E-business has been described as the base to the tip of the e-commerce iceberg, comprising roughly 80% of the online business transaction market. This means it encompasses not only buying and selling on the Internet, but also related business processes, such as customer service and relationships with business partners.
One of the first industry players to use the term was IBM, when, in October 1997, it launched a campaign built around the term. Today, major corporations are rethinking their businesses in terms of the Internet and its potential killer app, e-business.
In the business-to-business (B2B) application, companies make use of the Web to buy parts and supplies from other companies, and for a number of other uses, such as joint research and collaboration on sales promotions.
While much of the early security concerns regarding online trading have been addressed, the question remaining for decision-makers for companies not yet enabled is: What are the key issues you need to be aware of before enabling your business?
You must remember this...
Sandy Gilchrist, IBM`s principal consultant for e-business, explains: "Certainly the first thing that you need to do is translate real business processes into the Web. The first question you have to ask is: what processes do I actually have? And why are they there in the first place?
"E-business is about diverse companies sharing customer e-economy - where one company`s customer is the same customer of another company - in a different industry, in a different country, in a different language, using a different currency, which is why you should make sure that when you`re Web-enabling those relevant business processes, you understand them.
"While technology is important, it`s only a means to an end. The question is, how integrated are you from an IT systems perspective into your real business processes?"
Calum Russell, Microsoft SA`s business marketing manager, also believes integration to be core to getting e-business off the ground. "That`s where I expect to see B2B really take off this year - businesses are now preparing front-end systems for when their e-business offering takes off - which is why I expect to see the efforts this year being on integration, on building the back-end systems and the systems that allow that electronic linking."
Competition on all sides
Brent Shahim, an MD of e-business enabler Aqua Online, says: "Business managers need to understand that e-business is a very real threat to the sustainability of their businesses unless they can attend resource and capital to looking at embarking on e-business as it is."
However, the threat of competition is not only from without, as Russell explains: "Competition comes from lots of different aspects - yes, there`s competition from the retailer, but that is only one piece of the threat. The threat is more in your relationships with other businesses. If you don`t have the ability to deal with them, and still add value, then you`re going to be out of that circle.
"The broader aspect of the Business Internet as [Microsoft is] calling it, is that the collection of areas of knowledge, customer relationships, business applications are all Internet-enabled. This means that a customer can log onto your Web, at the same time as another could be coming through a service desk, directly into your manufacturing system - all of which puts tremendous pressure on [the company] for being operationally, very, very smooth and efficient in the extreme, to handle the kind of pressure of a transaction where everything is happening quickly, across the Internet."
Challenges
Almost all the industry experts agree that the biggest challenge facing e-business in SA is the lack of major capital investment into the industry. This is due mainly to the "wait and see" attitude adopted by most companies considering enablement.
But as Shahim cautions: "There`s no urgency yet - and [businesses] need to approach it with an urgency because you`ll find that critical mass in e-business implementation and usage will happen very quickly."
Show you the money?
Gilchrist also puts forward this definition of e-business: "E-business is the act of stepping out of the paradigm and asking: How do I invent new ways to make money, outside of my own industry?"
The answer lies in what he terms, "cross-sell/up-sell" - or using your existing knowledge of customers` circumstances to forecast their potential needs, and referring them to your strategic relevant business partners, thus keeping the profits within the extended enterprise that is the result of e-business enablement.
Shahim highlights one of the immediate opportunities to cut down on expense and add to your company`s bottom-line: "An example is MRO procurement - materials, repairs and operations. Those expenses traditionally make a big number of your expense item on your income statement. They`re not core to the business; they`re ancillary products like stationery and travel expenses, so they`re a lower risk implementation which provides a big cost saving - when you do get it right."
Tips for the wary
In terms of advice to business managers, Microsoft`s Russell believes that companies should evaluate their current business processes, and then envision a model where everything happens quicker. "When you start pushing your business to be faster and faster, where are the cracks going to appear? Where are your problems when it purely concerns speed? And what is your core competency as a business? Once you`ve analysed that, you can decide what to do in e-business."
Nick Cheetham, MD for the SA and UK arms of computer systems and services supplier Stratus, believes adopters of e-business will be more successful if they: "Firstly, use IT to empower the customer; all systems must be turned around so that they can be operated by the customer directly. Secondly, focus on making the IT infrastructure totally resilient. IT systems need to run continuously, change constantly and scale quickly."
Enterprise business solutions provider SoftworX technologies director Steve Green also believes that companies should view the implementing of e-business as a strategic business approach driven by senior management, and should address the issues of good back office applications and overall system integration of security, accuracy and speed of fulfillment.
But, as always, knowledge of the nature of the beast is the key to overcoming any challenge. Perhaps the best summation of the nature of e-business comes from Kent Foster, president of the US-based telecoms company, GTE, who describes it as being about "delivering products that are still evolving to a market that is still emerging via a technology that is still changing on a daily basis."
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