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| Spring 2007 |
Room | Time | Instructor: Howard Rosenbaum | Telephone: 855-3250 | Office hours | |||||
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| L001 | 5:45-8:30 PM T |  hrosenba@indiana.edu |
Office: 005B@SLIS | 12:30-2:00 M 3:30-5:30 PM T |
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| Where do great business ideas come from? | How do people develop new products and services? |
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| How do you write clear and persuasive business plans to promote your ideas to potential investors? | |
| How do you do this in the world of ebusiness? | |
| This is digital entrepreneurship and answering these questions is the focus of this course. | |
Background: An overview of ebusiness
A working definition of ebusiness focuses on the marketing and planning strategies, entrepreneurship, consumer behavior, and legal and regulatory policy issues related to the commercial development of the Internet. It includes at least the following:
Ebusiness over the Internet takes many forms, including:
Business on the web is in its second decade. What is the current state of electronic business? Since the beginning of the century, commentators and pundits have been competing to announce the most optimistic projections for the growth of ebusiness. For example, in 1999 Forrester Research analysts predicted that:
By 2004, online commerce will reach $6.8 trillion. This huge amount comprises Forrester's projection for both business-to-business and business-to-consumer transactions online.1
In 2003, Forrester revised their forecast for 2003-2008 and predicted that there would be:
A 19% compound annual growth rate overall (Forrester, US ebusiness Overview: 2003-2008, July 25, 2003). Compared with the explosive growth of 1997 to 2002, growth will slow, but nothing could match the heady days of going from a small base to a large one. Forrester sees two key trends impacting rates: "a growing and maturing online shopper base", and "retail site improvements." They cite the growth of home broadband and diversification of types of online purchasing as experienced shoppers become more and more comfortable with the channel.2
Here's another perspective:
Raising its estimates for internet e-commerce, eMarketer's newly released ebusiness: B2B Report forecasts that worldwide business-to-business activity will grow to $2.7 trillion by 2004, an increase from the $226 billion reported at year-end 2000.3
So now it's 2007 and what has happened?
This chart, from the Department of Commerce (2006), shows that retail ebusiness sales have risen steadily since 1999, the first year that sales were tracked. In the quarter before the recent holiday season, consumers spent $27.5 billion, an increase of 20.9% over the third quarter 2005 and amounted to approximately 2.8% of total retail sales for the quarter.4
The trend seems to be positive and increasing. According to Cominskey (2006)5:
Just how big is the online marketplace getting? Well, one new study predicts e-commerce in the United States will surpass a major milestone in 2006. Leadpile.com, a centralized online lead marketplace, says 2006 United States E-Commerce sales will top $100 Billion in a report released this week. This follows a report issued last month by JupiterResearch that predicts online retail sales are expected to grow from $81 Billion in 2005 to $144 Billion in 2010.Carlson (2007)6 goes even further:
American consumers bought into e-commerce in a big way during 2006, as online retail spending eclipsed $100 billion for the first time.Spending at U.S. online non-travel sites reached $102.1 billion, marking a 24-percent increase versus 2005, according to comScore Networks.
Much of that growth is due to a record-breaking holiday season that began with a Black Friday boom and a huge Cyber Monday.
Twelve days during November and December surpassed the $600 million mark in 2006. In comparison, just six days in 2005 reached $500 million in online sales.
And many of those big days came later than ever before.
On Monday Dec. 11, consumers set a single-day record for online spending with $661 million. But two days later, that record was broken as shoppers spent $667 million online. American shoppers during the following two days spent 33 percent and 38 percent more online than they did the same two years before.
By the end of the season, holiday e-commerce accounted for $24.6 billion, up 26 percent versus last year.
However, that's not where the real action is. According to the US Department of Commerce (2002)
In 2000, 94 percent of e-commerce is B-to-B. While the surveys do not collect separate data on business-to-business (B-to-B) and business-to-consumer (B-to-C) e-commerce, E-Stats shows that e-commerce represents a much larger share of total economic activity in sectors that sell primarily to other businesses.7
We watched as millions of dollars were invested in companies that either began with "e-" or ended in ".com," and have become fast-fading memories both in b2c and b2b sectors. By 2001, over 1,500 companies had burned through their venture capital or, if they had gone public, had seen their stock valuations decrease precipitously. Many hundreds of e-businesses have closed their virtual doors; we all miss Pet.com's sock puppet and the zippy WebVan delivery service.
