MODEL FOR E-COMMERCE & INFORMATION SUPERHIGHWAY
There are basically seven types of models for E-business. The E- Business model would be closely tied to the mission of the organization. Once the organization has decided what it aims to do one of the models that have been explained below may be adopted.
Category Killer
A category killer would use the Internet to define a new market by identifying a value proposition for the customer or create a new value proposition. The organization which des so, would have the first mover advantage in the market and would stay ahead of the competition by continuously innovating. .
Example: Amazon.com.
Channel Reconfiguration
This model would use the Internet as means of reaching the customers and suppliers and to conduct, transactions on them.
This model supplements the legacy distribution and communication channels. The advantage of such a model is decreased time to market. Such a model would invest in end-to end process integration. This would require a major application overhaul to develop an integrated infrastructure that allows the processes to flow seamlessly, which in turn should lead to reduction of costs of products by eliminating, redundancies of operations and enhancing the scope of each operation. The advantage of such a model is decreased time to market, and minimizing the total product cost. Examples: Cisco.
Transaction Aggregation
This type of organization would create an electronic commerce and payment infrastructure that integrates their existing transaction processing capabilities with e -business capabilities.
This would facilitate a client in carrying out all the steps of purchases - searching, comparing, and selecting and paying online. These intermediaries may fulfill the following roles
Support buyers in identifying their needs and finding an appropriate seller.
Provide an efficient means of exchanging information between both parties.
Execute the business transaction. For example: Microsoft Expedia and eBay.
Infomediary
An infomediary provides specialized information on behalf of producers of goods and services and their potential customers. That is, it serves to bring together the customer and the supplier of goods.
An example of an Infomediary is priceline.com.
Event Aggregation
This model would serve to simplify a major purchasing event such as buying a house, by offering the customer a unified front-end for purchasing related goods and services from multiple providers. It provides convenience to the customer and hence enhances the relationship between the customer and the company. E.g. RealtoLcom.
Market Segment Aggregation
The organization defines a customer base and builds a comprehensive suite of services tailored to that customer type.
Say for instance in our country the MNC’s which have to set up their offices would have to go through a lot of procedures before they get the final clearances. A Market segment aggregator, who could get all the clearances that are required, could possibly handle this work.
E.g. American Express’s, small business exchange, catering to the needs of small-scale companies.
Value Chain Integration
Value Chain Integration (VO) connects the organization’s systems with its supplier’s systems using the Internet, and this integration would lead to a joint manufacturing execution plan, keeping the customers needs in the center. Such an arrangement provides seamless integration within and between enterprises, tying together large islands of information systems. The advantage is that, when the customer keys in his requirement over the net, it would be transmitted to every process center in the value chain without much loss of time. This way the organization can rapidly react to events. E.g. Dell Online.
Strategic Model for e-Business/CMS/CRM- Software
Development
1. Stage of Orientation
Define your short, medium and long term targets to discuss your individual requirements
2. Stage of Analysis
Analyses of special requirements for your application
3. Stage of Design and Layout
Visual displays based on your ideas
4. Stage of Transformation
Realizing requirements and ideas in the software solutions
5. Stage of Implementation
Full implementation of your e Business solutions
Using Value Chains to Model An e-Commerce Business
A value chain for a product is the chain of actions that are performed by the business to add value in creating and delivering the product. For example, when you buy a product in a store or from the web, the value chain includes the business selecting products to be sold, purchasing the components or tools necessary to build them from a wholesaler or manufacturer, arranging the display, marketing and advertising the product, and delivering the product to the client.
In the book Designing Systems for Internet Commerce by G. Winfield Treese and Lawrence C. Stewart, the authors suggest breaking down the aspects of your business into four general value-chain areas:
Attract:
in which you get and keep customer interest, and includes advertising and marketing
Interact:
in which you turn interest into orders, and includes sales and catalogs
Act:
in which you manage orders, and includes order capture, payment, and fulfillment
React:
in which you service customers, and includes technical support, customer service, and order tracking.
Let’s Take a Look at an Example
Suppose we’ve already modeled a number of Process Chart diagrams for the various process flows that occur within our on-line retail business. Each of these Process Chart diagrams represents all or part of a Process Thread. We can create a
Process Decomposition diagram to model the hierarchy of our process threads to elementary business processes, and the value-chain areas that they are contained within. Create a Process Decomposition diagram.
Draw four Primary Process Groups on The diagram — named Attract, Interact, Act, and React. Browse all of the Process Threads that you’ve modeled for your business in System Architect’s browser. Drag-and-drop them onto the diagram workspace, and assign them to the value-chain Primary Process Groups according to the guidelines above.
