The document discusses e-business versus e-commerce, noting that e-business aims to improve business performance through connectivity across value chains. It then covers the rise and fall of the dot-com economy in the late 1990s, when many new online businesses failed due to lack of attention to fundamentals. Successful e-business models are those that exploit relationships across channels through a focus on margins, profits, and customer retention.
The document discusses e-business versus e-commerce, noting that e-business aims to improve business performance through connectivity across value chains. It then covers the rise and fall of the dot-com economy in the late 1990s, when many new online businesses failed due to lack of attention to fundamentals. Successful e-business models are those that exploit relationships across channels through a focus on margins, profits, and customer retention.
The document discusses e-business versus e-commerce, noting that e-business aims to improve business performance through connectivity across value chains. It then covers the rise and fall of the dot-com economy in the late 1990s, when many new online businesses failed due to lack of attention to fundamentals. Successful e-business models are those that exploit relationships across channels through a focus on margins, profits, and customer retention.
The document discusses e-business versus e-commerce, noting that e-business aims to improve business performance through connectivity across value chains. It then covers the rise and fall of the dot-com economy in the late 1990s, when many new online businesses failed due to lack of attention to fundamentals. Successful e-business models are those that exploit relationships across channels through a focus on margins, profits, and customer retention.
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e-Business
Discussion with UW Students
Agenda (from Abstract)
e-Business vs e-Commerce vs Internet
What makes e-Business different from business? The rise and fall of the dot.com economy Successful models for e-Business The drivers of benefit for e-Business applications The value of Brand with e-Businesses The potential for e-Business in Insurance and high quality on-line Financial Advice e-Business vs e-Commerce
E-Business: Improving business E-Commerce: performance through low cost and • marketing open connectivity: • selling • buying of products and • New technologies in the value chain services on the Internet • Connecting value chains across businesses
in order to :
• Improve service/reduce costs
• Open new channels • Transform competitive landscapes
e-Business is more than selling and marketing online!
e-Business vs Business
Re- Re- Assess Assess
‘Traditional’: Implement ‘E-Business’: Implement
Implementation Implementation Planning Planning
Opportunity Opportunity Analysis Analysis
Understand Business Understand Electronic Business
Traditional business organization Characteristics of an “Electronic Business
‘develop step by step’: journey”: Definitions are clear Definitions of the future are ‘fuzzy’ No change in the business and technology Permanent and unpredictable change in the environment business and technology environment High time pressure Time to market and speed are major competitive factors Continuous learning Continuous learning & fast adaptation is required
E-Business is not a project - but rather a journey that requires vision and non-linear procedures Experimentation and Learning
Continuous experimentation through specific Solutions
Prototyping 1997-1999 - e-Business Mania Strikes!
E-Business becomes a major economic force
NASDAQ hits 5,000 Venture capital in abundance Focus on new economy, new business models, growth potential no attention to traditional fundamentals bricks and mortar viewed as liability Traditional businesses shake in their boots at the threat of new non-traditional nimble bold competitors Dot.Com start-ups in every field Dot.Com multi-millionaires made over night B2B and B2C - Huge Potential
The Demise of Dot Com Retailers. Weak financials, intense competition, and investor flight will drive many of today's online retailers out of business in 2000. Those that survive must refocus funding on building hard assets to achieve scale, service, and speed. Wall Street will run out of patience. Financial markets exasperated with non-existent online profits will turn a deaf ear to persistent "investment mode" rhetoric and soundly punish merchants who bleed red ink. Recent stock disasters like Value America and eToys -- whose market caps as of January 11, 2000, are down $3.1 billion and $7.7 billion respectively from 1999 highs -- serve as bad omens for online stores that lack a unique approach or technology. The revenge of the brick-and-mortars will begin. The narrowing of the playing field in 2000 will rationalize but not resolve online retail competition. It will usher in a new era characterized by a few large players that exploit deep customer relationships and a presence across multiple channels to entrench themselves. To measure their success, these firms will ditch new economy platitudes in favor of unfashionable old metrics like margins, profits, and customer retention costs.
Traditional bricks and mortar assets can represent significant competitive strengths logistics, inventory, distribution choice in terms of customer access strength and brand
e-Business becomes an element of overall
business strategy - not the total business strategy e-Business still widely seen as a way of transforming business operations and thinking ‘Bricks and Clicks’ - A Hybrid Model
Traditional Pure Web - Dot.com
“Bricks and Mortar” “Clicks”
Combines strengths from traditional and Hybrid pure Web approaches “Bricks and Clicks” Emergence of the Hybrid Strategy Phases of e-Business Development
Four stage model in E-Business maturity relates business value to e-business leverage
Convergence Cross-Industry Supplier/Customer Just under 15% are in the convergence integration phase. Connections to suppliers and customers are fully E- Transformation Over 50% are in the channel Business enabled. phase of Industry transformation, E-Business development achieve competitive Business Value
with a web presence but no advantage
infrastructure tie-in. Integration Integrate with customers Channel and suppliers Brochureware and buying /selling
E-Business Leverage Source: PricewaterhouseCoopers Phases of e-Business Development The Journey Requires Investment
Significant multi-year investment predicted
The Journey Requires Investment
Significant multi-year investment predicted
The Benefits of e-Business
Generate additional Revenues
New markets New products New customers Reduce Costs (Integration and ‘Collaboration’) Process efficiency Reduce IT variety and -complexity Synergies with other initiatives Customer Retention (‘Added Services’ and ‘Virtual Community’) Know more about your customers Integrated channel management Proactive and personalized offerings Improve Image / Position Brand Applying innovative technologies Leadership enterprise Address younger customer segments Not to miss the boat Keeping options open Acquire know-how Focused investments e-Business and Brand
Research from Mainspring…
Online financial services customers are initially motivated by price sensitivity, but that influence declines as they realize the benefits of convenience Brand is more important online than offline When researching insurance purchases online, 56% of customers went straight to name-brand sites as compared with 32% for aggregation sites. When initiating a purchase online, 60% went to name- brand sites as compared to 32% for aggregation sites. Online Insurance
Growth of Internet-Enabled Insurance
1200 (US)
1000 Other 800 Auto US $ Homeowners MM 600 Life 400 200 0 1997 1998 1999 2000 2001 Source: Forrestor Online Advice
When will you offer financial advice online? Why will you offer financial advice online?
To improve our online
Don't know offering
Customers want online advice
> 3 years
Enhance customer 1 to 2 years relationships
< 1 year Help customers make
decisions
Now Competitive pressures
0 10 20 30 40 50 60 0 10 20 30 40 50 % % Source: Forrestor Source: Forrestor Online Advice vs Face to Face
Forrester: Few financial companies believe that online advice will
replace the human advisor. Except for a small group of low-end, self- directed customers, consumers are expected to continue to seek advice from financial advisors. More than half of our respondents believe that online advice solutions will never be a compelling alternative to working with one of their advisors, even as the technology improves. Almost half of financial institutions believe that online advice will enable advisors to deliver additional value to their customers. As automated advice vendors piece together the elements of the new advice creation process,we believe that use of online advice will surge.“ Customers don ’t care about the data-entry and number-crunching aspect of advising -- they pay for the conversation they have after the analysis is done. These online solutions will enable our advisors to spend more time with their customers.” (Insurer)
