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Chapter 8
E-Commerce, Web 2.0, and
Social Networking
Study Questions
Q1: What types of inter-organizational systems exist?
Q2: How do companies use e-commerce?
Q3: Why is Web 2.0 important to business?
Q4: How does social capital benefit you and organizations?
Q5: How does social CRM empower customers?
How does the knowledge in this chapter help Fox Lake and
you?
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Q1: What Types of Interorganizational
Systems Exist?
Pre-Internet
Systems
Postal mail,
telephone, fax
Web 2.0
Google, eBay,
Amazon, CNet
E-Commerce
Web Storefronts
Interorganizational
Systems
Enterprise
2.0
Social CRM, SOA
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Interorganizational Systems
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Q2: How Do Companies Use E-Commerce?
Merchant companies—take title to goods they sell
Nonmerchant companies—arrange for purchase and sale of
goods without owning or taking title to those goods
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Example of Use of B2B, B2G, and B2C
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Nonmerchant E-Commerce Companies
Online auctions
• E-commerce application enables
auction company to offer goods for sale
and to support a competitive-bidding
process
Clearinghouses
• Provide goods and services at stated
price, arrange delivery, but do not take
title
• Amazon.com sells books and other
merchandise for other businesses
Electronic
exchanges
• Match buyers and sellers
• Priceline.com
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Q2: How Does E-Commerce Improve Market
Efficiency?
Disintermediation
Companies learn how customers internalize competitors’
pricing, advertising, and messaging
X
Retail
Store
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What Economic Factors Disfavor E-Commerce?
• Channel conflict
• Price conflict with traditional
Economic Factors
channels
in
• Logistics expenses increase
Disintermediation
for manufacturer
• Customer-service expenses
increase for manufacturer
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Q3: Why is Web 2.0 Important to Business?
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Software as a (Free) Service (SaaS)
Figure 8-6
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Software as a (Free) Service
SaaS—thin-client applications run in Internet cloud
• License-free software
• Does not require an installation on the users’ computers
• Web servers download Web 2.0 programs as code within
HTML, as Flash, or as Silverlight code.
• Readily (and frequently) updated. New features added with
little notice or fanfare.
Google Docs & Spreadsheets
Google Groups
Google Earth
Google Maps
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User-Generated Content
Crowdsourcing examples
Combines social networking, viral
marketing, and open-source
design, saving considerable cost
while cultivating customers.
Crowd performs classic in-house
market research and
development. Sets up customers
to buy.
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Organic User Interfaces and Mashups
Mashups
•Mashup —a web application that combines data from
other websites
•Example—map data from Google Maps to add
location information to real-estate data, thus creating
a new and distinct web service
•See www.programmableweb.com/mashups
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How Can Businesses Benefit from Web 2.0?
Advertising
•AdWords
•Vendors pay for specific words, phrases
•Placement on search results list depends on
how much you pay for search word
•Vendor pays when someone clicks on their link
•Amount can vary day to day, hour to hour
•Ad Sense
•Google inserts ads that match web page
content
•Google pays web page owner for every click
•Website owners enroll in this program to
enable text, image, and video advertisements
on their websites
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Web 2.0 Not for All Applications
Don’t get
carried
away
• Information systems that deal with
assets, whether financial or material,
requires control, rather than
flexibility and organic growth.
Examples
• Credit card transaction processing
• Accounts payable or general ledger
system interface
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Q4: How Does Social Capital Benefit You
and Organizations?
Social Capital—investment in social relations with
expectation of returns in the marketplace
Adds value in four ways:
1. Information about opportunities, alternatives, problems
and other factors
2. Influence decision makers in your organization or others
3. Social credentials from linking to network of highly
regarded contacts
4. Personal re-enforcement of professional image and
position
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Social Capital
Value of social capital: Number of relationships in a social
network, by strength of those relationships, and by
resources controlled by those related.
Professional social networking factors
•Gain social capital by adding more friends and
strengthening relationships with existing friends.
•Gain more social capital by adding friends and
strengthening relationships with people who control
resources important to you.
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Importance of Weak Relationships
People you
know the
least
contribute
the most to
your
network.
Eileen is
weak tie
Expand network by
meeting Eileen
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How Do Social Networks Add Value to
Business?
Progressive
organizations
maintain a
presence on
Facebook,
LinkedIn,
Twitter, and other
sites
•Sales people,
customer support,
public relations,
and endorsements
by high profile
people
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Fan Connections and Endorsements
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Q5: How Does Social CRM Empower
Customers?
Classical CRM organization speak to customers with
one voice and controlled messages, offer support for
customers, depending on value of customer.
Today, customers craft own relationship with a
business by their use of touch points.
Social CRM—creation and use of Enterprise 2.0
collaborative relationship between businesses and
customers.
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What Are the Characteristics of Web 2.0:
SLATES
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Social CRM is Enterprise 2.0 CRM
Social CRM done in style of Enterprise 2.0.
Relationships between organizations and customers
emerge as both parties create and process content.
Employees create wikis, blogs, discussion lists, frequentlyasked-questions, sites for user reviews and commentary,
and other dynamic content.
Customers search content, contribute reviews and
commentary, ask more questions, create user groups, etc.
Each customer crafts own relationship with company.
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Classical CRM vs. Social CRM
Classical
CRM
Centered on
customer
lifetime value
Control what customer
reads, sees, hears
about company and its
products
Social
CRM
Effective reviewer,
commentator, or
blogger can have
significant influence
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