Case-study: SwissAir. The Internet Business. Case-study: SwissAir. Case-study: SwissAir. Summary. Summary

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1 Case-study: SwissAir The Internet Business Old model: check flight info online Step 1. Toward customers e-ticketing, electronic check-in frequent flyer miles Web site personalization (and statistics!) Web site traffic got a hype (more revenues) Step 2. Internal adoption of I-tech SwissAir set up corporate intranets for sales, marketing, and human resources 2 Case-study: SwissAir Marketing intranet Provides reports and design guidelines Exchange meeting minutes and presentations Share information about upcoming marketing campaigns w/ partners Sales intranet Provides sales statistics Collaborative workspaces Human resources intranet provides employees with updates of corporate policy, expense forms, and organization charts Case-study: SwissAir Step 3. Extranet to partners SwissAir provides travel agencies with fare data from its intranet Data about fares can be electronically loaded from the intranet into the agents own in-house information systems 3 4 Summary Business Increase sales Increase customer service Reduce costs Organization Marketing & Sales Customers Employees Travel agents Summary Information systems On-line ticketing system Collaboration system for marketing people Sales data sharing system HR support systems Visitors activity analysis system Technology Internet/Intranet/Extranet + DBs 5 6

2 Learning objectives Identify Internet benefits to organizations Demonstrate how Internet used for electronic commerce Demonstrate how Internet technology used for intra- and interorganizational electronic business Examine challenges of Internet to business The Internet Began as government connection of universities Internet service provider (ISP) Organization connected to Internet, leases temporary connections to subscribers No one owns it, no formal organization 7 8 Role of Internet We emphasized the benefits of integrating information across the enterprise as to let information flow seamlessly from one part of the organization to another and from the organization to its customers, suppliers, and partners Internet technology has emerged as the key enabling technology Role of Internet Proprietary systems to integrate information from their internal systems and to link to their customers and trading partners Costly Hard to maintain and evolve Internet Lower cost and easier to use alternative 9 10 Benefits-firm perspective Global connectivity Reduced communications cost Lower transaction costs Purchasing goods via an internet marketplace can reduce those costs by nearly 80 percent Accelerated knowledge Richness and reach of their information Benefits-customer perspective Shrinked information asymmetry An information asymmetry exists when one party in a transaction has more information that is important for the transaction than the other party Manufacturer price vs retailer price Disintermediation Manufacturer, distributor, retailer, client Manufacturer, client 11 12

3 E-commerce categories Business-to-consumer (B2C) Electronic commerce involves retailing products and services to individual shoppers (barnes&noble) Business-to-business (B2B) Sales of goods and services among businesses. Consumer-to-consumer (c2c) Consumers selling directly to other consumers (ebay) B2C Customer-centered retailing Disintermediation: removal of intermediate layers streamlines process Reduced cost to buyer, seller Web personalization The tailoring of Web content directly to a specific user Customer personalization with the ubiquitous Internet Mobile, wireless devices B2C Web sites as source of detailed information about customer behavior, preferences, needs, and buying patterns Interactive Marketing Tailored promotions, products, services, and pricing Lots of applications B2B The fastest growing area of electronic commerce is not retailing to individuals but the automation of purchase and sale transactions from business to business One type of on-line marketplace called an exchange has attracted special interest Exchanges are on-line marketplaces where multiple buyers can purchase from multiple sellers using a bid ask system E-Steel Vertical exchanges Business model An abstraction of what and how the enterprise delivers a product or service, showing how the enterprise creates wealth New Internet business models Provide the customer with a new product Provide additional information or service along with a traditional product Provide a product or service at a much lower cost than traditional means Internet business models Virtual storefront Sells goods, services on-line Amazon Marketplace concentrator Concentrates information from several providers CNET Information broker Provides product, pricing, availability information Travelocity 17 18

