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Business(organization) to Customer(individual) (O-2-I) Section 3 Disintermediation Disintermediation Disintermediation What is Disintermediation? it is used to describe the possible threat of the internet on businesses that used to work as intermediaries between the producer and the consumer. Disintermediation Examples 1- Online Banking : online banking has significantly reduced bank employees. 2- Online PC Sales : e.g. Dell Computer company which made most of its selling directly to customers via the Internet. This process had reduced the need for intermediaries like computer stores or resellers Re-intermediation While the Internet may remove the need for some intermediaries, it gives rise to new types of intermediaries, a process known as reintermediation. This is the introduction of new intermediaries between the individuals (the customers) and the product or service. Re-intermediation Examples Some examples of new intermediaries are: Search engines and web directories These sites act as intermediaries between the user and the information they are accessing Reviews and / or links sites Some sites offer a range of information and advice on a topic and part of the service will be a set of links to other sites Re-intermediation Examples (2) Portal sites: they are major sites that are frequently visited. They act as gateways to the internet like: AOL, MSN, and Yahoo. Intelligent Agents: computers that behave in a relatively intelligent way to perform a certain task online. Some examples of categories where these agents could help in are: Product Brokering, Merchant Brokering, Negotiators Intelligent Agents Product Brokering: is like alerting a user to products or information that, in the light of the person's previous behavior, might be of interest or relevance to him Merchant Brokering: are agents that roam the Net comparing prices, reporting back ‘ best buy ' options Negotiators: are intelligent agents that engage in negotiations (perhaps with other agents) to reach deals on the user's behalf within a set of parameters Some e-commerce models Some of the ways of making money on the web include : Advertising: Many sites offer their information free, but aim to make themselves the main portal in a particular area. The advertising space on their site then becomes valuable Affiliation: Affiliation is the linking of different companies or services. For example a sports review site which links with online gaming, or the baby discussion portal which links with child products Some e-commerce models (2) Subscription: the website offers some material free, as a 'taster', but if the user wants more information and services, then they have to pay a subscription fee Selling information: the most basic form is simply selling e-mail addresses (or other details) to marketing companies a website can record which customers bought which products, what people are interested in, their web use, their shopping habits and so forth this information is valuable for many research companies Section 4 Organization to Organization O-2-O e-business and e-commerce O-2-O is considered as the most dominant and profitable area on the internet. No need for a large number of customers because normally business customers will buy in big volumes. e-business and e-commerce e-business Vs. e-commerce: e-commerce: is used to describe online transaction between an individual and an organization. e-business: is used for online transactions involving two businesses or organizations ( O2-O). Electronic Data Interchange EDI (Electronic Data Interchange): is the process by which companies use computers over some network to exchange data in a predetermined format and following some fixed rules ( or protocols). EDI is used to increase profits or reduce costs. ( for example, it reduces paper work ). EDI before The Internet Advantages: Speed: same-day exchange of documents. Accuracy: fewer mistakes due to typing or transcription errors Economy: fewer clerks needed in the purchasing and goods-receiving chain. Although these were large benefits, in practice adoption of EDI was much less widespread than expected! Why?? EDI before The Internet (2) Disadvantages: Cost: In the early days, most computing was done through Mainframes which was very expensive compared to the current situation. Networking Complexity: For two businesses to communicate, they needed to build their own dedicated network, which was quite a complex and expensive operation. The Emergence of Alternatives: like overnight shipping and other technologies that could compete with EDI. EDI after The Internet With internet, there is a network connecting almost everybody. So, regular companies can use available computers for EDI simply and cheaply ( i.e. no need for dedicated machines). This makes EDI now a very attractive concept for many companies. Automotive Network Exchange (ANX) ANX: is a form of an extranet which is similar to the internet but only authorized users can access it. An extranet uses Internet techniques (&protocols) but is limited to authorized users only, inside a particular company, plus some trusted outsiders - clients, consultants, customers, suppliers. ANX was introduced by three American car makers ( Ford, Chrysler, and GM) to exchange information with each other. Automotive Network Exchange (ANX) ANX could be seen as a controlled and more secure version of the internet but for limited users only. Now ANX can be used for EDI type functions like: placing orders, arranging just-in-time delivery, billing, payments, etc. ANX is now being promoted as the 'business-class Internet', where it will move beyond its application to just the automotive industry and become a standard for all industry type. The impacts of the Net on Organizations 1. An Informed Customer Base: the easy access of information through the internet enables customers who want to buy a certain product to have the ability to search and find the best deal. an informed customer could be a company that knows it can get the parts - you supply - cheaper elsewhere 2. Increased Competition: The availability of information and the increase of the reach will increase competition between organizations Besides competing on price, other benefits may also be offered, such as guaranteed delivery, after sales care or additional benefits which give them a competitive edge The impact of the Net on Organizations 3.Increased Collaboration: through internet, there is a possibility for businesses to communicate together in an efficient manner on a certain project. Joint development and design Small organizations may group together to create buying cartels and get bulk prices Manufacturers of different car components in a particular area may create a global car components manufacturers website The impact of the Net on Organizations 4.Outsourcing: is the process by which some functions of an organization are performed by an external company Ex: In the health industry outsourcing can be anything from food preparation and cleaning services to expert surgeons The deconstruction process may well result in an increase in outsourcing. Why? if an organization is viewed as a collection of units, each with their own function, then it may be the case that some of these functions can be better performed by an external organization Extensible Markup Language ( XML): XML allows users to define their own tags, so businesses can communicate together using a set of predetermined tags that could be fixed by both of these businesses. For example, XML can inform the receiver of a web page whether the received document is an invoice or something else. XML describes the content of a web page in terms of the kinds of data that it contains, which is what makes it powerful for electronic document exchange XML is used for complex transactions that need security and more standardization between organizations ( which can’t be supported by HTML).