B2B Strategies and Implementation

1. B2B Strategies and Implementation Developing a B- Web INBS 510 B2B Module

2. References • Tapscott, Ticoll, Lowy. Digital Capital: Harnessing the Power of the Business Webs. Harvard Business School Press. 2000. • Fingar, Kumar, Sharma. Enterprise E-Commerce. Meghan-Kiffer Press.2000 • Turban, Lee, King, Chung. Electronic Commerce. Prentice Hall, 2002 • Siegel, 2000.

3. Exchanges • www.chemconnect.com th • ChemConnect uses a B2C business model where customers look for: • Lowest price • Fast shipment • Good return policy • Helpful customer servicee leading online chemical and plastics global marketplace. • http://www.chemconnect.com/case.html

4. ChemConnect & Covisint (cont.) • ChemConnect—world chemical exchange • Provides free membership in trading marketplaces and information portals • Public exchange floor for anonymous bids • Commodities floor for buying and exchanging • Corporate trading rooms—private online auctions • Up-to-the-minute market information • Large electronic catalog • Independent intermediary

5. ChemConnect & Covisint (cont.) • Covisint—e-market of automotive industry • B2B integrated buy-side marketplace • General Motors • Ford • DaimlerChrysler • Entire industry gains • Lower costs • Easier business practices • Increased efficiency

6. ChemConnect & Covisint (cont.) • Covisint (cont.) • “Co” stands for • Connectivity • Collaboration • Communication • “Vis” stands for visibility provided by the Internet • “Int” stands for integrated solutions

7. ChemConnect & Covisint (cont.) • Covisint (cont.) • Collaborative commerce • Facilitate product design • Enable procurement process • Provide broad marketplace of buyers and suppliers • Vertical consortia trading exchange • Few large buyers • Many sellers (suppliers to the industry)

8. Gains and Risks in B2B exchanges • Buyers • Sellers • p.269 Turban for a list

9. Managing Exchanges • Revenue models • Transaction fees • Fee for service • Membership fees • Advertisement fees • Networks of exchanges • Centralized management • Finding a CEO and independent management team

10. Critical Success Factors • Early liquidity • Liquidity refers to volume of business conducted • Business’s chance of survival is best when liquidity is achieved early • Right owners • Partner with companies that can bring liquidity to the exchange • Best owner may be intermediary that can push both buyers and sellers

11. Critical Success Factors (cont.) • Right governance • Good management and fair /effective operations and rules are critical • Governance provides: • The rules for the exchange • Minimized conflicts • Decision making support • Good management induces necessary liquidity

12. Critical Success Factors (cont.) • Openness • Exchanges must be open to all from: • Organizational point of view • Technical point of view • Open standards require: • Commitment by all involved • Universal agreement on the standards • Using the wrong standards can hurt the exchange

13. Critical Success Factors (cont.) • Full range of services • Participants are attracted by an exchange that helps cut costs • Exchanges team up with banks, logistic services and IT companies to help • Importance of domain expertise • Market makers need an in-depth understanding of: • The industry • Business processes inherent in the industry • Knowledge of industry structure • Government and policy stipulations

14. Critical Success Factors (cont.) • Targeting inefficient industry processes • Contribute to increased costs and time delays • Vertical exchanges can add value • Targeting right industries • Large base of transactions • Many fragmented buyers and sellers • Difficulties bringing together buyers and sellers • High vendor and product search/comparison costs • Strong pressure to cut expenses

15. Critical Success Factors (cont.) • Brand building is critical • Increase switching costs by adding features and functionality • Invest in: • Gaining brand awareness • Attracting businesses to exchange • Customer retention

16. Critical Success Factors (cont.) • Exploiting economics of scope • Value-added services make exchange compelling • Industry news • Expert advice • Detailed product specification sheets • Adjacent services • Banks and financial information providers • Identification supported by sophisticated digital certificate architecture

