Research Challenges for E-commerce The Future Is Not What It Was

1. Research Challenges for E-commerceThe Future Is Not What It Was 1 November ICEC 2001 Vienna Stuart Feldman Director, IBM Institute for Advanced Commerce Head, Computer Science Research

2. Outline • Trends and Directions • e-Government & e-Business • e-Commerce & e-Business • Dot-Bomb & reality • Driving Forces • Technology • Business • Some Research Challenges • Implications of September 11

3. Overlapping Topics www.egovlinks.com E-government Citizen services Foreign Relations E-governance Infrastructure E-Commerce Enterprise Resources Employee Services Partner Alliances E-Business CRM SCM

4. TRENDS AND DIRECTIONS Business, Societal e-government, e-governance, e-business, e-commerce

5. Progress – The Long View (Alas) Industrial Revolution Agricultural revolution Hunter Gatherers Farmers Villagers Cities Suburbs Increased disease Poorer nutrition Shorter life span Harsh working conditions Shorter urban life span Information Revolution Sept 11 … ?

6. Macro Issues • E-business growth continues • Efficiency, opportunity • Organizations will experiment and invest because • opportunities/greed • competition/fear • Implications uncertain for society, economy, workforce, community • big changes in industry sectors and national positions • realizations will come late and reactions unpredictable • Likely legal or political responses • will induce delay, cost, or circumvention • Hard to put the genie back in the bottle

7. Phases of Public Excitement • B2C • Portals • B2B • e-Marketplaces • e-business • Pervasive e-commerce • Service-Oriented Commerce

8. Phases of Public Excitement and Technical Challenges • B2C: storefront, images, payment, auction, authentication, privacy • Portals: content, collaboration • B2B: protocols, processes, robustness • e-Marketplaces: negotiation, services, databases • e-business: business processes, models, stability, inter-organizational federated computing • Pervasive e-commerce: scale, user experience, application and content adaptation • Service-Oriented Commerce: highly distributed computing, management

9. Fundamental Trends • Business-to-Business far outweighs Business-to-Consumer • Growth continues strong in B2B activity • Especially in broader e-business, not just e-commerce • “Dot-Bomb” more of an investment disaster than a technology loss • Experiences and software being reused • Usage expanding from large enterprises in G7 to mid-sized companies in many countries • Governments experimenting widely with the technologies, though usage is still relatively light

10. Phases of Public Excitement • B2C • Portals • B2B • e-Marketplaces • e-business • Pervasive e-commerce • Service-Oriented Commerce

11. Phases of Public Excitement and Technical Challenges • B2C: storefront, images, payment, auction, authentication, privacy • Portals: content, collaboration • B2B: protocols, processes, robustness • e-Marketplaces: negotiation, services, databases • e-business: business processes, models, stability, inter-organizational federated computing • Pervasive e-commerce: scale, user experience, application and content adaptation • Service-Oriented Commerce: highly distributed computing, management

13. Growth in E-Commerce Usage • E-Commerce : CAGR = 175% over 1995-1999 (U. Texas/Cisco); $ = ey • Forrester (2000) estimate: $6.9T in 2004 • Gartner (2001) estimate: $8.5T in B2B in 2005 • Online B2B will grow from 3% to 42% by 2005 (Jupiter, 2000): • Over 50% in aerospace&defense, chemicals, computers&telecom, electronics&motor vehicles • Number of digital cell phones > number of PC-type devices by 2003 • Exponential growth faster than h/w improvements • Faster than economy, society, organizations react • Large scale job and sector shifts: displacements, digital divides -- age, education, race, nation, continent

15. Some Inferences • Exponential growth • errors not significant • if growth rate is 175%, just shift the time axis a little • what is the asymptote, where is the knee • Government implications • tax holidays won't last long • US just permitted nationwide moratorium lapse • globalization concerns will boil over • “ interesting" economic shifts will occur anyway • Social implications • further blending of economic, political, social spheres • time scale ~10 years

