電子商務(wù)英文課件：ch14 Economics and Justification of

1、Chapter 14Economics and Justification ofElectronic CommerceCopyright 2010 Pearson Education, Inc. Publishing as Prentice HallLearning Objectives Describe the need for justifying electronic commerce (EC) investments, how it is done, and how metrics are used to determine justification.Understand the d

2、ifficulties in measuring and justifying EC investments.Recognize the difficulties in establishing intangible metrics and describe how to overcome them.List and briefly describe traditional and advanced methods of justifying IT investments.14-1Copyright 2010 Pearson Education, Inc. Publishing as Pren

3、tice HallLearning Objectives Understand how e-CRM, e-learning, and other EC projects are justified.Describe some economic principles of EC.Understand how product, industry, seller, and buyer characteristics impact the economics of EC.Recognize key factors in the success of EC projects and the major

4、reasons for failures.14-2Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallWhy Justify E-Commerce Investments? How Can They Be Justified?INCREASED PRESSURE FOR FINANCIAL JUSTIFICATIONIT executives feel the pressure for financial justification and planning from top executives, but mos

5、t face an uphill battle to address this accountability In order to achieve the optimal level of investment, CIOs will need to calculate and effectively communicate the value of proposed EC projects14-3Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallWhy Justify E-Commerce Investment

6、s? How Can They Be Justified?OTHER REASONS WHY EC JUSTIFICATION IS NEEDEDCompanies now realize that EC is not necessarily the solution to all problemsSome large companies, and many public organizations, mandate a formal evaluation of requests for fundingCompanies are required to assess the success o

7、f EC projects after completionThe success of EC projects may be assessed in order to pay bonuses14-4Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallWhy Justify E-Commerce Investments? How Can They Be Justified?EC INVESTMENT CATEGORIES AND BENEFITSIT infrastructure provides the foun

8、dation for EC applications in the enterpriseEC applications are specific systems and programs for achieving certain objectivesPurpose of the investment 14-5Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallWhy Justify E-Commerce Investments? How Can They Be Justified?HOW IS AN EC INV

9、ESTMENT JUSTIFIED?costbenefit analysisA comparison of the costs of a project against the benefitsBusiness Justification and Business CaseWHAT NEEDS TO BE JUSTIFIED? WHEN SHOULD JUSTIFICATION TAKE PLACE?14-6Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallWhy Justify E-Commerce Inves

10、tments? How Can They Be Justified?USING METRICS IN EC JUSTIFICATIONmetricA specific, measurable standard against which actual performance is comparedMetrics, Measurements, and Key Performance Indicatorskey performance indicators (KPIs)The quantitative expression of critically important metrics14-7Co

11、pyright 2010 Pearson Education, Inc. Publishing as Prentice HallDifficulties in Measuring and Justifying E-Commerce InvestmentsTHE EC JUSTIFICATION PROCESSFive areas must be considered in the justification of IT projects:Strategic ConsiderationsTactical ConsiderationsOperational ConsiderationsIntang

12、iblesTangibles14-8Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14-9Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallDifficulties in Measuring and Justifying E-Commerce InvestmentsDIFFICULTIES IN MEASURING PRODUCTIVITY AND PERFORMANCE GAINSData and Analysis Issue

13、sEC Productivity Gains May Be Offset by Losses in Other AreasHidden Costs and BenefitsIncorrectly Defining What Is MeasuredOther Difficulties14-10Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14-11Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallDifficulties in M

14、easuring and Justifying E-Commerce InvestmentsINTANGIBLE COSTS AND BENEFITSTangible Costs and BenefitsTangible costs are those that are easy to measure and quantify and that relate directly to a specific investmentIntangible Costs and BenefitsWhen it comes to intangible costs and benefits, organizat

15、ions must develop innovative metrics to track them as accurately as possibleHandling Intangible Benefits14-12Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallDifficulties in Measuring and Justifying E-Commerce InvestmentsTHE PROCESS OF JUSTIFYING EC AND IT PROJECTSLay an appropriate

16、 foundation for analysis with your vendor, and then conduct your ROIConduct a good research on metrics and validate themJustify and document the cost and benefit assumptionsDocument and verify all figures used in the calculationDo not leave out strategic benefits, including long-term onesBe careful

17、not to underestimate cost and overestimate benefits Make figures as realistic as possible and include risk analysisCommit all partners, including vendors and top management14-13Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallMethods and Tools for Evaluatingand Justifying E-Commerce

