Ebay’s Strategy Information System

Keywords: sis analysis ebay, ebay sis impact

Every time, the digital technology is evolution. Electronic business (e-business) is one of digital economic that grows up. “The term used to describe the information systems and applications that support and drive business processes, most often using web technologies” (The National B2B Centre Limited, unknown date). E-business has been implementation on Internet and the society since many years. It is a new way for companies and people do business today. The integration of a company’s activities is establish with e-business including products, procedures, service. It exist many business model on the Web as e-mall, portal, auctions, communities of interest or value chain service provider (McKeown, 2003, page 220).

The purpose of this article will descriptive and analyse the realising the benefits of Strategy Information System (SIS) through an on-line business as eBay Inc. In 1995, Pierre Omidyar has created auction on-line for customer-to-customer and business-to-consumer (Hsiao, unknown date). Today, the worldwide is auction leader. There is a hundreds of millions of buyers and sellers that connect every day. The undertaking is going from strength to strength. In 2009, the revenue of organization exceeds more 8 billion dollars (Jain, 2009, page 5). The article concludes with the examining of impact of government policy it.

Strategy Information System (SIS)

SIS adopting

SIS as a strategic IS/IT or competitive information systems, “represents a fundamental refocusing of the IS activities away from the previous back room attitudes towards the market place in which the organisation works” (Pritam, 2010,Chapiter 2).

The objective of SIS provide increase efficiency the process automate existing information flows and operations that constitutes a sustainable and significant competitive edge (PEPPARD, 1993, page 13).

Why they adopting SIS?

Companies use SIS in order to try to do change the industry structure and thereby to disturb the competitive forces in a market. It enables to give a high quality service, creates new product and saving cost thereby to obtain business competitive advantage over their competition (PEPPARD, 1993, page 13).

SIS for competitive advantage

The competitive advantage helps the company to maintain their efficiency and strategic position thereby decrease a competitive disadvantage and meet other strategic enterprise objectives (Phillips, 2005). Porter defined competitive advantage as growing ”fundamentally out of the value a firm is able to create for its buyers” (Peppard, 1993, Chapter 3, page 54).

Innovation strategy:

Implement electronic commerce is need strategies to counter these threats for companies. They should “emphasize innovation, because innovation is the one thing that is most difficult for other companies to imitate” (McKeown, 2003, page 235). It is a new service including a new way to do business: buy and sell real-time.

EBay develop unique auction markets with the assistance of IS, it is a disruptive technology for shop locally.

Auction of principle is “the buyers enter competitive bids and sellers enter competitive offers at the same time. The price a stock is traded represents the highest price that a buyer is willing to pay and the lowest price that a seller is willing to sell”(Investopedia, unknown date).

With Internet, the buyers can to introduce and sell more easily their product and capture large customer contrary auction classic. The sellers “can know the latest news and information from all around the world in just a blink of time by access to internet” (MengHan, 2007).

People can start a business or to get rid of thing through eBay’s website. Internet constitutes a gain time. One of benefit of SIS is the eBay haven’t got inventory and saving cost. Moreover, it is the first on-line auction that constitutes an advantage on market.

Differentiation through better services

In 2002, revenues of company decreased following an incident that loss of confidence between buyers and sellers. To remedy this eBay created ”a system that enables customers to rate their sellers. This step helped to improve consumer comfort, which is a key factor in e-procurement strategies” (Troy, 2010).

The system of eBay is strong, company use Greenplum to manage one kind of data (DBMS, 2009).

EBay develop many services, software and tools for customers ‘need and delivering value and solution to problem:

Skype: ”an Internet communication offering, allowing people everywhere to make unlimited voice and video communication for free between the users of Skype software” (eBay, unknown date).

