E-Business Case Study - Essay Example

e-Business The internet that has now emerged and matured, presents a paradigm shift in its very ideation. The infrastructure has acquired a businesscharacter, a transcontinental personality and a vending framework of wide-ranging, business, educational, scientific and personal data. Now its use covers real-time computer conferencing, audio broadcasting, video broadcasting, real time telephony and of course real-time business. E-business in its simplest form can be described as doing business in electronic form. Electronic business is the extensive use of computers, communication technology, networking technology and computerized data to perform business processes. In other words, e-business is any system of suppliers, distributors, or customers that use the Internet as the basis for their operations. It can range from using e-mail to communicate with customers and/or conduct business to a web page promoting a company, from a full e-commerce retail site to the integration of procedures and processes using Internet based technology. It takes its cue from terms like e-mail, e-commerce, e-governance etc. The term "e-business" was coined by Lou Gerstner, CEO of IBM. Today leading online stores and companies have moved beyond the 'one-size-fits-all' approach to internet relationship. It is an electronic commerce application used for B2B or B2C. Online shopping has become popular mainly because of its speed and ease of use. Initially users were mostly computer literates, but now the universality of access marks a paradigm shift in e-business operations. E-business is more than just e-commerce. It involves business processes spanning the entire value chain: electronic purchasing and supply chain management, processing orders electronically, handling customer service, and cooperating with business partners. Now the internet e-business portals greet each customer by name and present targeted information and services that correspond to each visitor's unique preferences and requirements. This type of personalized attraction increases customer loyalty, enhances revenue for the company and helps in establishing a valuable database of customers. The internet may be changing the way we do business, but it hasn't altered the fundamentals of human nature. People still respond to personalized services. They want to be treated as individuals and they appreciate intelligent assistance in finding products and services that meet their unique needs. Businesses that understand their customers and cater to their individual preferences benefit in two key ways. In the short term, they increase the sales potential of every customer interaction. In the long term, they establish a more loyal customer base. Corporate investments in e-commerce sales and marketing applications continue to climb steadily. With a personalized e-business solution, a company can customize the online experience for every visitor who comes to its internet, extranet, or intranet site. The process is relatively straightforward. Visitor information is accumulated through a registration process and by observing online behavior. Patterns can be analyzed and compared. Market segments can be defined and reliable predictions can be made about the products or services that interest a particular individual or group. Based on this analysis, a unique combination of information and promotions are presented to each user. The click stream behavior of each visitor can be monitored and feedback gathered accordingly. Personalized services can improve efficiency and communication throughout the e-business value chain. Companies can also push targeted content depending on the user's business role and personal preferences, further adding value to the user and strengthening the key business objectives. As is the case with the personal business-to-consumer environment, in this case also the tangible and intangible benefits are quite comprehensible. Information flow can be optimized, so that right information gets to the right person at the right time delivering the right content. But, the company must keep be aware that information overload does more harm and may provide to be counter productive. In order to gain a competitive advantage over others, the sanctity of customer preferential limits must be honored by the company. Brief History of e-business:. It won't be an exaggeration to say that this concept is still in an evolutionary stages, because of the prevailing uncertainty and doubt over the internet transactions. There have been many frauds concerning net-transactions and it is said that e-fraud is as rampant as e-probity. But till we can trace the timeline of e-business operations to at least a decade back. To make online purchases, EDI or Electronic Data Interchange, was standardized through ASC X12 in the year 1984. This guaranteed that companies would be able to complete transactions through electronic means with one another reliably. CompuServe (the company prefers to call itself The Value Leader in Cyberspace), a company offering computer equipment was the first one to offer online retail products to its customers. In 1979, CompuServe became the first service to offer electronic mail capabilities and technical support to personal computer users. CompuServe broke new ground again in 1980 as the first online service to offer real-time chat online with its CB Simulator. This provided people the first chance