Post on 03-May-2023
© Richardus Eko Indrajit, 2000
Bridging a Smooth Transformation into the Internet Economy presented by Dr. Ir. Richardus Eko Indrajit MSc. MBA Chairman of Renaissance Research Center TPE – CONNECTIVITY INDONESIA 2001 CONFERENCE SERIES ““eStrategy : Surviving and Succeeding in an Internet Economy”” Regent Hotel Jakarta, Indonesia Tuesday June 14th 2000
Special Presentation on
© Richardus Eko Indrajit, 2000
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OLD ECONOMY
INTERNET ECONOMY
Smooth transformation …
Bridging
© Richardus Eko Indrajit, 2000
SCOP
E OF
DIS
CUSS
ION
OLD ECONOMY
INTERNET ECONOMY
Culture ?
Ideology ? Politics ?
Social ?
Religion ? Business !
Behavior ?
National Defense ?
Education ?
Business ?
© Richardus Eko Indrajit, 2000
Understanding the Philosophy Behind the New Digital Economy Principles and Phenomena
Step One
Knowing Your Unique Existing Position within the New Business Environment (Virtual World)
Step Two
Determining the Target among Many Possibilities of Maximizing Wealth in the Digital Era
Step Three
Developing the Appropriate Scenarios of Strategy for Smooth Transformation
Step Four
PRES
ENTA
TION
AGE
NDA
© Richardus Eko Indrajit, 2000
Understanding the Philosophy Behind the New Digital Economy Principles and Phenomena
Step One
© Richardus Eko Indrajit, 2000
“Not an Old” Economy Principle ““Penghasilan
Sebesar-besarnya dengan
Pengorbanan Sekecil-kecilnya””
The Principle of
WEALTH MAXIMIZATION
It requires strategy because of the scarce resources
Resource = consist of atoms which are limited by time and space
© Richardus Eko Indrajit, 2000
Digital Technology = Digitization
10010001 atom bits
text audio video image voice data knowledge information process
real things abstract things
Bits characteristics: - easy to duplicate - cheap to produce - fast to restructure - good to represent
unlimited resources digital economy
© Richardus Eko Indrajit, 2000
Internet Economy
Digital Economy + Internet Development =
INTERNET ECONOMY INTERNET ECONOMY
© Richardus Eko Indrajit, 2000
Knowledge
Digitization
Virtualization
Molecularization
Integration/Internetworking
Disintermediation
1
2
3
4
5
6
Convergence
Innovation
Prosumption
Immediacy
Globalization
Discordance
7
8
9
10
11
12
New Economy Characteristics
© Richardus Eko Indrajit, 2000
THEME ECONOMY ORGANISATION
Knowledge Knowledge becomes an important element of products
Knowledge work becomes the basis of value, revenue, and profit
Digitization Products and services’’ forms are transformed into ones and zeros
format
Internal communication shifts from analog to digital
Virtualization Physical things (institution and relationship) can become virtual
The business transformation into virtual corporations type company
Molecularization Replacement of the mass media into molecular media
End of command-and-control hierarchy, shifting to team-based,
molecular structures
Internetworking Networked economy with deep and reach interconnections of economic
entities
Integration of modular, independent, organizational components for
network of services
Disintermediation Elimination of intermediaries and any stand between producers and
consumers
Elimination of middle managers, internal agents, etc. who boost the
communication signals
Paradigm Shifts
© Richardus Eko Indrajit, 2000
THEME ECONOMY ORGANISATION
Convergence Convergence of computing, communications, and content
Convergence of organizational structures responsible
Innovation Innovation becomes the key driver of business success
The only sustainable advantage is organizational learning
Prosumption Gap between consumers and producers blurs in a number of ways
Consumers of information and technology become producers