17. Garner diverse and multiple revenue streams Software licensing Advertising Sponsorship Critical mass of users will garner more value-added services Auction services Financial services Business reporting Data mining services Critical Success Factors (cont.) Choice of business/revenue models

18. Critical Success Factors (cont.) • Blending content, community, and commerce • Content and community perspective—stimulate traffic • EC transaction perspective—creates higher level of customer “stickiness” • Managing channel conflict • Hostile phase as buyers interact directly with sellers (disintermediation of supply chain) • Short-term revenues impacted by backlash from existing fulfillment channels result in price erosion affecting medium-term profitability

19. Shared Vision Inter-enterprise • Clear vision • Common direction, focus • Personal, team, organization • Motivate learning • Peter Senge’s “5th discipline” • General systems learning • Big picture view • If it ain’t broke, break it • Ask the following questions • Peter Drucker-” a knowledgeable worker is the greatest single asset” • Hyperarchy versus hierarchy

20. The Questions to ask • What can we do now that we couldn’t do before the net? • Who is the current and future e-commerce customer? • What can and should we outsource? • How can we add value to our present and future customers? • How do we design a value chain? • Should we cannibalize our present business? • How should we reintermediate?

21. More Questions • What roles should we play: standalone web site, aggregator, Open Market, supply chain portal? • What competitive threats do we face? • What is the readiness of our trading partners? • How do our pricing policies change? • How do we create or play a leading role in communities-of interest?

22. And more still…. • Should we create niche portals that may host our competitors? • What organizational and ownership forms should we create? • What are the people and technology requirements of the new architecture? • How do we bring more buyers together electronically and keep them there?

23. Now analze the gap… • Answers derived from 2 perspectives • Could be • As is • Analyze the “gap” • Eureka!! • Gap revealed • People, processes and technology to implement • A strategic plan emerges

24. The Strategic Plan • Conduct necessary education and training • Review current distribution and supply chain models • Speed up, shrink, or virtualize the value chain • Wholesalers, distributors, retailers? Are they disintermediated? • Understand the expectations of your customers and partners

25. The Strategic Plan 4. Reevaluate your products and services 5. HR demands new role • New policies • New jobs 6. Extend your current systems to the outside • Online links • Backend links- extranets 7.track competitors and market shares

26. The Strategic Plan 8. Develop a Web-Centric Marketing Strategy 9. Participate in the creation and Development of Virtual Marketplaces 10. EB Management Style Mougayar, Opening Digital Markets. New York: McGraw Hill, 1998

27. New Roles and Responsibilities • E-business program manager • Bridge tech and business divide • Enterprise architect • Chief architect and coordinate work info, infrastructure and application architects • Design • Business and Information Architects • Create a application neutral models

28. More roles… • Infrastructure architects • Identify technical infrastructure • Application architects • They guide solutions development in blending the business models with the infrastructure services needed to implement them in a platform • Solution developers • Assemble business solutions from components • Use integrated development Environments • Configure the ERP • Ranks of object oriented developers

29. And more still… • Component developers • Masters of component technology • Progamming in Java, C++ • Modeling in UML and XMI • Platforms- Cobra, DCOM and EJB • Human Factor Engineers • GUI • Extremely important – more than ever before • HCI- Human Computer Interaction • Read Donald Norman’s Design of Everyday Things • www.uie.com

30. Competitive Strategies • Frontal assault • Amazon vs Barnes and Noble • Toys R Us vs E-Toys • Flanking Maneuver • Attacking a part of market that is weak- niche marketing • E*Trade – competing against major stock brokerage companies • Virtual Vineyards

31. More competitive strategies • Raise structural barriers • Block challenger’s logical avenues of attack • Cisco, FedEx and Ebay, DELL • Lower the inducement to attack • Reduce challenger’s expectations of future profits in the industry • www.buycomp.com “lowest price on earth”

32. Cooperative Strategies • Joint venture- cooperative activity formed by separate organizations- preserving autonomy • Combine different strengths to achieve value • Virtual corporation • Value chain partnership • Long term arrangement- mutual advantage • FedEx as mentioned previously does this with many

