1	Today’s Strategic Imperative: E-Business Chapter 3 Information Systems Management In Practice 5E McNurlin & Sprague
2	Introduction “Strategic use” of IT is defined as “having a significant, long-term impact on a firm’s growth rate, industry, and revenue.” Historically, the strategic use of IT has followed an evolution from improving internal processes and structures of a firm, to improving the products, services, and relationships with its customers, and then with its partners. These evolution stages are characterized as: Looking inward Looking outward Looking across
3	Introduction What is e-business? The use of telecommunications networks, particularly the Internet, to conduct business transactions. Three categories of e-business (see Figure 3.2): Business-to-employee: Intranet-based applications internal to a firm Business-to-consumer: Internet-based applications for a firm’s customers Business-to-business: Extranet-based applications for a firm’s business partners Originally the term e-commerce was used to refer to these three categories. However, the term is now only used to refer to business-to-consumer applications, and the term e-business is used to refer to these three categories.
4	E-Business Drivers Key Components that have accelerated the acceptance of e-business: Wide access to a public network Standard communication protocol Standard user interface E-business applications run over the Internet, drastically reducing access and communications costs. With standardized communication protocols and user interfaces, implementation and training costs are far lower. As a result, a much broader set of users and firms has access to the systems, allowing rapid growth.
5	1. Looking Inward: Business-to-Employee Intranets Intranets are private company networks that use Internet technologies and protocols, and possibly the Internet itself. Benefits of using intranets Wider access to company information More efficient and less expensive systems development Decreased training
6	1.1 Managing Intranets Managerial concerns How to integrate legacy systems into the intranet Deciding how much control of the systems should be decentralized Proposed solutions Create a corporate portal to act as the gateway to the firm’s internal resources, information, and Internet services. Develop separate departmental or divisional portals, such as sales, HR, operations, and finance portals.
7	2. Looking Outward: Business-to-Consumer The E-Business Model Redefining Customer Value “Demanding on-demand”: reduces the time it takes to respond to customer requests Convenience: allows gathering and managing customer information Access to a wide range of competitive prices and sellers for products
8	2. Looking Outward: Business-to-Consumer Redesigning Relationships with Business Partners E-business allows: “disintermediation”: bypassing intermediaries by directly linking customers to the manufacturer. the development of “virtual organizations,” where a firm does not own parts of the value chain, but rather controls the coordination of other firms to appear as a single firm.
9	3. Looking Across: Business-to-Business IT has been used to reduce costs and time of interorganizational transactions, for example: Interorganizational Systems (IOS) Reservation systems, electronic funds transfer systems, Electronic Data Interchange Systems (EDI) Electronic Data Interchange Systems (EDI) Transmission, in standard syntax, of data for business transactions between computers of independent organization
10	3.1 Electronic Data Interchange Goal: Eliminate paper documents involved in business transactions Barriers: Technology available Standards/lack of standards X12 EDIFACT Value-added network (VAN): Third party companies that provide communication links and EDI services to other companies
11	3.2 Electronic Data Interchange Traditional Versus Internet–Based EDI Overcomes many technical barriers to EDI Eliminates the need for expensive telecommunication network Flexible systems Multimedia documents rather than simple streams of text
12	3.3 Supply Chain Integration Supply chain includes processes such as: logistics, procurement, production, and distribution Strategic options Build-to-order mode of operation Elimination of intermediaries Redesign the procurement process
13	3.4 Integration with Back-End Systems Challenge Variety of platforms Incompatible Approach Database Management Systems (DBMS) ERP Systems Extranet
14	4. Technical Considerations Evolution of the Internet: Quality of Service Next Generation Internet (NGI) Research and develop advanced network technologies Deploy high-speed test bed networks Develop and demonstrate revolutionary applications that demand high-speed networks not currently available on today’s internet University Consortium for Advanced Internet (UCAID) Internet 2 (advanced academic network) Abilene (support the demands of the advanced research applications of the UCAID)
15	4. Technical Considerations Security - ranks as one of the top management and consumer concerns Divided into three categories: 1. Sniffing: interception and reading of electronic messages as they travel over the communication networks Protection: Encryption (DES, RSA) 2. Spoofing: assumption of a false identity and the execution of fraudulent transactions Protection: Authentication (RSA) 3. Hacking: unauthorized access to a host computer Protection: Firewall
16	5. Legal and Ethical Considerations Privacy Intellectual Property Rights Copyrights Patents Trademarks Trade Secrets Legal Jurisdiction Content Regulation
17	6. Conclusion IT is a strategic asset that can be used to: Look outward to incorporate products and services Look inward to re-design and create new business processes Look across to link with other organizations make permanent changes in the nature of business with e-business