Spring 2001 Two-Year College Communicator

Despite the media’s taste for tragedy, there are actually far more success stories for eBusinesses (businesses that utilize the Internet for at least one of their processes) than there are failures. In fact, Internet sales this year are 61.5% greater than last year’s sales, and the trend is expected to continue (Delvalle 2001). Our students are perfectly positioned to make significant impacts in their entry-level positions if they are educated as to where the best value propositions lie for eBusinesses. However, many accounting faculty bypass the whole issue by getting “stuck” in the discussion of whether there should be a separate electronic commerce course, or in how to integrate the current lessons into their traditional accounting courses. The purpose of this article is to emphasize that our students cannot afford to be taking our courses without gaining eBusiness knowledge by illustrating how easy it is to gain eBusiness knowledge as a faculty member.

Get eBusiness information efficiently by visiting Dr. Rappa’s free online eBusiness course, Managing the Digital Enterprise, at http://ecommerce.ncsu.edu/topics/about.html. Not only is this a tremendous resource for learning eBusiness, but it is an excellent example of how to organize an online course. On the right-hand side of the page are the different links to the course modules. These modules include an introduction, navigation tools, web page design, web performance metrics, business models, digital markets, intelligent agents, auctions, channel conflict, trust, security, privacy, intellectual property, governance and ethics. After you have studied eBusiness and are motivated to include more of these topics in your courses, the question becomes how to include eBusiness in your course. Here are three examples of possibilities (recognizing that there are many more options available).

Storytelling
Perhaps the easiest method is tell real company stories in your courses to reinforce the importance of the concepts you are covering. For example, if you are discussing any aspect of the revenue cycle, you could illustrate the power of eBusiness by sharing that Wells Fargo & Co.’s online home-equity loans took in $600 million in new loans last year, that Delta and Northwest Airlines each increased sales by 5% through their web sites, saving as much as 80% in processing and commission costs in each transaction, and that Southwest Airlines reached $1 billion in annual online sales during the first eight months of the year 2000 (Meehan 2000). If you are discussing any aspect of recording or reporting expenditure cycle components, GE’s procurement costs dropped by $480 million in 2000 due to their supply chain changes, and the company expects to save $1.5 billion in 2001. If you are discussing the fiduciary responsibility to shareholders, tell your students that GE Co. has pledged to deliver 10 cents a share in cost savings by buying and selling online and digitizing manufacturing processes (Blachere 2001).

Help your students develop customer-centered thinking
On the web, a dissatisfied customer is only a click away from a better deal or better service. Teach your students to focus on providing information to line functions that motivates them to keep and build their current customers and to let word of mouth grow their businesses rather than draining cash with less effective web advertising. Tell your students that in a recent Gartner-Group survey of the 50 top e-tail sites, customer service ratings were extremely low, indicating tremendous opportunities for businesses to capture new market share through innovative customer service experiences and customer resource management (CRM) technologies. The companies that have invested in CRM systems find that they not only sell more when they improve communications and know more about their customers, but they are also able to work more efficiently, save resources, and end up pulling ahead of their competition. Bain & Co.’s research reports that a mere 5% increase in customer loyalty can improve profitability by 25–95%, depending on the industry (Blachere 2001). Online air travel ticket sales exceeded $7 billion last year (Bartlett 2001). United Airlines determined that web site users wanted to be able to check the status of a flight, search for airfares, and monitor frequent-flier miles. Once these web site changes were made, their online business grew by leaps and bounds (Gomes 2001). Another example is REI’s successful leveraging of its “member” relationships, its accurate records of customers’ buying habits and its management of the “last mile” service to create a winning online channel (Kalin 2001). New performance metrics have emerged to help managers make the best “customer-building” choices such as the costs to acquire a new customer, keep an old customer, and to convert a visitor into a buyer, and the percentage of revenues from repeat customers, abandoned shopping carts, on-time fulfillments, and returns to sales (Gardner 2001).

