class 6 systems support to organizational strategy: electronic commerce

1

Class 6

Systems Support to Organizational Strategy:

Electronic Commerce

Asper School of Business6150 Management of Information Systems &

TechnologyInstructor: Bob Travica

April-June 2009

Updated May 2009

26150 Management of Information

Systems and Technology

Outline

• Concept of E-Commerce

• E-Commerce and Strategic Management

• Business-to-Consumer (B2C) E-Commerce

• Business-to-Business (B2B) E-Commerce

• Class activity: IT/IS and Strategic Advantage

• Messages for Change Leadership

3

Concept of E-commerce

• Two main domains: - Business-to-Consumer (B2C), retail on the Internet via Web storefronts (Chapters.com; Wine.com, music, electronics) - Business-to-Business (B2B), buying & selling b/w firms

• via e-marketplaces (Covisint; Elance.com)• directly (EDI, linking via private nets or Web; Dell-HP, shipping industry, Cisco-UPS)

• Definition: E-commerce refers to performing buying and selling operations electronically – fully or in part.

Money transfer (e-payment)

Yes

Invoicing

NoProprietary technology

Order placing & tracking

EDI* Web

x

**

x

x

x

x

Functionality

* EDI = Electronic Data Interchange, technology for creating and transferring business electronic documents. ** Not as integrated function, Electronic Fund Transfer (EFT) needed.



• E-Commerce is a matter of business strategy and IS strategy as it affects business place and scope, alignment with traditional business, IT, management techniques, and capital investments.

E-Commerce and Strategic Management

• Supply chains turn electronic

SupplierOrganization

Buyer Organization

SupplierOrganization

Consumer



• Boom 1994-2000, 2001 crash; pure vs. hybrid

models

• 2006: 3% of all retail in U.S., 0.2% in Canada

• Firm perspective benefits:

- Global reach & 24/7 sales

- Savings

- Direct marketing & (customer profiling, personalized Web storefronts)

- Cross selling (automatic matching of customer

profiles)

B2C E-commerceSize

Benefits

Costs

IS Issues



Scope

Benefits

Costs

IS Issues

B2C E-commerce

• Firm perspective:

- Technology requirements)

- Delivery, Logistics

- Payment security

- Legal boundaries

- Competition increase

- E-branding

• Consumer perspective:

- IT have-nots

- Privacy

- Payment anxiety

- Recourse uncertainty



B2B E-commerceScope

Benefits

Costs

IS Issues

• Larger part of e-commerce (2006: 31% US, 1.8% CAN)

• Firms’ benefits:

- Larger market

- Savings from efficiencies in supply chain (Cisco-UPS, shipping industry, Dell-HP)

- Better coordination in supply chain

- Dynamic pricing (auctions)

- 24/7 business (via e-marketplaces)



Scope

Benefits

Costs

IS Issues

B2B E-commerce

• Technology requirements (systems, links, security)

• Volatile business relationships

• Losses from increased competition & dynamic pricing

• Legal boundaries (e.g., anti-monopoly pressures on buyers-driven e-marketplaces)

• Costs of intermediaries

• Costs of private networks

InventoryBuyer

Purchasing

Bank

Production

Scheduling

Supplier

E-marketplace

Sales



Class Activity: IT/IS does or does not matter Class Activity: IT/IS does or does not matter for strategic advantage?for strategic advantage?

To provide a competitive advantage, any technology needs to bea) scarce, rare (proprietary, can’t be copied)b) expensive .

Nicholas Carr (2003) claims that IT doesn’t fit either criterion but has become a commodity as electricity, which everyone can afford. Thus, IT enables no competitive differentiation.

Opponents argue that Carr’s analogies are false, management of IT/IS makes a difference, historical process of learning matters, first mover advantage still applies, affordability is not universal…

Working in teams, take (a) the position of Carr, or (b) the opponents, or (c) the middle way,and build your argument on any case/cases we have studied.

Messages for Change LeaderMessages for Change Leader

106150 Management of Information Systems and Technology

• Pay attention to e-commerce (B2B, B2C), which increasingly is a necessary part of business, both from the seller and buyer perspective. (Cisco-UPS, E-markets…)• Think of using IT creatively to expand the sales processes via direct sales to corporate and individual customers (Dell example).

• Be flexible in managing the sales processes over time as the market changes (Compaq added direct sales process toits indirect channel, while Dell added indirect sales to hisdirect channel).

• The case of e-commerce refutes Carr’s argument byproving that a strategic advantage can still be gained by using commonly available IT innovatively and before others.

class 6 systems support to organizational strategy: electronic commerce

Documents