Chapter 8

E-Commerce, Web 2.0, andSocial Networking

Chapter 8

Q1: What types of inter-organizational systems exist?

Q2: How do companies use e-commerce?

Q3: Why is Web 2.0 important to business?

Q4: How does social capital benefit you and organizations?

Q5: How does social CRM empower customers?

How does the knowledge in this chapter help Fox Lake andyou?

Study Questions

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Q1: What Types of InterorganizationalSystems Exist?

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Inter-organizationalSystems

Pre-InternetSystems

E-Commerce

Web 2.0

Enterprise2.0

Postal mail,telephone, fax

Web Storefronts

Google, eBay,Amazon, CNet

Social CRM, SOA

Interorganizational Systems

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Q2: How Do Companies Use E-Commerce?

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Merchant companies—take title to goods they sell

Nonmerchant companies—arrange for purchase and sale ofgoods without owning or taking title to those goods

Example of Use of B2B, B2G, and B2C

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•E-commerce application enablesauction company to offer goods for saleand to support a competitive-biddingprocess

Online auctions

•Provide goods and services at statedprice, arrange delivery, but do not taketitle

•Amazon.com sells books and othermerchandise for other businesses

Clearinghouses

•Match buyers and sellers

•Priceline.com

Electronicexchanges

Nonmerchant E-Commerce Companies

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Disintermediation

Companies learn how customers internalize competitors’pricing, advertising, and messaging

Q2: How Does E-Commerce Improve MarketEfficiency?

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RetailStore

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•Channel conflict

•Price conflict with traditionalchannels

•Logistics expenses increasefor manufacturer

•Customer-service expensesincrease for manufacturer

Economic FactorsinDisintermediation

What Economic Factors Disfavor E-Commerce?

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Q3: Why is Web 2.0 Important to Business?

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Figure 8-6

Software as a (Free) Service (SaaS)

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Software as a (Free) Service

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SaaS—thin-client applications run in Internet cloud

•License-free software

•Does not require an installation on the users’ computers

•Web servers download Web 2.0 programs as code withinHTML, as Flash, or as Silverlight code.

•Readily (and frequently) updated. New features added withlittle notice or fanfare.

Google Docs & Spreadsheets

Google Groups

Google Earth

Google Maps

Combines social networking, viralmarketing, and open-sourcedesign, saving considerable costwhile cultivating customers.

Crowd performs classic in-housemarket research anddevelopment. Sets up customersto buy.

User-Generated Content

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Crowdsourcing examples

Mashups

•Mashup —a web application that combines data fromother websites

•Example—map data from Google Maps to addlocation information to real-estate data, thus creatinga new and distinct web service

•See www.programmableweb.com/mashups

Organic User Interfaces and Mashups

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•AdWords

•Vendors pay for specific words, phrases

•Placement on search results list depends onhow much you pay for search word

•Vendor pays when someone clicks on their link

•Amount can vary day to day, hour to hour

•Ad Sense

•Google inserts ads that match web pagecontent

•Google pays web page owner for every click

•Website owners enroll in this program toenable text, image, and video advertisementson their websites

Advertising

How Can Businesses Benefit from Web 2.0?

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•Information systems that deal withassets, whether financial or material,requires control, rather thanflexibility and organic growth.

Don’t getcarriedaway

•Credit card transaction processing

•Accounts payable or general ledgersystem interface

Examples

Web 2.0 Not for All Applications

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Social Capital—investment in social relations withexpectation of returns in the marketplace

Adds value in four ways:

1.Information about opportunities, alternatives, problemsand other factors

2.Influence decision makers in your organization or others

3.Social credentials from linking to network of highlyregarded contacts

4.Personal re-enforcement of professional image andposition

Q4: How Does Social Capital Benefit Youand Organizations?

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Value of social capital: Number of relationships in a socialnetwork, by strength of those relationships, and byresources controlled by those related.

Professional social networking factors

•Gain social capital by adding more friends andstrengthening relationships with existing friends.

•Gain more social capital by adding friends andstrengthening relationships with people who controlresources important to you.

Social Capital

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People youknow theleastcontributethe most toyournetwork.

Importance of Weak Relationships

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Eileen isweak tie

Expand network bymeeting Eileen

Progressiveorganizationsmaintain apresence onFacebook,LinkedIn,

Twitter, and othersites

•Sales people,customer support,public relations,and endorsementsby high profilepeople

How Do Social Networks Add Value toBusiness?

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Fan Connections and Endorsements

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Classical CRM organization speak to customers withone voice and controlled messages, offer support forcustomers, depending on value of customer.

Today, customers craft own relationship with abusiness by their use of touch points.

Social CRM—creation and use of Enterprise 2.0collaborative relationship between businesses andcustomers.

Q5: How Does Social CRM EmpowerCustomers?

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What Are the Characteristics of Web 2.0:SLATES

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Social CRM done in style of Enterprise 2.0.

Relationships between organizations and customersemerge as both parties create and process content.

Employees create wikis, blogs, discussion lists, frequently-asked-questions, sites for user reviews and commentary,and other dynamic content.

Customers search content, contribute reviews andcommentary, ask more questions, create user groups, etc.Each customer crafts own relationship with company.

Social CRM is Enterprise 2.0 CRM

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ClassicalCRM

Centered oncustomerlifetime value

Control what customerreads, sees, hearsabout company and itsproducts

SocialCRM

Effective reviewer,commentator, orblogger can havesignificant influence

Classical CRM vs. Social CRM

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