Help your students develop cost-cutting thinking
The goal of most management is to develop sustainable competitive advantage that creates a greater than average return on their investment of resources. The customer-focus must also be combined with a focus on efficiency so that both efforts work to improve gross profit margins. The new technologies available for the eBusiness, such as XBRL and XML, are creating many new efficiencies from utilizing technology. For example, the IRS has lowered its tax form distribution costs from over $3 to a fraction of a penny per form by going online (Gomes 2001). Banks have lowered each customer’s transaction cost from $2.43 for a call center agent or $1.40 for a teller to $0.20 online (Investor’s Business Daily 2001). Cemex is a Mexican cement company in an asset-intensive commodity industry characterized by difficult-to-forecast demand, low-profit margins, low growth rates, and is often victim to changes in economic conditions, interest rates, and government policies. Cemex implemented an eBusiness strategy after studying how other industries (Exxon, FedEx, and 911 centers) used technology. Cemex went from being a struggling domestic company to the third largest cement company in the world, practically overnight (Slywotzky and Morrison 2000).

Kodak utilizes EDI with 40% of their over 200,000 suppliers worldwide, which provide 75% of their critical components and 92% of the overall supply costs (Murphy and Heun 2001). eGalleriaMall.com saved 90% on overhead by closing their physical stores and selling exclusively on-line, now generating $100,000 in sales per month and expecting to double next year. eBay has helped thousands of people create online businesses selling their products, lowering their costs per invoice from $87 to $27 (Hof 2001). Wells, a modeling agency has put all its model’s photo books online, increasing their access to casting calls as well as cutting costs. The owner spent $20,000 on the project, which is minimal compared to the annual $40,000 cost of a regular bound photo book per model (Business Week 2001).

The above eBusiness success stories just scratch the surface in terms of reviewing how sustainable competitive advantage has been created by many different types of businesses by going online. The critical key is teaching our students to get this information to the relevant managers in order for them to leverage their resources to benefit from the eBusiness market opportunities. In addition to topics specifically mentioned, accounting majors are also very interested in information security, fraud, contracting, and ethics issues and stories. Auditing students perk up when the discussion of online queries, intelligent agents, and firewall logs teach them to maximize the efficiency of their staff. Finance students are very interested in learning how to measure the new combination of market, technology, cash flow, management team, security, standards, and implementation risks for a business.

Including eBusiness topics or discussions in our courses is an easy sell to the students because they know the power of the Internet. They typically spend more time on the Internet than we do, surfing, downloading music, playing games, and shopping. In fact, including eBusiness in course components is a wonderful way to connect with our students. For example, an easy way to start discussing eBusiness is to utilize the many online resources available to students that are listed at http://accounting.rutgers.edu/raw/aaa/TYC/aaa2yr.htm, and/or to mention the many online tutoring services:

I suggest that you start by visiting Professor Rappa’s eBusiness site. As little of an investment as 15 minutes per day will result in tremendous insights for your teaching. Some of you who visit this site may feel compelled to ask why he is providing so much of his intellectual property for free? Professor Rappa has embraced the open source philosophy of the Internet, and its ability to raise the bar for everyone’s goals. He truly believes that by sharing information, the overall quality of our society will be increased. Another more “businesslike” interpretation is that by providing his very high quality basic eBusiness course for free, he builds the NC State University brand, creating demand for their higher level eBusiness classes, which are not available without registration.

References

Bartlett, M. 2001. Study: Online travel growing in popularity. Newsbytes (February 23).

Blachere, K. 2001. Satisfaction guaranteed. Smart Business (March). Available at http://www.smartbusiness.com.

Business Week. 2001. Why the web still works. (February 6). Available at http://www.businessweek.com:/2001/01_06/b3718047.htm.

Delvalle, U. 2001. Not a creature was stirring, not even a mouse. Fortune (January 22).

Gardner, E. 2001. Study lays out plans for successful e-Commerce. (February 27). Available at http://www.inter-networld.com/news/archive/02272001.jsp.

Gomes, L. 2001. Fix it and they will come. Wall Street Journal (February 12): R4.

Hof, R. D. 2001. Those mighty mini-dots. Business Week e.biz (January 29).

Investor’s Business Daily. 2001. Bank cost data. (February 12).

Kalin, S. 2001. e-Business as usual. Darwin Magazine (February). Available at http://www.darwinmag.com/read/020101/usual.html.

Meehan, M. 2000. Southwest Airlines cracks $1 billion mark in online ticket sales. (September 13). Available at http://www.computerworld.com/cwi/ story/0,1199,NAV47_STO50128,00. html.

Murphy, C., and C. T. Heun. 2001. The results are in. (January 29). Available at http://www.informationweek.com/822/ebusiness.htm.

Slywotzky, A. J., and D. J. Morrison. 2000. How digital is your business? (December 15). Available at http://www.cio.com/archive/010101_excerpt.html.

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This page was updated April 9, 2001, by the American Accounting Association