PayPal: it is system that facilitates the transaction and security. EBay acquires an acquisition price of $1.5 billion. It is ”enables any individual or business with an email address to securely, easily and quickly send and receive payments online. PayPal’s service builds on the existing financial infrastructure of bank accounts and credit cards and uses the world’s most advanced proprietary fraud prevention systems to create a safe payment solution.” (eBay, unknown date)

Software Developer Kit (SDK) is an application for the eBay API.

Application Programmers Interface (API) is ”an active member of the eBay Developer’s program, offers eBay certified solutions to automate listing lifecycle processes.” (Intechnic company, unknown date)

The benefits of eBay Integration is ”integration of the eBay API will increase your revenue while decreasing operating expenses, improving the efficiency and cost effectiveness of your eBay operations in all phases of the listing lifecycle. Furthermore, eBay API integration can also be used to quickly retrieve large amounts of information about other listings on eBay which can be automatically processed, analyzed, and presented to you in a report from which you can use to identify income opportunities. There is a multitude of additional applications and advantages of eBay API Integration and Intechnic Corporation can create a modular, scalable solution tailored to your company’s needs and goals. ” (Intechnic company, unknown date)

EBay Tools as solutions to improve the use of eBay developing with Java and J2EE which ”simplify the buying and selling process by providing functionality for listing multiple items, creating templates for repeated use, inventory management, sales and account management, email tools, and financial reporting.” (Chen, 2005)

Solution for buyers via eBay’s website that are payment as e-learning (figure 2).

Community around customer services as show Illustration 2. eBay ”strives to provide high quality customer service, with the help of many different technologies to provide online support, such as chat rooms, discussion boards, and frequently asked questions.” (Chen, 2005)

Every year, eBay improve the quality and customer service in developing or design tools and architecture. This notion links other strategy that is customer-orientation strategy. The benefits are a available all time to support customers and a detailed customer service information can cut down on phone calls to the company.

Cost leadership strategy

The firm offer the services at the lowest cost in the industry. Indeed, eBay offer to buyers and sellers to doing business on Internet with a physical presence in the exchange is now no longer necessary. They don’t pay to be present or transport. So, eBay provides virtual space and software tools and reduce their cost for people. (Hemmatfar, 2010)

About eBay, there are not inventory since its customers supply the product thereby reducing their cost without logistics and supply.

Growth strategy: externalisation and accessible

The base of business is founded by technology that have a lot of advantage and successful as “Internet connecting all the people of the world very closely” (MengHan, 2007), so technology facilitates the function of auction market.

EBay Marketplace has “a powerful online platform for the sale of goods and services and offers localized sites in the following markets” as Asia Pacific, Europe, North America and Latin America (eBay, unknown date).

In addition, the eBay’s pages are translated many languages as English, French, Spanish or Chinese that allows to be externalisation and accessible for many countries.

Appropriate strategic alliances

The firm establishes new business linkages and alliances with suppliers, customer, other companies or competitors for develop and perform their high software and services.

Higher architecture

The eBay infrastructure is compound a fifteen thousand servers. This environment is a software-as-a-service. ”New features are deployed every two weeks to both core and international platforms. Starting with C++ and moving to Java, XML, and HTML, in half an hour and deploy it automatically to QA or stage it to production. Strong hopes to accelerate development to a monthly, rather than quarterly, cadence. Managing a rapidly-evolving infrastructure to minimize the latency of process that end users, both buyers and sellers, experience is an everyday reality” (MacFarland, 1996).

For example, with the design a new architectural with Java technology and MSXML eBay have many benefits are a ”new architecture expected to handle growth in transaction volumes and increased number of registered users over the next 5 years and beyond-learning to eBay become a $3 billion dollar company. More than 25% architectural framework and design reuse helping to significantly speed development cycle. Moreover, perceptible improvement in application performance-faster, more efficient page loads and responses.” (Marshak, 2003)

