The Web is changing every aspect of our lives, but no area is undergoing as rapid and significant a change as the way businesses operate. As they incorporate Internet technology into their core business processes, they start to achieve real business value. Today, companies large and small are using the Web to communicate with their partners, to connect with their back-end data-systems, and to transact commerce.

In recent times e-business has become synonymous with so called 'dot-com' companies, but there are real advantages for 'bricks-and-mortar' companies adopting e-business in their existing business practices.

What is e-business?

The search for a definition of e-business uncovers a variety of ideas on what it means to be one:

E-business is connecting customers, suppliers and partners across the Internet using tools and standards that work cooperatively to achieve the required outcome in a secure manner.

Electronic business means creating value by utilising the Internet, intranets, cellular networks and other digital technologies to attract, interact and transact business with clients, suppliers, employees and other key constituents.

The transformation of key business processes through the use of Internet technologies.

The transformation of an organisation's business and functional processes to deliver additional customer value through the application of the technologies, philosophies and computing paradigms of the new digital economy.

The central theme in all these definitions is that e-business is about connecting systems that already exist in organisations so that they interact in meaningful ways that add value to established business processes. This is done using existing technologies and integrating systems over the Internet or intranet.

E-commerce is usually used as a synonym for e-business. However, e-commerce is more correctly restricted only to the part of e-business that deals with the buyer/seller relationship only.

Why e-business?

The concept of electronic business-to-business transactions is not new. Many technologies have been implemented over a number of years to try and achieve the goal of integrated business systems.

Computer Integrated Manufacturing (CIM) was the umbrella under which a number of related factory floor integration technologies were promoted for the factory floor. CIM worked relatively well when properly implemented but suffered from lack of standardisation between vendors. This often resulted in customers being tied to specific vendors for all their automation needs.

Electronic Document Interchange (EDI) was the beginning of what is now known as electronic commerce. This 'old fashioned' method of connecting different companies using electronic transactions has been in operation for a number of years but there are still only an estimated 50,000 companies worldwide that use EDI. This is because EDI requires a large, highly technical, staff to keep it running and the costs outweigh the benefits for most businesses.

What makes e-business different from these two previous attempts at integration? The ubiquitousness of a number of technologies (LANs, PCs, the Internet) and the establishment of standards (like TCP/IP, HTML, XML) have resulted in an environment where data and information interchange within and between businesses is easier than it has ever been.

For the traditional company, e-business means more than Web-enabling existing business processes. It means transforming these business processes by integrating web technologies into existing applications. It also means deploying new applications to support these redefined legacy processes to seamlessly inter operate with new partners, customers, and suppliers.

The aim of e-business should be to benefit from the operational efficiencies, new markets, and revenue growth driven by the digital economy and not just invent a 'dot-com' strategy. Looking solely at the e-commerce part of electronic business misses the most important point.

This transformation requires stripping time from the delivery of goods and services to the customer (supply chain management - SCM), enhancing the customer's buying and service experience (customer relationship management - CRM), providing the customer with new channels for purchasing (e-commerce), and leveraging the knowledge capital within the organisation (knowledge management - KM).

To achieve this may require fundamental change. In fact, traditional companies that are looking to extend their enterprises into e-business are realising that, to compete, they have to transform their business operations to deliver the projected benefits.

Benefits of e-business

The modern economic environment exerts pressure on businesses to adopt e-business practices in order to stay competitive.

Mergers and acquisitions require integrating dissimilar business processes from two or more companies so they can work as a single entity and fully leverage the benefits of the merged businesses.

The automation of business processes that has occurred over the last decade is accelerating as new business systems are implemented to improve efficiency, operating costs and customer service across an organisation. These are prime candidates for use as e-business processes and can be used to cross organisational boundaries and extend to partners, suppliers and customers.

Opening up business processes to share information or allow external access can result in the capability for a business to respond quickly with process and information flow change. This reduces business cycle times and may also result in a wider choice of suppliers and tighter supply chain management

Businesses with a large investment in Information Technology are increasingly becoming aware that the technical environment is becoming more complex as disparate system are interfaced to allow them to inter operate. Managing the technology infrastructure of an enterprise is made easier with the introduction and use of standard packaged software that conforms to e-business standards.

Integrating front and back office functions improves the effectiveness of business reporting and customer interaction. It also reduces the requirement for duplication of data, dual entry, manual data movement, and data exchange and replication. This eliminates reliability issues and provides access to timely and effective data.

In fact, the use of the technologies involved can provide a pervasive architecture for integration. This leads to scalable solutions and an integrated multi-vendor, multi-platform, business environment.

New Business Models

The Scenarios Project at MIT has concluded that two new models will challenge the traditional multidivisional firm: the virtual company and the highly disaggregated corporation. In the first, most of the necessary coordination is accomplished through technical standards and supporting institutions that exist outside the boundaries of the firm.

In the second, the corporate headquarters provides the glue for the disaggregated business units by establishing overall goals, shaping culture and setting performance targets.

E-business has allowed new companies that only exist as 'e-enterprises'. These businesses do not have traditional shop fronts and use the world-wide-web to establish their presence.

High profile Australian examples of these types of e-enterprises can be found in retail markets: Chaos music and Ozbooks represent pioneering industries where e-commerce is well established while Greengrocer belongs to an emerging group of e-enterprises that sell perishable goods over the Internet.

Small and medium sized business will also feel the effect of new business models as the adoptions of e-business practices will require some investment in IT technologies to allow them to participate as either suppliers or customers in the emerging e-business models.

Planning for e-business

An e-business is a company that can adapt to constant and continual change. To manage transitions smoothly, you have to remember three important ideas:

1. Start simple, but plan to grow fast.
2. Build on what you have.
3. It's about your business, not technology.

E-business isn't about re-inventing your business. It's about streamlining your current business processes to improve operating efficiencies, which in turn will strengthen the value you provide to your customers and give you a serious advantage over your competition.

So how does your company implement e-business? How can implementing e-business help you maximise the value of your information technology investment? How can it help you reduce your costs and grow your revenue? There are four important areas or stages in this process:

• Transforming core business processes.
• Building flexible, expandable e-business applications.
• Running a scalable, available, safe environment.
• Leveraging knowledge and information you've gained through e-business systems.

There isn't a set order or hierarchy to these stages. Successful e-businesses start at different points. But first, you must identify which of your core business processes are most suitable for, or most in need of, conversion to e-business.

Each company is unique and a solution must be tailored specifically, using standard building blocks that are available from a number of vendors. 

In Part 2 of this article we will examine what technologies are used to implement e-business solutions, and how you can take advantage of them in your business.

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