Chapter Three Chapter Three Digitizing the Business: e-Business Patterns www.ebstrategy. com 2 - © e-Business Strategies, Inc. e-Channel e-Channel e-Portal e-Portal e-Market Maker e-Market Maker e-Business Patterns: e-Business Patterns: The Structural Foundation The Structural Foundation Pure-E “Digital Products” Pure-E “Digital Products” Click-and-Brick Click-and-Brick Table of Contents Table of Contents www.ebstrategy. com 3 - © e-Business Strategies, Inc. e-Business Patterns: Structural Foundation e-Business Patterns: Structural Foundation In dynamic market environment, manager’s challenge is how to tell forest from trees – Are we investing in the right business opportunity? – Are these opportunities ever going to be useful? – Are we using the right business model to attack these opportunities? The Scoop: New, Web-enabled firms eating into large, old-economy companies’ businesses So: Managers of old-economy companies need right support tools to make strategic moves, allocate scarce resources, and manage risk www.ebstrategy. com 4 - © e-Business Strategies, Inc. e-Business Patterns: Structural Foundation e-Business Patterns: Structural Foundation But: Choosing target strategy complex – To move online, large brick-and-mortar corporations either swallow a startup or go at it alone. Which is the right approach? Implication: With focus shifting from physical to digital assets, managers must monitor macroeconomic and customer trends – To trigger new e-business structural designs – Resulting new business models form the basis for next gen corporate strategic planning Sadly: Many companies still not taking the digital world seriously www.ebstrategy. com 5 - © e-Business Strategies, Inc. e-Business Patterns: Structural Foundation e-Business Patterns: Structural Foundation Bottom line: We are still in early stages of the e-Business revolution – There have been and will be moments of extreme optimism; also moments of extreme pessimism – What is certain is that it is creating opportunities for companies willing to adapt – For others, it represents a destabilizing threat to the status quo of business-as-usual – When all is said and done, we’ll find big corporate winners join ranks of premiere companies in the world Aim of this chapter – Help identify winners – Discuss characteristics leading to their success – Analyze discernible patterns for better understanding www.ebstrategy. com 6 - © e-Business Strategies, Inc. Going Digital Going Digital First step in identifying an e-business leader – Look at companies asking the innovative questions that are transforming the rules of today’s business game When innovative companies change the types of strategic questions that they ask themselves, the result is business revolution – In 1970s, the Japanese posed new questions and changed rules of the Auto industry • Not gas-guzzlers, how do we create fuel-efficient cars? • Not cars that break down, how can we create a high- quality car with few manufacturing defects? • Not piles of “just-in-case” inventory, how can we create a “just-in-time” inventory process? www.ebstrategy. com 7 - © e-Business Strategies, Inc. Going Digital Going Digital In mid 1980s, it was Wal-Mart – Not what business are we in, what business should we be in? – Wal-Mart turned from retailer into supply chain expert – Offered right product mix at right store In mid 1990s, it was new entrants who rose to challenge almost every leading company – Questions about customer and business model, not processes, thus challenging sentiment of early 1990s among leading companies – AOL vs. CompuServe and Prodigy – Dell vs. Compaq and IBM – EMC vs. IBM and StorageTek – Sun Microsystems vs. HP and Silicon Graphics www.ebstrategy. com 8 - © e-Business Strategies, Inc. Going Digital Going Digital In the 2000s, the questions for today’s business leader will be on the speed with which his/her firm implements e-business solutions powered by recent innovations – How fully digital can we make our customers’ experience? – Our supply chain? – Our internal operations and processes? – Intuit transformed from a stand-alone PC-based business model into an online financial services portal when the Internet emerged to threaten it’s business www.ebstrategy. com 9 - © e-Business Strategies, Inc. Going Digital Going Digital Startups continue to shape the direction of today’s business by taking advantage of recent technological innovations E-Business can change the way companies interact with customers, communicates, sells, purchases, manufactures, and develops products Asking a new question not only produces new answers but also reinvents the game Result: a cost advantage that’s not 10 percent better than competitor’s but rather many fold. www.ebstrategy. com 10 - © e-Business Strategies, Inc. • What models are better suited to take advantage of new business opportunities? • What business processes need to change? • How do you move from existing model to an e-model reflecting your firm’s organizational readiness? • What