Immediacy It is a real-time economy that occurs at the speed of light
Required a new real-time enterprise that can adjust to changing business
conditions
Globalization Knowledge knows no boundaries, there is only a world of economy
The new enterprise enables time and space independence
Discordance Massive social contradictions are arising
Profound organizational contradictions are arising
Paradigm Shifts continue
© Richardus Eko Indrajit, 2000
PHYSICAL WORLD of value chain
The “Chain” Paradigm
Business on the 80s-90s
Business after the year of 2000
VIRTUAL WORLD of value chain
+
© Richardus Eko Indrajit, 2000
Key of Success
1. Flow of Physical/Digital Products 2. Flow of Money/Financial Data 3. Flow of Documents/Information 4. Flow of Services and Other Resources
© Richardus Eko Indrajit, 2000
Physical Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS OPERATIONS OUTBOUND
LOGISTICS MARKETING AND SALES SERVICE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS OPERATIONS OUTBOUND
LOGISTICS MARKETING AND SALES SERVICE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS OPERATIONS OUTBOUND
LOGISTICS MARKETING AND SALES SERVICE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND LOGISTICS OPERATIONS OUTBOUND
LOGISTICS MARKETING AND SALES SERVICE Industry Based Value Chain
Best Practice Oriented Software/Application Minded Physical Flow of Goods
© Richardus Eko Indrajit, 2000
Gather
Organize
Select
Synthesize
Distribute
Business Model: Info Based Process Flow of Bits Bit Restructuring Digital Asset
Digital Value Chain
© Richardus Eko Indrajit, 2000
P1 Purchasing
and Inbound Logistic
P2 Production
and Operation
P3 Outbound
Logistic and Distribution
P4 Sales and
Marketing
P5 Customer
Supports and Services
P1 V1 Gather
P1 V2 Organize
P1 V3 Select
P1 V4 Synthesize
P1 V5 Distribute
P2 V1 Gather
P2 V2 Organize
P2 V3 Select
P2 V4 Synthesize
P2 V5 Distribute
P3 V1 Gather
P3 V2 Organize
P3 V3 Select
P3 V4 Synthesize
P3 V5 Distribute
P4 V1 Gather
P4 V2 Organize
P4 V3 Select
P4 V4 Synthesize
P4 V4 Distribute
P5 V1 Gather
P5 V2 Organize
P5 V3 Select
P5 V4 Synthesize
P5 V5 Distribute
P1OB P2OR P3OB P4OB P5OB
P1OC P2OC P3OC P4OC
Po5C
PiV1OB
PiV2OB
PiV3OB
PiV4OB
PiV5OB
PiV1OC
PiV2OC
PiV3OC
PiV4OC
PiV5OC
P1IB P2IB P3IB P4IB P5IB
P1IC P2IC P3IC P4IC P4IC
Business
Consumers
Indrajit Model
© Richardus Eko Indrajit, 2000
Customers
Customers
Enterprise A
Enterprise B
Enterprise C
Enterprise D
Internetworking
© Richardus Eko Indrajit, 2000
P1 Books
Publisher
P2 Inventory
P3 Distribution
P4 Physical
Bookstore
P5 Courier Services
P1 V1 Gather
P1 V2 Organize
P1 V3 Select
P1 V4 Synthesize
P1 V5 Distribute
P2 V1 Gather
P2 V2 Organize
P2 V3 Select
P2 V4 Synthesize
P2 V5 Distribute
P3 V1 Gather
P3 V2 Organize
P3 V3 Select
P3 V4 Synthesize
P3 V5 Distribute
P4 V1 Gather
P4 V2 Organize
P4 V3 Select
P4 V4 Synthesize
P4 V4 Distribute
P5 V1 Gather
P5 V2 Organize
P5 V3 Select
P5 V4 Synthesize
P5 V5 Distribute
C U S T O M E R S
C U
S T O M
E R S P
A R
T N
E R
S
Amazon.com
© Richardus Eko Indrajit, 2000
P1 Subjects & Contents
P2 Online
Training
P3 Formal Exam
P4 Retake Exam
P5 Certificate Deliverable
P1 V1 Gather
P1 V2 Organize
P1 V3 Select
P1 V4 Synthesize
P1 V5 Distribute
P2 V1 Gather
P2 V2 Organize
P2 V3 Select
P2 V4 Synthesize
P2 V5 Distribute
P3 V1 Gather
P3 V2 Organize
P3 V3 Select
P3 V4 Synthesize
P3 V5 Distribute
P4 V1 Gather
P4 V2 Organize
P4 V3 Select
P4 V4 Synthesize
P4 V4 Distribute
P5 V1 Gather
P5 V2 Organize
P5 V3 Select
P5 V4 Synthesize
P5 V5 Distribute
C U S T O M E R S
C U
S T O M
E R S
P A
R T
N E
R S
C
U S
T O
M E
R S
Brainbench.com
© Richardus Eko Indrajit, 2000
P1 Freeware & Shareware Warehouse
P2 Components
Download
P3 Software
Demo
