E-Business — More Than Expected

OK, the Internet has tested the limits of marketing hype. If you only read the headlines, it seems that the only ones doing business on the Net are the IPOs.com or stock jocks and some early stock market investors.

While consumer online Web businesses get all the attention, much larger business is being done every day without the fanfare and headlines.

According to Forrester Research, business-to-business Web marketing will grow to $1.3 trillion by 2003. Considering that it approached $43.1 billion in 1998, this is not short of incredible growth. But at whose or what expense? How should business people prepare for such a fast transition?

E-business is more than sending e-mail or transaction-processing via the Net. To be successful, e-businesses must think and act differently. Instead of trying to do everything including billing, marketing and human resources, an e-business must figure out a core company strategy, develop a core competency and electronically outsource everything else, from mail to fulfillment.

E-business customers will be able to buy or collect information on multiple products or components without even knowing that they have left the e-business' Web site. The e-business will do this by tapping into different suppliers' Web sites to locate the information the customers are seeking and constructing their own products in mass customization from the seamless information provided by the integrated resource sites.

As one of the early pioneers in e-business solutions, IBM, in 1995, was connecting its various divisions together to develop new products and improve on communications with its global satellite companies and divisions. Today, at least 50 large enterprises, including Chevron, Ford Motor Co., General Electric and Merck & Co. have invested millions in Web procurement systems to automate corporate purchasing. The result has been dramatic. Invoices that used to cost $100 to process now cost $20 by some estimates, and banking transactions that used to cost $1.07 to process are now as little as 1 cent. Clearly, the initial promise and delivery of e-business is in cost reduction, and this must be the first step for most firms before they enter into a more robust e-business environment.

The key questions are, at whose expense will this unexpected e-business growth come and will new consumption alone absorb it? The answer to the first question is that new growth will come at the expense of the companies that are not willing or able to embrace change. The answer to the second question is a rhetorical “no.” Since global marketing was not truly a reality until a few years ago, e-business growth will come from the building of the electronic infrastructure and the evolution from a mass production economy to a digital economy.

When the Internet first started to emerge and companies rushed to build Web sites, the Net became mostly the territory of the IS professional. After all, they were the only ones who knew HTML. However, as corporations realized that customers were actually coming to their Web sites and were finding the information they required, the Net shifted into the marketing manager's territory. E-business is more than marketing. It requires a substantial electronic infrastructure, major support from IS professionals and heavy reliance on new software and Internet maturation.

The electronic procurement procedures ushered in a new wave of developers: small and boutique start-ups at first, and now e-procurement is attracting the attention of companies like SAP AG, Oracle and Sybase, which all have developed purchasing modules for their systems. OBI (Open Buying Internet) has taken hold as the way to exchange trading information. The new language of commerce is the Extensible Markup Language (XML), which has emerged as a key enabling technology for e-commerce applications. E-businesses can use this technology to formalize data structures such as price lists or catalogs to make them easy to read for Web browsers.

The future of e-business must be a team effort between marketing, who will manage the Internet communication and marketing strategies, and IT professionals, who will build the back-end engines that drive the dynamic content, remember the customer's last experience and provide the platform to build stronger customer relationships. Cisco, Nortel and Lucent are pushing convergence of voice and data that could redefine how we tap into business networks in the future. Tomorrow's team players will come from internal IS, Marketing, the ISP (Internet Service Provider), a proven software developer and consultant specialists, who will help provide the integration of systems and marketing.

Don't be daunted by the competition or the size of investment or the scale of change. Where there is this much growth, there will be plenty of e-business to go around. There is a size and place for any adventurer on the e-business frontier. E-business is the railroad for the 21st Century.

Robert McKim is CEO of MS Database Marketing, Los Angeles, a database and interactive marketing consultancy. His e-mail address is [email protected]

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