E-Commerce in Business Schools

E-Commerce in Business Schools S. Basheer Ahmed and Peter Hoefer Pace University New York, USA ABSTRACT The recent advances in internet-associated technologies have revolutionized the way business-to-business (b-to-b) transactions are conducted as well as the way business-to-customer (b-to-c) transactions are completed. Technological advances in hardware and software permit a high volume of data flow as useful information and on-line transaction processing. This affects the time, cost and efficiency in decision-making processes. At the same time, this new phase has opened doors for higher risks affecting the quality of data as well as security and legal issues. The rapid changes have made it necessary for business schools to take a closer look into academic training as well as student learning in business and economics. The end result is that both curricula and methods of delivering the curricula have been, and are continuing to change. Introduction The science of management has always moved in the direction of optimizing the use of scarce resources, time, capital, and labor in the production and distribution of products and services. For over a century, business schools have played a fundamental role in training students to understand business structure, formulate problems, perform analyses, do forecasting and determine optimal or close-to-optimal solutions under varying conditions or scenarios under uncertainty. Techniques which were used in optimization were also aimed at reducing uncertainty. Two of the main factors that caused uncertainty in business decision making were the unavailability of perfect information and the unavailability of timely information. Doing business under the new paradigm changes the element of the availability and quality of information, and has therefore radically altered the way business decisions are made. This in turn is affecting traditional indicators of performance in markets. The element of information has always been recognized as a critical element in decision making processes. The information, which was generally extracted from large amounts of data in the past, required considerable amounts of time and money. To overcome this problem, there were numerous technical advances in the computing industry, which led to the development of powerful personal computers and simultaneous developments in mathematical optimization methods. Also at the same time, the element of information was recognized as a critical factor in decision analysis. Alternate scenarios were formulated for the primary purpose of reducing uncertainty in decision making. The value of information was calculated for the inability to have access to perfect information. There are similar parallels to advances in the computer industry and in the communication industry over a period of time from large centralized systems to powerful decentralized smaller stations. The element of information was gaining significance for decision making in the

business world. This led to the development of the generic management information system programs in all academic institutions. The recent advances in the computer/communication industry has opened a new chapter and led to the emergence of an information industry that is currently impacting the traditional structure of the business world. An important component of the new emerging information industry is electronic commerce, which may be known to some as e-commerce, e-business or e-marketing. Business schools must determine the extent to which they can teach the technology of e-commerce, the transformation of the business structure, and the changing or new role of management and subsequent policy issues. Education In the last couple of years, business schools all over the world have been introducing e-business courses and concepts in undergraduate and graduate programs. And some schools have started offering e-programs (sometimes touted as e-marketing, e-technology or e-anything ) leading to academic degrees or professional certification. Reviewing the course outlines offered in selected schools, it appears that there is no clear-cut sense of direction and purpose relating to the goals of e-business course offerings in business schools (1). The e-business courses offered in different schools place different levels of emphasis on teaching what might be termed basic elements. We believe there are at least four broad categories of topics covering the e-business course offerings in business schools. 1. Technology 2. Business Systems 3. Policy 4. New Characteristics and Constraints Many programs offer a varied combination of these four areas in a semester course. At this time, the academic justification for offering of these components is not clear. The technology component can become a full-fledge course, or even a program, that can be offered in a computer science department or school, or in the management information systems area of a business school. Similarly, the business and policy aspects of e-business can reside in one or more of the functional areas of a business program, or in a single business course affecting all aspects of business management and policy. Technology Technological developments in voice and data communications have had an enormous impact on those businesses where the availability of information on a real-time basis is vital for making the right decisions. In businesses, where the value of information has far exceeded the value of products and services, the technology that allows that information to be available and accessed almost instantaneously is having far reaching effects on business structure, price/output, and performance of markets. Such technological development has already reduced the opportunity cost of decision making in many businesses. This has eliminated some segments or entire processes of business activities in some industries. There is a continuing technical progress in the delivery of large amounts of data, data reduction, miniaturization and in reducing market imperfections. The primary source of technical competencies in providing telecommunication

