e-Business

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e-Business

• Discussion with UW Students

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Agenda (from Abstract)

• e-Business vs e-Commerce vs Internet
• What makes e-Business different from business?
• The rise and fall of the dot.com economy
• Successful models for e-Business
• The drivers of benefit for e-Business
  applications
• The value of Brand with e-Businesses
• The potential for e-Business in Insurance and
  high quality on-line Financial Advice

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e-Business vs e-Commerce

• E-Business
• Improving business
• performance through low cost and
• open connectivity
• New technologies in the value chain
• Connecting value chains across businesses
• in order to
• Improve service/reduce costs
• Open new channels
• Transform competitive landscapes

• E-Commerce
• marketing
• selling
• buying of products and services on the Internet

e-Business is more than selling and marketing
online!
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e-Business vs Business
E-Business
Traditional


E-Business is not a project - but rather a
journey that requires vision and non-linear
procedures
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Experimentation and Learning
Short Strategy Formulation loops
Being a Connected Enterprise
Emerging e-Strategy
awareness
learning
learning
Continuous experimentation through specific
Solutions Prototyping
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1997-1999 - e-Business Mania Strikes!

• E-Business becomes a major economic force
• NASDAQ hits 5,000
• Venture capital in abundance
• Focus on new economy, new business models, growth
  potential
• no attention to traditional fundamentals
• bricks and mortar viewed as liability
• Traditional businesses shake in their boots at
  the threat of new non-traditional nimble bold
  competitors
• Dot.Com start-ups in every field
• Dot.Com multi-millionaires made over night

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B2B and B2C - Huge Potential
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Online Retail Sales - Likewise!
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2000 - The Dot.Com Bubble Bursts!

• The Demise of Dot Com Retailers. Weak financials,
  intense competition, and investor flight will
  drive many of today's online retailers out of
  business in 2000. Those that survive must refocus
  funding on building hard assets to achieve scale,
  service, and speed.
• Wall Street will run out of patience. Financial
  markets exasperated with non-existent online
  profits will turn a deaf ear to persistent
  "investment mode" rhetoric and soundly punish
  merchants who bleed red ink. Recent stock
  disasters like Value America and eToys -- whose
  market caps as of January 11, 2000, are down 3.1
  billion and 7.7 billion respectively from 1999
  highs -- serve as bad omens for online stores
  that lack a unique approach or technology.
• The revenge of the brick-and-mortars will begin.
  The narrowing of the playing field in 2000 will
  rationalize but not resolve online retail
  competition. It will usher in a new era
  characterized by a few large players that exploit
  deep customer relationships and a presence across
  multiple channels to entrench themselves. To
  measure their success, these firms will ditch new
  economy platitudes in favor of unfashionable old
  metrics like margins, profits, and customer
  retention costs.

Forrester Research, 1999/2000
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Valuations Plummet
Amazon.com - AMZN
Pets.com - IPET
Priceline.com - PCLN
eBay.com - eBay
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Same Trend in Canada
1-year trend
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Lessons Learned

• Fundamentals important, bottom line important
• Traditional bricks and mortar assets can
  represent significant competitive strengths
• logistics, inventory, distribution
• choice in terms of customer access
• strength and brand
• e-Business becomes an element of overall business
  strategy - not the total business strategy
• e-Business still widely seen as a way of
  transforming business operations and thinking

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Bricks and Clicks - A Hybrid Model
Traditional Bricks and Mortar
Pure Web - Dot.com Clicks
Combines strengths from traditional and pure Web
approaches
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Emergence of the Hybrid Strategy
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Phases of e-Business Development
Four stage model in E-Business maturity relates
business value to e-business leverage
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Phases of e-Business Development
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The Journey Requires Investment
Significant multi-year investment predicted
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The Journey Requires Investment
Significant multi-year investment predicted
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The Benefits of e-Business

• Generate additional Revenues
• New markets
• New products
• New customers
• Reduce Costs (Integration and Collaboration)
• Process efficiency
• Reduce IT variety and -complexity
• Synergies with other initiatives
• Customer Retention (Added Services and Virtual
  Community)
• Know more about your customers
• Integrated channel management
• Proactive and personalized offerings
• Improve Image / Position Brand
• Applying innovative technologies
• Leadership enterprise
• Address younger customer segments
• Not to miss the boat
• Keeping options open
• Acquire know-how

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e-Business and Brand

• Research from Mainspring
• Online financial services customers are
  initially motivated by price sensitivity, but
  that influence declines as they realize the
  benefits of convenience
• Brand is more important online than offline
• When researching insurance purchases online, 56
  of customers went straight to name-brand sites as
  compared with 32 for aggregation sites.
• When initiating a purchase online, 60 went to
  name-brand sites as compared to 32 for
  aggregation sites.

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Online Insurance
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Online Advice
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Online Advice vs Face to Face

• Forrester Few financial companies believe that
  online advice will replace the human advisor.
  Except for a small group of low-end,
  self-directed customers, consumers are expected
  to continue to seek advice from financial
  advisors. More than half of our respondents
  believe that online advice solutions will never
  be a compelling alternative to working with one
  of their advisors, even as the technology
  improves.
• Almost half of financial institutions believe
  that online advice will enable advisors to
  deliver additional value to their customers.
• As automated advice vendors piece together the
  elements of the new advice creation process,we
  believe that use of online advice will surge.
• Customers don t care about the data-entry and
  number-crunching aspect of advising -- they pay
  for the conversation they have after the analysis
  is done. These online solutions will enable our
  advisors to spend more time with their
  customers. (Insurer)