to buy things using internet and computer. Two biggest names in online retailing Amazon.com and ebay.com were other pioneering companies to make use of internet for their business purposes in 1995. In fact there were not many users of these online business portals and it took 8 years to amazon.com just for break-even in its operations. But in the year 2005-06 it earned a profit of $667 million. Even now, there are companies which are experimenting with online stores but without any monetary returns. Many of such stores are hugely subsidized by their companies. But the intangible benefit of being 'seen' in the public domain is too good to resist. Online business immensely helps in brand building and image building exercises. Even the functioning of governments has also been affected using this e-concept. Now even day-to-day operations are changing at every level of public service. The concept of e-governance has now become a trendy concept in both developing as well as the developed countries. This marks a shift from the traditional 'information exchange' to an 'information processing' model of engagement, where citizens are no longer just consumers of government programs and policies but actively engage in shaping them. With the exponential increase of net users, and newer inputs for securing all net transactions, this concept is bound to pick up very soon. Business Prospects and Brand Building: An e-business plan is simply a plan that outlines how a company will use Internet technology to build and grow its business. A well developed plan enables the company to identify how it will incorporate e-business, how much e-business adoption will cost, and what results should be expected. In short, it is the integration of 'E' into an existing business plan. The company has to ask itself 'can it serve an existing or new market online The global nature of the Internet requires companies to think more broadly about their customer base and hence the marketing strategy has to be devised in such a manner that it doesn't offend the sensibilities of any customer in any part of the globe. A very difficult task indeed, but there have been instances when web-sites had to take back some of the contents when reports came in from some other part of the globe that content has affected the sensibilities of a community. Such efforts may make or mar the brand image of a company. Traditional marketing techniques involved catering to one particular segment of the society, hence marketing efforts were required to be devised accordingly, but e-business involves taking care of 'everybody'. The online store has to be appealing to the prospective customer. Digital communication forms the essence of marketing on the web. Digital media and design forms - graphics, colour schemes, font-styles, video clips, animations, illustrations etc. All this contributes towards a visual appeal and experience on the web-site. Design on its own is responsible for grabbing the attention of its intended audience - what we may call 'first impression' and usability extends an invitation to engage the prospective customer, by virtue of that attention. Time.com is an example of how an editorial site uses e-business. It gives users the chance to subscribe to the magazine by offering four free issues. When the user clicks on the 'subscribe to Time' link, he or she is asked for name, address, credit card number and other information. And thereafter the new reader is welcomed in the Time fold. Time has benefited immensely from this approach. Organizational Changes: As more and more established companies and organizations realize that they need to form fruitful alliances with their customers, partners and suppliers over the Internet, e-business integration with e-marketplace systems becomes a critical issue. The success of such an initiative depends on how to successfully integrate e-Business projects with ongoing B2B e-marketplace systems. Kalakota & Robinson (1999, p. 60) state that "the creation and implementation of an e-business project is inextricably linked to the management of change." The performance gains can only be achieved through changes in relationships between management, information technology, organizational structure, and people. Planning and managing such systems requires an integrated multi-dimensional approach across the e-business and the development of new business process models. Organizational change can be defined as: (i) Changes in organizational structure and Changes in the work process, (ii) Innovative Human resource practices, (iii) Industrial relations practices and (iv) e-business practices and new management techniques Introduction of e-business applications change the organizational structure, responsibilities and internal power structures simultaneously with addition of certain new specialization fields like ERP and KMS (Knowledge Management System). ICT enabled new business practices involve; Business Process Re-engineering (BPR) and Enterprise Resource Planning (ERP) Supply Chain Management (SCM) Customer Relationship Management (CRM) e-market places and Online procurement Let us now analyze how IBM had to change its organization and development processes to survive the 1990s. Market innovation was an important aspect of IBM's turnaround. The company resorted to 'market innovation' i.e. it changed the way of segmenting its markets, defined compelling user needs, and drove these into new product designs