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e-Business
Discussion with UW Students
Agenda (from Abstract)
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e-Business vs e-Commerce vs Internet
What makes e-Business different from business?
The rise and fall of the dot.com economy
Successful models for e-Business
The drivers of benefit for e-Business applications
The value of Brand with e-Businesses
The potential for e-Business in Insurance and high
quality on-line Financial Advice
e-Business vs e-Commerce
E-Business:
E-Commerce:
• marketing
• selling
• buying of products and
services on the Internet
Improving business
performance through low cost and
open connectivity:
• New technologies in the value chain
• Connecting value chains across businesses
in order to :
• Improve service/reduce costs
• Open new channels
• Transform competitive landscapes
e-Business is more than selling and marketing online!
e-Business vs Business
ReAssess
‘Traditional’:
Implement
ReAssess
‘E-Business’:
Implement
Implementation
Planning
Implementation
Planning
Opportunity
Analysis
Opportunity
Analysis
Understand Business
Understand Electronic Business
Traditional business organization
‘develop step by step’:
 Definitions are clear
 No change in the business and technology
environment
 High time pressure
 Continuous learning
Characteristics of an “Electronic Business
journey”:
 Definitions of the future are ‘fuzzy’
 Permanent and unpredictable change in the
business and technology environment
 Time to market and speed are major competitive factors
 Continuous learning & fast adaptation is required
E-Business is not a project - but rather a journey that requires vision and non-linear procedures
Experimentation and Learning
awareness
Short Strategy Formulation loops
Product
development
Being a
Supplier network
Customer network
Connected Enterprise
Procurement
Emerging e-Strategy
Continuous experimentation through specific Solutions
Prototyping
Marketing
Inbound
logistics
Outbound
logistics
Production
Sales
Customer
service
1997-1999 - e-Business Mania Strikes!
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E-Business becomes a major economic force
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NASDAQ hits 5,000
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Venture capital in abundance
 Focus on new economy, new business models, growth
potential
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no attention to traditional fundamentals
bricks and mortar viewed as liability
Traditional businesses shake in their boots at the threat
of new non-traditional nimble bold competitors
 Dot.Com start-ups in every field
 Dot.Com multi-millionaires made over night
B2B and B2C - Huge Potential
The Projected US
Electronic Commerce
Market
The Projected Canadian
Electronic Commerce
Market
800
100
Business to Consumer
Business to Consumer
600
US $ Billion
Cdn $ Billion
80
Business to Business
60
40
Business to Business
400
200
20
0
2003
2002
2001
2000
1999
1998
2003
2002
2001
2000
1999
1998
1997
Source: IDC
1997
0
Source: IDC
Online Retail Sales - Likewise!
Growth of Online Retail Sales (US)
$25,000
$ US MM
$20,000
$15,000
Books & Music
Travel
Entertainment
Ticket Event Sale
PC Hardware & Software
Apparel & Footware
Financial Services
CAGR
42.9%
53.7%
44.9%
124.3%
$10,000
73.5%
83.4%
$5,000
63.0%
$0
1997
2001
Source: Forrestor
2000 - The Dot.Com Bubble Bursts!
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The Demise of Dot Com Retailers. Weak financials, intense competition, and investor
flight will drive many of today's online retailers out of business in 2000. Those that
survive must refocus funding on building hard assets to achieve scale, service, and
speed.
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Wall Street will run out of patience. Financial markets exasperated with non-existent
online profits will turn a deaf ear to persistent "investment mode" rhetoric and soundly
punish merchants who bleed red ink. Recent stock disasters like Value America and
eToys -- whose market caps as of January 11, 2000, are down $3.1 billion and $7.7
billion respectively from 1999 highs -- serve as bad omens for online stores that lack a
unique approach or technology.
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The revenge of the brick-and-mortars will begin. The narrowing of the playing field
in 2000 will rationalize but not resolve online retail competition. It will usher in a new
era characterized by a few large players that exploit deep customer relationships and a
presence across multiple channels to entrench themselves. To measure their success,
these firms will ditch new economy platitudes in favor of unfashionable old metrics
like margins, profits, and customer retention costs.
