John A. Foster, 2002 From E-Commerce to E-Business 1 From E-Commerce to E-Business The Convergence...

John A. Foster, 2002

From E-Commerce to E-Business 1

From E-Commerce to E-BusinessFrom E-Commerce to E-BusinessThe Convergence of Business and TechnologyThe Convergence of Business and Technology

John A. FosterPrincipal E-Business Architect

Eastman Kodak Company

[email protected]

©John A. Foster, 2002 From E-Commerce to E-Business 2

Key QuestionsKey Questions

Did e-commerce start with the Internet and the Web?

What’s the difference between “e-commerce” and “e-business”?

If the Web is so great, why did all those companies fail?

Are web services the next big thing in e-business?


Electronic Commerce (narrow Electronic Commerce (narrow definition)definition)

“Conducting business transactions through ‘market-facing systems’.”

EDI orders from customers

Selling products on-line

Delivering services on-line

Purchasing goods and services electronically

Procurement

Order-to-Cash

CCUUSSTTOOMMEERRSS

SUPPLIERSSUPPLIERS


Electronic Commerce (expanded Electronic Commerce (expanded definition)definition)

“Conducting business through ‘market-facing systems’.”

EDI orders from customers

Selling products on-line

Delivering services on-line

Purchasing goods and services electronically

Procurement

Order-to-Cash

Providing product information to prospective

customers

Customer self-help

Pre-Sales

Post-Sales

Exchanging engineering drawings with partners

CommercializationPARTNERSPARTNERS

Reviewing and updating benefits information

Benefits AdministrationEMPLOYEESEMPLOYEES

CCUUSSTTOOMMEERRSS

SUPPLIERSSUPPLIERS

electronic business


The Beginning of E-CommerceThe Beginning of E-Commerce

B2B B2C B2E

System to Individual

System to System

ElectronicTransactions

Phone SystemAutomation



1980s

1980s

1980s


… … and the Supporting Technologiesand the Supporting Technologies

B2B B2C B2E


System to System

EDI

IVRIVRIVR 1980s

1980s


The Elements of EDIThe Elements of EDI

A strength of EDI is its transport & infrastructure But it came with a price

Purchased transport• highly reliable• very secure

Standard documents• EDI standards• very extensive

ExpensiveEDI• ANSI X12• ISO 9735• UN/EDIFACT

Private network• VANs

Vocabulary

Transport

Some middleware• commonly purchased• map from one standard to

another

Middleware• Brokers, translators, mapsInfrastruc-

ture


Private Network

Electronic Data InterchangeElectronic Data Interchange

Enterprise A

MiddlewareTranslatorTranslator


Enterprise B

EDI standard documents

Connect with private networkTranslate documents


Core Business SystemsCore Business Systems


Public Phone Public Phone NetworkNetwork

IVR System Data servers

Telephone

Integrated Voice Response Integrated Voice Response ApplicationsApplications

Corporate Phone

Network

Install specialized systemConnect to phone network

Make core systems accessible by IVR system


Evolution to E-BusinessEvolution to E-Business

B2B B2C B2E


System to System

ElectronicTransactions

Customer RelationshipMgmt


Employee Self-service


Marketing InfoE-Tailing


Marketing InfoCustomer Self-service

1980s

1990s

1980s

1990s

1990s


… … and the Supporting Technologiesand the Supporting Technologies

B2B B2C B2E


System to System

EDI

Internet/XML

IVR

Intranet/Web

IVR

Internet/Web

IVR

Internet/WebInternet/Web

1980s

1990s

1980s

1990s


The Elements of Internet E-BusinessThe Elements of Internet E-Business

Many choices, but also more challenge and responsibility

Core set of base standardsMust address security… and redundancy and …

HTML for presentationXML for content representation

Inexpensive ???InternetA few XML vocabularies

• cXML (Ariba)• xCBL (CommerceOne)• RosettaNet• ebXML

https, https, SSL, ftpFirewalls, PKI

Vocabulary

Transport

Many optionsbuilt or purchasedInfrastruc-

ture

Middleware (RPC, MOM, msg. brokers, TP monitors)

Web servers, app servers, routersISPs


Internet System to SystemInternet System to System

Enterprise A



Enterprise B

InternetInternet

XML documents

Connect with InternetAdd robustness, redundancy, security

Connect with other enterpriseTranslate documents


Core Business SystemsCore Business Systems


InternetInternetWeb server

Commerce application server

Data servers

Browser

Web ApplicationsWeb Applications

The ubiquitous web browser

Make core systems accessible by apps on app

server


Internet economy poses opportunities Internet economy poses opportunities and threats …and threats …

Transform traditional business models using IT as enabler Compression of time & space

• 30% of BancAmerica’s online customers are outside of traditional geographic area

• Adaptec reduces manufacturing cycle from 12 to 8 weeks, slashing $10M in inventory costs

• “Always open” ‘Friction reduction’ creating new sources of economic value

• Intermediation premium (e.g. broker’s fee) • Manual sourcing by fax and phone • Cost of brick & mortar

But adding market turbulence “The Internet will change everything.”