in both hardware and software. IBM moved from a transactions processing orientation for all large corporate users, to an e-business consumer and focus within specific vertical markets. Technological innovation was the all important factor. There were two distinct generations of product line architecture in IBM's mainframe renewal. The first was to replace its old 31-bit bipolar processor architecture with 31-bit CMOS designs. Similar changes were carried out with the bipolar circuit processors, used pervasively with IBM's old architecture for task management, computing, and input/output to storage devices or communication networks. But innovative technology can at best provide a solid platform for the company to build a strong foundation, execution in real terms involves Organization and communication processes, which enable innovative firms to deliver new products in a timely and efficient manner. In the IT era the role of technologists became all the more crucial. IBM had to focus explicitly on defining product line architecture. Earlier the responsibility for defining and improving product line architecture was basically consensus-driven and shared across different groups. IBM created dedicated Systems Design Teams. These teams included marketers as well as technologists. The architecture they created became the focus of specific model development and subsystem requirements by teams in other parts of the organization. Most important, the architecture team provided the explicit technical interfaces by which all the different pieces of a complex system are attached to the overall system. In addition empowered program managers were created to help integrate product line development teams and subsystem teams. While these teams report to a single executive, they have been put in a matrix with product line directors and subsystem directors. The program managers are the interfacing "glue" between platform subsystems and specific products. Real people are behind the communications process. Executives are supposed to enforce the discipline expressed in the organizational structure. IBM's second phase of growth focused on new market applications. These market applications were new functional uses for the technology by largely the same set of customers/ very large corporations. These new uses included e-business applications, client server enterprise software, data mining and business-to-business Web-centric transactions. Legal and Ethical Issues in e-business: As such there is no central authority over the internet, the network is bare and exposed. It continues to be in tatters and its vulnerabilities, though of a different kind, are a concern of the entire civilized world. The legal aspect of e-business is all about managing risks. It is important to ensure that the content of a new website is accurate and complies with current law. It is also important to regularly review the website once it is up and running to ensure that it continues to comply with the latest rules and regulations. Ironically the beginning of the new millennium saw the internet turning into an instrument of naked terror too. Cyberspace is now a battlefield of virtual, proxy and remote controlled wards between good and evil, civilized and uncivilized and amongst others. Today if Microsoft, Intel, IBM etc are running successful business online than a terrorist organization like Al-Qaida too is doing a successful online business as well. There are even websites recruiting terrorists online. Such websites have been using innovative techniques like steganography to pass on messages to its members. Stegagnography involves encrypting the message along with some picture or video. The text message cannot be seen on the screen, but can be decoded by receiver after decrypting the coded messages. For any online communication between a company and an individual broadly the following ethical concerns are highlighted; Obtaining your personal details when you have not had any dealings with the organization Monitoring your Internet usage without your knowledge Using your personal details for other than what you provided them for Obtaining irrelevant personal details (which might be useful later). This indicates that a delicate balancing act is required to be maintained between business and consumer interests. Some of the general legal issues concerning e-business are; Choose one of these topics i. Privacy laws: It implies that personal information can be collected if it is necessary for the function or activity of the organization. And this information must not be disclosed for a purpose different from the original purpose of collection, except in limited circumstances like on matters concerning security of state. ii. Contracts: Contract law will apply to on-line contracts. For a binding contract the company must establish the essential terms of the contract, the offer made, the acceptance and the relevant consideration. This can be done through electronic communications or directly on the website. iii. Terms and conditions: It is essential for any e-business to outline terms and conditions on the website which govern the manner in which the website is to be used and the specific obligations that the user must accept prior to using the website. These general usage terms and conditions should be separate from the terms and conditions for on-line purchasing. iv. Trade practices: There has to be a 'Trade Practices Manual' to follow