18、 InvestmentsOPPORTUNITIES AND REVENUE GENERATED BY EC INVESTMENTMETHODOLOGICAL ASPECTS OF JUSTIFYING EC INVESTMENTSTypes of CostsDistinguish between initial (up-front) costs and operating costsDirect and indirect shared costsIn-kind costs14-14Copyright 2010 Pearson Education, Inc. Publishing as Pren

19、tice HallMethods and Tools for Evaluatingand Justifying E-Commerce InvestmentsTRADITIONAL METHODS FOR EVALUATING EC INVESTMENTSThe ROI MethodPayback PeriodNPV AnalysisInternal Rate of Return (IRR)Break-Even Analyses14-15Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallMethods and To

20、ols for Evaluatingand Justifying E-Commerce Investmentstotal cost of ownership (TCO)A formula for calculating the cost of owning, operating, and controlling an IT systemtotal benefits of ownership (TBO)Benefits of ownership that include both tangible and intangible benefitsEconomic Value AddedUsing

21、Several Traditional Methods14-16Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallMethods and Tools for Evaluatingand Justifying E-Commerce InvestmentsIMPLEMENTING TRADITIONAL METHODSBusiness ROI Versus Technology ROIROI calculatorCalculator that uses metrics and formulas to compute

22、ROIOther Calculators14-17Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallMethods and Tools for Evaluatingand Justifying E-Commerce InvestmentsADVANCED METHODS FOR EVALUATING IT AND EC INVESTMENTSMost justification methods can be categorized into the following four types:Financial a

23、pproachesMulticriteria approachesRatio approachesPortfolio approaches14-18Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallExamples of E-Commerce Project JustificationJUSTIFYING E-PROCUREMENTCUSTOMER SERVICE AND E-CRMe-CRM MetricsJUSTIFYING A PORTALJUSTIFYING E-TRAINING PROJECTS14-1

24、9Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallExamples of E-Commerce Project JustificationJUSTIFYING AN INVESTMENT IN MOBILE COMPUTING AND IN RFIDJUSTIFYING SECURITY PROJECTSJUSTIFYING SOCIAL NETWORKING AND THE USE OF WEB 2.0 TOOLS14-20Copyright 2010 Pearson Education, Inc. Publ

25、ishing as Prentice HallThe Economics of E-CommerceREDUCING PRODUCTION COSTSProduct Cost Curves14-21Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-Commerceproduction functionAn equation indicating that for the same quantity of production, Q, companies either can

26、use a certain amount of labor or invest in more automationagency costsCosts incurred in ensuring that the agent performs tasks as expected (also called administrative costs)14-22Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14-23Copyright 2010 Pearson Education, Inc. Publishing a

27、s Prentice HallThe Economics of E-Commercetransaction costsCosts that are associated with the distribution (sale) or exchange of products and services including the cost of searching for buyers and sellers, gathering information, negotiating, decision making, monitoring the exchange of goods, and le

28、gal fee14-24Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-CommerceCategories of transaction costs:Search costsInformation costsNegotiation costsDecision costsMonitoring costsLegal-related costs14-25Copyright 2010 Pearson Education, Inc. Publishing as Prentice H

29、all14-26Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-CommerceINCREASED REVENUESReach Versus RichnessOther Ways to Increase Revenues14-27Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-CommerceREDUCING TRANSACTION FRICTION O

30、R RISKFACILITATING PRODUCT DIFFERENTIATIONproduct differentiationSpecial features available in products that make them distinguishable from other products. This property attracts customers that appreciate what they consider an added value14-28Copyright 2010 Pearson Education, Inc. Publishing as Pren

31、tice HallThe Economics of E-CommerceEC INCREASES AGILITYagilityAn EC firms ability to capture, report, and quickly respond to changes happening in the marketplace and business environment14-29Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-CommerceVALUATION OF EC

32、 COMPANIESvaluationThe fair market value of a business or the price at which a property would change hands between a willing buyer and a willing seller who are both informed and under no compulsion to act. For a publicly traded company, the value can be readily obtained by multiplying the selling pr

33、ice of the stock by the number of available shares14-30Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe Economics of E-CommerceThree most common valuation methods:The comparable methodThe financial performance methodThe venture capital method14-31Copyright 2010 Pearson Education

34、, Inc. Publishing as Prentice HallOpportunities for Success in E-Commerce and Avoiding FailureFACTORS THAT DETERMINE E-COMMERCE SUCCESSProduct CharacteristicsIndustry CharacteristicsSeller CharacteristicsConsumer Characteristics14-32Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallOpportunities for Success in E-Commerce and Avoiding FailureE-COMMERCE FAILURESThree economic phenomena related to EC failure:At a macroeconomic level, technological revolutions, such as the railroad and the automobile industries, have had a boombustconsolidation cycleAt a mid-economic level,