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Ebusiness - Information
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A starting point is to define eBusiness as
"interaction with business partners, where the interaction is enabled by information technology".
This is an accurate definition, but doesn't give us much insight into the excitement surrounding
eBusiness and eCommerce.
EDI(Electronic Data Interchange) technology has been around since the 1970s, but
no one got very excited about EDI. So what does eBusiness have that EDI
doesn't, apart from the natural glow of youth? The key change is the
information technology is available to "enable" business transactions
electronically. The Internet has made access to enabling information technology,
much more widespread, cheaper, more powerful, and more integrated into the enterprise.
EDI was about cutting back-office costs (for instance, orders sent from one
Ebusiness partner to another no longer required paper work).
eBusiness is changing the way we do business, at every step in the value chain (initial
benefits for manufacturing firms will focus on the supply chain, which is the
chain of activities from procuring raw materials, manufacturing the product to
finally distributing it). It even beats EDI at its own game: EDI lowered
transaction costs making feasible the rapid exchanges of orders in a just in
time environment. eBusiness lowers transaction costs to the point where entire
new classes of customers and services are profitable. EDI is expensive to set
up, and was only used by large companies with their regular business partners;
it required a very high level of volume to make sense. eBusiness is cheap, has
hundreds of millions of participants already, and reaches into everything a
business does. Another key change is people: the workforce is now full of
people who are much more familiar with advanced technology than twenty years
ago.
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Another definition of eBusiness
is that it is Business Process Re-engineering (BPR), except this time, information technology is much more entwined. This
is a provocative definition. Firstly, BPR was very painful in the 1980s, and
only a few firms succeeded in radical change. BPR promised to redesign a firm
so that all processes focused on the customer; old hierarchies were no longer
relevant. It was supposed to empower junior employees, and remove layers of
management. Many firms that thought they did a good job at BPR actually paid
only lip service to the concepts. Secondly, it became associated with
downsizing. Thirdly, it was supposed to be closely related to IT in the 1980s,
so why do we need to emphasize that again?
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The key technology of the 1980s was ERP (Enterprise Resource Planning) systems. ERP
implementations are large, complex and slow moving projects. EPR systems were
the first software systems to integrate supply chain all activities into a
single IT backbone. The software involved was monolithic -- huge, expensive and
not very flexible. The only way to implement an ERP system is to move the way
the company does business to suit the ERP package; even ERP systems offering
'flexibility' is really just more comfortable straightjackets. The technology
of eBusiness is different: it is smaller, faster and much more fragmented.
There is no eBusiness system available from a single firm. An eBusiness
infrastructure is made up by piecing together different systems (the first
thing that is usually done is linking various eBusiness applications, such as
an ordering website, into the ERP system, bypassing the ERP order entry method
and just using the ERP system as a big database of inventory). This technology
is rapidly changing business in many industries. Now that the dot.com hysteria
has gone, we can see that eBusiness in a quantum leap in the way enterprises
use information technology. The new requirements are to integrate with many
external business partners and to have an IT environment that can much more
quickly respond to changes such as mergers and acquisitions. eBusiness see the
end of the attempt to run a business with centralized. Monolithic IT solutions.
In a way, it's analogous to transport passing from the railway era to the
roadway era. Railways are fixed gauge, run by a handful of operators, and users
were expected to build their warehouses and factories near the railway, rather
than the other way around. Railways are high volume and still today the best
way of moving very heavy loads over long distances. But roads can be built
almost everywhere; they can be heavy-duty eight lane masterpieces of civil
engineering, or they can be gravel tracks where this is the only affordable
solution. You can ride a bicycle on a road, or a Ferrari; carry goods in a
minivan or an outback-Australian road-train.
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eBusiness is about understanding the potential of new technologies in your market and in
your supply chain and then reorienting your business to implement your vision,
and implementing it quickly enough to minimize the threat from competitors if
you are defending your market share, or fast enough to take advantage of the
opportunities if you are aggressive about growing market share.
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eCommerce
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