are the challenges management must face when executing the new business model? Analyzing the Environment Analyzing the Environment • What is the new opportunity based on certain customer and market trends? • What are the macro-economic drivers of the business change? • Which digital technologies are going to dominant your industry? e-Business Models The strategic framework allows you to compete in the game e-Business Patterns The structural foundation sets the new rules of the game • Who are your target customers? • What is your value proposition? • How do you make money? • How to finance the company? • How do you get and retain customers? • How to attract and retain talented people? e-Business Designs A specific strategy for what you need to do in the marketplace [...]... warehousing Table of Contents e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” © e-Business Strategies, Table of Contents Transaction Transaction Enhancement Enhancement e-Channel e-Channel e-Channel Compression Compression e-Channel e-Channel Expansion Expansion e-Channel e-Channel Innovation Innovation © e-Business Strategies, Transaction... portals to consolidate along two segments • Full-service and off-price discount – Keys to success • Automation of the look-to-book process • Channel synchronization © e-Business Strategies, Table of Contents e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” © e-Business Strategies, The e-Market Maker Pattern Online intermediary, connects... positive ROI (return on investment) © e-Business Strategies, Table of Contents e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” © e-Business Strategies, The e-Portal Pattern Portals are “Killer” apps of e-business An intermediary or middleman offering an aggregated set of services for a specific well-defined group of users – Yahoo!... in where, when and how customers buy the products and services they seek – Winner will take all! © e-Business Strategies, Table of Contents e-Business Patterns: The Structural Foundation e-Channel Click-and-Brick e-Portal e-Market Maker Pure-E “Digital Products” © e-Business Strategies, The Click-and-Brick Pattern Brick and mortar + Click and order = Click and Brick The C&B pattern allows an existing... transaction, subscription, mark-up © e-Business Strategies, The e-Market Maker Pattern Major role for e-Market makers in industries with these characteristics: – – – – – – Large market size Fragmented supply chain Unrecognized vendor or product differentiation High information-search costs High product-comparison costs High workflow costs © e-Business Strategies, The Pure E-Digital Products Pattern New... Transformation of Business e-Channel E-Portal (B2C) Pure E Click and Brick E-Market-Makers (B2B) • Basic efficiency, effectiveness enhancements as the selling becomes E-enabled • Traditional business transferred to the Net • Selling goods/services • New forms of supply chain integration • Payment/settlement enhancements © e-Business Strategies, • Rise of new intermediaries • Consolidation/ transformation... permitting interface between data and speech and other systems © e-Business Strategies, The Pure E-Digital Products Pattern 3 types of entrepreneurial activity characterize digital-goods market – high-quality end user technologies, services and products – s/w and h/w platforms – distribution infrastructure © e-Business Strategies, High-Quality, High Speed Content to Consumers: Digital Music Internet... at all for many of the industry’s middlemen – New companies and peerto-peer technologies emerging to meet needs of the digital music download business: MP3.com, Napster, Gnutella, Pointera © e-Business Strategies, New Platforms for Digital-Media Delivery Market for delivery of Internet services through handheld devices new and evolving rapidly – PDAs and mobile phones WAP standard emerging for delivery... mobile phones WAP standard emerging for delivery of Internetbased services to mass-market wireless phones WML for Internet apps and content for wireless phones Next gen mobile delivery systems include voice browsers and speech-recognition systems – TellMe and HearMe © e-Business Strategies, New Infrastructure Services for Digital Content Delivery New infrastructure services required to support faster... Direct, one-toone experience • Personalized content • Automation (assistants, alerts) • Localized inventory • In-store shopping experience • Immediacy (try, buy, take home) • Service (returns, repairs, exchanges) Established retailers are creating new C&B patterns – Land’s End A new variation in C&B strategy – Amazon.com and Toys “R” Us © e-Business Strategies, Click & Brick Why the Click-and-Brick Pattern . www.ebstrategy. com 18 - © e-Business Strategies, Inc. e-Channel e-Channel e-Portal e-Portal e-Market Maker e-Market Maker e-Business Patterns: e-Business Patterns:. Transformation of Business Pure E E-Portal (B2C) E-Market-Makers (B2B) e-Channel Click and Brick www.ebstrategy. com 12 - © e-Business Strategies, Inc. e-Channel