Asper School of Business
9.613 Using Information Technology
Part-Time MBA, December 2001
Instructor: Bob Travica
Class 2
Electronic Commerce/Business
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Outline
• Concept of E-Commerce/Business
• E-Commerce as Strategic IS Management
• E-Commerce Domains
• Evolution of E-Commerce
• Business-to-Consumer (B2C) E-Commerce
• Business-to-Business (B2B) E-Commerce
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Concept of E-Commerce/Business
• “E-commerce” & “E-business” used interchangeably -choose your term; mine: e-commerce, external character
(skip the intranet part in the textbook!)
• Definition: E-commerce refers to conducting business
transactions electronically. Instances:
- Buying & selling on the Web/Internet
- Buying, selling, & running joint projects through
other computer networks
- Exchanging & managing trading documents with EDI
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E-Commerce as Strategic IS Management
• E-Commerce is a matter of strategic management
of information systems in terms of technological changes,
management implications, costs, benefits
Supplier
Organization
1
Organization
3
Partner
Organization
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Customer/Client
(Individual or
Organizational)
1: Electronic Supply
Chain
2: Web storefront
3: Extranet-supported
Alliance & Consortia
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Our focus
E-commerce Domains
P
• Business-to-Consumer - B2C (Web storefronts; e.g.: Chapters.com)
P
• Business-to-Business - B2B
- Buying & selling: Electronic supply chain & e-marketplaces
(e.g.: McDonnell Aerospace, Covisint; EDI networks between
Gillette & suppliers)
- Partnering in joint projects
• Consumer-to-Consumer - C2C (e.g., e-auctions)
• Other
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Evolution of E-Commerce
• E-commerce boom from 1993 on (but, EDI since 1960s!):
- graphical browser to Web (textual was already in place)
- increased consumer access to Internet
- business interest in Internet
- government regulations
- “easy money” (market bubble)
- globalization (consumer markets, sourcing, money markets)
• Bonanza to bonazza (calm sea) since 1999 in B2C;
• B2B continues
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B2C E-commerce
Scope P
Benefits P
Costs
IS Issues
• Smaller part of e-commerce
Firm perspective:
- Global reach
- 24/7 operations
- Direct marketing
- Efficiencies (orders,
customer profiling…)
- Customization effects
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Customer perspective:
- Increased selection
- Price comparison
- Competitive pricing
(reverse auctions)
- Lower transaction costs
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Scope
Benefits
Costs P
IS Issues
B2C E-commerce
Firm perspective:
- Technology (overhaul,
problems - next slide)
- Delivery, Logistics
- Payment
- Legal boundaries
- Competition increase
- Brand-making costs
Customer perspective:
- IT have-nots
- Privacy (marketers’
spamming)
- Payment
- Recourse
- Intellectual property
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Scope
Benefits
Costs
IS Issues P
B2C E-commerce
• Technology innovation needed continually:
- on the front-end
- in integrating front-end with accounting,
inventory, purchasing, marketing systems
- in interfacing with external delivery, logistics,
payment systems
• Internal Users (personnel) & External Users (customers)
• Data security systems (vs. virus menagerie & sniffing)
• Internet dependability and bandwidth
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B2B E-commerce
Scope P
Benefits P
Costs
IS Issues
• Larger part of e-commerce
• Buyer, Seller, Partner benefits:
- Larger market
- Savings from efficiency in supply chain
- Dynamic pricing (auctions)
- 24/7 operations (e-marketplaces)
- Linking production processes and core competences
(partners in project)
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B2B E-commerce
Scope
• Technology
Benefits
• Losses from increased competition &
dynamic pricing
Costs P
IS Issues
• Volatile business relationships
• Costs of private networks
• Costs of intermediaries (e-marketplaces)
• Legal boundaries (Covisint)
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B2B E-commerce
Scope
Benefits
Costs
IS Issues P
• Technology innovation needed continually:
- on the back-end
- in integrating back-end with accounting,
inventory, purchasing systems
- in interfacing with trading parties, e-marketplaces
& payment systems
• Data security systems (firewall, digital signature,
encryption/decryption keys)
• Internet dependability and bandwidth
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Summary
• E-Commerce is a strategic issue in IS management
• B2B e-commerce is here to stay; B2C will have place
• Costs & benefits from e-commerce demand careful analysis
• IS issues of E-Commerce are complex and demanding
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