B2B
General concepts and trends
14. Februar 2001
Snorre Eide
A vision of Tomorrow:
"A million e-businesses, interacting
with a billion people, through a
trillion interconnected intelligent
devices...."
Paraphrase of comments by
IBM CEO Lou Gerstner,
as presented by Al Zoller at
The Economist's "New Directions In Computing"
conference, London
e-Commerce versus e-Business
e-Commerce uses the Internet simply as means of
conducting sales transactions,
while e-Business
leverages new and existing technologies to interact,
transact and collaborate with members of the
organization’s value chain.
YESTERDAY, TODAY, TOMORROW
Company and industry specific solutions reduce
sp
e
fi
i
c
c
c
om
m
on
c
om
m
on
sp
1970
e
fi
ci
c
2000+
Company or industry common solutions increase
Processing Power Doubles
Moore’s
Law
Every
18 Months
Moore’s Law: Every 18 months, processing power doubles
while cost holds constant.
Decreased Costs in Processing Speeds…
YESTERDAY
TODAY
TOMORROW
400 MHz
$1000
$500
$250
750 MHz
$1,500
$1,000
$500
1,000 MHz
$2,000
$1,500
$1,000
…coupled with the decreasing costs of memory, hardware, and
peripheral devices. The result --- accessing the Internet has
become more economical and widespread.
Connectivity Helps Drive Value of Internet
Metcalfe’s law
Metcalfe's Law
demonstrates the benefits
of increased connectivity
Utility
“Robert Metcalfe, founder of 3Com Corporation and
the designer of the robust Ethernet protocol for
computer networks, observed that new
technologies are valuable only if many people use
them. Specifically, the usefulness, or utility, of a
network equals the square of the number of users,
a function known as Metcalfe’s Law.”
Users
Utility = Users2
Source: “Unleashing the Killer App”, L. Downes & C. Mui, pg. 24
Explosion in Bandwidth …
56 K/second
Highest Speed
over Standard
Phone Lines
1.5 M/second
T1 Standard
Enterprise
Access
3 M/second
AT&T,@Home
Now available in
Major US Cities
Price:
$20/month
Price:
$1,600/month
Price:
$40/month
64 M/second
Starting in 2003,
Teledesic, a low
earth orbiting
satellite-based
system
Gilder’s Law: Bandwidth will increase by at least
3 times the rate of Moore’s Law
Price ???
Source: www.teledesic.com and PC Magazine,
October 1994
What Makes e-Business Different?
First order differences
– Automation
– Transaction costs
– Access
– Process scope and visibility
– Data richness
– Globalization
– Personalization
– Elimination of boundaries
Impacts
ü New business models
ü Outsourcing decisions
ü 24x7 operations
ü Corporate boundaries/alliances
ü Legislation trailing business
change
ü Information and product
allowed to follow different
paths/economics
e-Business: Driving Significant Changes
At a very fundamental level, the Internet and web-related technologies
have a profound impact on markets
•• Market
Market boundaries
boundaries are
are dramatically
dramatically expanded
expanded or
or eliminated
eliminated altogether
altogether
•• Transaction
Transaction costs
costs are
are reduced,
reduced, often
often by
by orders
orders of
of magnitude
magnitude
•• Transparency
Transparency of
of market
market information
information is
is greatly
greatly enhanced
enhanced
•• Pricing
Pricing mechanisms
mechanisms become
become more
more efficient
efficient (i.e.
(i.e. auction/exchange)
auction/exchange)
On a macro level, the impact on markets and competitive environments is
significant
• Basis of competition changes
• Barriers to entry are lowered
• New service offerings are enabled
• Cost-to-serve market segments can be dramatically reduced
Visibility
The Hype Cycle theory
Peak of inflated
expectations
Technology
trigger
Trough of
disillutionment
Verticals of ”the New Economy”
- e1, e2, e3, ..., en vs. ∑ei
Slope of
enlightenment
Plateau of Productivity
2005?
Time
Source: Derived from Gartner
Main goal for IT investment:
- use IT to create revenue growth
80 %
90 %
70 %
80 %
60 %
70 %
60 %
50 %
50 %
40 %
40 %
30 %
30 %
20 %
20 %
10 %
10 %
0%
0%
1991-2
1996-7
Cost cutting as main motive
2001-2
1991-2
1996-7
2001-2
Revenue growth as main motive
Reverse strategic thinking?
Business
Strategy
Information
Technology
Business strategies have traditionally driven IT development,
but IT can now be used to enable new business strategies
C-COMMERCE: NON-LINEAR SUPPLY CHAINS
EVOLUTION TOWARDS
COLLABORATION