According to Treese and Stewart, looking at the value chain for your business helps you to define areas of focus — what your company is good at, or where you should concentrate your efforts to gain competitive advantage.
Within System Architect, the Process Decomposition diagram is a handy vehicle for establishing what business processes are performed within each of these value-chain areas.
The Process Decomposition diagram enables you to model three model elements — Primary Process Groups, Process Threads, and Elementary Business Processes. Each of the value-chain areas listed above can represent a Primary Process Group. Each group contains one or more process threads (a process thread is a grouping of process flows that deal with a central process — for example, ordering). Each process thread contains the elementary business processes that make up the thread (these are modeled on one or more Process Chart diagrams for each Process Thread).
Select all of the Process Threads on the diagram, and from
System Architect’s Dictionary menu, select Update Selected Process Threads EBPs.
System Architect reviews all of the Process Chart diagrams you have built, and automatically draws appropriate elementary business processes on the diagram, under the Process Threads that they belong to (remember, every Process Thread is represented by one or more Process Chart diagrams).
Take a look at one of the Primary Process Groups, for example,
Interact. Note that you can now view this value chain category, and see the various processes that are performed by your company to satisfy this value chain. As Treese and Stewart state, in developing systems for Internet commerce, you should focus on parts of the value chain related to that of the underlying business (ie, the product you are selling), and from looking at the value chain required to doing business online. Understanding these two pieces and how they fit together is an important part of creating a successful business in Internet commerce.
Electronic Commerce Industry Framework
Electronic commerce not only affects transactions between parties, it also influences the way markets will be structured. Traditionally, market ties were led through the exchange of goods, services, and money. Electronic commerce adds a new element: information. Market ties, such as those forming around online payments, are now based on information goods, in-lation services, and electronic money. Although banks have traditionally -dominated payment processing, new organizations, such as Intuit and ‘Osoft, have begun to process payment transactions online. Technology enabled the creation of new market opportunity that enables new play-ers to step in, creating a whole new set of market dynamics.
Electronic Commerce Applications
• Supply chain management
• Video on demand.
• Remote banking
• Procurement and purchasing
Generic Framework for E-Commerce
To better understand the market structure that is developing around electronic commerce, we have developed a simple framework (see Fig.) that succinctly captures the developments in this area. Even those aware of the importance of electronic commerce have little under-standing of online jargon, or how the industry is structured. Such confusion is further entrenched by the media’s use of different names to refer to the same phenomenon or its various elements: the Information
Superhighway, the Internet, Cyberspace, Interactive Multimedia, and so on. It is important for businesses to understand the overall industry in order to develop business strategies that employ electronic commerce.
The next section will explain each aspect of the electronic commerce infrastructure in detail, beginning with the most broadly based term: the Information Superhighway Infrastructure.
The Information Superhighway
The Information Superhighway has many different types of transport sys-tems and does not function as a monolithic entity; there is no single inter-state highway that connects the digital equivalent of Los Angeles to Miami. Instead, the architecture is a mixture of many forms of high-speed network transport, whether it be land-based telephone, air-based wireless, modem -based PC, or satellite-based. For instance, mail sent from a portable PC in the French Riviera to a computer in Los Angeles might travel across several different types of transport networks interconnected with each other before it reaches its destination.
The players in this industry segment can be called information transport providers. They include: telecommunication companies that provide phone lines; cable TV systems that provide coaxial cables and direct broadcast satellite (DBS) networks; wireless companies that provide mobile radio and satellite networks; and computer networks, including private net-works like CompuServe or America Online, and public data networks like the Internet.
This industry segment also includes hardware and software tools that provide an interface with the various network options, and to the customer premises equipment (CPE), or terminal equipment, which is a generic term for privately owned communications equipment that is attached to the network.
.
This category of subscriber terminal equipment can be divided into three parts: cable TV set-top boxes, computer-based telephony, and net-working hardware (hubs, wiring closets, and routers or digital switches). The terminal equipment is in fact the gateway to information services, commercial transactions, and 500 digitally compressed channels.
The biggest area of growth over the last five years has been in the router business. Routers and digital switches help to connect large net-works (or internet works). Routers are devices that can connect the local area networks (LANs) inside various organizations with the wide area networks (WANs) of various network providers. This interconnection enables easy communication between separate networks across geo-graphical distances and provides access to distributed computing resources. The router industry is a multibillion dollar industry that is dominated by players such as Cisco, Bay Networks, and 3COM, all three of which supply equipment that links data communications
net-works through the Internet. In a recent valuation by Business Week, Cisco was rated as the fortieth largest company in America, with a market value of $26 billion. Not bad for a company with an extremely specialized product.