With hindsight, we wonder what these venture capitalists were thinking. We also wonder if the people running these companies understood anything about running a business (beyond happily taking the VC money). If you have been following this story (online, of course), you are aware that the ebusiness bubble burst six years ago. In fact, you may know someone who has been affected by the shakeout - at last count, the number of dotcom layoffs had reached into the thousands. A 2002 report from Challenger, Gray, and Christmas8, an outplacement firm, estimates that 100,000 ebusiness jobs were lost in 2001.
Despite mixed early results, as ebusiness moved into its second decade, many business people, government officials, and academic researchers are optimistic and argue that ebusiness will become a permanent and important part of the Internet landscape. Laudan and Traver (2001) think that we are in the second stage of ebusiness, where the business rules that shape the offline economy extend to the digital economy; for example, ebusiness will by "business-driven" with an "earnings and profit emphasis" and more "traditional financing."9 A more positive trend was highlighted in a 2004 New York Times article which claimed that the rate at which jobs were being lost in Silicon Valley in 2003 was declining 10
There is also encouraging news from the Federal Government's Bureau of Labor Statistics (2006) 11 which tracks employment trends:
McGann, King and Lyytinen (2002) 12 argue that the US is well positioned to assume global leadership in ebusiness and provide a list of drivers of ebusiness:
So we know now that the shakeout is over. Ebusiness has not disappeared, in fact, it is getting stronger. What happens next?
The class
We will spend the semester thinking about this question. We assume from the start that the next stage will be driven by innovations in digital products and services as well as in the basic infrastructure of ebusiness. therefore, our first attempt to answer the question of what happens next is to focus on digital entrepreneurship. What kinds of ideas will work in this evolving ebusiness environment? Our second attempt will be to step back and take a broader view of this part of the marketplace.
This is a course on ebusiness. During the next four months, we will have two main goals. First, we explore digital entrepreneurship in the context of the process of new digital product development and the creation of new businesses. What is involved in the innovation process? How can you bring a new or improved product or service from conception to the marketplace? What is involved in selling your idea to potential investors and partners?
Second, we take a broader view of ebusiness drawing on theoretical and empirical work to understand how it has developed and what the main issues and forces are that are shaping its future. You will learn about the history, development, and economics of ebusiness and about the major issues with which people are grappling as they work to make their ebusiness succeed.
What we will be studying
This course will provide you with an analytical and technical framework to understand the emerging world of ebusiness and will be divided into three domains:
However, in reality, these realms are entirely interconnected and inseparable. The successful use of technologies is driven primarily by social and economic factors, and the lack of sensitivity to this relationship generally results in the development and implementation of technological systems that will fail, or fail to be used effectively. The course will thus focus on the interrelatedness of these three realms, and, in particular, the degree to which technological innovation in digital markets is driven by social, managerial, and economic choices.
Using an approach based on social informatics and economics, we will explore past and current experiments and models for ebusiness, starting with such pre-Internet activities as electronic data interchange (EDI) and electronic funds transfer (ETF) and moving to current business processes, including emoney (Paypal, Clickshare, Peppercoin), auctions (eBay) , portals (Yahoo!, MSN), mobile commerce (telecomms), and business-to-business marketplaces (Tradezone). The importance of advertising, marketing and demographic statistics in the networked environment will be covered. We willinvestigate the nature of entrepreneurship and innovation. Finally, we will explore issues of law, regulation, and ethics that affect the domestic and global conduct of ebusiness.
In terms of the technical framework, you will have an understanding of security, authentication, data integrity, and digital signatures. You will also gain an understanding of the dynamics of the emerging technical standards relevant to electronic commerce, including the business applications of XML, the Secure Electronic Transaction (SET) standard and Wireless Application Protocol (WAP) (among others).
What you will do
In this course, you will join a development team that will focus on the creation of an innovative or improved digital product or service. You will learn about and write a business feasibility plan for a digital product or service that you and your team will spend the semester developing and prototyping. Completing this project will merge your technical skills from the program with knowledge of the appropriate research literatures in the context of a "real world" simulation of innovation, product design, and prototype development.
The technical skills that you can bring to the class include programming, database, systems evaluation and design, usability and human-computer interaction, information seeking and use, information architecture, and information organization. The research areas that you can bring to the class are those that support these skills and could include project management, the organization and representation of knowledge and information, human-computer interaction, information visualization, and information retrieval.
Notes
| Return to Table of Contents or go to: | Introduction | Course Objectives | Course Requirements | Other Information | Assignments |
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| Grading | Required Texts | Topic Outline | Assignments/Due Dates (short) |
| Page by Howard Rosenbaum | |
| Find me at hrosenba@indiana.edu | http://www.slis.indiana.edu/hrosenba/www/L561/syll/intro.html |