16. Individuals • Privacy • erosion of privacy, • new ways to hide one’s tracks • Socialization • New modes of interaction, more time on friendships • Lessened need for physical closeness • Community • greater dependence on virtual communities • new opportunities for geographic regions

17. Business • Business time frames • accelerating tempos, • longer-term partnerships • Business advantage • Operational efficiency and niche specialization • Strategy, marketing, alliances • Supply chains • widening nets of suppliers, • deepening strategic partnerships

18. Economy • Business structure • fragmentation of businesses focusing on core capabilities, • growth of mega-corporations that increase brand and supplier power • Information sharing • Faster decision-making with better data • Greater synchronization and peakiness of behavior • Employment • more protection of jobs and workers, skills shortages • more export of entire business functions

19. Government • National Government • weakening control over national economy, challenges at the borders • new ways to affect/afflict other nations • Levels of Government • Increased competence and focus locally • Continental cooperation driven by networking • Citizen involvement and interaction • Government can seem increasing distant and venal • Citizens expect govt to respond on business timescales • National Security • New targets and risks • Greater opportunity for data gathering • Taxes • more auditable data and immediate access to cash flows • more ways to evade taxation

20. DRIVING FORCES Technical Business

21. What Does Business Demand? • Faster • Faster tempo, time to market • Cheaper • More efficient processes, less waste • Broader • More global; more partners, suppliers, customers • Deeper • More process optimization, business strategy • Response: more dynamic e-business • Increased automation • Deeper data-driven analysis • Continuous interdependence of people and systems

23. Drivers

24. TECHNOLOGY-RELATED TRENDS

25. Five Main Technology Trends • "Faster, Cheaper, Better" • "Wired Planet" • "Power Plants" • "NextWeb" • "Deep Computing“ Source: IBM Global Technology Outlook

26. Technology Trends • Moore’s Law (obligatory first technology bullet in IT talks) • Disk areal density growth • Bandwidth changes (backbone, org, home) • New displays • Algorithm improvements • Embodiment of techniques into software • Distribution of computing, data, applications and services

27. Technology Expectations • Number of network users • Near-universal participation • New expectations and uses • Networking • Far faster backbone capabilities • Storage demands will grow even faster • Security • People and orgs will be more conscious of security • Technologies will improve • People will still be sloppy • Computing capabilities • Typical users will do more computing than biggest ones today • High-end abilities will grow enormously

28. Technology Directions (M=106, G=109, T=1012, P=1015)

29. The Role of Software • Traditional • structure of software is determined by structure of the organization that creates it • New • structure of the organization is determined by structure of the software that it uses • Newer • the businesses that an organization participates in are determined by the software and services it can use

30. RESEARCH CHALLENGES

31. Difficulties of Research Field • Funding (assumptions of start-up dominance, followed by dot-com collapse) • Time scale: traditional publishing and grant intervals (2-4 years) vs “Internet Time” • Interdisciplinary nature • Requirements for deep knowledge • Application focus • Acquiring data (laboratory and real-world)

32. Growth of Research Field • Becoming recognized as legitimate subject • Increasing number of research conferences, journals, papers • Degree programs • Several PhD • Many Master’s, many more specialized MBA • E-Business Research Centers • >50 in North America alone • IBM Institute for Advanced Commerce and Pennsylvania State University are sponsoring a forum of Directors of such centers this month

33. Usage Opportunities • Electronic books • Networked information • Comfortable video conferencing • Improved collaborative environments • Simulation as preferred form of research • Knowledge in your pocket • Forget-nothing storage • Privacy?

34. Institute for Advanced Commerce: Eight Research Themes • Evolving Marketplace • Privacy • Variable Prices and Negotiated Dealings • Direct Business to Business Interactions • Managing the End Customer • Impact of Globalization • Deep Computing for Commerce • System Foundations

35. Some Research Challenges • How to adapt to the world of mobile gadgets • How to provide useful natural HCI for the billions • How to extract business knowledge from floods of data • How to maintain privacy • How to be a dynamic e-business • How to optimize business plans & decisions • How to build applications and services that work, quickly • How to optimize computing in a utility world • How to cope with skills shortages and globalization

