From ECommerce to EBusiness The Convergence of Business

From E-Commerce to E-Business The Convergence of Business and Technology John A. Foster Principal E-Business Architect Eastman Kodak Company john. foster@kodak. com John A. Foster, 2002 From E-Commerce to E-Business 1

Key Questions n n 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? ©John A. Foster, 2002 From E-Commerce to E-Business 2

Electronic Commerce (narrow definition) “Conducting business transactions through ‘marketfacing systems’. ” C U S T O M E R S Order-to-Cash Delivering services on-line Selling products on-line Procurement Purchasing goods and services electronically EDI orders from customers SUPPLIERS ©John A. Foster, 2002 From E-Commerce to E-Business 3

Electronic Commerce (expanded definition) electronic business “Conducting business through ‘market-facing systems’. ” PARTNERS Commercialization Exchanging engineering drawings with partners EMPLOYEES Pre-Sales Providing product information to prospective customers C U S T O M E R S Order-to-Cash Delivering services on-line Benefits Administration Reviewing and updating benefits information Procurement Purchasing goods and services electronically SUPPLIERS ©John A. Foster, 2002 Selling products on-line EDI orders from customers Post-Sales Customer self-help From E-Commerce to E-Business 4

The Beginning of E-Commerce 1980 s B 2 B Phone System Automation B 2 C Phone System Automation B 2 E Phone System Automation 1980 s System to Individual Electronic Transactions 1980 s System to System ©John A. Foster, 2002 From E-Commerce to E-Business 5

… and the Supporting Technologies B 2 B IVR B 2 C IVR B 2 E IVR 1980 s System to Individual 1980 s EDI System to System ©John A. Foster, 2002 From E-Commerce to E-Business 6

The Elements of EDI n A strength of EDI is its transport & infrastructure u But it came with a price Expensive EDI Standard documents Vocabulary • EDI standards • very extensive Purchased transport Transport Infrastructure • highly reliable • very secure Some middleware • commonly purchased • map from one standard to another ©John A. Foster, 2002 • ANSI X 12 • ISO 9735 • UN/EDIFACT Private network • VANs Middleware • Brokers, translators, maps From E-Commerce to E-Business 7

Electronic Data Interchange Connect with private network Translate documents EDI standard documents Middleware Translator Enterprise A ©John A. Foster, 2002 Private Network Middleware Translator Enterprise B From E-Commerce to E-Business 8

Integrated Voice Response Applications Telephone Install specialized system Connect to phone network Public Phone Network Corporate Phone Network IVR System Data servers Middleware Translator Make core systems accessible by IVR system Core Business Systems ©John A. Foster, 2002 From E-Commerce to E-Business 9

Evolution to E-Business 1990 s B 2 B Phone System Automation System to Individual Marketing Info Customer Self-service B 2 C Phone System Automation B 2 E Phone System Automation Marketing Info E-Tailing Employee Self-service Electronic Transactions System to System 1990 s 1980 s Customer Relationship Mgmt ©John A. Foster, 2002 1980 s 1990 s From E-Commerce to E-Business 10

… and the Supporting Technologies B 2 B IVR System to Individual Internet/Web B 2 C IVR B 2 E IVR Internet/Web Intranet/Web 1990 s Internet/Web 1980 s EDI System to System 1990 s Internet/XML ©John A. Foster, 2002 1980 s From E-Commerce to E-Business 11

The Elements of Internet E-Business n Many choices, but also more challenge and responsibility Inexpensive ? ? ? Internet Vocabulary Transport Infrastructure HTML for presentation XML for content representation Core set of base standards Must address security … and redundancy and … Many options built or purchased ©John A. Foster, 2002 A few XML vocabularies • • c. XML (Ariba) x. CBL (Commerce. One) Rosetta. Net eb. XML https, SSL, ftp Firewalls, PKI Middleware (RPC, MOM, msg. brokers, TP monitors) Web servers, app servers, routers ISPs From E-Commerce to E-Business 12

Internet System to System XML documents Middleware Translator Enterprise A ©John A. Foster, 2002 Internet Connect with Internet Add robustness, redundancy, security Connect with other enterprise Translate documents Middleware Translator Enterprise B From E-Commerce to E-Business 13

Web Applications Browser Internet Web server The ubiquitous web browser Commerce application server Middleware Translator Data servers Make core systems accessible by apps on app server Core Business Systems ©John A. Foster, 2002 From E-Commerce to E-Business 14

Internet economy poses opportunities and threats … n Transform traditional business models using IT as enabler u Compression of time & space • 30% of Banc. America’s online customers are outside of traditional geographic area • Adaptec reduces manufacturing cycle from 12 to 8 weeks, slashing $10 M in inventory costs • “Always open” u ‘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 n But adding market turbulence u “The Internet will change everything. ” ©John A. Foster, 2002 From E-Commerce to E-Business 15

