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Managing e-Business


What s special about high technology? ... used for computer conferencing ... Software Group EMEA Server Group Global Services Sales & Distribution ... – PowerPoint PPT presentation

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Title: Managing e-Business

Managing e-Business High Technology
Week 1
  • Introduction
  • Module handbook
  • Plans for the semester
  • Overview of module content
  • Goals of the assignment
  • This week
  • Whats special about high technology?
  • How does it affect the way we Operate and
    Market?Example IBM in over 90 years
  • E-Commerce and E-Business

What has Technology done for us?
  • 1953
  • Middle-class salary 800
  • House-price in Midlands 3K
  • Small family car 800
  • lt14 Television (BW) 100
  • Radiogram (AM disc) 60
  • Computer (very slow) 300K
  • 10 record, per minute 6p
  • Pint of milk 2p
  • 2011
  • Comparable salary 18,000
  • House-price in Midlands 200K
  • Small family car 11K
  • 19 TV/DVD (TFT Colour) 125
  • FM/AM radio/CD (stereo) 50
  • Computer (much faster) 280
  • Music CD, per min. 2-25p
  • Pint of milk 50p

We need to understand why these huge
discrepancies arise Globalization is part of
it, as is the cost of input commodities
There is a pattern
  • Labour-intensive products and services have
    stayed at fairly constant price in real terms
  • Manufactured goods have got cheaper because of
  • Improved efficiency (this greatly outweighs
    lower unit labour costs)
  • Reduced input content things are smaller and
  • Simplification of design tiny transistors
    replaced valvesthen one integrated circuit
    replaces millions of transistors mechanical
    components largely replaced
  • Mass production with increased degree of
  • Migration of other production to low-cost
  • Increasing share of GDP is intellectual property
  • Movies, CDs, software very cheap to reproduce

High Technology
  • The things that have dropped fastest in price are
    what I class as high technology
  • Television, radio, stereo
  • Computers and equipment including microprocessors
  • Cars and white goods, to the extent they are
  • Note that there is now global production of these
  • The same goes for services
  • Bank charges were significant until IT revolution
  • Mail Order companies used to take big admin
  • Photo processing is faster and cheaper (and in
  • Online brokers offer bargain dealing charges

High Technology Costs
  • Largely up front costs
  • Create and test the chip then print millions
  • Design, code and test the program then copy
  • Research and write the book, make the
  • Advantage to big players same costs, more
  • Especially if product is potentially global
  • Or can be given local features by software
  • Competitors need to make a better or cheaper
  • Causes feature creep as in Office Packages
  • Moores Law ever faster processors from Intel
    and AMD (is this why Apple abandoned Motorola?)
  • Lower price memory, TFT screens

Keeping up with the Tanakas
  • Product must meet market requirement
  • Need to exploit all opportunities for
  • Cost-reduction better yield, fewer inputs
  • Quality enhancement fewer problems for customer
  • USPs (real or otherwise)
  • You can be sure that your competitors
  • Have a new version under development
  • Will soon be able to undercut your price
  • (and there may be others preparing to enter the
  • You need to enhance margins or get a new version

So High Technology Companies...
  • Do best if they have a global market
  • Can be achieved through international alliances
  • Embrace change, to
  • Increase sales
  • Enter new markets
  • Cut costs
  • Seek a fast cycle time
  • New products developed before tail-off of old
  • Product or production improvements before
  • The conflict Need a global organization with
    ability to take quick decisions and deploy new
    ideas worldwide

Aside Dilbert Episode 2
  • This may be a good time to see Scott Adams
    perspective on managing a high-technology
  • In the first episode, they decided to call the
    new product the Gruntmaster 6000

IBM An International Business
  • Started in USA with machine for 1890 census
  • Applied punch card technology to Business
  • Introduced automated time-clocks
  • 1914 International Business Machines in Canada
  • 1922 Whole corporation renamed IBM, and started
    subsidiaries in most developed countries
  • Specialized in precision electro-mechanical
  • Butcher-scales, time-clocks, card sorters and
  • Bought electric typewriter company in 1930s
  • Biggest manufacturer of gears in the world by
  • US Government took action in 1950s to limit IBMs
    dominance of punch-card business

Years of Success
  • 1914-1950
  • Developed punch-card technology to dominate
    markets in most of 1st world (development almost
    exclusively in USA)
  • 1950s
  • Became major player in new electronic computer
  • Came under pressure for dominating punch card
  • Established global development and manufacturing
  • Invented systems engineers
  • 1960s
  • Bet the company on System/360 and succeeded
  • Developed must have memory technology
  • 1970s
  • Abandoned this memory technology for
  • Came under renewed Anti-trust Act pressure

Management System
  • Highly centralized Development
  • Laboratories in USA, Canada, UK, Germany, France,
  • All managed and funded by central Systems
    Development Division (SDD) in USA
  • National Sales Organizations
  • Able to respond to local opportunities
  • Paying royalties back to Corporate
  • Manufacturing distributed but managed centrally
  • Located to exploit skills and market
  • and to keep IBM balance of trade approximately
  • Example, Large computers in France, medium in UK

International Structure
  • Marketing and Manufacture managed by region
  • Domestic (US) operations
  • World Trade initially dealt with the rest of
    the world
  • then AFE (Americas/Far East) Europe ME Africa
  • then AFE split into Latin America, Canada and FE
  • EMEA largely decentralized now
  • Development remained a Corporate responsibility
  • Divisions handled particular product lines, e.g.
  • Small mainframes in UK, D, CDN and Endicott NY
  • Big mainframes based in Poughkeepsie NY
  • Research in Yorktown NY, Almaden CA, Zurich CH
  • Strong interdependence between laboratories