There are basically seven types of models for E-business. The E- Business model would be closely tied to the mission of the organization. Once the organization has decided what it aims to do one of the models that have been explained below may be adopted.
Category Killer
A category killer would use the Internet to define a new market by identifying a value proposition for the customer or create a new value proposition. The organization which des so, would have the first mover advantage in the market and would stay ahead of the competition by continuously innovating. .
Example: Amazon.com.
Channel Reconfiguration
This model would use the Internet as means of reaching the customers and suppliers and to conduct, transactions on them.
This model supplements the legacy distribution and communication channels. The advantage of such a model is decreased time to market. Such a model would invest in end-to end process integration. This would require a major application overhaul to develop an integrated infrastructure that allows the processes to flow seamlessly, which in turn should lead to reduction of costs of products by eliminating, redundancies of operations and enhancing the scope of each operation. The advantage of such a model is decreased time to market, and minimizing the total product cost. Examples: Cisco.
Transaction Aggregation
This type of organization would create an electronic commerce and payment infrastructure that integrates their existing transaction processing capabilities with e -business capabilities.
This would facilitate a client in carrying out all the steps of purchases - searching, comparing, and selecting and paying online. These intermediaries may fulfill the following roles
Support buyers in identifying their needs and finding an appropriate seller.
Provide an efficient means of exchanging information between both parties.
Execute the business transaction. For example: Microsoft Expedia and eBay.
Infomediary
An infomediary provides specialized information on behalf of producers of goods and services and their potential customers. That is, it serves to bring together the customer and the supplier of goods.
An example of an Infomediary is priceline.com.
Event Aggregation
This model would serve to simplify a major purchasing event such as buying a house, by offering the customer a unified front-end for purchasing related goods and services from multiple providers. It provides convenience to the customer and hence enhances the relationship between the customer and the company. E.g. RealtoLcom.
Market Segment Aggregation
The organization defines a customer base and builds a comprehensive suite of services tailored to that customer type.
Say for instance in our country the MNC’s which have to set up their offices would have to go through a lot of procedures before they get the final clearances. A Market segment aggregator, who could get all the clearances that are required, could possibly handle this work.
E.g. American Express’s, small business exchange, catering to the needs of small-scale companies.
Value Chain Integration
Value Chain Integration (VO) connects the organization’s systems with its supplier’s systems using the Internet, and this integration would lead to a joint manufacturing execution plan, keeping the customers needs in the center. Such an arrangement provides seamless integration within and between enterprises, tying together large islands of information systems. The advantage is that, when the customer keys in his requirement over the net, it would be transmitted to every process center in the value chain without much loss of time. This way the organization can rapidly react to events. E.g. Dell Online.
Strategic Model for e-Business/CMS/CRM- Software
Development
1. Stage of Orientation
Define your short, medium and long term targets to discuss your individual requirements
2. Stage of Analysis
Analyses of special requirements for your application
3. Stage of Design and Layout
Visual displays based on your ideas
4. Stage of Transformation
Realizing requirements and ideas in the software solutions
5. Stage of Implementation
Full implementation of your e Business solutions
Using Value Chains to Model An e-Commerce Business
A value chain for a product is the chain of actions that are performed by the business to add value in creating and delivering the product. For example, when you buy a product in a store or from the web, the value chain includes the business selecting products to be sold, purchasing the components or tools necessary to build them from a wholesaler or manufacturer, arranging the display, marketing and advertising the product, and delivering the product to the client.
In the book Designing Systems for Internet Commerce by G. Winfield Treese and Lawrence C. Stewart, the authors suggest breaking down the aspects of your business into four general value-chain areas:
Attract:
in which you get and keep customer interest, and includes advertising and marketing
Interact:
in which you turn interest into orders, and includes sales and catalogs
Act:
in which you manage orders, and includes order capture, payment, and fulfillment
React:
in which you service customers, and includes technical support, customer service, and order tracking.
Let’s Take a Look at an Example
Suppose we’ve already modeled a number of Process Chart diagrams for the various process flows that occur within our on-line retail business. Each of these Process Chart diagrams represents all or part of a Process Thread. We can create a
Process Decomposition diagram to model the hierarchy of our process threads to elementary business processes, and the value-chain areas that they are contained within. Create a Process Decomposition diagram.
Draw four Primary Process Groups on The diagram — named Attract, Interact, Act, and React. Browse all of the Process Threads that you’ve modeled for your business in System Architect’s browser. Drag-and-drop them onto the diagram workspace, and assign them to the value-chain Primary Process Groups according to the guidelines above.
