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Dean’s Seminar: The Future of e-Business in the New Millennium

Dean’s Seminar: The Future of e-Business in the New Millennium. Ned C. Hill, Dean Marriott School of Management Brigham Young University Management Society Houston April 2001. BYU. BYU. BYU Update. Increased enrollment (27,000 to 29,000) Summer visiting student program

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Dean’s Seminar: The Future of e-Business in the New Millennium

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  1. Dean’s Seminar:The Future of e-Business in the New Millennium Ned C. Hill, Dean Marriott School of Management Brigham Young University Management Society Houston April 2001

  2. BYU

  3. BYU

  4. BYU Update • Increased enrollment (27,000 to 29,000) • Summer visiting student program • Growth in physical facilities • Growth in online courses (over 200) • Continuing education (50,000 students) • Influence throughout the world • China • Inventions • Languages

  5. Marriott School Update • Faculty—125 (20 new this year!) • Students (MBA) • International 17% • Women 21% • Bilingual 70-80% • GMAT average 670 • Placement • Web site marriottschool.byu.edu

  6. Recognition • MBA Finance #9 in world (Financial Times) • Accounting (MS/BS) #3 in U.S. • Steve Albrecht—top award from AICPA • Undergraduate Bus Mgmt ranked #31 • MBA in second 25 in Business Week & USNWR • #1 for value • MISM program #20 by ComputerWorld • Entrepreneurship program #18 by Success • “#1 Stone Cold Sober School in U.S.” Princeton Review

  7. Curriculum • Strong functional area, e.g., Finance, Accounting, Marketing • Infuse throughout curriculum: • e-Business • Globalization • Entrepreneurship • Solid foundation of ethical behavior, work ethic, Gospel principles

  8. International Outreach • China—designing MPA, MBA and certificate programs in Sichuan/Ningxia; microenterprise • Mexico—employment, certification • Argentina—designing EMBA program • Peru—helping congress • Honduras—HELP project • Australia—joint executive education, conferences • ISSP students—125 so far

  9. Annual Management Conference • June 28-30, 2001 • Leadership and e-Business • 600-700 attended last several years • To register: marriottschool.byu.edu

  10. Questions about BYU or the Marriott School?

  11. The Future of e-Businessin the New MillenniumOutline • What’s wrong with the old paradigm? • What is e-Business? • How large is the market? • How e-Business change business processes? • What does e-Business mean for you?

  12. e-Business: Road to Fabulous Wealth! X Just add an “e” to a business process or a “.com” to a company. Without obeying well-accepted economic principles, you will magically create wealth beyond your fondest dreams.

  13. e-Business Changes... • Information flows • Internal and external processes • Relationships • Power BUT, it does not change need for… • Quality products • Excellent service • Cost effective delivery • Valued relationships

  14. What’s Wrong with the Old Paradigm?

  15. The Paper-based Commercial Transaction Seller Mail Mail Check Check and Remittance Advice Request for Quote Purchase Order Banking System Carrier Quote Invoice Bill of Lading Mail Mail Mail Buyer

  16. Keying in the Paper World Seller’s Computer System Keying Keying Keying Keying Postal System Keying Keying Keying Keying Buyer’s Computer System

  17. What’s Wrong with this Picture? • Labor intensive • Slow • Error prone • Uncertain • Excessive inventory (and cash) • Bottom Line: IT’S EXPENSIVE

  18. What Can We Do? • Option 1: Make paper work harder • Option 2: Get rid of the paper altogether

  19. Definitions of e-Business To most people: “The selling of products and services using the Internet.” More powerful definition : The use of computer and communication technology to facilitate the information exchange between two parties in a transaction.

  20. Map of e-Commerce EDI, FEDI, FTP All Electronic Internet, E-mail, E-trade MICR, OCR, ICR, Bar Coding Cell Phones FAX Traditional Paper/Manual Transactions All Paper/ Manual

  21. An e-Commerce Transaction Seller Bill of Lading Request for Quote Banking System Quote Payment and Remittance Advice Invoice Carrier Purchase Order Goods Buyer

  22. Manual Processes in an e-Commerce World Seller’s Computer System Keying Translation Translation Translation F.A. F.A. F.A. Computer Network (VAN, Internet) Invoice P.O. RA Keying Translation Translation Translation Buyer’s Computer System

  23. Changes Due to e-Business • Lower personnel costs • Reduced error rates • Faster cycle time • Improved customer service • Reduced inventory • Fewer stock-outs • Reduced paper handling costs • Faster payments • Better control over information • Potentially creates entirely new markets

  24. Online Households Million From Net Profit by Peter S. Cohan

  25. Web Ad Revenues $ Million From Net Profit by Peter S. Cohan

  26. Business Through the Web $ Billion Est. from the U.S. Department of Commerce

  27. Size of e-Business Market Billions of dollars, projected for 2003

  28. Cost Curves • Labor costs • Paper costs • Building costs vs. • Computer costs • Telecommunication costs

  29. Time Required to Download the 32 VolumeNew Encyclopedia Britannica • 1200 bps modem……………………..… 28 days • 9600 bps modem………………….…… 3.5 days • 28.8 Kb modem……………………….. 28 hours • Basic Rate ISDN…………..……….… 6.3 hours • T-1 line…………..…….……….….. 31 minutes • T-3 line…………..……………….… 1 minute • Optical Fiber (OC-3)…….…….…. 17 seconds • Optical Fiber (OC-12)…….……... 4.7 seconds • Optical Fiber (new technology).... .005 second

