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1 e-roadmapping

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3 e-roadmapping digital strategising for the new economy by Stefan P. Bornheim with Jutta Weppler and Oliver Ohlen with case studies from DaimlerChrysler, getmobile.de, GoIndustry.com and Siemens

4 Stefan P. Bornheim 2001 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2001 by PALGRAVE Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representatives throughout the world PALGRAVE is the new global academic imprint of St. Martin s Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Bornheim, Stefan P. E-roadmapping : digital strategising for the new economy / Stefan P. Bornheim ; with assistance from Jutta Weppler and Oliver Ohlen. p. cm. Includes bibliographical references and index. ISBN Electronic commerce. 2. Business enterprises Data processing. I. Weppler, Jutta. II. Ohlen, Oliver. III. Title. HF B dc Editing and origination by Aardvark Editorial, Mendham, Suffolk ISBN (ebook)

5 CONTENTS List of Figures List of Tables Preface List of Abbreviations viii x xi xiv Introduction 1 Chapter 1 Challenges of Change 5 Literature review 5 Definitions 6 Digital patterns and laws 7 From ERP to EAI and ASP 15 From e-commerce to m-commerce, WAP and UMTS 17 From mere information access to total transparency and marketing 21 From hierarchies to networks and digital value chains 23 Summary 25 References 26 Chapter 2 Shift in Competition 27 Drivers of competition 28 Competitive output: digital landscape 33 Strategies derived from organisational consequences of blurring boundaries and complex systems 38 Summary 41 References 41 Chapter 3 Strategising in the Digital Economy: e-roadmapping 42 Strategising in the Digital Economy: e-roadmapping 42 Analysis 42 Design 44 End-product 46 e-roadmapping: a concrete example 46 e-roadmapping: an automotive example 52 v

6 vi Contents Concretising an automotive e-roadmap: mobility provider 57 The e-roadmapping index (eri) 59 References 70 Chapter 4.1 Introduction to the Cases 71 Chapter 4.2 Chapter 4.3 Materialising e-business: From Idea to Realisation 73 Johannes Schmohl, Senior Manager, marchfirst Preface 73 Idea identification 74 Design 79 Execution 89 Summary 93 getmobile.de: Digital Strategising of a High-growth Internet Start-up 94 Oliver Ohlen, Manager e-commerce, getmobile AG Introduction 94 Development path of the digital strategy 95 Summary getmobile.de s digital strategy at a glance 105 The e-roadmapping analysis 105 References 111 Chapter 4.4 GoIndustry.com: Surplus Equipment Online 112 Paul Vega, Business Development Group, GoIndustry.com Introduction 112 Why focus on business-to-business? 113 The B2B auction opportunity 122 The business model of GoIndustry 123 Summary of GoIndustry s benefits to buyers and sellers 127 Categorisation and roll-out approach 127 Competitive factors 128 Strategy and the road ahead 129 The e-roadmapping analysis 135 Chapter 4.5 DaimlerChrysler Five Star Market Center: A Roadmap for Small Business e-procurement 140 Market Center Development Team, econnect Platform, DaimlerChrysler Introduction 140 Business model 141 Organisation and core competencies 147 Market and competition 150

7 Contents vii Structural competitive advantage 152 The e-roadmapping analysis 153 Chapter 4.6 Siemens: The Transformation into an Application Service Provider 155 Stefan Holler,Vice-President, Siemens Business Services, Management Consulting Anatomy of Siemens I&C for ASP providing 155 Application service provision: an overview 158 Positioning Siemens Business Services in today s ASP market 169 Conclusion 173 The e-roadmapping analysis 173 Chapter 5 The Quest for Total Connectivity 176 Collaborative commerce 176 Summary 188 Index 190

8 LIST OF FIGURES 0.1 Roadmap of Chapters Second generation profit models Playing the digital game The strategy web From ERP to EAI and ASP From e-commerce to m-commerce, WAP and UMTS From information access to total transparency and marketing From hierarchies to networks and digital value chains The e-roadmapping process e-roadmapping strategic axis Positioning today and in the future Portfolio of strategy webs Community of co-opetition The e-business model for the automotive industry Unbundling the traditional organisation The customer-driven network for the automotive industry Value proposition of a mobility provider The e-roadmapping index (eri) Case matrix The strategy web and the cases e-business orientations for new business development e-business positioning options Definition of value proposition example portals and marketplaces Materialising e-business overall concept Detailing of value proposition example information and education Online business logic getmobile.de s one-stop shopping solution for mobile communication devices One-step order process Motorola s online shop realised and hosted by getmobile.de The basic business model of tel2bmarket.net Basic functionality of the cardmaxx.de business model getmobile.de partner of choice for Old Economy players getmobile.de s eri score getmobile.de s value chain and future opportunities 109 viii

9 List of Figures ix B2C Lastminute.com stock price vs. FTSE Vertical and horizontal markets (illustrative example) Fragmented domestic auction market Fragmented auction markets with geographical clusters Margin structures and inefficient transactions in B2B auctions Western European B2B Internet auctions The GoIndustry trading platform concept Multi-lingual, multi-currency trading platform Market adoption with risks Online B2B network effects in an SD model GoIndustry eri score Market Center vision Revised value proposition The partnership business model Core competencies Auto dealer e-procurement options Siemens I&C content Domains of enterprise application outsourcing Contrasting ASP and outsourcing Enterprise computing in the Internet age Comparing cost: traditional vs. ASP enterprise computing Potential ASP players The ASP value chain Positioning the SBS ASP offering The SBS ASP value chain Siemens Business Services eri score Current market landscape B2C and B2B statistics Components of the collaborative commerce vision Vision of collaborative commerce in action Strategic complementarity map for collaborative commerce vision 188

