imchapter15.docx

imchapter15.docx

《imchapter15.docx》由会员分享，可在线阅读，更多相关《imchapter15.docx（11页珍藏版）》请在冰豆网上搜索。

imchapter15

Chapter15

EconomicsandJustification

OfElectronicCommerce

LearningObjectives

Uponcompletionofthischapter,youwillbeableto:

1.DescribetheneedforjustifyingECinvestments,howitisdone,andhowmetricsareusedtodeterminejustification.

2.UnderstandthedifficultiesinmeasuringandjustifyingECinvestments.

3.Recognizethedifficultiesinestablishingintangiblemetricsanddescribehowtoovercomethem.

4.ListandbrieflydescribetraditionalandadvancedmethodsofjustifyingITinvestments.

5.Understandhowe-CRM,e-learning,andotherECprojectsarejustified.

6.DescribesomeeconomicprinciplesofEC.

7.Understandhowproduct,industry,seller,andbuyercharacteristicsimpacttheeconomicsofEC.

8.RecognizekeyfactorstothesuccessofECprojectsandthemajorreasonsforfailures.

Content

JustifyingInvestmentinITandECat

CaliforniaStateAutomobileAssociation

15.1WhyJustifyE-CommerceInvestments;HowCanTheyBeJustified?

15.2DifficultiesinMeasuringandJustifyingE-CommerceInvestments

15.3MethodsandToolsforEvaluatingandJustifyingE-CommerceInvestments

15.4ExamplesofE-CommerceProjectJustification

15.5TheEconomicsofE-Commerce

15.6FactorsThatDetermineE-CommerceSuccess

15.7OpportunitiesforSuccessinE-CommerceandAvoidingFailure

ManagerialIssues

Real-WorldCase:

JustifyingECandIT

InvestmentintheStateofIowa

AnswerstoPause/BreakSectionReviewQuestions

Section15.1Review

1.ListsomeofthereasonsforjustifyinganECinvestment.

JustifyinganECinvestmentmeanscomparingthecostsoftheprojectagainstitsbenefitsinwhatisknownasacost-benefitanalysis.

2.DescribetherisksofnotconductinganECjustificationstudy.

However,evenwhenformalanalysisisnotrequired,anorganizationshouldhavesomequalitativeanalysistoexplainthelogicofinvestingintheECproject.

3.DescribehowanECinvestmentisjustified.

Metricsareusedtodescribecosts,benefits,ortheratiobetweenthem.Theyareusednotonlyforjustification,butalsoforothereconomicactivities（e.g.,tocompareemployeeperformanceinordertorewardspecificemployees）.

4.ListthemajorECinvestmentcategories.

OnebasicwaytocategorizedifferentECinvestmentsistodistinguishbetweeninvestmentininfrastructureandinvestmentinspecificECapplications.

5.WhenisjustificationofECinvestmentsunnecessary?

∙Whenthevalueoftheinvestmentisrelativelysmallfortheorganization

∙Whentherelevantdataarenotavailable,inaccurate,ortoovolatile

∙WhentheECprojectismandated—itmustbedoneregardlessofthecostsandbenefitsinvolved

6.Whataremetrics?

Whatbenefitsdotheyoffer?

Ametricisaspecific,measurablestandardagainstwhichactualperformanceiscompared.

Section15.2Review

1.Howdoorganizationsmeasureperformanceandproductivity?

Whatarethedifficultiesinmeasuringperformanceandproductivity?

OneofthemajorbenefitsofusingECisincreasedproductivity.However,productivityincreasesmaybedifficulttomeasureforanumberofdifferentreasons.

2.WhyisitdifficulttorelateEC（IT）investmentstoorganizationalperformance?

Listthemajorreasons.

Data,ortheanalysisofthedata,mayhideproductivitygains.Whyisthis?

Formanufacturing,itisfairlyeasytomeasureoutputsandinputs.

3.Definetangiblecostsandbenefits.

Tangiblecostsarethosethatareeasytomeasureandquantifyandthatrelatedirectlytoaspecificinvestment.

4.DefineintangiblecostsandbenefitsandexplainwhytheymustbeconsideredwhenjustifyinganITinvestment.

Intangiblecostsmayincludethelearningcurveofthefirm’scustomerserviceemployeestoincorporateanECsystemtorespondtocustomerinquiries.

5.Whyisitdifficulttomeasurethevalueofintangiblebenefits?

TheproblemsofmeasuringintangiblecostsandbenefitsbecomemorecomplexascompaniestrytojustifylargeinvestmentsinECbecauseofthespecialcharacteristicsofEC.

6.Describeasimpleapproachtotheintangiblesproblem.

Studentresponsesmayvary.

7.Howshouldmanagementhandletheuncertaintiesofbenefits?

Thetextprovidesamodelonpage691fromA（2006）andBaseline（2006）.

Section15.3Review

1.ListtheitemsthatconstitutethebusinessROIandthetechnicalROIforanECportalapplication.

BusinessROIrelatestotheECinvestmentbenefitsincurredfortheimprovementofthebusinessanditsoperations.TechnologyROIrelatestotheECinvestmentbenefitsincurredbyimprovementsintheintegrationoftechnologyanditsdeployment.

2.Whatarethecomponentsofthebalancedscorecard?

Thismethodevaluatesthehealthorperformanceoftheorganizationbylookingatabroadsetoffactors,notjustfinancialones.ItisbecomingapopulartoolforassessingECprojects.

