Quarterly Journal on Management
From the publishers of THE HINDU BUSINESS LINE
Vol. 2 :: Iss. 3 :: February 1999
Building Bridges
Why businesses need to embrace E-commerce
Atul Vijaykar
Two of the major buzzwords on the Internet today are e-business or e-commerce. These two terms are often used interchangeably but they really have a slightly different focus.
E-business is the broad concept of using the Internet to fully automate business processes such as purchasing, sales, accounting, customer service, marketing, and inventory management. By so doing, you web-enable your business - making your company easier to do business with, and providing information to customers, suppliers and employees 24 hours a day, 7 days a week. E-business is really about creating electronic relationships with your customers, suppliers and employees.
E-commerce is a subset of e-business and involves taking advantage of the immense popularity of the internet to buy and sell goods and services electronically. Businesses selling. products to end-users, such as Barnes and Noble (www.barnesandnoble.com) and Amazon.com (www.amazon.com) are some well known examples.
Why should your company care?
So why should businesses care about e-business or having an electronic storefront on the Internet if they are already satisfied with current business models? The answer is that your company can improve its competitiveness. You can automate business processes, increasing efficiency and therefore competitiveness.
With an effective e-business solution, communication with your customers, clients and suppliers becomes more convenient and doesn't stop after office hours. Your customers can find out if you have inventory of products they may wish to order, or they can confirm delivery times online. This is particularly important for businesses which have customers and suppliers located in remote parts of the country, or overseas. E-business lets you remove time, distance, language and geographic barriers, saving time and expanding your potential customer base to include distant export markets.
Companies do not operate in a vacuum. They have to find a way to be easy to do business with, to offer products and services in a way that is more convenient than other companies. Federal Express, for example, lets you prepare shipping documents, order suppliers and track parcel deliveries, all using their web site at www.fedex.com
Customers are now beginning to demand the convenience of executing business transactions electronically. It's not necessarily a luxury in your business - sooner or later it will be a competitive necessity. Businesses need to get wired today or risk losing customers to more technically savvy competitors. They risk being left behind - as more Internet-savvy businesses raise the bar.
Compete in global markets, around the clock
E-commerce is exploding. According to IDC, a US-based IT research firm, electronic commerce over the Internet will be a $220 billion business by the year 2000. Why restrict your business to serving a small geographic location, or the domestic economic conditions? By applying electronic business principles, you can reach global markets in a cost effective manner. You can serve customers anywhere without the significant overheads of a retail presence. You can do business around the clock too, by letting customers search your product catalogue online, place and confirm orders and so on.
Leverage and enhance existing architecture
Small businesses have a tremendous opportunity to embrace the Internet, to run faster and implement systems more rapidly than larger more complex multinationals. You don't have to be a large company or have large technology budgets to web-enable your business. That's because you can wire your company for e-business based on Intel architecture PCs and servers that you use today. If your company already has a local area network and servers, you are already more than half way towards setting up your own e-commerce solution. The wide affordability and availability of Intel Pentium II processor based PCs and servers means that even the smallest business can have the tools that enable e-commerce. The next step is to connect your company network to the Internet and build your own Web site.
E-commerce solutions abound
You can choose from a wide variety of off-the-shelf e-commerce software available for Intel processor-based PCs. These range from simple online product catalogues with shopping cart functions to fully functional automated online transactions systems. There are inexpensive applications available today using standard Web technologies such as HTML and Java* that allow you to build comprehensive online catalogues and databases, communicate electronically with your suppliers and customers and perform transactions securely and reliably. Contrary to general perception, Web enabling your business today is not a difficult task and it's within the capabilities of even the smallest business.
E-business solutions can be deployed in all aspects of your business processes or in just a few. Transactions and communications can take place externally over the Internet, internally on your company intranet or exclusively over an extranet. All these scenarios use the Internet as the unifying entity that brings your customers, suppliers and employees together. An intranet is an internal company network that uses Internet browsers and communication technology to share information. Extranets are Internet-based, restricted access networks, where suppliers, customers, resellers, dealers or other channel partners can log in to place orders, make enquiries and so on.
Share information on intranets, extranets and the Internet
You can communicate with customers more conveniently and cost-effectively via e-mail or your company website. Being accessible to vendors and suppliers over the Web or through an extranet will help reduce paperwork and eliminate unnecessary telephone calls thereby lowering costs and streamlining the business process. With a reliable and secure extranet, you can automate your business while protecting your data from competitors.
For example, you can make your inventory system available to your suppliers through a password-protected extranet. That way, your supplier knows when your inventory is close to minimum levels and can supply you with more stock once it reaches an agreed level.
Having a company intranet will greatly improve the way your company responds to e-business transactions a ' rid business processes internally by centralising valuable information and data and by making making them available to the employees who need it.
Is there a catch?
So what's the catch? You are convinced that e-business will benefit your company by expanding your markets, raising your competitiveness and increasing your business efficiency but there must be some hidden issues, right? Wrong. Of course any company thinking of increasing the role of IT in their business process must consider issues such as reliability, scalability and security. These are not catches, they are realities that businesses already contend with in their everyday operations. A good e-commerce solution pays particular attention to these issues.
You want your computer systems to be reliable, maximising system uptime, and ensuring that your business is up and running even when the office is closed. The latest e-commerce solutions offer unprecedented security by taking advantage of secure servers, digital certification and secure payment technologies such as Secure Electronic Transactions (SET).
Essential steps towards e-business
How can your company get into e-commerce? How about starting by networking the PCs in your office, and allowing employees to communicate, collaborate and share files and data better. Then connect your company to the Internet. See what your competitors are doing on the Web. You're probably losing customers to them already because they are taking better advantage of the Internet. Shop around to see what the various e-commerce solutions can do and find out which one will serve your company best.
Remember that e-business is not only about online shopping but also about improving the efficiency of business-to-business communications. Depending on your current hardware you may be able to use existing PCs and servers but you should consider investing in the latest systems that ensure reliability and give you the scalability you need as your business grows. Customers and companies are increasingly demanding the convenience and efficiency of e-commerce and electronic communications. Remember: E-business is not a maybe. It's only a matter of time before another company raises the bar in your industry by applying electronic commerce.
Atul Vijaykar is Director - South Asia, Intel Corp. He can be reached at atul.vijaykar@intel.com.