Strong Control Brave Decisions
  • Mid-50s switched from punched-card equipment to
    electronic computers
  • IBM was dominant in punched card, not in
  • 1971 ditched magnetic memory in favour of chips
  • IBM was most efficient producer of magnetic cores
    (competitors all licensed the IBM patents)
  • Pre-emptive strikes against technology
  • Alas, didnt do the same in the 80s
  • PC developed on a shoestring
  • Not integrated into Corporate strategy
  • Grossly underestimated competence of Microsoft

  • 1970sThreat of Anti-trust action led to
    separation of Divisions
  • Large Systems Smaller Systems Office Products
  • Consequence was duplication of development and
    marketing effort, and increasing cycle time
  • But still appreciated risk posed by Apple II in
  • 1980 to 1995
  • Further separation of divisions into Lines of
    Business (an extra layer of management)
  • PC developed outside traditional structure
    incompatible with IBM systems and dependent on
  • Underestimated quality and market-awareness of
    Microsoft (Windoze was much faster than IBMs

1990s Recovery
  • Recognized value of customers investment in
    mainframe software and systems
  • New focus on Servers mainframe and mid-range
    embraced Web Services
  • Major effort to reduce mainframe cost of
    ownership(already lower than PC equivalent,
    similar to Unix)
  • Developed new family of C-MOS processors
  • Software focus on parallelism and management
    tools to conceal complexity
  • Virtual organizations for collaborative
  • PCs concentrated on Corporate niche
  • Bought Lotus and developed the Notes line
  • Too late to beat Microsoft abandoned OS/2 and
    started pushing Windows NT as associate for

Parallel Sysplex Development
  • The problem
  • Mainframe technology (ECL) fast, but hot and
  • Not competitive with PC technology (CMOS)
  • The solution
  • Build collections of CMOS chips working in
  • Find some way to make them run existing
  • Logistics
  • Boeblingen in Germany was brilliant at CMOS chips
  • Poughkeepsie could integrate mainframes
  • Hursley could make CICS efficient on new hardware
  • Santa Teresa and Toronto could fix up the

you dont need to know these are Emitter
Coupled Logic and Complementary Metal Oxide
How do you communicate?
  • Used to be hierarchical, backed up with Executive
  • Later meetings video-recorded and played in
  • Education was by
  • Classroom-based technical and management
    education (local, national and regional major
    centre in Belgium)
  • On-line instruction and reference services
  • Written communication from 1980 by PROFS
  • E-mail, calendars, document sharing and
  • Extended to virtual notice-boards, online forms
  • Based on VM/370 terminal and proprietary network
  • Same hardware used for computer conferencing
  • From 1995, moved on to PCs and Internet protocols

Dynamic Workplaces
  • This was the subject of an IBM/Lotus seminar in
  • Concept is that the nature of work is changing
  • Less geographically determined
  • Involves more and changing professional
  • Personal goals are becoming more of a constraint
  • Geography and hierarchies are less constraining
  • This is largely driven by technology
  • Mobile phones and the mobile office
  • Hot-desking when you are in the office
  • Internet and distributed access to corporate data
  • Ability to get work done in a different time-zone
  • Impact of broadband only just being seen

More later
Big evolution Big Pay-Off
  • Benefits to Employee(from 2002 IBM
  • Benefits to IBM
  • e-learning over 350 million in 2001
  • Customer self-serviceover 700M
  • Blue Pagesestimated 10M
  • Consolidating News Sources 2M
  • HR Process Reengineeringreduced costs by 40
    and increased satisfaction to 92
  • e-Workplace Key tool to changing the culture of

Sites on Portal reflect a Federation Model
e-Commerce and e-Business
  • IBM is in the business of making high-tech
  • But any business can depend on technology
    whatever its product
  • Either by how you make it Computer Integrated
    Manufacturing, Supply Chain Management
  • Or by how you market it
  • Or by how you sell it e.g. by e-commerce
  • Or how you run the organization Enterprise
    Resource Planning, electronic HR
  • Can also allow loose federations to function as a
    virtual organization
  • These will be key considerations over the next 11

  • This consists of two assignments, both based on
    an organization you choose to study
  • The organization can be a real one, ora start-up
    company you propose and describe
  • No two students will study the same company or
  • Eric will maintain a list make your bids as soon
    as you can
  • Each assignment carries 50 of the module mark
  • Dont worry about stealing the thunder of your
    second assignment in the first

Assignment 1 Due date 6 May 2011
  • Assignment takes the form of an initial business
    proposal for one of the following
  • a start up e-business company,
  • introduction of a high-technology product, or
  • introduction of e-business activities to an
    existing company
  • You will need to come up with a suitable
  • Write enough to explain what is proposed
  • Analyse the opportunity, risks and capital
  • The assessment is concerned with your ability to
    analyse the business-case, rather than with the
    quality of the innovative idea itself
  • Needs handing in BEFORE the lecture!

Assignment 2 Due 6 June 2011
  • You need to prepare and write a detailed plan for
    deploying the change you proposed, into the same
    existing or start up e-business company
  • Assessment criteria concentrate on your
    understanding of the issues involved in managing
    high-technology ventures, and the logic and
    clarity of your analysis
  • If you are not around to hand in the assignment
    in person, please make sure you use recorded
    delivery and that the package is postmarked on or
    before the due date
  • Or you could arrange electronic submission on the