4.1.3 The Three Syndication Roles
Werbach (1999) highlights that within syndication networks business can play one or more of three roles.
a) Originator Originators create as their name suggests original content. The Internet increases the scope of originators in two ways. It expands the scope of the original content and makes it easier for companies to disseminate their content globally. It is possible to syndicate any product, service or process once they can exist as information.
b) Syndicator Syndicators bring together content from a number of sources and then make it available through digital information. This relieves the distributor from having to find and negotiate with vast numbers of originators to gather the content they require. Syndicators are rare in the physical business world except in the entertainment field, but it is becoming increasingely popular as business model on the Internet.
c) Distributor Distributors are the customers facing aspect of the business. Distributors using syndication to lower the cost for acquiring customer content. This allows them to increase value to customers.
Syndication allows originators to expand their reach and speed their time-to-market, both critical elements for success in a Web business. It also makes it possible for smaller, less commercially oriented sites to share the benefits of the Internet economy.
4.1.4 Syndication Summary
As Werbach has discussed, ?The true hallmark of the Internet is choice.? With syndication, any information can be anywhere, because the link between creation and distribution is broken. There will be many possible paths between companies and their audiences. Many of these paths will exist simultaneously. The great opportunity for technology and service providers lies in navigating the tangle, taking advantage of the best distribution chain for a given customer at a given moment.
4.2 E-Hubs: The New B2B Marketplaces
4.2.1 Introduction
?As business to business commerce shifts to the Internet, companies that have control over the on-line markets can exert tremendous influences on the way players carry out transactions, form relationships and capture profits.? In an article ?E-Hubs: The New B2B Marketplaces.? Kaplan and Sawhney (2000) examine the theme of efficient and profitable customisation from a B2B lens by examining four types of E-Hubs in the B2B marketplace, these E-Hubs let companies buy exactly what they want and exactly how they want to buy it.
Kaplan and Sawhney identify four types of E-Hubs:
1. MRO hubs
2. Yield Managers
3. Exchanges
4. Catalogue Hubs
4.2.2 MRO Hub
MRO (Maintenance, Repair, and Operating) hubs are horizontal markets that enable a systematic sourcing of operating inputs. Systematic sourcing of inputs involves negotiated contracts with qualified suppliers, because the contacts tend to be long term, the buyers and sellers build up a close relationship. Generally used with low value goods with relatively high transaction costs providing largely increasing efficiencies in the procurement process.
4.2.3 Yield Manager
Yield managers are also horizontal markets that enable spot sourcing of operating inputs. Spot sourcing is when the buyer?s goal is to fulfil an immediate need at the lowest possible cost. Commodities trading for oil or steel are a good example of spot sourcing. There is now relationship between buyer and seller in fact it is possible for the buyer not to know whom they are dealing with. Yield managers create spot markets for common operating resources like advertising or labour. This allows companies to expand or contract their operations on short notice. This type of E-Hub adds the most value in situations with a high degree of price and demand volatility, such as electricity or with high fixed cost assets that cannot be liquidated quickly such as manpower.
4.2.4 Exchanges
Exchanges are vertical markets that enable spot sourcing of manufacturing inputs.
They enable procurement specialists to smooth out the peaks and the valleys in demand and supply by rapidly exchanging the commodities or near commodities required for production. The exchange hub maintains relationships with buyers and sellers, this makes it easy for them to conduct business without the having to flesh out the bones of a relationship with all the connected paperwork.
4.2.5 Catalog Hubs
Catalog hubs are vertical markets that enable systematic sourcing of manufacturing inputs. They automate the sourcing of non-commodity manufacturing inputs, creating value by reducing transaction costs. Catalog hubs bring together many suppliers to the easy to use Web site. They are industry specific and can be buyer or seller focused.
The B2B Matrix
What Businesses Buy?
How Businesses Buy?
Systematic Sourcing
Spot Sourcing Operating Inputs Manufacturing Inputs
MRO Hubs
MRO.com
BizBuyer.com Catalog Hubs
Chemdex
PlasticsNet.com
Yield Managers
Steptstone.com
AdAuction.com Exchange Hubs
e-Steel
PapersExchange.com
Fig. 1.The B2B Matrix
4.2.6 Aggregation and Matching
There are obvious differences between systematic and spot sourcing this in turn makes the market mechanisms for MRO and Catalog hubs quite distinct from that of Yield mangers and Exchange Hubs. E-Hubs creates value by two fundamentally different mechanisms, aggregation and matching.
