The Strategic Challenges of E-commerce
Introduction
11th Century Europe saw the emergence of credit-bad banking systems and financial instruments such as bills of exchange. The concepts remain with us, in their modified form, to this day (Chown, 1994). They underpin all modern forms of commerce. The arrival of information technology (computers and telecommunications) has raid the prospect of radical change to this traditional model.
The ri of the Internet (electronic commerce), since the advent of the World Wide Web, has provided an easy to u communication channel for business to contact current and potential customers. The emergence of the Internet as a general communication channel has also given ri to the possibility of widespread electronic commerce. Even though there is still much debate relating to electronic payment for commercial activities, this is clearly an area of growth.
It is difficult to say how large the Internet is. Hoffman & Novak (1996) quote a number of surveys (O'Reilly, FIND/SVP, Times Mirror and CommerceNet) which suggest that there are at least 10 million Internet urs in the United States alone. The number of computers (hosts) connected to the Internet topped 9.47 million (Network Wizards, 1996) as of January 1996. Note that a single host supports anywhere from a single ur to, in some cas, thousands of urs.
As of March 21, 1996, 24,347 firms were listed in Open Market's (1996) directory of "Commercial Services on the Net," and there were 54,800 entries in the "Companies" directory of the Yahoo Guide to WWW (Yahoo, 1996), with the total number of Web sites doubling approximately every two months. Jim Clarke, the chairman of Netscape, estimated the Internet has 40 million urs in 1995 with growth at 8% per month (Clarke, 1995).
The Internet is only one aspect of technology. Business require information and supporting systems (process) to handle the data - over time the systems have beco
me computerid (IT). Modern information technology can both support the process and help capture uful information for the enterpri. The technologies include:
1. Organizational support systems, such as workflow and groupware - making business more efficient.
2. Customer contact databas - helping capture information about customers and facilitate new methods of marketing.
3. Electronic payment systems for goods and rvices - the are emerging, although the majority of payments are still bad on relatively expensive traditional cheque clearance.
Collectively and individually, the areas will contribute to major changes in the way a company conducts its business. Enix have coined the term Workware to describe the combination of the technologies.
Figure 1 - The emergence of Electronic Commerce will be underpinned by three key components
However, there is still widespread misunderstanding on the value of organisational support technology. A recent survey of 437 large enterpris by rearch company Xephon (1996) indicated that an astonishing proportion (44%) had no immediate intention of introducing modern information handling systems (Groupware was defined by Xephon as Lotus Notes, Microsoft Exchange and Novell GroupWi). Of the, 65% said they were unsure what the technologies could deliver. From the statistics, it is clear many organisations are still sceptical about the benefits of technology.
The efficient collection, utilisation, handling, storage and dismination of information is a vital component of corporate success in the modern business world. However, the gathering and u of information must take into account issues of privacy and curity. A recent feature in the Financial Times (1996) noted that " … in order to thrive in the 1990s, financial rvices organisations are as much in the business of managing and manipulating information as managing and making money." Furthermore, the interest shown in topics such as TQM and BPR has demonstrated the importance of process as a fundamental building block.
Inevitably a few savvy organizations in each ctor will utili all three components to change their market or develop new markets. Tho who do not adapt quickly to the new ways of working are likely to be disadvantaged as their strategies become redundant. All business should investigate the implications of the technologies for them and the markets within which they operate.
Marketing
Champy, Buday and Nohria (1996) argue that the ri of electronic commerce and the changing consumer process brought about through electronic communities are likely to lead to a new wave of reengineering, mergers and acquisitions. Moreover, organizations may expand into new business areas, taking on roles unforeen prior to the ri of the Web. For example: a magazine publisher, Cond Naste, has moved into the travel business; Bill Gates is now an electronic real estate agent; and a recruitment advertising agency, Bernard Hodes, has now become an electronic recruitment company.
