what is e-business?

In the first instance it is beneficial to split e-business into three categories, however, others may not consider this split a de-facto standard:

Electronic Commerce is principally the use of Internet for financial transactions. These transactions are many but the easiest way to consider it is via a comparison with Electronic Data Interchange (EDI). EDI is used to transfer information between companies in a very structured manner. Order, purchase and financial details are but a few of the uses of EDI, however, EDI can only economically be implemented in Medium to Large-Scale organisations. Smaller organisations cannot afford the infrastructural expense and the subscription to the Value Added Network. To offset this a new standard has been developed using existing telecommunications infrastructures (ISP’s) termed OPEN EDI. OPEN EDI uses web based forms to transcribe the information that is to be passed between the organisations - much of the overhead of standard EDI is reduced in this manner. This new form of EDI will enable smaller organisations to electronically communicate with the traditional EDI users.

Business to Business e-business is about sharing and communicating information and providing services to and with your trading partners. This is principally the back end processes that are being opened and shared. For example, the procurement process is streamlined by enabling your partners to securely access your internal databases to conduct the transaction (think about this). However, it is not just procurement but logistics management, ordering, paying, and distribution support that may be linked in this manner - ultimately the internal processes must be altered to accommodate these changes.

Business to Consumer e-business addresses the utilisation of a new channel for the distribution of goods and services to the end-user. Historically the Internet has achieved this by creating a domain that users may use as an electronic advertising board, however, recently the use of a business domain has become and will become even more sophisticated. Secure on-line environments are now beginning to flourish (even if they do not yet post significant, if any, profits). Much media interest has been associated with these developments, however, in the United Kingdom the percentage of users necessary to sustain a profitable business to consumer e-business has still not reached critical mass - by December 1999 this will have changed with over 20% of the population having access to an Internet Browser.

For an organisation to compete effectively all three of these sectors must be addressed holistically. Thankfully the infrastructure and skills set for each are very similar and an organisation has no excuse if it only embarks on one of the sectors at the expense of the others.

All business develops over time. The fact that new processes and technologies are introduced linearly creates many problems. To overcome these problems an organisation my choose to business process re-engineer from time to time to make more flat it’s hierarchy and reduce it’s internal costs. Nonetheless there are still many areas of inefficiency.

Take as one example the purchase of new stationary. An employee must determine from a catalogue or list of catalogues the precise stationary needed, then a request form may need to be filled - this form is then passed through the traditional channels to be signed-off by one or more managers. Thence to the purchasing department where someone will crosscheck the details and manually find the preferred supplier for the variables of the form. When a supplier is determined an order is sent (snail mail, fax or e-mail) and the process moves to the internal system of the supplier. The supplier will check the credit and sales history of the purchaser, whether there is enough product in stock or if a new batch needs to be initiated. If the order can be processed at this point a series of internal processes will be undertaken to make sure the right quantity of goods are picked, packed and shipped and that a delivery note is assigned. An invoice is then issued and when you are satisfied the order will be honoured. This is the traditional approach. The complexity of these processes are only recognised on reading this paragraph.

Today it seems illogical that any internal to external process should be conducted in such a manner, however, all but the top 1% of organisations continue, even after business process re-engineering, to purchase goods in this manner. For you to compete in a competitive marketplace you need to embrace the holistic concepts of e-business. A precise description of these process efficiencies is outlined in the following section...

For more information please see our 'What is e-business' White Paper