E-Business and E-Commerce Fundamentals Knowledge - There are a range of definitions of e-business. Damanpour (2001), for example, defines e-business as any ‘net’ business activity that transforms internal and external relationships to create value and exploit market opportunities driven by new rules of the connected economy. The Gartner Advisory Group (Damanpour, 2001), a research and advisory services firm, describes e-business in terms of a quantity rather than an absolute state of a company. They consider a business an e-business to the degree that it targets the market opportunities of conducting business under new electronic channels, which revolve around the Internet. This is an acknowledgement that e-business comes in many forms and can be implemented to a very small or a large degree. It is also an acknowledgement that the ‘Internet’ is an essential component of an e-business strategy.
1.5 e-Business in construction
The uptake of e-business in the construction industry has been relatively limited and ineffective as compared to other engineering sectors such as the automotive or the aerospace industry. e-Business has the potential to overcome some of the process and communication inefficiencies. Some of the common construction e-business trends include:
Table 1.2 Potential benefits of e-business to construction organizations
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Laudon and Laudon’s (2002) definition of e-business, as the use of the Internet and other digital technology for organizational communication, coordination and the management of the firm, encompasses these different adaptations. In the broadest possible terms, however, e-business is an electronic way of doing business. The fact that the value proposition of e-business includes the creation of new market opportunities through electronic channels, should not be ignored as these electronically channelled market opportunities enable companies to lower transaction costs, reduce delivery times, improve customer services, and add convenience (Damanpour, 2001). In this context, e-business is defined broadly as the conduct of construction business by electronic means. This fits with broad definitions of the term ‘e-commerce’ exemplified by the definitions below:
The Organization for Economic Cooperation and Development (OECD):
Taxonomy for e-business
e-Business can be broadly divided into the following categories as illustrated in Figure 1.1:
Business-to-Business (B2B)
Business-to-Business (or B2B as it is commonly referred to) is an electronic means of carrying out business transactions between two or more businesses. B2B incorporates everything from manufacturing to service providers There are several examples of B2B models. Using B2B a company can leverage the Internet to place orders electronically, receive electronic invoices and make electronic payments.
Consumer-to-Consumer (C2C)
Examples of C2C business models include, consumer e-auctions and blogs. In a C2C business model, although there may be no financial transaction, there is still an exchange of value and these are economic activities and could be referred to as peer-to-peer (Timmers, 2000). Blogs, for example, have led to the development of news C2B and C2C applications by presenting the opportunity and tools for virtually anyone to express their views easily and to communicate these globally and inexpensively. For instance, Nano-publishing is an application of C2C (and C2B) schemes using low cost online publishing techniques such as blogging (writing weblogs) to target a specific audience. Additionally, Podcasting, video casting, and other blog-related technologies help to provide opportunities to develop new economic systems and to generate alternative revenues.
Administration-to-Administration (A2A)
Using the A2A model, government departments can nationally and or internationally communicate and exchange classified information through dedicated portals. Typical examples include the national DNA database and other policing information.
Business-to-Consumer (B2C) or Consumer-to-Business (C2B)
In a B2C model, commercial transactions are between an organization and the consumers (Chaffey, 2002). When applied to the retail industry, for instance, a B2C process will be similar to the traditional method of retailing, the main difference being the medium used to carry out business – the Internet. Such a method of carrying out business transactions assumes that the consumer has access to the Internet. By selling direct to customers or reducing the number of intermediaries, companies can achieve higher profits while charging lower prices (Laudon and Laudon, 2002). This removal of intermediary organizations or business process layers is termed disintermediation. Some examples of the B2C category include Amazon.com and eBay. C2B on the other hand, is a business model in which consumers offer products and services to companies at a cost. This business model is a reversal of traditional business model where companies offer goods and services to consumers. Online surveys such as Surveys.com, and Survey Monkey, are typical examples of C2B models, where individuals offer the service to reply to a company’s survey and in return the company pays the individual for their service.
Business-to-Administration (B2A) or Administration-to-Business (A2B)
The B2A category covers all transactions that are carried out between businesses and government bodies using the Internet as a medium. This category has steadily evolved over the last few years. An example of a B2A model, is that of Accela.com, a software company that provides round the clock public access to government services for asset management, emergency response, permitting, planning, licensing, public health, and public works. A2B is an electronic means of providing business-specific information such as policies, regulations directly to the business. A typical example of the A2B category is construction e-tendering solutions that enable potential construction stakeholders to bid for government-led projects such as the 2012 London Olympics, using online tendering tools.
Consumer-to-Administration (C2A) or Administration-to-Consumer (A2C)
The C2A and A2C categories have emerged in the last decade. C2A examples include applications such as e-democracy, e-voting, information about public services and e-health. Using such services consumers can post concerns, request feedback, or information (on planning application progress) directly from their local governments/authorities. A2C provides a direct communication link between governments (e.g. local authority) and consumers. The HM Revenue and Customs Website, for example, allows consumers to directly fi le tax returns using a secure Website. Other examples are those of local council and civic service Websites that inform the general public about community events, road closures, and other activities that impact the community and public services.
