Transcript 8 Cs. Customers Creativity Co-operation Commitment Final thoughts

Driving bottom line benefit from ICT
IoD Yorkshire Region
IT Masterclass
21 March 2006
Prof. Jim Norton
Senior Policy Adviser
UK Institute of Directors
Former Director UK
Cabinet Office PIU
e-Commerce team
www.profjimnorton.com
Issues to be covered
• Setting the scene.
• The new business context - 8 Cs.

Customers

Charging

Creativity

Competition

Co-operation

Culture

Commitment

Cost
• Final thoughts.
… and remember that the world is changing
rapidly
1949
All world trade
1960
All scientific projects
1983
In 1999
Source: Chatham House Forum
All telephone calls
1990
All emails
With acknowledgement to the Office of the e-Envoy
Does this remind you of anything?
Great Western Railway
225
200
175
150
125
100
75
50
1844 1845 1846 1847 1848 1849 1850 1851 1852
Source: Bains, Crafts & Leunig - Sunday Times
It was ever thus…the e-Biz trough of disillusion
Source: Gartner Group
The e-Business capability ‘hype’ cycle
Source: Gartner Group
Roger Beale sums it up beautifully…
With acknowledgement to Roger Beale at the FT - 13/3/01
Internet access by top 12
countries (millions of users)
23.7
21.9
25.9
Global total
Passed 1Bn
in 2005
28.8
197.8
USA
China
Japan
India
Germany
UK
South Korea
Italy
France
Brazil
Russia
Canada
28.8
33.9
35.8
46.3
119.5
50.6
Source: Computer Industry 86.3
Almanac 2005
600 M new users added since 2000….
UK Internet usage & penetration statistics
UK Internet connections (Millions)
Source: UK
regulator
Ofcom 2005
Market Report
(July 2005)
data to end
Q4 2004
http://www.ofc
om.org.uk/res
earch/cm/cm0
5/comms_mkt
_report05.pdf
Issues to be covered
• Setting the scene.
• The new business context - 8 Cs.

Customers

Charging

Creativity

Competition

Co-operation

Culture

Commitment

Cost
• Final thoughts.
The new e-business context..
…or how not to get lost in the desert

E-business is evolving
at a fearsome rate.

How can we determine
the best approach?

Some old business
landmarks do remain
firm in this shifting
landscape.
Focus on the ‘business’ and not on the ‘e’
Eight key landmarks to navigate by:

Customers

Creativity

Co-operation

Commitment

Charging

Competition

Culture

Cost
The eight ‘C’s of e-business strategy...
Customers - serving them better...

Outsourcing cost to
customers yet
improving their
satisfaction.

Developing ‘one to
one’ marketing based
on detailed customer
profiles.
Outsourcing cost to the customer….Dell
Source: http://www1.euro.dell.com/content/default.aspx?c=uk&l=en&s=gen
Outsourcing cost to the customer….Jali
Source: http://www.jali.co.uk
Outsourcing cost to the customer….Jali
Source: http://www.jali.co.uk
Outsourcing cost to the customer….Jali
Source: http://www.jali.co.uk
New types of banking with lower fixed costs...
There were estimated to be 11.5 M
online banking users in the UK at
the end of 2003.
This compares to just 5.6M at the
height of the “dotcom” boom.
Only 2.45M are customers of
“branchless” banks (e.g. Cahoot,
Smile, First Direct, Intelligent
Finance)
Some 300,000 customers at HSBC
offshoot's First Direct - almost a
third of its current account
customers - already use its free text
messaging service. This alerts them
when pay enters their bank
account or when they are close to
breaching their overdraft limit.
Source: http://www.woolwich.co.uk
Source: Datamonitor Aug 2003
Creativity - new value propositions...

Using the transaction
information available
at marginal cost to
generate new value
propositions.

Fundamentally
transforming
business models.
New value in pharmaceutical retailing….routing all purchases
through a single site and gaining automatic warning of adverse drug interactions
Source: http://www.drugstore.com
How can you create value from an online pharmacy?
Drugstore.com offers superior customer service and a host of valueadded features, including:
• eMedAlert™, which alerts members about drug warnings, updates,
and recalls;
• the Drug Price Index, which shows consumers the price savings
from purchasing larger quantities of a drug or choosing a generic
version of the drug;
• the Drug Information Database, which lists all relevant data about
the drugs stocked by the drugstore.com™ pharmacy;
• the Drug Interaction Checker, which provides information on drug
interactions, including drug-drug, drug-food, drug-vitamin, drugherb, and drug-alcohol interactions; and
• the Generic Insider, which notifies customers if a branded drug
they are taking becomes available in a generic form.
Source: http://www.drugstore.com
Co-operation - new types of intermediary

Customers’ agents
for collective
purchasing or to
manage risk.

