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E-Commerce v/s
E-Business |
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Today the
internet is transforming how we conduct business. It will change
business irrevocably, yet most businesses have yet to perceive it,
let alone understand it or adopt it. The idea is electronic
business, often known as e-business. The e- will soon be dropped
and e-business will be business as it comes to be generally
understood.
Once a
theoretical concept discussed by academics, e-business has become a
core topic at business schools, of some MBA courses and more
recently of popular business publications. However, it is not widely
grasped, largely because the speed at which it is being introduced
has allowed very few organisations the time to analyse its
potential. It is still confused with its most visible but
relatively limited manifestation, electronic commerce. Many
business leaders believe that they can ignore e-business until it is
more fully developed. But, by the time e-business is commonplace, in
years, rather than decades, it will be too late for the
non-adopters. Those companies will have ceased to exist.
The power of electronic
technology to change fundamentally the way in which organisations
work is hard to conceive. It can help to boost revenues, cut
production cycle times and costs, improve customer service and
broaden market share. Interactive relationships with customers and
suppliers enable new products and services to be delivered faster
and better at a substantially lower cost. Ultimately, e-business
will be deployed throughout an entire industry's supply chain,
linking manufacturers, assemblers, distributors, marketers and
customers. One press of a button triggers processes throughout the
chain.
Historically,
e-business has been thought of as electronic commerce. While
Internet shopping is expected to generate at least $1 trillion a
year by 2002 (and some research suggests more than $3 trillion), the
wider concept of true e-business will bring benefits worth many
times more. In fact, e-business's greatest opportunities are to
be found in back office and supply chain systems.
E-business seamlessly moves
data and information over open and closed networks, bringing
together previously separate groups inside and outside companies. It
improves company performance by connecting disparate value chains,
which allows new relationships to be developed. It provides
information instantaneously, helping executives to identify their
best profit centres, modify existing business processes and create
new ones. E-business allows organisations to create strategic
alliances and to outsource functions and processes that can be
carried out more efficiently by others.
The directions that businesses choose to take will
increasingly be determined by the results of inter-networking
through e-business. These may be radically different to
traditional ideas of companies in a marketplace, who carve out a
section of an industry value chain and provide a product or service
for that niche.
Instead,
e-business blurs the demarcations between businesses and joins value
chains in different industries. Organisations will find ways to work
together to build on common strengths. In the longer term, value
chains - rather than companies - will compete against one
another. The businesses that flourish will have integrated their
joint demand and supply chains to the point where information is
seamlessly shared and instantly transmitted to all partners.
Inevitably, this will involve multi-company strategic planning,
human resources and finance.
Ultimately, a company could concentrate solely on managing
its brand, outsourcing all physical aspects of the business to
others. As demand increases, there will be no need to go through the
usual steps of scaling up production and distribution capacity. It
will simply connect to third parties who have the
capacity.
As the speed of
change accelerates, companies will find that they need an unusual
blend of skills and experience if they are to succeed. They must
have the ability to integrate new technologies, a thorough
understanding of their current business processes and a clear vision
of how their future ones will work. They also need a well-informed
view of the strategic consequences of forging partnerships and
alliances.
Heads of large
companies will also have to consider what their company actually
means. In the past, the bulk of day-to-day CEO responsibility
consisted of managing the staff who carried out the operations of
the company. As these activities are moved to specialist third
parties, the core activities will change.
The truth of e-business is that it changes
industries. It merges industries. It destroys industries. And it
is unstoppable. The technology already exists and it cannot be
uninvented. It is an idea that is rapidly turning into a fact of
life. |
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