services would come mainly from the following organizations which would play an important role in the future development of e-technologies:(2) Telephone companies Cable System Operators Internet Service Providers Satellite Systems Providers Computer hardware and software vendors. The role each of the telecommunication companies would play depends upon their market share, competitive status, and the future plans concerning their participation in the overall development of Internet technologies. It is rather important that business students know not only the fundamentals of telecommunications but also the potential future developments in the computer/communication industry affecting the operations management of the business world. Business Systems In a basic course in Productions and Operations Management, it is generally shown that the production and distribution of goods and services can be portrayed in a systems framework identifying the material flows, information flows, financial flows, transportation networks and human resource needs at each stage of operations. Some of the well known stages of production and operations management can be depicted in terms of the following activities: Procurement of raw materials; production scheduling ; inventory (in-process; finished goods); product distribution (b-to-b and b-to-c). In the traditional model, at each stage of production and distribution, there is a great deal of literature that is devoted to examining the system structure and optimizing the operating procedures. At each of the stages and substages, information plays a significant role in system optimization. The Internet technology paving the way to e-business is affecting, with different intensities, the operating structure of the businesses in various industries. Some businesses see the opportunity to incorporate the new changes and thereby preserve the traditional structure with enhanced operating efficiency. There are other businesses, which are so vulnerable to the new technology that they would either be eventually replaced in their entirety or a substantial set of operations would be taken over by new business entities. It has been stated that a traditional business structure include value chains, supply chains, organizations, and consumer franchises. The new economics of information destroys some of these traditional structures and then recombines them into new business structures, based on the economics of information and products. (3) Policy

Policy issues are central to the infusion of any new technology into business practice and application. The introduction of electronic commerce creates a new dimension in the fields of insurance, legal issues, risk assessment and management, privacy and encryption. These issues are not new in the traditional market as traditional tools already exist to evaluate them and measure them in terms of benefits and costs for each option in the market place. But in the case of the Internet economy, these concepts take more of a qualitative dimension and can be a case of win-or-lose for many of the dot programs. Business schools should provide a check list of factors which appear to be unique to e- commerce business operations and should develop appropriate quantitative and qualitative tools to assess each situation. There can be no single course or format that can accommodate the entire spectrum of policy issues in one course offering. Each functional area of business, such as, marketing, finance, economics, should deal with these issues. New Characteristics and Constraints The beginning of the e-commerce era is shifting the ratio of technology/human intervention toward more of technology and less of human intervention in all intermediate steps in completing business transactions. Such as shift reduces the risk of human error, on the surface, in the completion of a task. However, it also increases the risk from technology failure. In operations management, this will become a critical issue in the analysis of business systems. This adds a new characteristic to the e-system that a great deal of emphasis be placed on human factor issues for any success of business activity. The technology failure can affect the buyer and seller in many different ways than in the traditional context of doing business. For example, the power outages can have profound effect on doing business in the e-economy. Though there are ways to safeguard the failures, the cost of risk reduction can be very high. As experience with the new ways of doing business continues, a new structure will evolve allowing the analysts to quantify the risk at each stage of operations management. There could be inherent limitations to doing business in the e-economy from the requirements of special training requirements, additional capital needs, and the level of confidence in e-business in the minds of buyers and sellers. Surveys and Accreditation In the relatively new context of business schools competing in a global market for students, confirmation of quality plays an important role. Certainly web-pages and other Internet enhancements allow potential students to learn, or at least get a perception, of the type of business school, education and other qualities associated with business schools. However, astute potential students know this is all self serving, and the school with the best web site may not be the best school to apply to. Hence, independent affirmation of quality is important to the global student market. This affirmation comes in two forms: Accreditation and surveys (rankings). Survey rankings, a bit of a misnomer, serve poorly to distinguish among a few top schools; they do, however, usually identify schools which offer quality education (at times omitting, according to some bias, schools which do offer quality programs). Some surveys, such as

Business Week s, categorize business schools by specialization. Others, such as the survey presented in US News & World Report, differentiate programs according to the typical student (part-time versus full-time, for instance). Accreditation also serves to provide information to students about the quality of an educational institution. Currently there are at least two accrediting agencies competing for recognition in the West ; AACSB: The International Association for Management Education ( AACSB ) and the European Foundation for Management Development ( EFMD ). AACSB, the older and better known of the two agencies, currently has accredited business schools in North America, Europe and Asia; EFMD has recently begun accrediting business schools in Europe. Both agencies require continuous improvement and being contemporary as standards for accreditation. Given that there is nothing more contemporary than e-commerce, schools are looking at how to position their electronic courses and programs to meet accreditation standards. The results are that two types of responses have been emerging; schools which are looking mainly to programs and courses to substantiate their response to this phenomenon, and schools which are mainly distributing e-commerce in a traditional structure (how can you teach a policy course without mentioning e-commerce?). Many educators feel that, even though programs and courses will continue to exist, e-commerce will mainly be absorbed into the traditional business school structure. References (1) Authors personal internet survey, Summer 2000. (2) Choi, S-Y, Stahl, D.O. and Whinston, A.B., (1997) The Economics of Electronic Commerce, Macmillan Technical Publishing (3) Evans, P., Surster, T.S., (2000), Blown to Bits, Harvard Business School Press, pp. 39-98. (4) Moving into Unchartered Territory-E, Strategic Directions, CIO, p. 576.