More on E-commerce
March 19, 2000
BUSINESS PAGE is dedicated to providing objective information an opinion on issued of interests to the business community and the public at large. The articles in Business page are prepared and contributed by CHRISTOPHER RAM. Christopher Ram is the Managing Partner of Ram & McRae, Chartered Accountants, Professional Services Firm.
Today the pace at which changes take place in the business world is mind-boggling and before one can grasp these other changes occur at warp speed. The most successful entities in this new economy will be the ones whose leaders are visionary enough to recognize coming trends. They will also have to ensure that their organizations are flexible enough to adapt constantly to new situations.
This is a new challenge for those who insist on business as usual in the bureaucratic, top-down style with which many ineffective managers are comfortable. In this brave new world, technological advances are being experienced that sometimes make it difficult to measure results in the traditional manner or even to identify and highlight what is important. The growth of Electronic Commerce (E-commerce or E-business) has redefined the commercial space and places new demands on the business community.
E-commerce is playing a crucial role in addressing strategic mission-critical business needs and many companies have been forced to expand into new areas. Both business systems and corporate strategy must now be modeled to acknowledge the importance of E-commerce solutions. Of course, the main driver of all this has been the explosive growth of the Internet.
The Worldwide Web has transformed the way companies do business and has given new impetus to global competition by helping to facilitate E-commerce. In this so-called "E"-volution the Internet has emerged as key in the future of E-commerce and along with intranets and extranets is becoming an established pipeline for business-to-business (B2B) communication.
The ease with which the Internet can be accessed and its relative low cost have assisted in the tremendous growth in the new digital mode of doing business which has been experienced worldwide. A personal computer (PC), modem, web-browser, and phone line are all that even the smallest business needs to gain access. The Internet is also user-friendly with Point-and-click technology making for easy use of browsers and search engines, and Web sites themselves are generally easy to enter and navigate.
Another driving force is the value chain management initiatives that are beginning to permeate global business. These efforts have sparked a need for collaborative sharing of information about the supply and demand chains of enterprises and their business partners. They have also necessitated more widespread, timely communication as companies reach out to smaller partners, international partners, and others, including their vendors, raw material suppliers farther back along the chain as well as suppliers of maintenance, repair and operations products and services.
A third driver of the future of E-business and the Internet is the demand for enhanced customer service. With this goal in mind, companies are turning to the Internet as a way not only to lower costs but also to increase service quality levels. Internet-based communication is seen as a way to strengthen business relationships with suppliers and customers. Indeed, many firms are setting up extranets to support established interaction with commerce partners. In addition, companies hope to use the Internet and E-commerce to increase inventory turnover as well as revenues for themselves and their customers.
Information flow Companies are moving and managing unprecedented amounts of information. In fact, some analysts predict that data communication will dwarf voice as the de facto method of information exchange. The Internet is bolstering that trend as it fuels the information flows, making them even more useful and critical to the success of businesses and their commerce partners.
As more electronic data becomes available, businesses must make better use of it. Data will be accessed and shared both inside and outside the enterprise. Inside the enterprise, there will be better communication with remote users, and enterprise-wide information management will bring with it the challenge and promise of application integration. Outside the enterprise, there will be a blossoming of business-process collaboration. Data sharing throughout the commerce community will result in better understanding of consumers and customers. In both cases, information will be available to more users and used more productively.
Technique not just technology
To reap the greatest reward from any solution requires more than pure technology. For example, a PC can be used as a glorified adding machine. But the promise of the PC as a tool is achieved through an emphasis on training in the understanding of the technology, on knowing what is possible, and on learning how to fulfill this promise. By the same token, users will need to know how to make an Internet-based E-business system provide maximum rewards while functioning with optimum efficiency.
Increased Internet access which hopefully will be facilitated by the availability of increasing telephone lines will lead to increases in E-commerce among small and medium-sized overseas companies. This will enhance their power and positioning in the global marketplace, and in some cases, even tiny businesses in developing countries will become able to bid effectively against established companies in industrialized nations. Even with these developments, the fundamental goal of most enterprises must still be to focus on meeting customers needs.
New opportunities will emerge for companies to maximize profits and achieve greater efficiency. For instance, the buy, sell, and ship areas of electronic commerce will continue to grow rapidly as it continues to spread through the Internet, and the business-to-business payments area will provide new prospects for financial institutions.
Perhaps the most obvious future trend resulting from the spread of E-commerce to the Internet is increased globalisation. This is made possible by 24-by-7 nature of the Internet and by the fact that it is always open to users. With globalisation comes an increased interest in international trade issues, such as logistics, legal import/export restrictions, and international tariffs.
There will be a major move toward managed services and outsourcing by companies of all sizes. Instead of trying to manage E-commerce on the Internet for themselves, organizations will enhance their focus on their core businesses. The struggle for human resources skilled in information technology is already a challenge.
As the competition for IT talent becomes even more fierce, companies will increasingly turn away from striving to keep top IT professionals on their payrolls. Companies exploring Web-commerce solutions tend to seek outsourced skill sets. Areas of outsourcing in the future will include the following: Technology implementation, application integration, invoice processing, logistics management, and order management.
A final future trend will be a change in the role played by service providers. Many of the previous issues surrounding the Internet are changing or disappearing. For example, security was once a major concern, but today's solutions are mitigating security risks, and worries are lessening as Internet usage becomes a more typical part of everyday business.
In the past, many E-commerce service providers focused on moving data; in the future they will offer applications such as catalogue hosting, data mining and data analysis. They will become more Internet-centric, offering a wide variety of value-added solutions including intranet/extranet management services. E-business providers will also increase their emphasis on implementation, policies, access control, and other business issues.
Business-to-business electronic commerce has clearly evolved into a major force for global business in the new millennium. The Internet revolution offers companies the opportunity to expand their activities to larger commerce communities; embrace the benefits of collaborative value chain management; and realize the promise of increased business process efficiency and enhanced customer service.
How well we accept the opportunities and challenges of E-commerce will depend on the vision of those in business and will determine how quickly we catch up with the rest of the world.