EBay’s keeping the site up and running. ”In 1999, eBay was galvanized when a catastrophic systems failure blacked out the entire auction site for 22 hours. The company lost millions in transaction fees and billions in market value as investor’s dumped shares. Two results of the Big Crash remain paramount to this day: first, eBay’s realization that remaining “up” on a 24/7 basis is a mission-critical business imperative; and second, the hiring of Maynard Webb as CIO. Every analyst consulted for this story acknowledged Webb’s crucial role in eBay’s evolution.” (Hill, 2003)

E-business strategies for value chain

Internet value chain helps eBay to how use Internet in a company strategically (Figure 3)

Impact of government policy

It is ”a set of responsibilities and practices exercised by the board and executive management with the primary purpose of providing strategic intent, or direction, ensuring that corporate objectives are achieved, ascertaining that risks are managed appropriately and verifying that the enterprise’s resources are used responsibly. This provides a degree of protection to the organization, its customers, suppliers and stakeholders” (Chita, 2010)

The company has developed a set of community policy in order to consistent and safe trading in the Internet based market. Every year, ”eBay constantly conducts reviews of its policies and user agreement and makes changes and adjustments. Some of the updates are routine and some of them are necessary due to information system issues. For example, in 2001, when the company had discovered a bug in its registration procedure, it reset the personalized settings for over 6 million of its customers”. (Chen, 2005)

In terms of consumer protection, eBay say: ”we treat your information as an asset that must be protected and we use numerous tools (encryption, passwords, physical security, etc.) to protect your personal information against unauthorized access and disclosure. However, as you probably know, third parties may unlawfully intercept or access transmissions or private communications, and other users may abuse or misuse your personal information that they collect from the Site. Therefore, although we work very hard to protect your privacy, we do not promise, and you should not expect, that your personal information or private communications will always remain private” (eBay, 2007). For example, eBay changed its policies about some JavaScript functions used in online auctions for security purposes and has ‘PayPal Purchase as discussed above. (Chen, 2005)

Moreover, eBay ”requires that all users be at least 18 years of age. The reason behind this policy is that in the past underage bidders have placed bids on items that they never intended to purchase, and as minors they cannot be held legally responsible”. (Chen, 2005)

Much investment to avoid a financial loss of data if there is disaster. The system must be strong, reliable and efficient. For example, a security incident would reveal PayPal accounts from users. The firm must to use a methodology as Control Objectives for Information and related Technology (COBIT). It is a ”good year framework strategy to help organization Maintain and Develop a standard system of IT governance” (GOESSLER, unknown date).

The model is centered on the client. The structure of employees is dedicated to customer service. The company is headed by the sellers and buyers. They are involved in the transaction. EBay plays a role as an informant and must have to find solutions to meet customer needs, adapting to customers. For example, eBay created a system to evaluate the actors to help sellers and buyers ”achieve recognition as good sellers those who deliver within the agreed-upon time frame or good buyers those Who Pay for Their order” (Zara, 2008). Furthermore, it allows knowing the status and other details as you can see in Figure 4. This system reassures them whether it is a buyer or seller or not reliable. The notation is made from the two previous players of the transactions.

Conclusion

Strategy information system gives to companies an opportunity to have a gain advantage and other benefits that improve their system, process and services as eBay case. The creating a competitive advantage results comes alignment strategy organizational information systems. Indeed, IS are inevitably associated with government policy, because they have an influence on access to a key resource: information. The concept comes in. The government companies must comply. ” eBay has tried to avoid policing its site for activities that violate local rules and instead has chosen to issue disclaimers and rely exclusively on its sellers to abide by local rules” (Daniel, unknown date).

Company must to assurer security of system en permanence as authenticating users, authorizing access, and enforcing security features or security process payment. In this eBay’s case, is in ”developing and improving software and digital infrastructure tools that lead to the creation of a safe, secure, information-rich on-line trading community. The company’s strategy is to allow users to innovate using the tools that it provides, regardless of what they are buying or selling or where they are buying or selling it” (Daniel, unknown date). So, good strategies ISs have contributed to eBay’s long lasting, success and enhance the position of leader in the global market.