1.3 The four faces of e-business
Damanpour (2001) discusses the four faces of e-business, which were originally identified by the Gartner Advisory Group each of which looks at e-business from a different perspective (Figure 1.2). The four faces include the following:
1.4 e-Business models
The Internet has changed the ways in which companies manage businesses. Traditionally, for example, if a car buyer required information about a car, it would mean several visits to car dealer showrooms (Figure 1.3). Cost comparison, in such instances was complicated as the potential buyer would invest considerable time and effort to visit each dealer. Such models relied on the physical location of the supplier and buyer and quite often businesses were ‘localized’ in their clientele. The e-business models extend the traditional boundaries beyond the physical location to potentially global markets (Figure 1.4). Onestopcaradvice.co.uk, for example, allows users to search for used and new cars from a wide selection of franchised car dealers and second hand car dealers across the United Kingdom. So the buyer can now compare and contrast car prices and specifications and shortlist/select those that best fi t their specifications.
Tabel 1.1 Examples of e-business models
The Organization for Economic Cooperation and Development (OECD):
- The electronic exchange of information that support and govern commercial activities including organizational management, commercial management, commercial negotiations and contracts, legal and regulatory frameworks, financial settlement arrangements and taxation’
- Learnthat (2004): e-Commerce is not just about buying and selling online, but also includes all forms of business activities that are conducted over the Internet (e.g. the business-to-business flow of information between companies or within a company, communication between businesses, online advertising, etc.).
- Kalakota and Whinston (1997): e-Commerce at its grass root level can be described as an electronic method of doing business, typically over the Internet. Broadly defined, however, ‘e-commerce is a modern business methodology that addresses the needs of organizations, merchants and consumers to cut costs while improving the quality of goods and services, and increasing the speed of service delivery.
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| image source: www.e-commercenotes1.cf |
e-Business can be broadly divided into the following categories as illustrated in Figure 1.1:
- Business-to-Business (B2B)
- Consumer-to-Consumer (C2C)
- Administration-to-Administration (A2A)
- Business-to-Consumer (B2C) or Consumer-to-Business (C2B)
- Business-to-Administration (B2A) or Administration-to-Business (A2B)
- Consumer-to-Administration (C2A) or Administration-to-Consumer (A2C)
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| Figure 1.1 e-Business taxonomy |
Business-to-Business (or B2B as it is commonly referred to) is an electronic means of carrying out business transactions between two or more businesses. B2B incorporates everything from manufacturing to service providers There are several examples of B2B models. Using B2B a company can leverage the Internet to place orders electronically, receive electronic invoices and make electronic payments.
Consumer-to-Consumer (C2C)
Examples of C2C business models include, consumer e-auctions and blogs. In a C2C business model, although there may be no financial transaction, there is still an exchange of value and these are economic activities and could be referred to as peer-to-peer (Timmers, 2000). Blogs, for example, have led to the development of news C2B and C2C applications by presenting the opportunity and tools for virtually anyone to express their views easily and to communicate these globally and inexpensively. For instance, Nano-publishing is an application of C2C (and C2B) schemes using low cost online publishing techniques such as blogging (writing weblogs) to target a specific audience. Additionally, Podcasting, video casting, and other blog-related technologies help to provide opportunities to develop new economic systems and to generate alternative revenues.
Administration-to-Administration (A2A)
Using the A2A model, government departments can nationally and or internationally communicate and exchange classified information through dedicated portals. Typical examples include the national DNA database and other policing information.
Business-to-Consumer (B2C) or Consumer-to-Business (C2B)
In a B2C model, commercial transactions are between an organization and the consumers (Chaffey, 2002). When applied to the retail industry, for instance, a B2C process will be similar to the traditional method of retailing, the main difference being the medium used to carry out business – the Internet. Such a method of carrying out business transactions assumes that the consumer has access to the Internet. By selling direct to customers or reducing the number of intermediaries, companies can achieve higher profits while charging lower prices (Laudon and Laudon, 2002). This removal of intermediary organizations or business process layers is termed disintermediation. Some examples of the B2C category include Amazon.com and eBay. C2B on the other hand, is a business model in which consumers offer products and services to companies at a cost. This business model is a reversal of traditional business model where companies offer goods and services to consumers. Online surveys such as Surveys.com, and Survey Monkey, are typical examples of C2B models, where individuals offer the service to reply to a company’s survey and in return the company pays the individual for their service.
Business-to-Administration (B2A) or Administration-to-Business (A2B)
The B2A category covers all transactions that are carried out between businesses and government bodies using the Internet as a medium. This category has steadily evolved over the last few years. An example of a B2A model, is that of Accela.com, a software company that provides round the clock public access to government services for asset management, emergency response, permitting, planning, licensing, public health, and public works. A2B is an electronic means of providing business-specific information such as policies, regulations directly to the business. A typical example of the A2B category is construction e-tendering solutions that enable potential construction stakeholders to bid for government-led projects such as the 2012 London Olympics, using online tendering tools.