  30. e-Business Impacts Everything HR Finance Supply Chain e-Business Accounting Systems Operations Marketing Strategy

  31. Example 1: Bergen BrunswigPaper System Bergen Brunswig Manual Processing Delivery Payment Order Pharmacist

  32. Example 1: Bergen Brunswige-Business System Bergen Brunswig Automated Processing Capture bar code on shelf label PC consolidates entire order Order transmitted over Internet Warehouse is automated Delivery is within 5 hours Order Delivery Payment Pharmacist

  33. Example 1: Bergen BrunswigWhat Changed? • Sales function • Role of salesperson • Information channel • Order fulfillment processes • Manual to automated • HR focus • Compensation issues • Hiring & training • Customer relationships • Responsibility for order initiation/errors • Service level

  34. Example 2: Daimler-ChryslerVendor Relationships under e-Business Supplier Purchase Order e-Advanced Ship Not. e-Payment e-Material Release e-Delivery Order Delivery Chrysler

  35. Example 2: Daimler-Chrysler • Inventory management • Just-in-time possible • Invoiceless pay (“Evaluated Receipt Settlement”) • Quality control moved back to supplier • Close cooperation necessary • Tolerance for errors is much lower • Result? Inventory Reduced by $1,000,000,000

  36. Four Stages of Web Involvement • Stage 1: “Brochure” • One-way information broadcast • Lowest cost, easiest to maintain • A holder for your place in e-commerce • Stage 2: “Basic Transactions” • Offer basic transactions: orders, payment • Requires significant maintenance, real-time processing • May compete with existing business avenues

  37. Four Stages of Web Involvement • Stage 3: “Complete Business Partnership” • Multiple transactions with customers • Integrated functionality • Builds customer loyalty, long-term relationships • Involves major funding commitments • Stage 4: e-Market Participation

  38. Four Stages of Web Involvement Stage 1 Stage 2 Stage 3 Stage 4 NASDAQ: Multiple buyers Multiple sellers Cisco: Product Info. Design Orders Status Customer service Delivery Payment LandsEnd: Catalog Orders WSJ: News

  39. e-Marketplaces Buyer Internet-based Marketplace Seller Buyer Seller Automated Matching Rules Buyer Seller Record keeping, reporting, etc. Buyer Seller Banking Regulatory Agencies

  40. Should My Company Go on the Web? • Do we have $100,000 to $200,000 to invest in launching a Web site? (And are we willing to invest in maintaining it?) • Are our competitors involved in the Web? • Do our customers demand Web services? • Do we have customer service opportunities that could be improved via the Web? • Is a significant portion of our customer base under the age of 30? • Do we want to be in business 2-5 years in the future?

  41. Suggestions on Entering e-Business • Keep your focus on creating value for your customer--don’t get lost in the technology • Use e-Business to improve processes and information flow--don’t pave over old cow paths • Develop customer loyalty by providing multiple services that add value • Partner when necessary to widen your ability to provide services

  42. Want to Find an Internet Business Opportunity?Hint: Study Possible Timelines • Consumer shopping • Applying to college • Buying a house • Booking a flight • Checking out a book from a library Also ask: Will this add value? And will people pay for it?

  43. Be Careful of e-Business Negatives e-Business… • Demands technologically sophisticated staff—make sure you have them (or can obtain other services) • Demands constant attention to keep up web sites • May alienate some customers • May alienate some employees—e.g., ubiquitous contact with the office • Will lead to problems if you overlay technology onto a poorly designed information system • May create security issues • May create audit control problems

  44. Rollins Center for e-Business • Faculty development • Curriculum enrichment • Research • Public awareness • Partnerships with e-Businesses

  45. Enter General Course Map for e-Business Application to Functional Areas: Finance, Marketing, Operations, HR, Government, etc. Overview of e-Business Strategy and e-Business Foundation Technologies: Networking, Data Bases, Programming

  46. Using e-Business within the University • Applications -- Internet • Course Registration -- Internet • Purchase of Supplies -- Internet • Phone Bills -- EDI • Grade Transcripts -- EDI • Travel Arrangements -- Internet • Alumni Relations • Publications -- Internet • Communications -- e-Mail • Internal Communications -- MS Outlook • Correspondence Courses -- Internet/CD Rom

  47. Examples of Computer-Assisted Courses Course Key Feature Accounting Replaces lectures Rat Lab Decreases costs Chemistry Lab Allows experiments Languages Adaptive learning Music Visualizing Bach Accounting Repetitive drills

  48. References on e-Business • Evans and Wurster, Blown to Bits: How the New Economics of Information Transforms Strategy, Harvard Business School Press, 2000 • Tapscott, et al, Digital Capital: Harnessing the Power of Business Webs, McGraw Hill, 2000 • Shapiro and Varian, Information Rules: A Strategy Guide to the Network Economy, Harvard Business School Press, 1999 • Kalakota and Robinson, e-Business: Roadmap for Success, Addison Wesley, 1999 • Naisbitt, High Tech, High Touch, Broadway Books, 1999 • Friedman, The Lexus and the Olive Tree, Anchor Books, 2000 • Nicholas Negroponte, Being Digital, Knopf, 1995--one of the most insightful commentaries on the Information Age

  49. Conclusions • Technology is changing the business (and the educational) paradigm • But e-Business is not a cure-all—just another tool (and a very powerful one) • Most changes are beneficial—some are detrimental • Learn all you can about e-Business • You will be doing e-Business sooner or later--might as well get started now!

  50. Thank You

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