E-Commerce
For this seminar, we will accept the broadest definitions and focus on the
impact of using the Internet and the web to transact business in different
types of companies and different industry sectors
Popular E-Biz Perception
May 13, 2004
May 10, 2004
Some Perspective on E-Commerce
Past and Future
• New and revolutionary technologies typically go through
a cycle of rapid growth and adoption (with many
competing business models and providers) followed by
shake out and consolidation
• Think about electricity, telephone, automobile and
computer adoption cycles
– The strongest impact and the lasting value emerge AFTER the
shake out phase
– Many early predictions about these technologies never came to
pass and countless business models failed in the process of
mass adoption
• Gartner Research has characterized this predictable
process as the technology “hype cycle”
The e-Business Hype Cycle
“e” is Best
European IPOs
1999
“Dot.Com”
Share Fallout
U.S. Christmas
1998
Post-Net
Businesses
“Dot.Com”
Shakeout
U.S. IPOs
1997/1998
U.S. IPOs
2004
Publicized
e-Failures
Search for “True”
e-Business
“Dot.Com”
Begins
Optimized
e-Business
Business
Disillusionment
Internet
Web
Technology
Trigger
Investor
Disillusionment
Peak of Inflated
Expectations
Trough of
Disillusion
Slope of
Enlightenment
Plateau of
Profitability
Source: The Gartner Group
The dot.com Bust Made B2C E-Commerce
Synonymous With Bad Business
Spilt Milk: WebVan burned
through $1.2 billion in two years
from launch to shutdown
Scary: Boo.com spent
over $1 million per
week in burning up
$135 million VC
investment
Was e-commerce
completely overhyped or was
something else at
fault?
Dead Dog:
Pets.com had $82
million IPO then
shut down
B2C Forecasts from the Early Years
• Interactive, One-to-One Marketing as Driver
– Personalized and customized design and delivery would drive
profitable traffic to sticky web sites
• “Me-Business” and “The Experience Economy”
• Disintermediation of bricks and mortar and online
aggregation into a few online Megastores
– Malls and brand-name storefronts would be “Amazoned”
– Manufacturers would sell direct to consumers bypassing stores and
traditional channels
• Frictionless transactions and fulfillment
– Online interactive support systems, bolstered by virtual
communities, would transform the sales process
– Proactive supply chains would enable dynamic pricing options
– The web would become a transparent global E-marketplace
Enterprise B2C Drivers Today
• Web Presence as a Competitive Necessity
– Detailed product information
• Majority of customers research online then buy in traditional store
or by phone
– Additional channel for sales
– Customer acquisition through search and advertising
• Need to Lower Costs of Customer Support
– Supplement traditional support systems
• Self service online
– Enhance Customer Loyalty
• Encourage repeat businesss
• Manage relationships with suppliers, vendors and
distributors online
The More Pervasive the Technology
Becomes, the Higher the Final Plateau
Why Did The Internet as a “Trigger Technology”
Have Such a Huge Impact?
• Open, dynamic standards
– Global, decentralized, scalable
– Continual innovation and evolution (http, ssl, xml, etc.)
• Worldwide deployment of each wave of functionality into
new business as well as existing systems and platforms
• Low barriers to entry
– Users also became developers and e-commerce entrepreneurs
– Proliferation of start ups and spin offs in all sectors
– Low costs of implementation and distribution for enterprise and
individuals combined with a large and rapidly growing market
• Abundant opportunities for increasing productivity and
reducing cost of doing business across all sectors
Ten Years of E-Commerce Growth
US$ billions
$250
The early
years
The rocky
years
The next
five years
$217.8B
$200
$148.6B
$150
$95.3B
$100
$72.1B
$42.4B
$50
Courtesy of
$2.4B
Forrester
Research
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
What Does It Mean for Today’s
Enterprise?
• Channel Ubiquity
– Creates new marketing, sales, support and distribution channels
and alters structure of market by adding transparency across
borders and organizations; increases market size but requires
new differentiation strategies
• Cycle Compression
– Constant innovation and improvements in core products with
outsourcing of non-core areas; shorter learning curves,
development and product cycles
• Cost and Pricing Pressures
– Must squeeze costs out of supply chain and internal processes to
compete in more open markets
• Customer Expectations
– Difficult to attract and retain customers without using the Internet
in some way
Where Are We Today?
• Less focus on new business models and
Internet-only spin outs
• More focus on integration with existing
enterprise solutions and solving new problems
• Selected but significant value generated from
combining intrinsic Internet capabilities with ECommerce strategies and best practices
• On the other side of the shakeout and likely to
see even more value and lasting strategic
impact in the next few years
Framework for Our Objectives
Global Context
Best Practices
New Trends
Strategic Analysis and
Management
Industry Impact
E-Commerce History
Failures
Competitive Advantage
Lessons Learned
E-Com Infrastructure
–Technology and
Business
Current Threats
(B2B, B2C, B2E)
After the Shakeout: Back to Basics
• B2C (and C2C)
– Interactive marketing
– Online sales and distribution
– Service and support
• B2B
– Supply chain transformation
– E-marketplaces
• B2E
– Knowledge management and decentralization
– Employee training, tracking and productivity support
Ups and Downs in the Internet’s
Competitive Landscape
Bargaining Power
Competition Among
Threat of Substitute
of Buyers
Leading Players
Products and Services
Each industry sector has a different balance of factors
and pace of e-business adoption
Bargaining Power
of Suppliers
Barriers to Entry
Bargaining Power of
Channels
Continuing E-Business Challenges
• Security
• Trust and privacy
• Stability and robustness under attack (virus,
spam)
• Internal enterprise integration of Internet and ECommerce implementation
• Channel conflict and fear of cannibalization
• Sorting out the truly valuable from the easily
possible
E-Commerce Reality Check
Market Hype
Are we here?
E-Business Forever
Dot-com
share fallout
E-Tailing
Investor
disillusionment
E-Business subsumed
into corporate DNA
Business
disillusionment
Dot-com starts
Optimized E-Business
“True” E-Business emerges
Internet
WWW
Technology
Trigger
Peak of Inflated
Expectations
Trough of
Disillusionment
Slope of
Enlightenment
Plateau of
Productivity
1990-1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year