Transcript UITA Summit - Marriott School

LEADING YOUR
COMPANY TO THE WEB
Ned C. Hill, Dean
Marriott School
Brigham Young University
Electronic Commerce: A Quick
Overview
 What’s
wrong with the old paradigm?
 What is e-Commerce?
 How large is the market?
 How is e-commerce (and the Web)
changing business?
 Should my company enter Web-space?
 What we are doing in the Marriott School
and at BYU
What’s Wrong with the Old Paradigm?
The Paper-based Commercial
Transaction
Seller
Mail
Mail
Banking
System
Carrier
Mail
Mail
Mail
Buyer
Keying in the Paper World
Seller’s Computer System
Keying
Keying
Keying
Postal System
Keying
Keying
Buyer’s Computer System
Keying
What’s Wrong with this Picture?
 Labor
intensive
 Slow
 Error
prone
 Uncertain
 Excessive inventory (and cash)
 Bottom Line: IT’S EXPENSIVE
What Can We Do?
 Option
1: Make paper work harder
 Option 2: Get rid of the paper altogether
Definitions of e-Commerce
Simple: “The selling of products and services using
the Internet.”
More General: The use of computer and
communication technology to facilitate the
information exchange between two parties in a
commercial transaction.
Primary Types of e-Commerce
 Paperless:
– Application to application
 Electronic
data interchange (EDI)
 Financial EDI (firm to bank)
 File transfer
– Manual to application
 Web
applications
 Electronic order entry
 E-mail
Additional Types of e-Commerce
 Physical
–
–
–
–
–
media assisted by computers:
Facsimile transmission
MICR, OCR, ICR
Bar coding
RF
Voice recognition
Map of e-Commerce
EDI, FEDI, FTP
All
Electronic
Internet, E-mail, E-trade
MICR, OCR, ICR, Bar Coding
FAX
Traditional Paper Transactions
All
Paper
Carrier
Goods
Buyer
Payment and Remittance Advice
Bill of Lading
Purchase Order
Quote
Request for Quote
An e-Commerce Transaction
Seller
Banking
System
Manual Processes in an e-Commerce World
Seller’s Computer System
Translation
Translation
F.A.
Keying
Translation
F.A.
F.A.
Computer Network (VAN, Internet)
P.O.
Translation
Invoice
Translation
RA
Keying
Translation
Buyer’s Computer System
Benefits of e-Commerce
Lower personnel costs
 Reduced error rates
 Faster cycle time
 Improved customer service
 Reduced inventory
 Fewer stock-outs
 Reduced paper handling costs
 Faster payments
 Better control over information

What is the Size of the U.S.
e-Commerce Market?
 Accurate
data is hard to find
 Three measures
– Number of online households
– Revenues from Web advertising
– Dollar volume of transactions through the Web
 This
is NOT the entire e-commerce market
– EDI market is even higher than Web market
Online Households
Million
70
60
50
40
30
20
10
0
1997
1998
1999
2000
2001
From Net Profit by Peter S. Cohan
2002
Web Ad Revenues
$ Million
3000
2500
2000
1500
1000
500
0
1996
1997
1998
1999
From Net Profit by Peter S. Cohan
2000
Business Through the Web
$ Billion
1200
1000
800
600
400
200
0
1996
1997
1998
1999
2000
2001
2002
Est. from the U.S. Department of Commerce
Cost Curves
 Labor
costs
 Paper costs
 Building costs
vs.
 Computer costs
 Telecommunication costs
Faster and Faster!
Time Required to Transmit the 32 Volume
New Encyclopedia Britannica
 1200 bps modem……………………..…28 days
 28.8 Kb modem………………………..28 hours
 Basic Rate ISDN…………..……….…6.3 hours
 T-1 line………………….……….….31 minutes
 T-3 line………………………………..1 minute
 ATM-SONET (OC-3)……………....17 seconds
 ATM-SONET (OC-12)………….....4.7 seconds
 Newly proposed technology……
.005 second
How the Web Changes Business
Traditional
Broadcast: 1 to N
Sellers more powerful
Customer loyalty
High barriers to entry
Speed: slow
Charge for each product
Transactions costs: high
Web
Network: N to N
Buyers gain more power
Less customer loyalty
Low barriers to entry
Speed: very fast
Often give away products
Transaction costs: low
Should My Company Enter Web-Space?
Do we have $100,000 to $200,000 to invest in
launching a Web site? (And are we willing to
invest in maintaining it?)
 Are our competitors involved in the Web?
 Do our customers demand Web services?
 Do we have customer service opportunities that
could be improved via the Web?
 Is a significant portion of our customer base under
the age of 30?
 Do we want to be in business 2-5 years in the
future?