E-Hubs under aggregation brings together a large number of buyers and sellers under one virtual roof. They can reduce transaction cost by providing one stop shop. The aggregation mechanism is static in nature, as prices are pre negotiated. An important aspect of aggregation is that the addition of another buyer benefits only the seller and the addition of another seller benefits only the buyer. The reason behind this is that in aggregation both the buyers and sellers positions are fixed.
Unlike in the aggregation mechanism the matching mechanism is non-static and brings buyer and sellers together in a dynamic real time environment. Matching used spot sourcing where prices are determined at the moment of purchase; it is possible for the purchase to take place in the form of an auction. The roles of the players in matching is fluid, buyers can be sellers and vice versa. Therefore the introduction of any new dealers in to the mechanism can be beneficial to both parties.
4.3 Choiceboards: The age of the Choiceboard
Slywotzky (2000) suggests that, ? Thanks to the Internet an alternative to the unhappy model of supplier-customer interaction is finally becoming possible. In most markets customers will be able to design or describe the exact product or service that they want and supplier will be able to deliver it with out compromise or delay, this is made possible through Choiceboards. Choiceboards are interactive on line systems the allow individuals to design their own products by choosing from a menu of attributes, components and prices. The customer can now go from being the product taker to product maker.?
In ?The age of the Choiceboard?, Slywotzky (2000), a management consultant, looks at this interactive on-line system that allows consumers to customise the products or services they order. He anticipates that Choiceboards will dominate commercial activity this decade, as the U.S. economy shifts from a supply-driven to a demand-driven system. Slywotzky theorises that ?because the companies that control Choiceboards will also control customer relationships,? these companies will be the industry powerhouses that ?reap the lion’s share of the profits?. The same opportunities exist for SME?s in the B2B sector.
Dell are already operating a successful on line configuration where customers are designing their own personnel computers.
4.4 Hypermediation: Commerce as Clickstream
Carr, a senior editor at Harvard Business Review, argues in an article entitled ?Hypermediation: Commerce as clickstream?2000, that electronic commerce has greatly enlarged, not eliminated the middleman’s role in on-line business a phenomenon he calls ?Hypermediation.? Those who stand to benefit most from electronic commerce, he says, will be the plethora of Internet intermediaries such as wholesalers and retailers; content providers; developers of affiliate sites, search engines, and portals; Internet service providers; and software makers. The emerging economic structure of e-commerce, he says, indicates that ?profits lie in intermediate transactions, not in the final sale of a good.? Carr refers to this as ?profit for clicks?. Moreover, he foresees the most profit flowing to the owners of specialised content sites and the engineers who are advancing e-commerce technologies.
Chapter 5
Primary Research Objectives and Methodology
5.1 Introduction
This chapter shall describe the purposes of the research that was undertaken and detail the methods that were employed in the pursuance of these objectives. The literature review has highlighted the impacts that B2B ecommerce is having on the Irish SME and the way they in which they conduct business. The future challenges and changes for the SME have also been reviewed. The reported work ?B2B in SME?s: Perspectives and Future Challenges? seeks to examine such changes in an Irish context and evaluate the implications of the Internet and related technologies on the SME sector in Ireland. Specifically, the reported work will examine managerial attitudes and opinions towards B2B ecommerce and the challenges faced by such companies in the evolving Internet economy. In order to complete such an examination primary research will be conducted, analysed, reviewed and presented to illustrate the ways in which SME?s managers view B2B ecommerce.
5.2 Objectives of Primary Research
The objectives of the research may be outlined as follows: -
1. To investigate the levels of understanding of B2B ecommerce issues in Irish SME?s
2. To detail the extent to which managers are familiar with the opportunities for participating in B2B ecommerce
3. To examine the cost of involvement for SME?s in B2B ecommerce
4. To investigate the challenges for mangers of SME?s in participating in further ecommerce initiatives
5.3 Secondary and Primary Research
The secondary research that was examined in the literature review was undertaken using business journals, books, newspaper articles, the Internet, desk research and libraries. Ecommerce was introduced with a simple history and background. Followed by the opportunities and challenges faced by the SME manager in the B2B ecommerce environment. Disruptive technologies and repeating patterns in retailing, the challenges, hurdles and benefits of e-commerce from the SME?s managers viewpoint were reviewed. Finally the new developing strategies and business models available using the Internet were discussed and the benefits they bring the B2B ecommerce environment.
The primary research is to be conducted across a random selection of SME?s in the south east of Ireland. These SME?s were selected across a broad spectrum of industries and service providers ranging from manufacturing companies to electricians, from transport/logistic companies to retail shops. The list was derived partially from the Industrial Development Authority (IDA) and partially from the ?Business and Shopping Guide?. This was done in order to get a broad cross section of SME?s.
