What Is E-Business?

Possibly, because of the rapid development of technologies, processes, and models underlying e-business, there are myriad definitions of e-business.

We will use the following definitions, adapted from TechWeb's online TechEncyclopedia^[1]:

^[1] TechWeb's Tech Encyclopedia can be found at www.techweb.com/encyclopedia.

E-business: Having a total presence on the Web in order to do business online. The business conducted from the company's Web site might feature the selling of products and services, as well as the ability to, for example, track shipments, have discussions, or provide feedback.

There is sometimes confusion as to the difference between e-business and e-commerce.

E-commerce: Implies that products and services can be purchased online through electronic data interchange (EDI) features in which purchase orders are transmitted from computer to computer via the Web.

E-commerce is essentially the exchange process (i.e., buying, selling, and collaborating) between internal and external business partners as well as end customers across electronic platforms such as Intranets, extranets and the Internet/Web. It is a component of an overall e-business strategy.

Many companies that have made business and financial investments into e-business have proven that online business is not only possible but also very profitable. E-business is more than allowing customers the ability to view a few Web pages of company information, it's the ability to extend the enterprise out to customers. To do this in the past would have required major efforts in custom software on the customers' computers—oftentimes a very difficult proposition.

Keep in mind though that e-business is only one piece of the puzzle, as discussed in Chapter 2, “CRM: A Working Definition”; it is a component of the overall Customer Relationship Management (CRM) framework. Other CRM components like sales and marketing, call centers, etc. are required to provide the full customer experience depending upon the type of organization that implements e-business.

Unlike brick-and-mortar operations, e-business need not be constrained by space, time, or type of currency. Today, goods can be purchased, paid for, and shipped globally (subject to physical constraints like weather conditions) at any time. E-business is inherently shifting more power to customers, producers, and distributors because there can be direct connections between entities involved in the exchange process, in some cases eliminating the need for intermediaries (see Figure 18.1). E-business is reflective of the changing roles in the producer-customer relationship, where the consumer has increased participation in the way the producer is doing business. An example would be the feedback mechanisms that are provided to consumers via e-business, which allow for more feedback and more immediate response and measurement/analysis of that feedback. In this way, e-business is bringing the customer closer to the actual producer of products and services.

E-business and CRM is more than just purchasing and installing software, it means that organizations have to do business and leverage technology in a different way. In order to maintain a competitive industry position, management must realize that the business rules are being rewritten. The vast majority of the Global 2000 have significant e-business components to their overall business.

Supply chain management is another area of e-business. Electronic linkages between suppliers, distributors, resellers, retailers, etc. are increasingly incorporated into the e-business framework. These various entities, using Web-related technologies and architecture, are taking advantage of opportunities to exchange information, products, and payments to expedite the transaction process. For example, suppliers that use CRM software applications to automate sales, marketing, and customer service functions are also using e-business via the Web to share information on customers, competitors, shipping/delivery, inventory, financials, etc. with members of the supply chain. In other words, e-business facilitates communication and cooperation with members of the supply chain, which can increase the business effectiveness of the channels. This also fosters interdependencies, which force supply chain members to mutually consider strategies, knowledge base and business structures/processes.

E-business technology is evolving. Electronic data interchange (EDI) had been the leading platform for conducting e-business before the rapid expansion in Web technology. EDI was generally used by large companies with substantial financial resources that were able to buy their own proprietary infrastructure for interchange of information about payments, deliveries, inventory, etc. EDI provides for secure data communications between organizations, with the translation of data between disparate computing systems. EDI nonetheless requires significant investments in computers (e.g., hardware, software), third-party service providers and telecommunications (e.g., dedicated data lines and Value Added Networks [VANs]), regular maintenance, and training. Web technologies such as the emerging industry standard XML (Extensible Markup Language) provide EDI functionality at a lower overall associated cost. Also, Web technologies provide reach and accessibility of e-business to small businesses and consumers that do not have the resources available to implement EDI. XML, EDI, and Web technology are being integrated together and used concurrently. This integration is in turn fueling the expansion of e-business.

Business-to-business e-commerce far outpaces that of business-to-consumer in terms of volume of revenue generated. Sales, technical support, customer service, and public relations are the main reasons cited by 70 percent of Fortune 500 companies that have or are building e-business structures.

What Are the Key Applications of E-Business?

E-business is being used to augment or replace existing models of transaction and interaction with customers. For example, in business-to-consumer e-commerce, Barnes & Noble bookstores is using e-business to evolve from brick-and-mortar retail outlets to click-and-mortar (i.e., customers can order via an online store as well as in retail outlets). The focus of most e-business efforts has been related to the following business functions:

• Sales of products and services (e.g., including payments).

• Product development (e.g., gathering customer feedback).

• Customer self-service (e.g., Frequently Asked Questions, online tutorials, chat/discussion groups, automated e-mail response).

• Post-sales support (e.g., order status, billing, technical support).

Here is an example of a company that uses e-business processes and systems:

Company: Type of e-commerce:

Works™ Business-to-business

Works is another Web-based business that changes the online purchasing paradigm much like Amazon.com has done. By forming a Web-centric company, Works is able to transcend the traditional geographic constraints of brick-and-mortar operations. Works has developed a supply-chain, workflow-enabled software suite that allows companies to order business products online and manage both online and offline expenditures from indirect goods and services.

What Are the Benefits of E-Business?

The benefits that can be derived from application of e-business include:

• Enhanced customer service

• Market expansion

• Cost reduction

• Customer retention/loyalty

• Streamlining of the sales cycle

What Are the Challenges to the Growth of E-Business?

E-business provides many opportunities for companies to grow their business. Nonetheless, given the short history of e-business using Web technologies, there remain several issues associated with the implementation and use of e-business. These include:

• Resistance to organizational change

• Business process redesign and systems integration hurdles

• Lack of e-business expertise

• Difficulties in matching technology to business needs

• Security concerns

Setting Up the E-Business Infrastructure

Since e-business opens up the corporate information technology infrastructure to potentially millions of users, there are several important points that must be considered when designing and implementing an e-business system:

• The information technologies infrastructure must be designed from the ground up to handle this environment. In other words, the infrastructure must be designed to be massively scaleable.

• It must be able to provide consistent service quality with low administrative overhead allowing companies the ability to take advantage of new business opportunities.

• Must be able to offer 24×7×365 availability while providing security and transaction integrity.

• The system must be able to tightly integrate and leverage existing business systems.

• The system must be able to handle hundreds of applications and new services that can be transformed in “Web-time” (4 months = 1 Web-year).

• The systems must be able to support the complexity of integrating both business-to-business and business-to-consumer trading.