4 Internet business models Transaction broker Buyers view rates, terms from various sources Electronic clearinghouse Auction-like setting, products, prices, change in response to demand ebay Reverse auction Buyer sets price, submits to multiple sellers Internet business models Digital product delivery Sell, download software, other digital products Content provider Creates revenue through providing content for a fee, and advertising On-line service provider Provides service, support for hardware, software products WinDrivers Evolution of business models Pure-play Based purely on the Internet Amazon Bricks-and-mortar Old model Clicks-and-mortar supplement or enhance a traditional business model The Wall Street Journal Interactive E-commerce support systems Web hosting services Provides large servers for web sites of fee-paying customer Electronic payment system Using web for electronic funds transfers, credit, smart & debit cards E-payment systems Credit cards Secure services for cc payments on the web (VISA one-time CC numbers) Person-2-person (PayPal) Send money to individuals who are not set up to accept credit card payments The party sending money uses his or her credit card to create an account with the designated payment The recipient picks up the payment by visiting the Web site and supplying information about where to send the payment (a bank account or a physical address) E-payment systems E-cash (CyberCash) Users are supplied with client software and can exchange money with another e-cash user over the Internet or with a retailer accepting e-cash Digital wallet Software that stores credit card, electronic cash, owner identification, and address information and provides these data automatically during electronic commerce purchase transactions MS Passport Amazon 1-Click Gator 23 24

5 Intranet Internal network WWW technology Firewall: security system to prevent invasion of private networks Overcomes computer platform differences Web software presents a uniform interface Often installed on existing network infrastructure Benefits of intranets Can be tied to legacy system & transaction processing Easy to use browser interface Rich, responsive information environment Interactive applications with text, audio, video Scalable to larger or smaller systems as required Low start-up costs Reduced information distribution costs Intranet - adoption Company communications ( , newsgroups) Electronic libraries On-line repositories of information that can be updated as often as required Product catalogs, employee handbooks, telephone directories, Faster than paper-based publishing Application-sharing systems Shared web calendaring Group collaboration Group collaboration Teamware: intranet-based applications allow teams to share ideas, documents, brainstorming, scheduling. Similar to chat room. Internal newsletter Intranets and e-business Functional applications Cross-functional applications Supply chain management Functional applications Finance & accounting Human resources Sales & marketing Manufacturing & production 29 30

6 Finance & accounting General ledger reporting Project costing Annual reports Budgeting Human resources Corporate policies Employee savings plans On-line training Job posting Sales & marketing Competitor analysis Price updates Promotional campaigns Sales presentations Sales contracts Manufacturing & production Quality measurements Maintenance schedules Design specifications Machine output Order tracking Cross-functional apps (SCM) Intranets can be used to simplify and integrate business processes spanning more than one functional area Firms can use intranets to improve coordination among their internal supply chain processes They can use extranets to coordinate supply chain processes shared with their business partners Examples Through a Web interface, a manager can tap into suppliers systems to see if inventory and production capabilities match demand for the manufacturer s products Sales representatives can tap into suppliers production schedules and logistics information to monitor customers order status Business partners can use Web-based supply chain management tools to collaborate on-line on forecasts (extranet) 35 36

7 Supply-chain mgmt (SCM) Sample applications MARKETING & SALES PRODUCTION PLANNING ICAT: on-line catalog shopping, order placement (Icat) CUSTOMERS CUSTOMER SERVICE ACCOUNTING FINANCE SHIPPING & DISTRIBUTION INTRANET PRODUCTION & MANUFACTURING PROCUREMENT INVENTORY NET.COMMERCE: merchant server supporting Secure Electronic Transactions protocol (IBM) MerchantXpert: search tools, order management, tax, payment, logistics modules (Netscape) Sample applications OPEN MARKET TRANSACT: customer authentication, order & payment processing, tax, multi-language customer service (Open Market) INTERNET COMMERCE SERVER: integrates orders, inventory, customer service, payments (Oracle) Challenges and opportunities Business process change requirements Unproven business models Technology challenges Security & privacy Management challenges Many companies have started to use the Internet to Communicate with customers and suppliers Streamline their internal business processes E-commerce and e-business require change New organizational designs and management processes Redesign (and integrate) entire business process rather than throw new technology at existing business practices Different strategies for ordering, advertising, and customer support than traditional ones Technology challenges Many companies have started to use the internet to Communicate with customers and suppliers Streamline their internal business processes Internet technology is risky Passwords stealing Electronic eavesdropping Dos (jamming and defacing) Worm Viruses 41 42