Market TurbulenceMarket TurbulenceTravel, Brokerage, BooksTravel, Brokerage, Books

Customer Space

(Physical World)

TraditionalTraditionalCompetitorCompetitor

Merrill Lynch

Travel AgenciesLocal Bookstores

Internet Preview TravelAmazon.com

New Customer Space

Internet-Only Competitor

ETrade

Internet

(New Channel)

Sabre, TravelocityBarnes & Noble

Schwab

The The “Actor”“Actor”

MS Expedia

Out-of-Market Out-of-Market CompetitorCompetitor

Intuit

Courtesy: Cisco Systems


The Ultimate ImpactThe Ultimate Impact

The Internet dramatically lowers the cost of communication

Potential Revolutionary Impact

Financial ServicesEntertainmentHealth CareEducation

Government

But:Privacy issuesNeed for additional technology (e.g.

broadband, on-line bill paying)Who controls the information

Likely Incremental Impact

RetailingManufacturing

TravelPower

Why? – physical factors overrule virtualTop of the line web site $15-25MWarehouse & distribution system

$150M

Cou

rtesy: Bu

siness W

eek


NewNew Tools for the Tools for the OldOld Economy Economy

Tremendous tools for “old economy” companies to apply to business processes.

Annual Growth Rate in Nonfarm Business Productivity

0

0.5

1

1.5

2

2.5

3

'80-'85 '85-'90 '90-'95 '95-'00

Source: Bureau of Labor Statistics

An

nu

al g

row

th r

ate

(%) Worldwide B2B Transactions

0

1

2

3

4

'99 '00 '01 '02 '03

Source:Forrester Research Inc.

Tri

llio

ns

of

do

llar

s


Challenge: Process ImprovementChallenge: Process Improvement

E-Business is like putting a magnifying glass in front of your core processes

Legacy Business Operational Processes

Legacy Back Office Systems

New Business Operational Processes

ERP

Order to Cash

Manufac-turing

Procure-ment

Finance

from

to


Challenge: Systems DevelopmentChallenge: Systems Development

Product software development and information systems development are becoming intertwined

Product Software Information Systems

NetworkNetwork

from

to


Challenge: CommercializationChallenge: Commercialization

Product commercialization must become business commercialization

Discovery & Innovation

DefinitionDesign

ImplementationMfg./Operations Implementation

Production

0Opportunity

Selection

2 4 6 7C

Innovation Phases Commercialization Phases

Business Hypothesis

Business Development

Planning

Business Development

Business Start-UpBusiness Building

DCBA

New Business Development Phases


Why Did the “.com” Companies Fail?Why Did the “.com” Companies Fail?

Flawed business model Companies view the technology as their business,

rather than having a business Lose money on individual transactions

• Amazon.com loses almost $3 per order on multi-product orders

Lack of control over supply of what they sell• Priceline.com

All the good ideas duplicated by established concerns with deep pockets and staying power


Likely WinnersLikely Winners

NOTNOT

?


Web Services – the Future?Web Services – the Future?

B2B B2C B2E


System to System

EDI

IVR

Intranet/Web

IVR

Internet/Web

IVR

Internet/WebInternet/Web

2000s

Internet/XML

WebServices

WebServices

WebServices


Web ServicesWeb Services

Built on the foundation from Internet e-Business

Built on a ubiquitous core – but is it robust enough?

New standards – but built on XML.

???Web ServicesWSDL, UDDI for service interactionBut … business, security, …

XML-based (e.g. SOAP)Over http, https, …

Vocabulary

Transport

Much the same as for Internet e-BusinessInfrastruc-

ture

Middleware (RPC, MOM, msg. Brokers, TP monitors)Web servers, app servers, routersISPs


Web Services – “ready for prime Web Services – “ready for prime time”?time”?

Favorable Signs Takes “component”

foundation …• Reuse culture

• Semantic agreement … and leverages Internet

technologies• http

• XML

Challenges Cross-vendor

interoperability Simplicity Security Pre- and post-transaction

processes• Trading partner

agreements


ProviderRequestor

Who does this

service?

Request Service

Deliver Service

Directory Services

-UDDI

Core ServicesCore Services

Deploy Service


Provider

Requestor

Who does this

service?-Products

-PriceDeploy Service

Request Service

Deliver Service

Directory Services

-UDDI

Do we want to do

business with them?

-T&Cs-Reliability Do we want

to do business

with them?-T&Cs-Risk

Credit Services

• Evaluating risk• Underwriting risk

Record activity &

settle payment

Billing & Payment Services

• Tax• Import/export

““Helper” ServicesHelper” Services Define business

and business

terms

Directory Services

-UDDI-other


SummarySummary

E-business has been around for 20+ years, but the opportunities have been accelerated by the Internet and the web.

Business is still business The Internet hasn’t changed that – though for a while

many thought it might have.

Web services may be the “next big thing”, but EDI, IVR, etc. will probably still be around.

John A. Foster, 2002 From E-Commerce to E-Business 1 From E-Commerce to E-Business The Convergence...

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