which prohibits misleading or deceptive conduct or any behavior which is likely to mislead or deceive. Consumer sensibilities are also taken care of in fair trade practices. v. Intellectual property: Various intellectual property issues will arise with respect to an e-business. It is important that all intellectual property rights applicable to the e-business are properly identified. Particular attention is paid to copyright, trade marks and patents. This includes: vi. Copyright: Copyright owners enjoy certain exclusive rights in relation to their creations. Any website will have copyright content on it and one should take measures to protect the rights by obtaining an assignment or license of the copyright in the material created by the website designers so future websites can be control. vii. Trade marks: If any company is using, words, devices or sounds on its website as a trade mark, the company should seek advice about registering one or more as trade marks through specialized trade mark attorneys or intellectual property solicitors.. viii. Confidential information: No confidential information should be published on the business portal: ix. Digital signatures: Digital signatures are electronic codes specific to individual users, which can be used to identify the originator of a message or file, and to indicate approval of information transmitted. There are different types of digital signatures available (ie public key infrastructure, asymmetric cryptography, account numbers and passwords), and the level of security one requires will dictate which method is used by the company. x. Security: Managing legal risk on a website necessitates implementing security measures for the company and its website and for users/ customer of the website. Security measures, both in relation to hardware and software are to be implemented, to protect confidentiality and ensure authentication and verification of parties to contracts. This includes implementing quality technical and business solutions, such as the use of public key infrastructure, encryption/ decryption to identify parties to contracts, setting up reliable front-end and back-end systems and setting out relevant disclaimers in the terms and conditions of the company and maintaining accurate electronic transaction records. To ensure the security of online transactions, many companies make use of public key cryptography, which uses digital certificates and a pair of unique 'keys' to identify a business or individual involved in a transaction. Digital certificates and keys provide a strong degree of security for electronic business. However, as with any security device, they can be compromised if not protected properly. xi. Jurisdiction: The laws that apply to electronic transactions will be governed by the applicable jurisdiction. This can be a complicated issue in relation to the World Wide Web, particularly regarding contracts where the contract is formed between parties in different countries. Each contract, as well as the website terms and conditions, should specify the applicable law. A website business can limit the online transactions to contracting with the host country residents only as this will avoid the international jurisdictional problem. However, there may still be State-based issues (within one country) which the company needs to address, so it is important to state the applicable law exactly. e-Governance Initiatives: E-Governance has become a buzzword now a days with governments allocating resources to reach out to the masses through the Computer and Internet. UN World Public Sector Report 2003 on 'E-Government at the Crossroads' said, "THE POTENTIAL of e-government as a development tool hinges upon three prerequisites - a minimum threshold level of technological infrastructure, human capital and e-connectivity - for all. E-government readiness strategies and programmes will be able to be effective and "include all" people only if, at the very minimum, all have functional literacy and education, which includes knowledge of computer and Internet use; all are connected to a computer; and all have access to the Internet. The primary challenge of e-government for development therefore, is how to accomplish this." In fact this statement hold true for developing as well as the developed world. Countries like India which may not have very high GDP and GNP figures as compared to countries like UK, USA or EU scores very high points when e-literacy and computer awareness is counted. As for the difficulties towards e-readiness, it is true that even the EU nations are little worried and plan to bridge this digital divide as soon as possible. EU basically comprises of twelve countries, stretching from the Mediterranean to the Arctic Circle (namely Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland). In its recently released press release (June 2006), the Commission has outlined wide broadband coverage in Europe as crucial for fostering growth and jobs in Europe. EU telecoms rules are opening up regional and local markets to the most cost-efficient broadband suppliers. However, outside the metropolitan centres of the EU, weak demand, due to population scarcity and distance, means lower returns on investment and can discourage commercial suppliers. The commission is therefore asking for Public/private partnerships to roll out the broadband technology mix that best reflects local needs and makes its benefits affordable. The