Market Turbulence Travel, Brokerage, Books Internet The “Actor” Internet-Only Competitor (New Channel) Schwab ETrade Sabre, Travelocity Barnes & Noble Traditional Competitor Merrill Lynch Travel Agencies Local Bookstores Internet Customer Space (Physical World) New Customer Space Preview Travel Amazon. com Out-of-Market Competitor Intuit MS Expedia Courtesy: Cisco Systems ©John A. Foster, 2002 From E-Commerce to E-Business 16

The Ultimate Impact n The Internet dramatically lowers the cost of communication Likely Incremental Impact Financial Services Entertainment Health Care Education Government Retailing Manufacturing Travel Power But: Privacy issues Need for additional technology (e. g. broadband, on-line bill paying) Who controls the information ©John A. Foster, 2002 Courtesy: Business Week Potential Revolutionary Impact Why? – physical factors overrule virtual Top of the line web site $15 -25 M Warehouse & distribution system $150 M From E-Commerce to E-Business 17

New Tools for the Old Economy n Tremendous tools for “old economy” companies to apply to business processes. ©John A. Foster, 2002 From E-Commerce to E-Business 18

Challenge: Process Improvement n E-Business is like putting a magnifying glass in front of your core processes Legacy Business Operational Processes Legacy Back Office Systems from New Business Operational Processes ERP Order to Cash Manufacturing Procurement to Finance ©John A. Foster, 2002 From E-Commerce to E-Business 19

Challenge: Systems Development n Product software development and information systems development are becoming intertwined from to Network Product Software ©John A. Foster, 2002 Information Systems From E-Commerce to E-Business 20

Challenge: Commercialization n Product commercialization must become business commercialization Innovation Phases C Opportunity Selection Commercialization Phases 0 2 4 Discovery & Innovation Definition Design Implementation Business Hypothesis Business Development Planning Business Development A B 6 Mfg. /Operations Implementation 7 Production Business Building Business Start-Up C D New Business Development Phases ©John A. Foster, 2002 From E-Commerce to E-Business 21

Why Did the “. com” Companies Fail? n Flawed business model u Companies view the technology as their business, rather than having a business u Lose money on individual transactions • Amazon. com loses almost $3 per order on multi-product orders u Lack of control over supply of what they sell • Priceline. com u All the good ideas duplicated by established concerns with deep pockets and staying power ©John A. Foster, 2002 From E-Commerce to E-Business 22

Likely Winners NOT ? ©John A. Foster, 2002 From E-Commerce to E-Business 23

Web Services – the Future? 2000 s B 2 B IVR System to Individual B 2 C IVR Internet/Web B 2 E IVR Internet/Web Intranet/Web Internet/Web EDI System to System Internet/XML Web Services ©John A. Foster, 2002 Web Services From E-Commerce to E-Business 24

Web Services n Built on the foundation from Internet e-Business Web Services ? ? ? Vocabulary New standards – but built on XML. WSDL, UDDI for service interaction But … business, security, … Transport Built on a ubiquitous core – but is it robust enough? XML-based (e. g. SOAP) Over http, https, … Infrastructure Much the same as for Internet Middleware (RPC, MOM, msg. Brokers, TP monitors) e-Business ©John A. Foster, 2002 Web servers, app servers, routers ISPs From E-Commerce to E-Business 25

Web Services – “ready for prime time”? n Favorable Signs u Takes “component” foundation … • Reuse culture • Semantic agreement u … and leverages Internet technologies • http • XML ©John A. Foster, 2002 n Challenges u u Cross-vendor interoperability Simplicity Security Pre- and post-transaction processes • Trading partner agreements From E-Commerce to E-Business 26

Core Services Who does this service? Directory Services -UDDI Requestor Deploy Service Provider Request Service Deliver Service ©John A. Foster, 2002 From E-Commerce to E-Business 27

“Helper” Services Who does this service? Define business and business terms -Products -Price Directory Services Do we want to do business with them? Provider -T&Cs -Reliability Request Service -UDDI -other Do we want to do business with them? -T&Cs -Risk Deliver Service Record activity & settle payment Requestor ©John A. Foster, 2002 Deploy Service Credit Services • Evaluating risk • Underwriting risk Billing & Payment Services • Tax • Import/export From E-Commerce to E-Business 28

Summary n n E-business has been around for 20+ years, but the opportunities have been accelerated by the Internet and the web. Business is still business u The Internet hasn’t changed that – though for a while many thought it might have. n 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 29