P4 Purchasing
P5 Full
Download
P1 V1 Gather
P1 V2 Organize
P1 V3 Select
P1 V4 Synthesize
P1 V5 Distribute
P2 V1 Gather
P2 V2 Organize
P2 V3 Select
P2 V4 Synthesize
P2 V5 Distribute
P3 V1 Gather
P3 V2 Organize
P3 V3 Select
P3 V4 Synthesize
P3 V5 Distribute
P4 V1 Gather
P4 V2 Organize
P4 V3 Select
P4 V4 Synthesize
P4 V4 Distribute
P5 V1 Gather
P5 V2 Organize
P5 V3 Select
P5 V4 Synthesize
P5 V5 Distribute
C U S T O M E R S
C U
S T O M
E R S
P A
R T
N E
R S
Download.com
© Richardus Eko Indrajit, 2000
P1 List of Used
Goods
P2 Auction
Registration
P3 Auction Session
& Winner
P4 Payment
& Settlement
P5 Goods
Deliverable
P1 V1 Gather
P1 V2 Organize
P1 V3 Select
P1 V4 Synthesize
P1 V5 Distribute
P2 V1 Gather
P2 V2 Organize
P2 V3 Select
P2 V4 Synthesize
P2 V5 Distribute
P3 V1 Gather
P3 V2 Organize
P3 V3 Select
P3 V4 Synthesize
P3 V5 Distribute
P4 V1 Gather
P4 V2 Organize
P4 V3 Select
P4 V4 Synthesize
P4 V4 Distribute
P5 V1 Gather
P5 V2 Organize
P5 V3 Select
P5 V4 Synthesize
P5 V5 Distribute
C U S T O M E R S
C U
S T O M
E R S C
U S
T O
M E
R S
Ebay.com
© Richardus Eko Indrajit, 2000
Knowing Your Unique Existing Position within the New Business Environment (Virtual World)
Step Two
© Richardus Eko Indrajit, 2000
Indrajit Matrix
Know the Paradigm
Impact on Existing
Business
Reactive Action
Highly Possible Output
Yes Yes Yes Survive
Yes Yes No Business Threat
Yes No Yes Opportunities Taken
Yes No No Adding Knowledge
No Yes Yes Boomerang
No Yes No Dangerous
No No Yes Gambling Adventure
No No No Nice Watcher
© Richardus Eko Indrajit, 2000
Population
Internet Users
Internet Business
B2B
B2C
C2C
1
2 3
Virtual and Physical Community
© Richardus Eko Indrajit, 2000
DISTRIBUTORS
SUPPLIERS
CUSTOMERS
PARTNERS
Finance and Management
Manufacturing and Production
R&D and Engineering
Procurement Distribution
Supply Chain Logistics
Marketing Advertising
Sales Customer Care
Inward Focused Core Business Process and Applications
Internet/Intranet/Extranet
The World of Internet Economy
© Richardus Eko Indrajit, 2000
The 18 Internet Imperatives
1. Power Shift to Customer 2. Global Sales Channel 3. Reduced Costs of Buying and Selling 4. Converging Touch Points 5. Always Open for Business 6. Reduced Time-to-Market 7. Enriched Buying Experience 8. Customization 9. Self-Service 10. Reduced Barriers of Market Entry 11. Demographics of the Internet User
12. Power Shift to Communities-of-Interest 13. Cybermediation 14. Logistics and Physical Distribution 15. Branding: Loyalty and Acceptance Still
Have to be Earned 16. When Most Markets Behave Like the
Stock Market 17. Auctions Everywhere 18. Hyper-Efficiency
© Richardus Eko Indrajit, 2000
1. New Business (products/services) 2. New Market (customers) 3. New Revenue (business model)
4. New Company (business transformation)
5. New Image (business community)
6. New Wealth (paradigm shift)
Etc. Key Points: From “nothing” to “existing” From “existing” to “creating” From “creating” to “improving” From “improving” to “growing” From “growing” to “performing”
The Winners
© Richardus Eko Indrajit, 2000
1. Loss market share (products and services) 2. Loss revenue (customers) 3. Loss competitive advantage (business model)
4. Loss trust (business community)
5. Loss resources (competition)
6. Loss opportunity (cost)
Etc. Key Points: From “performing” to “stopping” From “stopping” to “decreasing” From “decreasing” to “surviving” From “surviving” to “eliminating”
The Losers
© Richardus Eko Indrajit, 2000
Determining the Target among Many Possibilities of Maximizing Wealth in the Digital Era
Step Three
© Richardus Eko Indrajit, 2000
Corporate Enhancement Old Company plus Internet
DotCom
Start from Scratch in Internet Extended Supply Chain