37. M-Business • Not just commerce • M = Mobile + Multi-Modal + Multi-Channel • Challenges: • Ubiquity and new demographics • Networking quality and bandwidth unpredictable, devices of limited capability • Content and process Adaptation • People always online • and available for business opportunities? • Location sensitivity – how to use? • Authentication and personalization

38. How would you sell 50 types of socks? On a high-resolution screen show them all On a PDA: use profile, outline best 3 choices Over a phone app asks questions, describes best sock How would you auction a painting? On a high-resolution screen pan, zoom beep when out-bid On a PDA view of signature and guarantee flash when out-bid Over a phone discuss with expert ring when out-bid Business Process Adaptation - Change the process based on device capabilities

39. The Challenge and Opportunity of Demographics • Billions of users in 2010 • Most never saw the old Web • Most never heard of English • Many are illiterate • Will not be techno-tolerant • how explain "Bus Error Core Dumped"? • Need multimodal interactions • complex user and communication models • application generalization • And lots of computing

40. Data -> Information -> Knowledge -> Understanding • New sources of data • Clickstreams • Surveillance cameras • Environmental sensors • Extended sources of business information • World Wide Web • Speech recognition • Challenges: • Coping with magnitudes of data • Extracting useful meaning • Reacting fast enough to change

41. Software and System Engineering • Complexity is rising • Demands for quality of software increasing • Tempo accelerating, intervals shrinking • Challenges • Dynamic e-business • Ensuring quality, deserving trust • Security, availabilty, etc.

42. IMPLICATIONS OF SEPTEMBER 11 EVENTS

43. Immediate losses of intellectual, human, and physical capital repair, restoration, substitution specific government needs New risks and concerns US especially industrialized world overall Fundamental shifts policy, regulation, legal individual expectations, fears, dependence on government, willing exchange of liberty for security governmental actions and needs Priority shifts investment priorities national, corporate, personal enterprise security and reliability support distributing & replicating assets R&D funding (defense as % of GDP, high tech vs low tech) military/defense/applied research topics and funders infrastructure upgrades human and social capital cross-training, knowledge mgmt Technologies security (narrowly) physical/device level software (OS, middleware, application) end-to-end concerns system-wide issues common needs for many purposes September 11: Overall Implications and Responses

44. Outline

45. Socio-Political Drive&Needs New risk sensitivity for large sudden events Greater concern for risk abatement Desire for autarky Privacy concerns shift (US) Greater sharing of info and responsibility among organizations Demands for societal and governmental access to organization and personally identifiable information Societal Changes & Priorities Greater government expenditure (US especially) Assistance to law enforcement for prevention and detection Travel problems More distributed IT and workforces INFORMATION IMPLICATIONS Information management for law enforcement and intelligence involving new orders of magnitudes of information; Federated data bases (sharing of old and new data bases as situations demand and laws are changed) Transaction data sharing and merging Societal Effects

46. Generic Supply chain Risk management Concentration reduction Travel avoidance Examples – Specific Industries Energy Distribution/Delivery Travel Finance Manufacturing Telecommunications [see also IT infrastructure Enterprise Reactions

47. GOVERNMENT RESPONSES Civilian government: organizational concerns, disaster planning Law Enforcement: more information and authority sharing local, national, border Intelligence Defense INDIVIDUAL PROTECTION Communications worked Cellphones become essential Internet increasingly important Personal security personal locators, emergency signals Health information Personal information and privacy Government & Individual

48. IT INFRASTRUCTURE Threat models Cyber and information warfare Information networking: hardening the net Networks Data PHYSICAL INFRASTRUCTURE Infrastructure Elements Energy Communication Networks Travel Risky infrastructure General Ingress control Data collection Responses Infrastructure Protection

49. Spotlighted technologies Software, devices, operating systems, end-to-end and system-wide issues Computer security and auditing Privacy enabling and managing technologies Language Video and image analysis Identity management Biometrics (many) Collaborative applications Data-Oriented System and service management - to the limit Real time control Continuous optimization Simulation and modeling Physical devices Technology Impacts and Uses