Business Driven Information Systems 2e

CHAPTER 3
EBUSINESS

McGraw-Hill/Irwin

©2009 The McGraw-Hill Companies, All Rights
Reserved

SECTION 3.1

BUSINESS AND THE
INTERNET

McGraw-Hill/Irwin

©2009 The McGraw-Hill Companies, All Rights
Reserved

3-3

Amazon.com
• The “worlds biggest (virtual) bookstore” turned the industry upside down.
– There are no physical stores
– Comments and recommendations of buyers are captured, customer traffic is monitored all in an effort to evaluate buying and selling patterns and the success of promotions • It’s more than just a website, it’s an intelligent, global digital business.
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Personalized recommendations
Online customer reviews
1-click ordering
Amazon marketplace where customers sell their own items 3-4

DISRUPTIVE TECHNOLOGY
• How can a company like Polaroid go from $60 share in 1997 to $.08 a share in 2002 and eventual bankruptcy? They had a 50% market share with their instant camera.
– Using Porter’s Five Forces, they may have seen two threats: one-hour film processing and digital cameras

• Digital Darwinism – implies that organizations which cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction

3-5

Disruptive versus Sustaining
Technology
• What do steamboats, transistor radios, and Intel’s 8088 processor all have in common? – Disruptive technology – a new way of doing things that initially does not meet the needs of existing customers but tends to open new markets – Sustaining technology – produces an improved product in an established market that customers are eager to buy

3-6

Disruptive versus Sustaining Technology

3-7

Disruptive versus Sustaining Technology

3-8

Disruptive versus Sustaining Technology
• Disruptive technologies:
– Disruptive technologies redefine the competitive playing fields of their respective markets
– Disruptive technologies tend to open new markets and destroy old ones
– Disruptive technologies typically cut into the low end of the marketplace and eventually evolve to displace highend competitors and their reigning technologies

• Sustaining technologies:
– Sustaining technologies tend to provide us with better, faster, and cheaper products in established markets
– Sustaining technologies virtually never lead in markets opened by new and disruptive technologies

3-9

Disruptive versus Sustaining Technology
• The Innovator’s Dilemma - discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders
– Xerox, IBM, Sears and DEC all listened to their existing customers and invested aggressively in technology but still lost their dominant positions in the market. – Too much emphasis on satisfying the current needs of their customers rather than looking to meet the customers’ future needs

3-10

Companies that Capitalized on
Disruptive Technology

3-11

The Internet – Business Disruption
• One of the biggest forces changing business is the Internet
– Was this always the case?

• Organizations must be able to transform as markets, economic environments, and technologies change
• Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology

3-12

The Internet – Business Disruption
• There were 1 billion Internet users in 2005
• How will 2 billion additional Internet users change the competitive landscape for businesses over the next few years?
– Greater access to a larger number of customers – More competitors
– Location and distance becomes a smaller factor for businesses

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The Internet – Business Disruption
Estimates predict more than 3 billion Internet users by 2010

3-14

The Internet – Business Disruption
Estimates predict more than 3 billion Internet users by 2010

3-15

The Internet – Business Disruption
Estimates predict more than 3 billion Internet users by 2010

3-16

The Internet – Business