How to become e-active
How to become e-active
Research has revealed a divide between outdated companies and "e-active" firms - the ones which actually understand the new economy.
A new business model is emerging in the Web-driven environment that has descended across the corporate world. Having its roots partially in the EDI (electronic data interchange) systems of the 80s and early 90s, and partially in the e-commerce successes of the late 90s, e-business is a discipline and supporting infrastructure to conduct business transactions with other business partners over the Web.
Thus, unlike e-commerce, e-business does not only focus on the front-end brick-and-mortar business, automating consumer transactions, but automates and "webifys" the entire value chain, linking partners and customers under a single automated system. Unlike EDI systems, e-business applications are built on open non-proprietary environments based on the Web. E-business is not just about point of sale applications, nor is it just about distribution, but the automation of the entire value chain. E-business addresses the growing network of transactions that results in business markets and work. It is this broad reaching e-business model that is the focus of this analysis.
Over the last six years, the e-business market has experienced steady growth. This growth has been building on the legacy of proprietary systems such as EDI and networked communications between partners. But, with the advent of the Web, the universal appeal and accessibility of e-business models and technologies has created exponential growth for the e-business market. E-business implementations grew by nearly 80 per cent between 1990 to 1999, with nearly 40 per cent of that growth in the past year alone.
But, while the stage is set for rapid growth in e-business, there is still much groundwork that is necessary before wide scale deployment. Survey respondents indicated that despite the growing percentage of business that is conducted via electronic means, the use of intermediaries, partners that outsource and broker the purchase of low ticket (e.g. office supplies, stationery) as well as big ticket items (capital equipment, software, professional services), is minimally deployed. The majority of respondents indicated that less than 20 per cent of all such purchases are made though an intermediary.
While the e-active respondents indicated a greater usage of intermediaries, the majority of their responses indicated less than 40 per cent of all purchases. Indeed, amongst those organisations that are e-active, the majority report less than 40 per cent of their business processes have currently been integrated into an e-business approach.
Lack of infrastructure, lack of standardised procedures and processes and lack of interest among constituents were cited by total survey respondents as the major impediments to more wide-scale deployment of e-business. But, among e-active responses, a slightly different list of issues was cited. These organisations stressed technology issues as the major impediment to more wide-scale use of e-business. The challenges of integrating legacy business applications into an e-business system proved formidable to these pioneering organisations.
AGGRESSIVE ATTITUDE
Comparison of the answers of the e-active group and the total respondents also shed light on the nature of partnering and outsourcing in the e-conomy. E-active organisations take a more aggressive attitude towards partnering and outsourcing and view it as a strategic part of their business plan, whereas the total respondents position partnering as something that is sometimes done out of necessity. While partnering with competitors is positively viewed by e-active organisations, the total respondents again viewed this as something that is occasionally done only out of dire necessity. Each survey group agreed, however, that trust among partners is a critical element to establishing partnerships.
While cultural issues were paramount to e-business initiatives, the use of technology also plays a role in separating the e-business "haves" from the "have-nots". The Web is a critical element of infrastructure for e-active organisations. Whereas the total respondents were rather ambivalent regarding the importance of the Web to their ability to respond to change, the e-active organisations responded strongly (81 per cent) that the Web was very important/important to their ability to change. In fact, among those organisations that have an e-business system in place, 38 per cent reported creating the e-business system by rebuilding existing systems on the Web.
E-active organisations, while perhaps not solely motivated and empowered by technology, have realised the value in strategically leveraging technology. The e-active organisation is far more likely to provide employees with technology specifically to empower them as free agents and use data mining and other such technologies to better understand and leverage their customers' buying habits and preferences.
TAKE CHARGE
Among those organisations that have implemented an e-business system, a common take charge attitude prevails. Only 15 per cent outsourced the building of their e-business system. For most, the establishment of an extended value chain via an e-business implementation must begin at a grass roots level. Fundamental changes to business processes and customer relations must begin with direct control over implementation. Of those that have built their own e-business solutions, 38 per cent rebuilt existing systems using the Web, a statistic that underscores the importance e-business organisations place on Web technology. But, another 47 per cent indicated that their e-business implementation was built from the ground up. These organisations, while undoubtedly leveraging Web technology, have seized the opportunity not only to port applications to the Web, but simultaneously to rethink the rules and constraints of each application, and redesign and redeploy each - specifically taking advantage of the openness and flexibility of the e-based business.
But whether organisations are learning through immersion, trial and error, or waiting and watching, the issue of education is paramount in e-business. Although there are some differences regarding the level of awareness of e-business concepts and functionality between e-active organisations and the total respondents, both groups indicated less than stellar understanding of these concepts. Among the e-active organisations, there is a fairly good appreciation (i.e. a ranking of 55 per cent or more) for basic e-business concepts, such as portals, customer intimacy, value chain, e-business and XML. But, other features and benefits of e-business such as reintermediation, hyperportals, vortals, and reverse markets have yet to be understood by even the e-active organisations. Until a level of education is achieved about these concepts, many of the benefits and capabilities of e-business will elude organisations.
Jeff Sussman is the managing director of the Delphi Group in Australia.