The Rise of eCommerce & eLearning: Opportunities & Challenges

1. The Rise of eCommerce & eLearning:Opportunities & Challenges Eilif Trondsen, Ph.D. Program Director 28 October1999

2. Agenda • The large Context •  Selected eC & eL Developments* • What’s Ahead? • New Business Opportunities • Emerging Challenges • * eC=eCommerce, eL= eLearning;

3. The Large Context Historical Perspective on eC “eCommerce is to the Information Revolution what the Railroad was to the Industrial Revolution—a totally new, totally unexpected development. And like the railroad 170 years ago, eCommerce is creating a new and distinct boom, rapidly changing the economy, society, and politics.” Peter Drucker, “Beyond the Information Revolution,” The Atlantic Monthly, October 1999

4. The Large Context Historical Perspective on eC “In the new mental geography created by the railroad, humanity mastered distance. In the mental geography of eCommerce, distance has been eliminated. There is only one economy and only one market. One consequence of this is that every business must become globally competitive, even if it manufactures or sells only within a local or regional market.” Peter Drucker, “Beyond the Information Revolution,” The Atlantic Monthly, October 1999

5. The Large Context Drucker on eCommerce “eCommerce is profoundly changing economies, markets, and industry structures; products and their flow; consumer segmentation, consumer values, and consumer behavior; jobs and labor markets. But the impact may be even greater on societies and politics and, above all, on the way we see the world and ourselves in it.” Peter Drucker, “Beyond the Information Revolution,” The Atlantic Monthly, October 1999

6. The Large Context Drucker on learning “Productivity in knowledge work and service work demands that we build continuous learning into the organization. Knowledge demands continuous learning because it is constantly changing. To obtain the improvement in productivity which the post-capitalist society now needs, the organization has to become both a learning and teaching organization.” Peter Drucker, Post-Capitalist Society (1993)

7. The Large Context Towards eLearning: Drivers • New learning infrastructures: intranet & Internet •  “Time to knowledge” • Distributed workforce • Cost and competitive pressures • Need to integrate learning into work processes • Arrival of “Nintendo Generation” into workforce

8. Selected eC & eL Developments“Internuts Mania” • New rules for new economy •  Virtuous circle of “.com”market evaluations  • Building the new Internet infrastructure • Shift from products to services—HP introducing E-Speak: “universal language for eServices” • Proliferation of alliances • Internet bringing flood of innovations (in both products and business models) and start-ups

9. Selected eC & eL DevelopmentsNew times..new alliances.. “The alliance between the two giants [Ford and Microsoft; to receive auto orders online] in their respective industries underscores how eCommerce is challenging traditional ways of doing business, and pushing the high-technology and manufacturing industries closer together.” Wall Street Journal September 20, 1999

10. Selected eC & eL DevelopmentsMayfield Fund investment Satellite companies Fiber- optic companies Telecommunictions companies Wireless companies eCommerce Infrastructure companies • • • Internet Infrastructure software • Web and Digital TV applications eCommerc services Enterprise applications & Tools • • High-speed data & TV wide area networks Internet Infrastructure companies Digital media chips Communications chips

11. Selected eC & eL DevelopmentsTop eCommerce sites • Company Product Revenue* • Amazon.com Books, CDs, videos 307 • E*Trade Stock trading 215 • Onsale Computer equipment, auctions 149 • Ameritrade Stock trading 139 • Peapod Groceries 69 • CDnow Music 33 • Cyberian Outpost Computer gear 30 • N2K** Music 25 • Beyond.com Software 24 • * Million dollars; June 1987-June 1998 • ** Merged with CDnow Source: Internet World

12. Selected eC & eL DevelopmentsNothing but ‘Net Internet investments are commanding a growing share of venture capitalists’ total outlays $4 60% Internet investments (billions); left scale $3 50 Percent of all venture capital outlays (right scale) $2 40 $1 30 Q1 Q2 Q3 Q4 Q1 Q2 1998 1999

13. Selected eC & eL DevelopmentseL: Replay of eC experience? • Growing media attention and “hype” •  Virtual universities versus corporate learning  • Rising innovation and investments •  eLearning gaining top management attention • Learning portals emerging: on intranets and Internet

14. Selected eC & eL DevelopmentsCisco: Leadership on both fronts • eCommerce: • v Handles 78% of its orders over Net and never touches half of them • v 70% of 20,000 resumes montly via Net • eLearning: • v eLearning Executive Council • v Building internal learning architecture

15. What’s AheadGrowth of online services • Travel Arrangements • Retail Stock Brokerage • Automobile Commissions • Concert and Sports Tickets 1998 2002 10 20 30 40 50 Percent online Source: SRI Consulting