Upstream Connection through Internet (Suppliers)
Customer Relation
Downstream Connection through Internet (Customers)
1
2
3
4
Four Types of eCompany
© Richardus Eko Indrajit, 2000
Corporate Enhancement
Stakeholders
Management Control Finance – Accounting - Auditing
Emplo
yees
Admi
nistra
tive C
ontro
l HR
MS –
ORMS
- Pu
rchas
ing
Customers, Resellers
Selling Chain Management
Customer Relationship Management Marketing – Sales – Customer Service
Business Partners Suppliers, Distributors, Resellers
Supply Chain Management
Enterprise Resource Planning Logistics – Production - Distribution
Knowledge Tone
Applications
Enterprise Application Integration
© Richardus Eko Indrajit, 2000
DotCom
Consumer Management
Registration
Credit Processing
Consumer Fulfillment
History
Account Maintenance
Catalogue Management
Product Description
Samples
Availability
Prices
Order Management
Order Accounting
& Settlement
Web-Enabled Call Center
Payment Processing
Sales Reporting
Delivery Management
Source Product and Delivery
Services
Track and Trace
Merge in Transit and Installation
Services
Delivery
Inventory Management
Availability to Promise
Pick, Pack, and Ship
Warehousing
Product Replenishment
Business Operations Management
Information flow Money flow Physical flow
End Consumers
Producers Suppliers
Who is buying ? What is being offered ?
What is being ordered ?
How is the order being fulfilled ?
Who is supplying the product ?
© Richardus Eko Indrajit, 2000
Extended Supply Chain
Engineering Contractor
Value Added Suppliers
3rd Party Logistics Installers
Commodity Suppliers
Contract Manufacturing
3rd Party Service
e-Supply Chain Management
Collaborative Planning On-line collaborative planning and forecasting Supply chain available-to-promise Inventory and order visibility Dynamic scheduling and reprioritization Real-time decisions based on demand, capacity, costs, and
responsiveness Real-time demand profiles
Web Fulfillment Real-time capture of customer orders into manufacturing systems On-line training and information Real-time product information / engineering changes
e-Supply Chain Management Utilize information as a substitute for inventory Compete on supply chain agility and speed View partner collaboration as a strategic asset
© Richardus Eko Indrajit, 2000
Customer Relation
Joint Offering Partners
Indirect Channels Partners
Existing Customers
New Customers
New Markets e-Customer Relationship Management Real-Time Ordering Customer-specific pricing and products Accurate order status 24 x 7 Real-time available-to-promise
Opportunity Management Competitive intelligence capability Tracking of channel partner performance Customer and channel partner incentive programs
Value Added Services via the Web Training Customer-specific functionality and branding Demand full from customers’ service provisioning Cycle time monitoring from lead to installation
Customer and Partner Self-Service Interactive customer assistance Personalized extranets
e-Customer Relationship Management Anticipate customer needs View customer information as a strategic asset Treat each customer as unique Provide single face to customer Mine customer information for sales purposes Provide integrated multi-channel customer service
© Richardus Eko Indrajit, 2000
Developing the Appropriate Scenarios and Strategy for Smooth Transformation
Step Four
© Richardus Eko Indrajit, 2000
Gather Organize Distribute Select Synthesize
Facts
Data
Information
Knowledge
Wisdom
Business Value of
Information System
Add Value customers and markets
Reduce Costs transactions and processes
Minimize Risks market, financial, legal,
operational risks
Create New Realities intelligence (social, political, technological, etc.)