Commission has already approved a number of broadband projects in the year 2005, finding in several cases that aid was compatible with state aid rules (UK, Spain, Austria, Ireland) or that there was no state aid involved (two decisions in France). Besides this the EU has just published a report on 'e-Government in the Member States of the European Union', providing the most extensive sum of information to date on the advancement of e-government in the enlarged EU. This report is the compilation of the e-Government Observatory Fact-sheets for the 25 EU Member States, which have just been enriched and updated. These Fact-sheets provide an overall picture of the situation and progress of e-government in each member state, profiling then on the basis of following parameters; Country Profile: basic information about the country and its political structure, and key indicators regarding its advancement in the Information Society area. e-Government History: major past e-government developments and milestones, in the context of both Information Society and administrative modernisation policies. e-Government Strategy: vision, objectives and principles supporting the drive to electronic service delivery and e-enabled government modernisation. e-Government Legal Framework: key legal texts impacting on the development of e-government and of the Information Society. e-Government Actors: key organisations involved in the e-government drive, at central as well as at regional and local level. e-Government 'Who's Who': main decision-makers and executives steering and shaping the move to e-government. e-Government Infrastructure: key components of the infrastructure established to support the drive to e-enabled government and public services. e-Government services for citizens: availability and sophistication of e-services for citizens, based on the e-Europe common list of basic public services. e-Government services for businesses: availability and sophistication of e-services for businesses, based on the e-Europe common list of basic public services. E-business and Employment scenario: In general the success of e-business has to be measured by financial performances, which are indicated by the following factors; Cost savings, productivity and efficiency gains are the main motivations Investments should be coupled with restructuring of business processes To this end, new skills and forms of work organization are needed The idea of e-work is closely linked to the development of the knowledge society in Europe. The Lisbon Strategy highlighted the importance of creating "more and better jobs and greater social cohesion". The knowledge society opens new perspectives for the quality of work: creating the conditions for change in existing jobs, generating new working methods and new ways of organizing work, and allowing greater flexibility in the workplace. Modernization of work organization in a knowledge-based economy is one of the areas identified by the e-Europe 2005 Action Plan. In fact one of the biggest challenges for enterprises (notably SMEs) remains finding employees with appropriate ICT or e-business skills. The emergence of e-business is driving demand for people possessing insights into the industry that they intend to target. e-business professions include all the strategic planning, decision-making processes and implementation activities related to : Creation, development and delivery of e-Commerce products and services Execution of business or organization processes over the Internet Creation and delivery of services over the Internet in public or non-profit organizations At the European Council in March 2000 in Lisbon, the Heads of State and Government of the European Union set the ambitious target for the EU to become, by 2010, "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion". The intelligent use of ICT and of e-business skills ("e-skills") is a major enabler to increase productivity and competitiveness, which are at the heart of the Lisbon strategy. This requires a skilled and adaptable labor force. Various reports/ working groups point out a shortage of ICT skilled manpower in Europe, which can adversely affect the goal of EU. ICT skills shortages fall into three main categories; i. Basic ict skills often defined as "digital literacy ". ii. Upgrading the e-skills of the workforce as business processes and industry structures changes. iii. Skills for ICT and e-business specialists and professionals Member states of EU have already identified these three categories and they have also formed work groups to look into the ways for improvement. Some reports point out that some of the top technical ICT skills sought by employers are in the fields of; C++, Unix, SQL, Oracle, Visual Basic, Java, C, Windows NT, MS Office, TCP/IP, .Net, SAP, ADA, UML, SAS, CRM, Some of the most popular job titles in this e-business regime are; Project manager, Software Engineer, Business Analyst, Analyst Programmer, Java Programmer, Programmer etc. All such posts are highly paying as well, as they are considered 'super speciality' tasks. Resources: 1. e-business case study, Web based EDI for a large retailer, USA http://www.wipro.com/webpages/itservices/ebusiness/webservcasestudy2.htm 2. Case studies, Web Services, IBM, http://www-306.ibm.com/software/ebusiness/jstart/casestudies/volvo.shtml 3. Kalakota, R., and Robinson, M. (1999). e-Business: Roadmap for success. Reading, MA: Addison-Wesley Read More