Consumer-to-Administration (C2A) or Administration-to-Consumer (A2C)
The C2A and A2C categories have emerged in the last decade. C2A examples include applications such as e-democracy, e-voting, information about public services and e-health. Using such services consumers can post concerns, request feedback, or information (on planning application progress) directly from their local governments/authorities. A2C provides a direct communication link between governments (e.g. local authority) and consumers. The HM Revenue and Customs Website, for example, allows consumers to directly fi le tax returns using a secure Website. Other examples are those of local council and civic service Websites that inform the general public about community events, road closures, and other activities that impact the community and public services.
1.3 The four faces of e-business
Damanpour (2001) discusses the four faces of e-business, which were originally identified by the Gartner Advisory Group each of which looks at e-business from a different perspective (Figure 1.2). The four faces include the following:
- Face 1: Business and Financial Models Perspective – This face focuses on the business model and opportunities that operate as an electronic entity. Financial considerations such as reduced costs and operations efficiency are primary considerations. Such a model regards technology as an enabler of the business opportunity and sometimes requires changes in the corporate culture, financial accounting guidelines, and the corporate image. The model can be used for an existing company (brick-and-mortar), a new spin-off from brick-and-mortar, or a small unknown start-up (e.g. amazon.com when it was first launched).
- Face 2: Relationships – This face looks at e-business from a relationship perspective as new relationships and collaborations are created and forged in e-business to enter new markets or enhance customer, supplier and business relations. Some examples of the relationship perspective are customer relationship management (CRM), supply chain management (SCM) and Infrastructure management. For example, the traditional ordering and invoicing processes can be managed electronically. Electronic marketplaces, catalogues and bidding systems, and Internet searches can transform business demean our, accelerate business activities, increase global competition, create global logistics networks, provide improved customer relationships, cost-effective services, and speed up goods and information delivery down the entire supply chain.
- Face 3: Commerce – This face focuses on electronic buying and selling, which requires the development of systems, services, models, and relationships to support effective buying and selling. Face 3 overlaps other three faces and emphasizes the importance of technology to business success and customer demands by leveraging the capability of the Internet to reach global buyers around the clock.
- Face 4: Responsiveness – This face is centered on the efficiency and timing of business transactions. Responsiveness, in e-business terms, means reducing the time between a business request and its fulfillment by increasing efficiency of the delivery of processes and their supporting computing systems for seamless operations to provide fulfillment. For example, the direct connection of a rent-a-car automobile request system to insurance companies results in improved efficiency, reduction of errors, and hence customer satisfaction.
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| Figure 1.2 Four faces of e-business. (Source: Adapted from Damanpour, 2001) |
The Internet has changed the ways in which companies manage businesses. Traditionally, for example, if a car buyer required information about a car, it would mean several visits to car dealer showrooms (Figure 1.3). Cost comparison, in such instances was complicated as the potential buyer would invest considerable time and effort to visit each dealer. Such models relied on the physical location of the supplier and buyer and quite often businesses were ‘localized’ in their clientele. The e-business models extend the traditional boundaries beyond the physical location to potentially global markets (Figure 1.4). Onestopcaradvice.co.uk, for example, allows users to search for used and new cars from a wide selection of franchised car dealers and second hand car dealers across the United Kingdom. So the buyer can now compare and contrast car prices and specifications and shortlist/select those that best fi t their specifications.
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| Figure 1.3 Traditional buyer–supplier environment |
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| Figure 1.4 Buyer–seller relationship in an e-business environment |
Tabel 1.1 Examples of e-business models
The uptake of e-business in the construction industry has been relatively limited and ineffective as compared to other engineering sectors such as the automotive or the aerospace industry. e-Business has the potential to overcome some of the process and communication inefficiencies. Some of the common construction e-business trends include:
- Service promotions: The Internet is being used to promote companies by the dissemination of company service information. Architects, designers, fabricators contractors, and other members of the construction sector are using the Web to promote their companies and inform potential clients of their services.
- Product promotion: The Internet is used for the purpose of increasing product sales through online promotion. Product promotion is done either through an independent Website or through an online vendor. Such a product promotion site displays all product and material specifications that can include manufacturer and supplier details, product availability, quality assurance, cost and mode of delivery
- e-Procurement through Web directories and search engines: Some of the principal methods of locating information on the Web are with the help of search engines, Web directories, and broadcast or ‘push’ technology (Laudon and Laudon, 2002).
- Project management: Some Websites are designed to streamline the construction business process. These sites look into how the Internet can be used to improve and integrate the process of design and management of a construction project.
- Project collaboration: The Web can be used as a tool to facilitate online collaboration for project partners, which allows project partners to collaborate and communicate with each other in real time. The concept of online collaboration defines the boundaries of time and geography and allows construction stakeholders to among other things, exchange ideas, and make comments no matter where they are located.
- Online tendering: The Internet has now made it possible to have online tendering services. With this facility it is possible to provide tendering information online along with project specifications.
Table 1.2 Potential benefits of e-business to construction organizations
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