Web bases strategies - A presentation from Dr. Lakshmi Mohan's class

1. Rethinking the Internet 1. The Web In Perspective - Cuts Interaction Costs 2. Where is the Value for “Brick-and-Mortar” Companies? - IBM, Herman Miller 3. High-Value Applications - Customer Self-Service: Cisco, U. S. Govt. – Income Tax Dept. - Human Resources On-line: Cisco, Dell - Know Your Customers Better: P&G 4. Customised Products: Land’s END, Dell 5. Customer Contact Through E-mail: Schwab 6. The “Moo-Economy”: Impact on Agriculture 7. Create E-Communities: King Arthur Flour Case example 8. Trends to Watch: - Wireless CRM - Speech Recognition - Web Services 9. The “New” Business Lens

2. Technology In Perspective Pre-1980 : Mainframes, Minicomputers - Expensive, Remote 1980s : PCs - Desk-top computing at an affordable price 1990s : Internet, World Wide Web - ”Any-to-any” connectivity at a low cost Post-Web : Wireless Net, Peer-to-Peer

6. Today . . . . . Transaction Costs Are Crashing Virtual Integration - Unbundle functions to Customers, Suppliers & Partners “ It enables you to have more specialization... You will get more small firms as a result, but large firms will get larger, because they can concentrate on core activities.” - Ronald Coase in a telephone interview to “The New York Times”, October 2000.

10. IBM Getting Smarter Too ...... IBM has a contract with supplier, ABC Corp., for PC motherboards. IBM asks ABC to zap a list of all the chips that go into that product along with names of ABC’s suppliers and the prices ABC pays them. IBM has wired 12,000 such Tier II suppliers (suppliers of IBM’s suppliers) to IBM’s network. All the information from these Tier II suppliers is stored in a data warehouse along with IBM’s own information on what IBM pays for every chip or part that IBM uses to make other products. Using data-mining software, if IBM finds that it uses the same chip X as ABC but pays less to the Tier II supplier of chip X, it will approach that supplier to demand that ABC get the same price as IBM. ABC has to then pass the savings to IBM since IBM got the Tier II supplier to reduce the price for ABC.

12. The SQA Division was founded in 1995 “ Simple, Quick, Affordable” Office Furniture - New Market : Smaller Companies (5-150 employees) IT made it happen . . . . - Cut Costs Inventory Turns: 40 vs <20 for industry Order Entry Errors : Nil vs >20% - Cut faulty shipments - Fast Turnaround Design : 2 hours vs weeks/months Delivery : 3 days-2 weeks vs 6-8 weeks - 99% on-time SQA is now a blueprint for improving efficiency in the main company Total IT Investment : $500 Million in 5 years

13. IT is the Key to SQA - Getting Orders - Special 3D design software for the laptop for use by 1,200 salespeople - Customer can select styles, colors, configurations - Each variant can be seen in 3D - Software also give the prices - Salesperson transmits customer’s order via the Web to factory

17. Customer Self-Service - A “MUST-DO” Extranet Application 1. On-line Ordering - Product Configurator to get order right and price options - Check status of pending orders - Update service contracts 2. 24x7 After-Sales Support - Get answers to questions - Diagnose problems and provide expert solutions

25. Savings from HR Self-Service - Not Just Cost But Also Time 1. HEWLETT-PACKARD - Put HR Policies on Web - Cost to print, shrink-wrap, package and ship 600-page volume to 14,000 managers in U.S. - $130,000 - Today : 100,000 global employees; Cost - $200 2. SUN Microsystems – Expense Reporting - 27,000 employees submit 150,000 reports a year - $25 cost to process each report - Saved $3.6 million from Web application - Time: 5 days before vs. 2 days now to get reimbursed

27. Cisco: E-Learning - Cisco’s online sales : 75% to retailers or “ channel partners”; 25% direct to huge, sophisticated consumers - Objective : Faster learning at reduced cost Increased access to learning Keep up with change that occurs on Internet time - Cisco Interactive Mentor (CIM) offers an interactive learning approach through : Self-paced CD-ROM products Support and shared resources in a Knowledge Community site Technical competency in networks is increasingly critical to a corporation’s success. CIM helps our customers and partners quickly build and refresh their networking knowledge base to optimize performance and maximize availability from their network

28. Knowledge Management - Stealth Learning at Dell We try to put knowledge on the critical path of people’s work….. In manufacturing, during a quality assessment for example, people can call up a tool to do a Pareto chart on-line. They don’t think they are going to school on quality. They just do it as they need for their work. It doesn't feel like training, but it is. That’s why we call it “Stealth Learning”………… … .We talk about the micro-bite, a chunk of knowledge about 5 minutes long, which we think is an ideal chunk to deliver………. … .. Give people what they need to know to do the work; learning embedded into the actual task ……. … .. No longer meaningful to measure hours of training given by HR or taken by the employee. - John Cone, VP of Dell Learning

37. Three Categories of Outgoing E-mails 1. Microcast Customized e-mails to 500,000 people e.g., “Full Closing Bell” service Gives end-of-day services and news abstracts on the positions customers hold and have on their watch lists

38. Three Categories of Outgoing E-mails 2. Narrowcast 1.2 M Customers have signed up to receive these e-mails e.g., A customer volunteers that she is interested in three topics: mutual funds, the basics of investing and Schwab’s CEO Speaker Series. She would then receive e-mail bulletins at every month-end with information on only these topics.

39. Three Categories of Outgoing E-mails 3. Broadcast All Schwab customers can potentially get them e.g., General interest announcements such as pricing changes and IPO announcements to eligible customers

69. The Benefit ... Before: Salespeople contacted Putman’s Publications dept. to mail research report to a client Publications dept. tracked down the desired report, packaged and mailed it Automatic routing of research reports via e-mail saves $500,000 a year on printing and e-mail costs alone. PLUS New process prompts trades that might not have been made Source: BusinessWeek, Mar.18, 2002

73. The New Business Lens...

74. The New Business Lens...

76. The End of “E-Business”?

77. Is E-Business Finally Living Up To Its Hype? Source: 2003 E-Business Survey of 512 companies published by CIO Insight 60 Closely Track the Value of E-B Efforts 70 Not Yet Tapped the Full Competitive Advantage of E-B 59 Significant Cost Savings 42 Revenues Have Significantly Increased % of Companies E-B Survey Finding

78. Evolution of E-Business Phase I : “Brochure ware” Phase II : Online Transactions & Order Status Tracking Phase III : Move Core Business Functions to a Web - Centric Model Deploy Web-based applications for: - Increasing revenues - Cutting costs - Enhancing customer service - Improving employee productivity

80. How Can E-B Provide A Competitive Advantage? 3. CUSTOMERS “ Customer self-service is really on the top of every company’s E-B wish list.” “ When you make available Web-based services to your customers, like order management or logistics, you completely transform your relationship from a buy/sell one to a service-based relationship.” 4. PROCESS “ The smart CIOs are the one who understand how to tightly link their E-B initiatives with their companies’ business processes to get ahead.” “ With E-B, you’re trying to unlock process innovation. Can we modify the business processes in order to take advantage of the Web’s capabilities? Otherwise, it’s like putting lipstick on a pig. If all you are doing is putting Web-based GUIs on antiquated business processes, what’s the point?”

81. In Conclusion ... We are in the middle of a 20-year march. We are just halfway there in terms of realizing the full potential of digital technologies to transform industry and commerce. We have only seen the beginning of the inter-enterprise efficiencies and customer relationships that are possible… Those who stay focused on innovative applications of new technologies to solve business problems will win big. - The CEO Challenge 2001 Survey