Three Stages of Web Involvement
 Stage
1: “Brochure”
– One-way information broadcast
– Lowest cost, easiest to maintain
– A holder for your place in e-commerce
 Stage
2: “Basic Transactions”
– Offer basic transactions: orders, payment
– Requires significant maintenance, real-time
processing
– May compete with existing business avenues
Three Stages of Web Involvement
 Stage
3: “Complete Business Partnership”
– Multiple transactions with customers
– Integrated functionality
– Builds customer loyalty, long-term
relationships
– Involves major funding commitments
Three Stages of Web Involvement
Cisco:
Stage 3
Product Info.
Orders
Customer service
Design
Status
Delivery
Payment
LandsEnd:
Catalog
Orders
Stage 2
WSJ:
News
Stage 1
Suggestions on Entering Web Space
 Keep
your focus on your customer--don’t
get lost in the technology
 Use EC to improve processes and
information flow--don’t pave over old cow
paths
 Develop customer loyalty by providing
multiple connections that add value
 Partner when necessary to widen your
ability to provide services
Can We Sell Through the Web?
Web Applications OK but
Must Be Sophisticated
Product
Web Applications
Difficult/Impossible
Web Applications
OK
Unskilled
Web Applications
OK
Sophisticated
Customer Knowledge Level
Can We Sell Through the Web?
Cisco
Estate planning
Product
Dell
Term insurance
Groceries
Unskilled
Amazon.com
Sophisticated
Customer Knowledge Level
Suggestion: Analyze the Timelines You
Create for Your Customers
What processes do they go through to find us?
 How do we tell them about our products?
 How do they order from us?
 How do they contact us about customer service
problems?
 How do they pay us?
 What other information would they like to have
about status, payments, availability, etc., and how
do they get it?

Determine Your Timelines
Seller
Mail
Mail
Banking
System
Carrier
Mail
Mail
Mail
Buyer
Time delays, internal processing, costs, bottlenecks
Want to Find an Internet Business
Opportunity?
Hint: Study Possible Timelines
 Consumer
shopping
 Applying to college
 Buying a house
 Booking a flight
 Checking out a book from a library
Illustration: NetRoadshow


Public stock and bond offerings
Old timeline:
– Executive visits to possible customers
– Extensive exchange of paper information

Innovation:
–
–
–
–

Create electronic roadshow
Customers get passwords to watch at leisure
Information exchanged electronically
Sales calls follow
Results
–
–
–
–
SEC approved
Over 400 shows in 1999, at $20,000 each
Goldman Sachs, DLJ, Bear Stearns use
Company acquired for $50M by broadcast.com
The University--As a Business
 BYU
located in Provo, Utah
 31,000 students--largest private university
campus in U.S.
 300,000 alumni
 6,000 employees
 $300 million annual budget
 Cost structure: 80% salary
The Marriott School
of Management
 110
faculty
 5 masters programs, 2 undergraduate
– MBA, top 50 (tops in “payback”)
– Masters of Accounting, number 2
 2,300
undergraduate students
 700 graduate students
 1,100 graduating students per year
Why We Entered Web Space

Marketing
– Competition uses Web extensively
– Image is important (rankings)

Desire to improve “customer” service
–
–
–
–
Prospective students
Current students
Alumni
Recruiters
Desire to extend influence internationally
 Need to contain costs/positions

How We Did It

Used outside consultant to develop strategy
– Brought together all programs and functions
– Developed list of priorities
– Coordinated with rest of university efforts

Formed a Web development team
– Four students plus full-time staff member
Analyzed top Web sites from other universities
and companies
 Developed plan to phase in Web site over time

Marriott School Web Site

Phase 1: Infrastructure and design
– Went online Aug. 30th
– Primarily information (“Brochure Stage”)
– Navigation tools developed

Phase 2: Database integration
–
–
–
–

Data base driven pages (Oracle)
Some transactions (applications)
Ease of maintenance
Online spring 2000
Phase 3: Transactions and customization
– Multiple transactions and value-added services
– My Marriott, My Courses, My Students, etc.
– Online fall 2000
Other Uses of e-Commerce
at Brigham Young University
 Grade
transcripts
 Telephone bills
 Inter-library loans
 Applications
 Student loan documents
 Course registration
 Ordering supplies
 Course delivery
EDI
EDI
EDI
Internet
EDI
Intranet
Internet
Internet, etc.
Technology Goals at BYU
Permanent e-mail address for all students/alumni
 Moving towards use of Internet for 100% of
applications and registrations
 Apply EDI to purchasing, invoicing, prices, etc.
 Move 100 correspondence courses to Internet by
Jan 2000 (then 200, 300, etc.)
 Intranet-based services for students, alumni,
recruiters, etc.
 Increase electronic holdings for library
 Use of Internet to assess teaching, services, etc.
 Will soon require laptops for all students

Changing the Educational Paradigm
Utilize technology to help deliver course content
 Asychronous vs. synchronous
 Mixed-mode learning
 Use professors for what they do best

– Mentoring
– Q&A
– Discussion subjects

Use technology for what it does best
– Exercises
– Factual material
– Objective testing
Examples of Computer-Assisted Courses
Course
Chemistry
 Rat Lab
 Bacteriological Lab
 Engineering Technology
 Languages
 Music
 Accounting

Key Feature
Replaces lectures
Decreases costs
Allows experiments
Controls equipment
Adaptive learning
Visualizing Bach
Repetitive drills
Conclusions

Technology is changing the business (and the
educational) paradigm

Learn all you can about e-commerce

Direct benefits of e-commerce are impossible to
measure--but can you measure the value of your
telephone?

You will be doing e-commerce sooner or later-might as well get started now!
References on e-Commerce






Peter Cohan, Net Profit, Jossey-Bass, 1999--investing and competing
in the Internet business world
Bruce Judson, Hyper W@rs, Scribner, 1999--good commentary on
online business opportunities
Nicholas Negroponte, Being Digital, Knopf, 1995--one of the most
insightful commentaries on the Information Age
Karen Southwick, Silicon Gold Rush, Wiley, 1999--strategies for
developing a high-tech business
Don Tapscott, The Digital Economy, McGraw Hill, 1996--how the
Information Age will impact the economy
Don Tapscott, Growing Up Digital, McGraw Hill, 1998--how the
younger, computer-literate generation will change business and the
world