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The Big Bang

The Big Bang. Diana G. Oblinger, Ph.D. Kenan-Flagler Business School University of North Carolina at Chapel Hill Senior Fellow, EDUCAUSE Center for Applied Research. Only the paranoid survive…. – Andy Grove. Stable, predictable Rely on geography Protect markets Averse to failure

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The Big Bang

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  1. The Big Bang Diana G. Oblinger, Ph.D. Kenan-Flagler Business School University of North Carolina at Chapel Hill Senior Fellow, EDUCAUSE Center for Applied Research Technology and Standards Watch Day February 7 2001

  2. Only the paranoid survive…. – Andy Grove Technology and Standards Watch Day February 7 2001

  3. Stable, predictable Rely on geography Protect markets Averse to failure Economies of scale Positioning Long-range planning Free-for-all Movement Cannibalize markets Failure is expected One-to-one Value migration Real-time execution Traditional vs. Net-economy Net-Economy Traditional Economy Hartman & Sifonis, 2000 Technology and Standards Watch Day February 7 2001

  4. Born on the Web Companies Technology and Standards Watch Day February 7 2001

  5. The Big Bang • e-companies emerged in the late 1990s • Analogous to the “big bang” • Net-generation companies are now coalescing into distinct constellations of products and services Eduventures, 2000 Technology and Standards Watch Day February 7 2001

  6. Categories of e-business • e-commerce • e-learning • e-care • e-procurement Technology and Standards Watch Day February 7 2001

  7. e-commerce Technology and Standards Watch Day February 7 2001

  8. Definition of e-commerce • Transactions involving individuals or organizations • US students spent $700 million for online purchases in 2000 • Estimates are that student purchases will exceed $14 billion by 2002 Oblinger & Katz, 2000 Technology and Standards Watch Day February 7 2001

  9. edu.com • Competing for student e-commerce market • Deep discounts on brand-name products for college students • computers • software • banking services • phone and Internet services • credit cards • textbooks Technology and Standards Watch Day February 7 2001

  10. UVentures.com • Universities selling intellectual property online • Hope to supplement research funds • New online intellectual marketplace • Designed to connect buyers and sellers, online • Similar to models such as Autobytel.com Technology and Standards Watch Day February 7 2001

  11. e-learning Technology and Standards Watch Day February 7 2001

  12. Size of Education Market The US currently spends $740 billion per year on education... ... more than is spent on national defense … more than the GDPs of Spain, Canada or Brazil Moe, 1999 Technology and Standards Watch Day February 7 2001

  13. 1997-2002 12000 AcademicCorporate 10000 8000 Billion $ 6000 4000 2000 0 1997 1998 1999 2000 2001 2002 Year International Data Corporation, 1999 Worldwide Academic vs. Corporate Education Market Technology and Standards Watch Day February 7 2001

  14. Growth of e-learning • Universities with aggressive programs are seeing growth rates of 200-1000% • Partnerships between “non-traditional” providers and universities are increasing • Over 5,000 competitors offer all types of e-learning; no single competitor has more than a 5% market share • Last year, over 100 e-learning portals entered the market Oblinger, 2000 Technology and Standards Watch Day February 7 2001

  15. UNext.com • Provides online business education through Cardean • Uses Internet technologies to create learner-centric, highly personalized and interactive environment • Academic partners: Columbia, Chicago, Stanford, London School of Economics, Carnegie Mellon Technology and Standards Watch Day February 7 2001

  16. Hungry Minds • Online learning portal that aggregates courseware from academic institutions and corporate training firms • Over 37,000 online courses; more than 160,000 subscribers • Academic partners: UC Berkeley, UCLA, Maryland, WGU, Jones International, U Mass-Lowell Technology and Standards Watch Day February 7 2001

  17. Business Model Description e-Commerce The sale of products and services over the Web; reseller agreements Advertising The sale of advertising space on a Web site Seat License The licensing of content or software on a per-use basis (e.g., license an entire library of courseware) Subscription The sale of e-Learning services via periodic payment Pay for use The sale of specific e-Learning products and services (e.g., purchase a specific course title) Direct Marketing/Data Collection The sale of customer lists and market data Enabling Services The sale of e-Learning development and delivery services, such as Web hosting, performance monitoring, professional services (e.g., content customization) Business Models Source: U.S. Bancorp Piper Jaffray Technology and Standards Watch Day February 7 2001