According to Treese and Stewart, looking at the value chain for your business helps you to define areas of focus — what your company is good at, or where you should concentrate your efforts to gain competitive advantage.
Within System Architect, the Process Decomposition diagram is a handy vehicle for establishing what business processes are performed within each of these value-chain areas.
The Process Decomposition diagram enables you to model three model elements — Primary Process Groups, Process Threads, and Elementary Business Processes. Each of the value-chain areas listed above can represent a Primary Process Group. Each group contains one or more process threads (a process thread is a grouping of process flows that deal with a central process — for example, ordering). Each process thread contains the elementary business processes that make up the thread (these are modeled on one or more Process Chart diagrams for each Process Thread).
Select all of the Process Threads on the diagram, and from
System Architect’s Dictionary menu, select Update Selected Process Threads EBPs.
System Architect reviews all of the Process Chart diagrams you have built, and automatically draws appropriate elementary business processes on the diagram, under the Process Threads that they belong to (remember, every Process Thread is represented by one or more Process Chart diagrams).
Take a look at one of the Primary Process Groups, for example,
Interact. Note that you can now view this value chain category, and see the various processes that are performed by your company to satisfy this value chain. As Treese and Stewart state, in developing systems for Internet commerce, you should focus on parts of the value chain related to that of the underlying business (ie, the product you are selling), and from looking at the value chain required to doing business online. Understanding these two pieces and how they fit together is an important part of creating a successful business in Internet commerce.
Electronic Commerce Industry Framework
Electronic commerce not only affects transactions between parties, it also influences the way markets will be structured. Traditionally, market ties were led through the exchange of goods, services, and money. Electronic commerce adds a new element: information. Market ties, such as those forming around online payments, are now based on information goods, in-lation services, and electronic money. Although banks have traditionally -dominated payment processing, new organizations, such as Intuit and ‘Osoft, have begun to process payment transactions online. Technology enabled the creation of new market opportunity that enables new play-ers to step in, creating a whole new set of market dynamics.
Electronic Commerce Applications
• Supply chain management
• Video on demand.
• Remote banking
• Procurement and purchasing
Generic Framework for E-Commerce
To better understand the market structure that is developing around electronic commerce, we have developed a simple framework (see Fig.) that succinctly captures the developments in this area. Even those aware of the importance of electronic commerce have little under-standing of online jargon, or how the industry is structured. Such confusion is further entrenched by the media’s use of different names to refer to the same phenomenon or its various elements: the Information
Superhighway, the Internet, Cyberspace, Interactive Multimedia, and so on. It is important for businesses to understand the overall industry in order to develop business strategies that employ electronic commerce.
The next section will explain each aspect of the electronic commerce infrastructure in detail, beginning with the most broadly based term: the Information Superhighway Infrastructure.
The Information Superhighway
The Information Superhighway has many different types of transport sys-tems and does not function as a monolithic entity; there is no single inter-state highway that connects the digital equivalent of Los Angeles to Miami. Instead, the architecture is a mixture of many forms of high-speed network transport, whether it be land-based telephone, air-based wireless, modem -based PC, or satellite-based. For instance, mail sent from a portable PC in the French Riviera to a computer in Los Angeles might travel across several different types of transport networks interconnected with each other before it reaches its destination.
The players in this industry segment can be called information transport providers. They include: telecommunication companies that provide phone lines; cable TV systems that provide coaxial cables and direct broadcast satellite (DBS) networks; wireless companies that provide mobile radio and satellite networks; and computer networks, including private net-works like CompuServe or America Online, and public data networks like the Internet.
This industry segment also includes hardware and software tools that provide an interface with the various network options, and to the customer premises equipment (CPE), or terminal equipment, which is a generic term for privately owned communications equipment that is attached to the network.
.
This category of subscriber terminal equipment can be divided into three parts: cable TV set-top boxes, computer-based telephony, and net-working hardware (hubs, wiring closets, and routers or digital switches). The terminal equipment is in fact the gateway to information services, commercial transactions, and 500 digitally compressed channels.
The biggest area of growth over the last five years has been in the router business. Routers and digital switches help to connect large net-works (or internet works). Routers are devices that can connect the local area networks (LANs) inside various organizations with the wide area networks (WANs) of various network providers. This interconnection enables easy communication between separate networks across geo-graphical distances and provides access to distributed computing resources. The router industry is a multibillion dollar industry that is dominated by players such as Cisco, Bay Networks, and 3COM, all three of which supply equipment that links data communications
net-works through the Internet. In a recent valuation by Business Week, Cisco was rated as the fortieth largest company in America, with a market value of $26 billion. Not bad for a company with an extremely specialized product.
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