Suppliers’ agents to
generate critical
mass from a large
number of small
companies
Co-operatives acting for small businesses...
Source: http://www.agriculture.com
We are seeing a wave of new intermediaries…
Whilst existing intermediaries (physical realtors, travel agents,
financial advisers,…) may see their traditional roles severely
threatened, many new opportunities are created.
‘Infomediaries’ are an example. They:
•
can resolve the privacy dilemma between the consumer’s
desire for privacy and the industries need for information...;
•
support confidence building services such as holding
payments in escrow against fulfilment;
give new opportunities for the resolution of taxation
challenges;
add real value for the consumer.
•
•
Commitment - ensuring fulfilment works...

“In a gold rush those
who are really smart
get there fast and sell
shovels”.

Enhanced safety and
stability in the
fulfilment backend
rather than the ‘dot
com’ front end.
Charging - linking directly to value created

Many business are
threatened not
because they no
longer add value but
because e-commerce
undermines their
existing ways of
charging for that
value.
Travel Agents’ inherent cross-subsidy is lost
It is now very difficult to book seats on ‘budget’ airlines other than on the
Internet… Even traditional carriers offer “e-ticket” discounts…
Source: http://www.thomascook.com
Competition - leveraging brand into new markets

Using brand to
transfer trust into
adjacent market
segments without
building new
businesses
WAL*MART carries ten times more lines on
its Website than in its largest store...
Online sales
via
Walmart.com
reached
$1.17Bn in
2005, a 50%
increase on
2004…
Source: http://www.walmart.com
Culture - keeping the team onside

Valuing creativity

Giving people genuine
authority

Developing the best
blend of systems and
people

Avoiding attrition
Cost - driving it down through new approaches

Pushing stock holding
elsewhere in the supply
chain.

Increasing competition
among sub-contractors

Enhancing logistics

Gaining cash flow at
the expense of suppliers
The chemicals sector as an example...

Bulknet.com
Bulk chemicals distribution
logistics centre.

CheMatch.com
Commodity chemicals exchange

ChemConnect.com
Auction site

Speciality chemicals marketplace
• ChemSource.com
Index site…
• GlobalBA.com
Site that includes distributors
Chemdeals.com
Trades off excess inventory

• Chem-etrade.com
Chemdex.com
Trades laboratory chemicals
• Lotsofplastics.com
Trades surplus raw plastics
• Chemmerce.com
Chinese chemicals marketplace
A darwinian process - all these sites were
operating six years ago. Those in red italic are
now gone or merged….
Evolution in B2B exchanges (1)
In the B2B space, infomediaries – in the guise of
the next generation of trade exchanges – will:
• change the balance of power in entire sectors by
aggregating the purchasing and selling power of
large numbers of small companies;
• foster (rather than destroy) supply chain
relationships for collaborative development,
innovation and the creation of ‘competitive
edge’;
• offer options to manage the risk associated with
‘just in time’ approaches to inventory
management;
“Covisint” represented a key test case
E-business is not about incremental improvement; e-business is a fundamental redesign of the
enterprise. Web sites that offer incremental solutions for isolated aspects of your business do not
enable you to reap the full benefits. Covisint will address your entire business, link you to the
entire industry, and provide a foundation to accelerate you into operating at Internet speed.
Source: www.covisint.com
Evolution in B2B exchanges (2)
In the B2B space, infomediaries – in the guise of
the next generation of trade exchanges – will also:
• maintain online registers for the location of scarce
resources or high value spare parts;
• support escrow accounts as part of a payment offer
in order to transfer payment upon agreed fulfilment;
• develop anonymised and accurate market
intelligence based on aggregated actual purchasing
behaviour;
• help to manage exchange rate risks; and
• provide real-time on-line credit search for
accreditation of third parties;
Issues to be covered
• Setting the scene.
• The new business context - 8 Cs.

Customers

Charging

Creativity

Competition

Co-operation

Culture

Commitment

Cost
• Final thoughts.
Some final thoughts….

E-business is about new opportunities to improve
your business model…

Implementation is usually incremental: adoption;
adaption; and finally absorption.


Normal ‘Darwinian’ processes have removed from
the market those who had wacky business plans
and little common sense…
E-business is now being integrated into
‘traditional’ business, bringing major cost savings,
service enhancements and new business
opportunities.
A step too far…
Questions & Answers
Slides available to download from:
http://www.profjimnorton.com/iodyorkshire1.ppt