10 LIST OF TABLES 3.1 The customer centricity axis The value metrics axis The technology axis The organisational configuration axis getmobile.de s digital strategy at a glance Comparing B2B and B2C characteristics Stock market valuations of selected B2B companies Indicators of fragmentation in various industries Predictors of B2B adoption Competitive structural analysis: ability to meet dealership e-procurement requirements Competition for domination through standards 180 x

11 PREFACE Navigation through the book The set-up of this book is rather modular. Each of the five chapters can be read by itself and, of course, they can be read in any order. Nevertheless, for the reader planning to read the whole book the recommendation is to do so in a sequential manner, as the early part of the book is broad based before coming to detailed e-strategy questions. The benefit from reading in sequence is expected to be greater than that derived from chapter-jumping. Readers interested in partial aspects of the book may use the following elaboration to detect where to go for their interest: Chapters 1 and 2 to find out about the general Digital Economy trends and the changes in competition and competitive behaviour. Chapter 3 for those interested in understanding and applying our e-roadmapping strategising tool. Chapter 4 for a variety of e-business case studies. These case studies range from business-to-consumer (B2C) to business-to-business (B2B) and cover start-up as well as corporate e-business projects. Chapter 5 for a glimpse of the promises of the future; readers interested in the future of business and technology applications should direct their attention to this chapter. The underlying academic research of e-roadmapping This book is a practitioner-oriented book and therefore will not dwell on research methodologies, sample sizes, and so on. Yet, our readers are entitled to know what the academic grounding of this publication is. This book rests on over 18 months of academic research at the University of St. Gallen and subsequent consulting and executive teaching in the field. xi

12 xii Preface In the initial phase of the tool development many interviews were held with traditional corporations as well as with start-up companies. These interviews gave a clearer understanding of the challenges at hand and provided many insights into the real problems of companies dealing with the emerging Digital Economy. Once the basic concepts were developed and put in place, another round of interviews was conducted to beef up these concept categories and to test these constructs. After completing the tool-set a final empirical test was done through a quantitative survey of European B2B marketplaces through which the tool was tested and validated in detail. Further reality checks were then achieved through applying the e-roadmapping tool in a number of strategy workshops with various companies, as well as using the concepts in an executive teaching environment. Thanks to As always a book of this nature and magnitude could not have happened without a substantial team effort. I am particularly thankful to my coauthors Jutta and Oliver, who endured my very special writing mode and whose endless constructive input and willingness to discuss parts of the concept were crucial to the completion of the book. Without their help in further developing and refining the concepts, many questions would still be unanswered. Many thanks also to my publishing editor, Stephen Rutt, and his team at Palgrave, who from the proposal stage onwards displayed absolute professionalism in their conduct and were very constructive in helping to publish this book on time. I also owe a debt of gratitude to Winfried Ruigrok at the International Management Institute at the University of St. Gallen, as well as the GFF research fund of the university for their support during this period. A great many thanks also to the companies contributing e-business case studies. Both the getmobile.de team and Paul Vega with GoIndustry were superb in their turnaround time and ability to produce fascinating case studies. At Siemens my thanks go to Stefan Holler and his team, who produced a case of great depth and tremendous complexity. I also thank Olaf Koch and Mitchell Mackey at DaimlerChrysler s DCX-Net in Stuttgart for setting up this co-operative effort and Keith Helfrich and his team at the Five Star Market Center in Auburn Hills for so promptly delivering the actual case. Lastly, I am grateful to Johannes Schmohl from

13 Preface xiii marchfirst who without hesitation was willing to share a great many insights on how to implement successful e-business projects. A last and very special thanks goes to my fiancée for unconditional support, incredible patience and continuous inspiration during the long and occasionally tedious period of writing this book. S.B. Every effort has been made to trace all the copyright holders but if any have been inadvertently overlooked the publishers will be pleased to make the necessary arrangements at the first opportunity.

14 LIST OF ABBREVIATIONS AIP ASP B2B B2C BIF C2C CAGR CRM CSF DSP EAI EDI eri ERP EV FSMC GSM HTML I&C IP IPO ISP ISV IT LTM ASP infrastructure provider application service provider/provision business-to-business business-to-customer/business-to-consumer business integration framework customer-to-customer/consumer-to-consumer compounded annual growth rate customer relationship management critical success factor dealership systems provider enterprise application integration electronic data interchange e-roadmapping index enterprise resource planning enterprise value Five Star Market Center global system mobile hypertext markup language information and communication Internet protocol Initial Public Offering Internet service provider independent software vendor information technology last twelve months xiv

15 List of Abbreviations xv MRO MRP MSDW OEM PDA PO RFQ SBS SCM SD SME SMS T-tax UCS UMTS USP WAP XML maintenance, repair and operations material requirement planning Morgan Stanley Dean Witter original equipment manufacturer personal digital assistant purchase order request for quotation Siemens Business Services supply chain management systems dynamics small and medium-sized enterprises short message service transaction tax User Centre Services universal mobile telecommunications system unique selling point wireless application protocol extensible markup language