The Main Philosophy
© Richardus Eko Indrajit, 2000
SAVE MONEY 2 Financial, Manufacturing, Services 1 Administrative
MAKE MONEY 4 Mega Decisions 3 Marketing, Distribution, Customer Service
REMAIN IN BUSINESS 5 People Systems, Home Computers
OPERATIONAL CONTROL 2 Asset Management 1 Process Management
ORGANIZATIONAL EFFECTIVENESS 5 Restructuring of the Industry 4 Restructuring of the Organization 3 Growth and Increase in Market Share
FUNCTIONAL USE MANAGEMENT FOCUS
Reducing Costs
Leveraging Investment
Enhancing Products and Services
Enhancing Executive Decision Making
Reaching the Consumer
Above the Line
Below the Line
1
2
3
4
5
Conservative Approach
© Richardus Eko Indrajit, 2000
Localized Exploitation
Integration
Business Process Redesign
Business Network Redesign
Business Scope Redefinition
LOW Range of Potential Benefits HIGH
LOW
HIGH
Deg
ree
of B
usin
ess
Tran
sfor
mat
ion
Revolutionary
Evolutionary
MIT Approach
© Richardus Eko Indrajit, 2000
Communities Of Interests
Brochureware
Customer Interaction
Transaction Enabler
Real-Time Organization
Time
Evolution of Internet Usage
Common Approach
© Richardus Eko Indrajit, 2000
Commodity Exchanges
Value-Added Services
Knowledge Networks
Value Trust Networks
Value Proposition
Com
plex
ity
Other Approach
© Richardus Eko Indrajit, 2000
The History of DotCom
AA: Traditional “invest for future” going- concern success
AB: Dark Model Profitless growth, war of corporate attrition
AC: Black Hole Massive company generates negative
cash flow, never recovers
© Richardus Eko Indrajit, 2000
New DotCom Grow Up Paradigm
CHARACTERISTICS NET-PHASE 1 NET-PHASE 2
Ideal company Thin float IPO, all-new online standalone start up
Second generation bricks ‘n clicks hybrid with compelling market proposition
Foundation investor/shareholders Individual online investor, buying anything in current Cant Miss sector on dips
Institution, adapting value investment principles to volatile internet
Key player Startup originators, early stage angles, VC, top IPO investment bankers
Killer model developers, secondary (mainstream) financiers
Primary management focus Positioning: Being in the right sector
Viable business plan that ensures survival today, segment leadership tomorrow
Presence Participation Domination (40/40)
Market share capture approach Bottom up Top down
© Richardus Eko Indrajit, 2000
CHARACTERISTICS NET-PHASE 1 NET-PHASE 2
Positive cash flow in the future Communicated via “perceptions management”
Through specific forecasts and commitments
Net-Brand development Reliance on high risk, low-yield, high-cost traditional media
Extending the few highly successful key net nameplates and bricks ‘n clicks hybrid nameplates leveraging on traditional market presence
Mergers and acquisitions emphasis Cross-Dot-Com commercial contracts with spin as special alliances
Industry group strategic alliance announcement: overpromise
Market share capture strategy Bottom up Top down
New DotCom Grow Up Paradigm cont.
© Richardus Eko Indrajit, 2000
The Conclusion
Old Company
+ Information Technology
= Old and Expensive Company