3.WhatareROIcalculators?

VendorsandtheconsultingcompanieshaveaccumulatedquiteabitofexperienceindevelopingmetricsandtoolscalledROIcalculatorstoevaluateinvestments.

4.DifferentiatebetweenbusinessandtechnologyROI.

TechnologyROIisgenerallymoredifficulttocalculateasITresourcesgenerallybenefitmultipleinitiatives.

5.DescribetheTCOandTBO.

TotalCostofOwnershipevaluatesthesumofthecostsofowning,operatingandcontrollinganITsystemwhereastheTotalBenefitsofOwnershipsumsthetangibleandintangiblebenefitsofanITsystem.

Section15.4Review

1.Listfivesuccessfactorsfore-procurement.

E-procurement（seeChapter5）isnotlimitedtojustbuyingandselling;italsoencompassesthevariousprocessesinvolvedinbuyingandselling:

selectingsuppliers,submittingformalrequestsforgoodsandservicestosuppliers,gettingapprovalfrombuyers,processingpurchaseorders,fulfillingorders,deliveringandreceivingitems,andprocessingpayments.

2.Listfiveperformancemetricsfore-procurement

Seetable15.1.

3.Listthreetangibleandthreeintangiblebenefitsofe-CRM.

∙Reducethecostofsales.

∙Reducesalesadministrationoverhead.

∙Improvethelead-to-saleclosureratio.

∙Increasecustomerretention.

∙Improvecustomersatisfactionandloyalty.

4.Listsomemetricsthatcanbeusedtojustifye-training.

End-usertrainingthathelpsemployeesacquireorimprovetheirITskillsplaysakeyrole

inensuringthesmoothoperationoforganizationsintheinformationeconomy.

5.HowisthecostofSOXcalculated?

Baselinecalculatesthiscostbyexaminingindividualcomponents.AnexampleisavailableinExhibit15.9

Section15.5Review

1.HowcanECenhanceincreasingreturnsinabusiness?

（Hint:

consultroi-.）

Althoughproducersmayhaveinitialincreasingeconomiesofscale,theyeventuallyreachapointwherecostsincreasefasterthanrevenueswhentheyproducemoreoftheproduct,andadditionalproductionbecomeslessandlessprofitable

2.HowdoesECimpacttheproductioncostcurve?

Theproductionfunction,showninExhibit15.11,representsamathematicalformulathatindicatesthatforthesamequantityofproduction,Q,companieseithercanuseacertainamountoflabororinvestinmoreautomation

3.Definetransactioncosts.ListsomeexamplesandexplainhowECcanreducesuchcosts.

Transactioncostscoverawiderangeofcoststhatareassociatedwiththedistribution（sale）and/orexchangeofproductsandservices.

4.HowcanECbeusedtoincreaserevenues?

AnorganizationcanuseECtoincreaserevenuesthroughonlinestorefronts,auctions,cross-sellingopportunities,multichanneldistributionarrangements,andsoon.

5.Whatarethebenefitsofincreasingreach?

HowcanEChelp?

Themorecustomersacompanywantstoreach,thefewerservicesitcanprovidetothem.WithEC,thecurvecanbeshiftedoutward.

6.Howcanorganizationsreducepsychologicalrisk?

PsychologicalriskscanbereducedbyallowingthecustomertoutilizeanEC-basedcalculatorandavoidpotentiallyembarrassingsituations.

7.ExplaintheimpactofEConproductdifferentiationandagility.

ECcanbeexploitedtoprovidegreatervaluetocustomersbyenablingproductdifferentiation.

8.Definevaluation.WhyisitsohighforsomeECstartups?

Valuationistheprocessoftryingtodeterminethevalueorworthofacompany.Itisdoneforthepurposeofsellingacompanyordeterminingitsvalueforaproposedmerger.IntheECcontext,valuationoftenisconductedtodetermineareasonableIPOpricewhenacompanygoespublic.

9.Howcanacompanydecidewhiche-marketplacetojoin?

Hopkins&Kehoe（2006）suggestaneconomicsbasedapproachtoevaluatethebenefitsandpotentialentrantstoamarketplace.

Section15.6Review

1.DescribeproductcharacteristicsinEC.

Digitizableproducts,suchassoftware,documents,music,andvideos,areparticularlywellsuitedfore-marketsbecausetheycanbedistributedtocustomerselectronically,resultingininstantdeliveryandverylowdistributioncosts.

2.DescribepricingissuesinEC.

Aproduct’spricemayalsobeanimportantdeterminantofitssuccess.Thehighertheproductprice,thegreaterthelevelofriskinvolvedinthemarkettransactionbetweenbuyersandsellerswhoaregeographicallyseparatedandwhomayhaveneverdealtwitheachotherbefore.

3.WhatareindustrycharacteristicsinEC?

Electronicmarketsaremostusefulwhentheyareabletomatchbuyersandsellersdirectly.

4.WhataresellercharacteristicsinEC?

Electronicmarketsreducesearchcosts,allowingconsumerstofindsellersthatofferlowerpricesand/orbetterservice.

5.WhatareconsumercharacteristicsinEC?

Consumerscanbeclassifiedasimpulse,patient,oranalytical.Electronicmarketsmayhavelittleimpactonindustriesinwhichasizablepercentageofpurchasesarem