Forrester Research, 1999/2000
Valuations Plummet
Amazon.com - AMZN
Pets.com - IPET
Priceline.com - PCLN
eBay.com - eBay
Same Trend in Canada
1-year trend
Lessons Learned
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Fundamentals important, bottom line important
 Traditional bricks and mortar assets can
represent significant competitive strengths

logistics, inventory, distribution
 choice in terms of customer access
 strength and brand

e-Business becomes an element of overall
business strategy - not the total business strategy
 e-Business still widely seen as a way of
transforming business operations and thinking
‘Bricks and Clicks’ - A Hybrid Model
Traditional
Pure Web - Dot.com
“Bricks and Mortar”
“Clicks”
Combines strengths
Hybrid
from traditional and
pure Web
approaches
“Bricks and Clicks”
Emergence of the Hybrid Strategy
Phases of e-Business Development
Four stage model in E-Business maturity relates business value to e-business leverage
Business Value
Convergence
Over 50% are in the channel
phase of
E-Business development
with a web presence but no
infrastructure tie-in.
Channel
Just under 15% are in the
integration phase.
Connections to suppliers
and customers are fully EBusiness enabled.
Cross-Industry
Supplier/Customer
convergence
Transformation
Industry transformation,
achieve competitive
advantage
Integration
Integrate with
customers
and suppliers
Brochureware
and buying /selling
E-Business Leverage
Source: PricewaterhouseCoopers
Phases of e-Business Development
The Journey Requires Investment
Significant multi-year investment predicted
The Journey Requires Investment
Significant multi-year investment predicted
The Benefits of e-Business
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Generate additional Revenues
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Reduce Costs (Integration and ‘Collaboration’)
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Know more about your customers
Integrated channel management
Proactive and personalized offerings
Improve Image / Position Brand
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Process efficiency
Reduce IT variety and -complexity
Synergies with other initiatives
Customer Retention (‘Added Services’ and ‘Virtual Community’)
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New markets
New products
New customers
Applying innovative technologies
Leadership enterprise
Address younger customer segments
Not to miss the boat
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Keeping options open
Acquire know-how
Focused investments
e-Business and Brand
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Research from Mainspring…
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Online financial services customers are initially
motivated by price sensitivity, but that influence
declines as they realize the benefits of convenience
 Brand is more important online than offline
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When researching insurance purchases online, 56% of
customers went straight to name-brand sites as compared
with 32% for aggregation sites.
When initiating a purchase online, 60% went to namebrand sites as compared to 32% for aggregation sites.
Online Insurance
Growth of Internet-Enabled Insurance
(US)
1200
1000
800
US $
MM
600
Other
Auto
Homeowners
Life
400
200
0
1997
1998
1999
2000
2001
Source: Forrestor
Online Advice
When will you offer financial advice online?
Why will you offer financial advice online?
To improve our online
offering
Don't know
Customers want online advice
> 3 years
1 to 2 years
Enhance customer
relationships
< 1 year
Help customers make
decisions
Now
Competitive pressures
0
Source: Forrestor
10
20
30
%
40
50
60
0
Source: Forrestor
10
20
30
%
40
50
Online Advice vs Face to Face
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Forrester: Few financial companies believe that online advice will
replace the human advisor. Except for a small group of low-end, selfdirected customers, consumers are expected to continue to seek
advice from financial advisors. More than half of our respondents
believe that online advice solutions will never be a compelling
alternative to working with one of their advisors, even as the
technology improves.
Almost half of financial institutions believe that online advice will enable
advisors to deliver additional value to their customers.
As automated advice vendors piece together the elements of the new
advice creation process,we believe that use of online advice will
surge.“
Customers don ’t care about the data-entry and number-crunching
aspect of advising -- they pay for the conversation they have after the
analysis is done. These online solutions will enable our advisors to
spend more time with their customers.” (Insurer)