  18. Other for-profit e-learning ventures • Quisic (University Access) • Pensare • Provant • Caliber • SmartForce • Headlight.com • OnlineLearning.net Technology and Standards Watch Day February 7 2001

  19. Kentucky Commonwealth Virtual University • KCVU is a “utility company” for educational institutions • View and understand certificate and degree opportunities • Admissions, registration and financial aid applications online • Online classes • Advising, bookstores, library and study groups online Technology and Standards Watch Day February 7 2001

  20. e-care Technology and Standards Watch Day February 7 2001

  21. Definition of e-care • Using the Web to deliver information, support, services and decision-making aids • assistance in clarifying student career or goals • enrolling employees in human resources programs • update personal information (e.g., address) • answering Frequently Asked Questions (FAQs) Oblinger, 2000 Technology and Standards Watch Day February 7 2001

  22. Rationale • Most individuals ask the same questions over and over • Question repeat rates are often 50% to 70% • Telephone inquiry: $25 - $30 • Web inquiry: $2 to $3 Oblinger, 2000 Technology and Standards Watch Day February 7 2001

  23. Type of service Access method High touch Special Service Student requests for counsel/ guidance or referred (10%) by a generalist General Service Help desk Student requests (20%) personal assistance Phone bank Self Service Internet/WWW EFT Student accesses (70%)* technology and Touch tone Kiosk completes Self-help center transactions on-line Automatically Proactive triggered with- High tech Service EFT EDI Mailings Imaging out intervention (70%)* by the student *`Estimated 70% of all transactions could be handled through combined use of automatic service or self service. PriceWaterhouseCoopers, 1999 Changes in Student Services Technology and Standards Watch Day February 7 2001

  24. Smarthinking.com • Provides online, real-time academic support for students • Online writing lab • Real-time math study sessions • Tutoring • Plans to provide • independent study resources • learning analysis Technology and Standards Watch Day February 7 2001

  25. Tutor.com • Leading provider of educational referral services on the Internet • Independent tutors and instructors register on National Registery • Virtual classroom application includes text chat and whiteboard • Database of 13,000 tutors & educators • $1 connection fee and 10% of overall transaction Technology and Standards Watch Day February 7 2001

  26. e-procurement Technology and Standards Watch Day February 7 2001

  27. Definition • Using digital technology for paperless procurement • EDI (electronic data interchange) • digitally process transactions • order management • inventory control • Electronic payments reduce paperwork and cut costs Oblinger, 2000 Technology and Standards Watch Day February 7 2001

  28. Rationale • Eliminate paper bills • traditional paper bill costs $0.90 in postage and processing • online services can cut cost to $0.30 or $0.50 • Improve efficiency • reduced cycle time • faster processing • reduced error rate Oblinger, 2000 Technology and Standards Watch Day February 7 2001

  29. Commonfund Treasury • Creates an online purchasing system • Paperless systems reduce transaction costs • Traditional requisition costs $150 to process • e-procurement costs $10 - $15 • Efficiencies and price discounts could lead to an additional 10% savings • U Penn, CSU Fullerton, UCLA Technology and Standards Watch Day February 7 2001

  30. FreeMarkets.com • Creates online auction markets • Suppliers bid for clients’ business • Working with Pennsylvania state government FreeMarkets has: • conducted 9 online auctions • items ranged from construction to telecommunications to license plates • $10 million in savings on procurement volume of $98 million Technology and Standards Watch Day February 7 2001

  31. Comparative Shopping • The Internet is a perfect place to compare prices • For example, shopping for CDs: • 5 bricks-and-mortar stores per hour • 50 online suppliers • with a shopping agent, exposure to 500 suppliers Hartman & Sifonis, 2000 Technology and Standards Watch Day February 7 2001

  32. Net-Generation Companies Technology and Standards Watch Day February 7 2001

  33. Net-Generation Companies • Online admission applications • Embark • CollegeNet • XAP • Campus-based portals • Campus Pipeline • Jenzabar.com • Studentonline.com Technology and Standards Watch Day February 7 2001

  34. Net-Generation Companies • Online procurement • CommerceOne • Ariba • FreeMarkets • Online course delivery • WebCT • Blackboard • Convene • eCollege Technology and Standards Watch Day February 7 2001