5.4 Methodology
The data to be collected is quantitative, based on a questionnaire. This questionnaire contains 28 questions, which will be forwarded to 100 SME?s via e-mail, post and from business relationships. Upon receipt of the questionnaire the recipient will be asked to return their completed questionnaire to the author within a period of two weeks. Once the completed questionnaires have been completed, analysis of the data will take place and the results will be presented, analysed and discussed. Due to speed of response e-mail will be utilised to forward and return the questionnaire. However the author appreciates that this may bias the findings of the research, so a minimum of 25 percent of questionnaires will not be sent via e-mail or any other electronic medium.
5.4.1 Quantitative versus Qualitative Research
Quantitative research designs strive to identify and isolate specific variables within the context of the study. It is a hard science with a narrow focus and is concise, it?s reasoning is deductive and logistic. Quantitative research involves objective measurements where the reduction to numbers allows for the testing of the hypothesis and the deriving of statistical data. In quantitative research there is validity because of the opportunity to generalise. Quantitative data is collected under controlled conditions in order to rule out the possibility that variables other than the one under study can account for the relationships identified
Qualitative design focuses on a holistic view of what is being studied via documents, case histories, observations and interviews. Qualitative data are collected within the context of their natural occurrence. Qualitative research involves the collection, analysis and interpretation of data that are not easily reduced to numbers.
Quantitative research has been selected as the methodology for primary research in the reported work because it should give a broad overview of the attitudes and opinions of SME manager?s and B2B ecommerce. Quantitative research is undertaken knowing that it does have disadvantages, such as, low response rates, response times, and potential misinformation due to lack of understanding of the questions posed.
5.4.2 Questionnaire
1. How many Employees are there in the Company?
2. What is the specific industry/service provider sector that your business is involved in? E.g. Electronics, contract cleaning, retail outlet.
3. Is there an Information Technology (IT) department within the Company?
4. How many Personal Computers (PC?s) are there in the Company?
5. Does your company have access to the Internet?
6. Does your company have access to e-mailing facilities?
7. Does you company have it?s own Web site?
8. Is there an understanding of Business to Business (B2B) ecommerce within the company? If so give a brief explanation of what you understand this to be.
9. Does your company utilise the Internet to make purchases?
10. Does your company utilise the Internet to make sales?
11. Is your company committed to B2B ecommerce?
12. Does your company believe that B2B ecommerce it is just another passing fad? Please rate your answer, strongly agree, unsure or strongly disagree
13. If the company is already involved in B2B ecommerce is this part of the company?s strategic plan?
14. If so are there specific targets for the B2B ecommerce set?
15. If so are these targets monitored?
16. Is your company aware of the implications of not being involved in B2B ecommerce?
17. What costs did your company experience in becoming involved in B2B ecommerce?
18. Did your company have to use external consultants when setting up your B2B ecommerce?
19. If yes, are these consultants still necessary for the correct maintenance of your IT and B2B ecommerce related systems?
20. Was training and development necessary among your existing staff to gain entry into B2B ecommerce?
21. Has any additional training / retraining taken place since commencing in B2B ecommerce?
22. Did your company hire personnel specific to the B2B ecommerce function?
23. Did your company experience barriers in gaining entry to B2B ecommerce? Please detail e.g. Security issues, speed of response, delivery time, methods of payment.
24. Did your company experience any difficulties with existing business relationships whilst adopting B2B ecommerce?
25. Has your company experienced any difficulties since commencing B2B ecommerce?
26. Does your company use its involvement in ecommerce as a marketing tool?
27. If yes how would you rate the following statement ?The use of B2B ecommerce promotes the company as a progressive forward thinking business?
Please rate your answer, strongly agree, unsure or strongly disagree
28. Does your company believe that there is no future for companies who are not involved in B2B ecommerce? Please rate your answer, strongly agree, unsure or strongly disagree.
References
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Christensen CM. and Bower JL. 1995:?Disruptive Technologies: Catching the Wave? Harvard Business Review January ? February 1995
Evans P. and Wurster TS. 2000: ? Getting Real About Virtual Commerce? Harvard Business Review November ? December 1999 Product No.4525
Christensen CM. and Tedlow RS. 2000: ?Patterns of Disruption in Retailing? Harvard Business Review January ? February 2000. Product No. 4681
Treese GW and Stewart LC 1998: ? Designing Systems for Internet Commerce? Addison Wesley Longman Inc. 1998.
Kalakota R and AB. Whinston 1997: ?Electronic Commerce-A Manager’s Guide.? Addison Wesley Longman, Inc. 1997.