33. Web Corporations • The confluence of widespread Internet use, emerging standards, and the economic crunch may hasten the advent of the Web corporation, also known as the virtual corporation. • A Web corporation "is composed of temporary collaborating partnerships for the purpose of creating one particular product or service," according to IDC Analyst Gisela Wilson. • IDC- article related to Web Corporations

35. Who are the Business-Webs?http://www.digital4sight.com/aboutus.php • Where “Corporation” embodied capital in the industrial age • B-web does the same in the digital economy • “interconnected, fluid sets of contributors coming together to create value for customers and wealth for shareholders” • “each participant focuses on a limited set of core competencies” inventing new value propositions • A system of … that use the Internet for primary communications and transactions

36. So who are they? • MP3 • Microsoft • IBM • Oracle • Amazon • Travelocity • Etc

37. Internet is infrastructure Value proposition innovation i.e. MP3 Multi-enterprise capability --machine- partnering 4. 5 classes of participants Customers- receive and contribute Context providers- interface Content providers- forms of value Commerce service providers- enable flow Infrastructure providers-deliver Features of B-Webs

38. 5. Coopetition- cooperate and compete 6. Customer-centricity- customer value Context reigns- choreographs Rules and standards Bathed in knowledge There are corollaries Uncharted territory Potential for high returns Customers have more power than ever before Disaggregation leads to “disintermediation” and “reintermediation” B-web is a revolution not a tea party More features of B-Webs

39. Agora Theme- Dynamic pricing Value-Liquidity: converting goods into a desirable price Customer is a market player Timing and market intelligence Examples: Ebay Priceline NASDAQ FreeMarkets Aggregation Theme- selection and convenience Value-optimization of selection, organization, price, convenience Customer is the buyer Know market segments, supplier offerings and fulfillment factors Examples: Amazon HomeAdvisor E*Trade Travelocity Five Types of B-Webs

40. Value Chain Process integration theme Value- to design and deliver an integrated process or service The customer is the value driver Innovation and supply chain management are key Examples: Cisco Dell GM Bidcom Alliance Theme is creativity Goal shared across a community of contributors The customer is a contributor Focus on community., creativity and standards and roles Examples: AmericaOnline Linux MP3 Wintel B-web types

41. Distributive Network Theme is allocation and distribution Value is to facilitate the exchange and delivery of information, goods and services Customer is sender/recipient Focus is network optimization Examples: AT&T- all telcoms UPS Well Fargo Enron One more b-web type

42. Six Steps to create B-Web strategy 1. Describe the current value proposition from the customer’s point of view– that is why does this system exist • Who are the end customers as opposed to intermediary customers of your products and services? • What products/services are provided to its customers? • What is the value proposition? • What are the strengths and weaknesses from an end-customer’s perspective? Who delivers more value and how?

43. Value Proposition Description:SWOT

44. Six Steps continued… 2. Disaggregate • Identifies the entities that contribute to the total value creation system • End customer • Context provider • Content provider • Commerce services provider • Infrastructure provider

45. Disaggregation Analysis

46. Six Steps continued.. • 3. Envision B-web enabled value • human advisors • Automated alerts- programmed by thresholds • Tools • Easy linkages: wireless, intelligent agents • Communities- forums, chat, • Virtual advisors- decision support, scenarios • Analysis tools • Tracking tools

47. Six steps continued again… 4. Reaggregate • identify new value contributions • Expect reintermediation • Technology improvement • Identify and engage best for outsourcing

48. Six steps only one more… 5. Prepare a value map • Tangible benefits- goods, services, money, knowledge if is part of a product. • Knowledge- strategic information, planning, process and technical knowledge • Intangible benefits- brand community, loyalty, image enhancements

49. Reaggregation as a B-Web

50. Finally Step Six is the B-Web Mix • Find the right mix for your design