  35. Net-Generation Companies • Supplemental content providers • PinkMonkey.com • CliffNotes.com • Thinkwell.com • InstantKnowledge.com • Versity.com • Online libraries • Questia.com • Net.Library.com • ebrary.com Kidwell, et al., 2000 Technology and Standards Watch Day February 7 2001

  36. Net-Generation Companies • Online Textbook Distributors • VarsityBooks.com • Textbooks.com • Advising and Tutoring • Smarthinking.com • Tutor.com • Degree Navigator Kidwell, et al., 2000 Technology and Standards Watch Day February 7 2001

  37. Net-Generation Companies • Learning portals • click2learn.com • Hungry Minds • Ziff-Davis • SmartPlanet.com • Blackboard.com Kidwell, et al., 2000 Technology and Standards Watch Day February 7 2001

  38. e-Business Principles Technology and Standards Watch Day February 7 2001

  39. Effectiveness E-Line Efficiency CompetitiveAdvantage MarketExpansion Why Use IT? Innovation Values Net-generation institutions use IT for its innovation value Technology and Standards Watch Day February 7 2001 The Economist Business Unit, 1999

  40. CurriculumDevelopment ContentDevelopment Learner Acquisition & Support Learning Delivery Assessment &Advising Articulation Credentialing Faculties & Departments SoftwareAuthoring Tools(WebCT, eCollege.comAsymmetrix) StudentServices Faculties & Departments Colleges & Universities(central administration) Full-ServiceBroker (WGU) Full-ServiceBroker (WGU) Full-Service Broker (WGU) Tutoring andTesting Centers(Sylvan, KaplanPrinceton Review) University Spin-Offs(OnlineLearning.net, NYU Online) Catalogs (SREC, CVU, NJVU) AccreditingAssociations &LicensingAgencies Educational Publishers Market ResearchFirms Software Publishers(CBT Systems, NETG) LearningEnvironments(Convene, Lotus,Microsoft,Blackboard) TeleconferencingCompanies(Caliber, One-Touch) Testing Organizations(ETS) OnlineApplications (XAP, CollegeEdge, IBM) Industry AssnStandards Body(EduCause) Training Companies(GP Technologies, Knowledge Universe) Training Companies Corporate Universities Corporate Universities Educational Management Organizations (U of Phoenix, Open U., Harcort, UNEXT.com) UNC and PwC, 1999 Value Chain Alternative Providers Technology and Standards Watch Day February 7 2001

  41. Creating a Value Web Value Nets TraditionalProviders Non-traditional Providers Technology and Standards Watch Day February 7 2001 IBM, 1999

  42. $0.01-0.5 WWW $1-4 Direct Mail Tele Marketing $3-8 Tele Coverage $30-40 $250-400 Direct Sales Force Internet Drives Cost Efficiencies Technology and Standards Watch Day February 7 2001 Cost-Per-Contact for Various Technologies Source: Agency Survey

  43. Compression • Transaction costs are reduced • Time and distance are squeezed out of the equation • Costs that were assumed fixed are eliminated Technology and Standards Watch Day February 7 2001 Hartman & Sifonis, 2000

  44. “Stickiness”: How to Ensure Repeat Visitors High Quality Content 75% Ease of Use 66% Quick to Download 58% Updated Frequently 54% Cutting Edge Technology 12% Purchasing Capabilities 11% Customizable Content 10% Chat and BBS 10% Other 6% Source: Forrester Research Technology and Standards Watch Day February 7 2001

  45. Technology Enablement • Utilize standards across the enterprise • If you can buy it, don’t build it • Build a technologically smart business organization • Create a business-smart technology organization Hartman & Sifonis, 2000 Technology and Standards Watch Day February 7 2001 Hartman & Sifonis, 2000

  46. E-business Issues Technology and Standards Watch Day February 7 2001

  47. e-Business Issues • Viewing IT as a strategic asset • Adequate, affordable bandwidth • Skills • Consumer protection • Legal framework • Liability • Privacy • Equitable access Technology and Standards Watch Day February 7 2001

  48. Challenges • Values / culture • Nimbleness • Leadership • Focus • Organizational structure • matrix • partnerships • Funding • Human resources Technology and Standards Watch Day February 7 2001

  49. All great truths begin as blasphemies. – George Bernard Shaw Technology and Standards Watch Day February 7 2001

  50. The Big Bang Diana G. Oblinger, Ph.D. oblinged@bschool.unc.edu Technology and Standards Watch Day February 7 2001

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