16. What’s AheadGrowth of online products • Consumer Software • Personal Computers • Books • Music • Videos • Specialty gifts • Flowers • Toys 80 60 50 75 70 1998 50 2002 10 2020 50 0 5 10 15 20 25 30 35 40 Percent online Source: SRI Consulting

17. What’s AheadDistribution Space with Hybrid Strategies Marketplace creator controls distribution Product creator controls distribution The Brick- and Mortar-Store Strength: Shopping Experience The Expert Strength: Expertise On land Radio Shack The Gap Charles Schwab Macy’s Radio Shack Online Gap Online Schwab.com Both Online And on land Macys.com Gateway Country Stores In-Store Braches Garden Escape Magazine Hollywood Video Security First Reel.com Garden.com Gateway Online only The Online Retailer Strength: Convenience The Online Producer Strength: Loyalty

18. What’s Ahead?Top management will (finally) get it... Despite enormous publicity and rapid growth in both BTB and BTC eC many in top management have not yet understood what is coming……. “Out of 119 board directors and CEOs of global corporations surveyed, not one believed that the effects of e-business was an important problem facing their company.” PriceWaterhouseCooper It is surprising how overall technology goals are not in line with how these companies [SMEs surveyed] use the Internet. The Web site is more of a toy than a business tool.” The Yankee Group BTB: Business to Business; BTC: Business to Consumer

19. What’s Ahead?…and laggards will catch up “The recent e-Business & Technology Survey conduced by the Cutter Consortium indicates that 65% of business lack an overall e-Commerce strategy, and almost a fourth of companies do not have a basic business implementation plan for e-commerce.” InternetWeek, September 6, 1999 The study, “e-Business in a Connected World,” shows that many UK directors fail to understand the impact of technology, believing that business on the Internet is “someone else’s job.” The Financial Times, September 29, 1999

20. What’s AheadTechnology remaining key driver • Greater bandwidth will stimulate growth of both eC and eL • v3-D graphics found to boost online spending • vEnrich content for eLearning •  Cheaper and better computers and portable devices—for both eCommerce and eLearning • Wireless communication will drive major change on both eCommerce and eLearning fronts

21. What’s AheadMore effective eLearning • Greater supply, variety, and higher quality content •  More dynamic learning modules • Improved interactivity while learning •  Greater use of learning communities •  Beyond courses to smaller learning “chunks”

22. What’s AheadIncreased integration of eC and eL

23. New Business OpportunitieseC:Shift to Software & Services • Outsourcing/hosting services •  Customer relationship management—Web-based • Unified messaging—voice, fax, and e-mail •  Growing range of eC software •  Logistics and fulfillment for eC

24. New Business OpportunitiesNew needs emerging from web • Capture, management, and protection of Web-based data • Analytical tools for creating value from Web-generated data •  Design of product/service that simplify—reduce complexity and/or uncertainty •  Creation of highly personalized Web experiences

25. New Business OpportunitieseL: Profiting from eLearning • Create learning modules and content for specific market segments •  Intermediate/aggregate learning content • Organize and mediate communities of interest •  Design innovative learning software—and demonstrating improved work performance •  Meet growing life-long-learning needs

26. New Business OpportunitieseL: Growth at interfaces New services: Universities, learning portals (ehow.com, learn2.com) Topic of recent 4 hour Seminar at SRI New services: Corporate portals, collaboration tools (XML, visto.com, hotoffice.com, SAP)

27. New Business OpportunitiesCreating value via eLearning Value-Added Resellers and Other Channels Value Chain Customers Intrafirm Supply Chain • Integration • Product managers • Profit centers • Component-based

28. New Business OpportunitieseLearning dashboard

29. Emerging ChallengesHow to keep up with pace of change? • High Uncertainty about future •  Compressed time frames to • make decisions • Increasing difficulty catching-up • as pace increases • Increasing penalty from mistakes • as competitive intensity • increases Planning is limited Reacting is insufficient Traditional strategies of “build and defend” position” are inadequate Source: Kathleen Eishenhardt; Stanford University

30. Emerging ChallengesCreating dynamic filtering mechanisms • Too many opportunities?—staying focused… • …while watching external trends—and threats • Too many distractions and information overload • Merging of work & leisure • Finding right balance between the new and old

31. Contact Information • Eilif Trondsen, Ph.D. • Program Director • Tel: 650-859-2665 • Fax: 650-859-4544 • E-mail: etrondsen@sric.sri.com • Business Intelligence Center: http://future.sri.com • LoD: http://future.sri.com/LoD-PS.shtml