Page 41 - Introduction to Electronic Commerce and Social Commerce

18 1 Overview of Electronic Commerce and Social Commerce

The Apps Society Table 1.4 The digital versus brick-and-mortar company
New apps change the way that people communicate, work, and Brick-and-mortar Digital organizations
play. People are looking for apps for thousands of new uses. organizations (enterprises)
Selling in physical stores Selling online
Example: Swedish Farmers Go Online Selling tangible goods Selling digital goods online as well
According to Willgren (2013), traditional farmers in Sweden Internal inventory/production Online collaborative inventory
planning forecasting
created a social network called “Min Farm (My Farm).” The
Paper catalogs Smart electronic catalogs
network allows communication between the farmers and
Physical marketplace Electronic marketplace
their customers. It also allows people that grow their own
Use of telephone, fax, VANs, Use of computers, smartphones,
food to tell their stories and ask for advice. Customer can and traditional EDI the Internet, and extranets and EDI
visit farms and do some shopping there; they can also order Physical auctions, infrequently Online auctions, everywhere, any
online. The network promotes self-sustainability. time
Broker-based services, Electronic infomediaries,
transactions value-added services
The Digital Enterprise Paper-based billing and payments Electronic billing and payments
Paper-based tendering Electronic tendering (reverse
auctions)
One of the major impacts of EC is the creation of the digital
Push production, starting with Pull production, starting with an
enterprise concept that accompanies the social enterprise. demand forecasting order (build-to-order)
The term digital enterprise has several definitions. It Mass production (standard Mass customization,
usually refers to an enterprise, such as Amazon.com, products) build-to-order
Google, Facebook, or Ticketmaster, which uses computers Physical-based commission Affiliated, virtual marketing
and information systems to automate most of its business marketing
Word-of-mouth, slow and Explosive viral marketing, in
processes. The digital enterprise is a new business model
limited advertisement particular in social networks
that uses IT to gain competitive advantage by increasing
Linear supply chains Hub-based supply chains
employee productivity, improving efficiency and effective -
Large amount of capital needed Less capital needed for
ness of business processes, and better interactivity between for mass production build-to-order; payments can be
vendors and customers. The major characteristics of a digital collected before production starts
enterprise are listed in Table 1.4, where they are compared Large fixed cost required for Small fixed cost required for
with those of a traditional enterprise. See also Olanrewaju plant operation smaller and less complex plant
operation
et al. (2014).
Customers’ value proposition is Perfect match of customers’
Note that the term enterprise refers to any kind of organi- frequently a mismatch value proposition (cost ≤ value)
zation, public or private, small or large. An enterprise can be (cost > value)
a manufacturing plant, a hospital, a university, a TV network,
or even an entire city. They are all moving toward being
digitized. Smart and Intelligent Enterprise Systems
A digital enterprise uses networks of computers in EC to
facilitate the following: IBM is a leading force in developing smart (or intelligent)
computing systems (other companies include SAP, Intel,
• All business partners are reached via the Internet, or a Oracle, Google, and Microsoft). IBM provides software and
group of secured intranets, called an extranet, or value- knowledge to digital enterprises (including cities). See ibm.
added private communication lines. com/smarterplanet/us/en.
• All internal communication is done via an intranet, which
is the counterpart of the Internet inside the company. Smart Computing and Integrated Expertise
A major part of IBM’s project is based on cloud computing
Most companies’ data and EC transactions are done via (see Online Tutorial T2). The project created software for effi-
the Internet and extranets. Many companies employ a corpo- cient, easy to use and flexible computing systems that include
rate portal, which is a gateway for customers, employees, a built-in pattern of expertise. The integrated systems are
and partners to reach corporate information and to communi- known as “IBM PureFlex” and “IBM PureApplication.” For
cate with the company. details, see ibm.com/ibm/puresystems/us/en. These systems,
A key concern of many companies today is how to change per IBM, are changing the economics of computing by:
themselves into digital (or at least partially digital) enterprises.
The concept of the digital enterprise is related to the smart • Helping reduce time-to-market
and intelligent enterprise systems. • Conserving resources and reducing costs