-
This article was downloaded by: [Central U Library of
Bucharest]On: 01 April 2014, At: 10:32Publisher: Taylor &
FrancisInforma Ltd Registered in England and Wales Registered
Number: 1072954 Registered office: Mortimer House,37-41 Mortimer
Street, London W1T 3JH, UK
Information Systems ManagementPublication details, including
instructions for authors and subscription
information:http://www.tandfonline.com/loi/uism20
Business-To-Business E-CommerceJames A. Senn aa Director of the
Information Technology Management Group at Georgia State
University,Atlanta, and a member of the journal's Board of Advisers
and Contributors.Published online: 21 Dec 2006.
To cite this article: James A. Senn (2000) Business-To-Business
E-Commerce, Information Systems Management, 17:2, 19-28,DOI:
10.1201/1078/43191.17.2.20000301/31224.3
To link to this article:
http://dx.doi.org/10.1201/1078/43191.17.2.20000301/31224.3
PLEASE SCROLL DOWN FOR ARTICLE
Taylor & Francis makes every effort to ensure the accuracy
of all the information (the Content) containedin the publications
on our platform. However, Taylor & Francis, our agents, and our
licensors make norepresentations or warranties whatsoever as to the
accuracy, completeness, or suitability for any purpose of
theContent. Any opinions and views expressed in this publication
are the opinions and views of the authors, andare not the views of
or endorsed by Taylor & Francis. The accuracy of the Content
should not be relied upon andshould be independently verified with
primary sources of information. Taylor and Francis shall not be
liable forany losses, actions, claims, proceedings, demands, costs,
expenses, damages, and other liabilities whatsoeveror howsoever
caused arising directly or indirectly in connection with, in
relation to or arising out of the use ofthe Content.
This article may be used for research, teaching, and private
study purposes. Any substantial or systematicreproduction,
redistribution, reselling, loan, sub-licensing, systematic supply,
or distribution in anyform to anyone is expressly forbidden. Terms
& Conditions of access and use can be found at
http://www.tandfonline.com/page/terms-and-conditions
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
BUSINESS-TO-BUSINESSE-COMMERCE
James A. Senn
Business-to-business E-commerce represents a fundamental shift
in the man-ner in which rms are interacting with buyers and
suppliers. It is restructuring the very basis for conducting
business by reducing geographic distance for both the largest
multinational companies and the smallest entrepreneurial
start-up.
ONDUCTING BUSINESS THROUGHelectronic commerce, the handling
oftransactions over communications net-works, continues to grow in
a seemingly
unabated fashion. The excitement surroundingthe explosive growth
of many Internet compa-nies, coupled with a wide range of
capabilitiesprovided through the World Wide Web areimportant
drivers of this growth. So is a widepublic awareness of
consumer-oriented elec-tronic commerce, including amazon.com,
theInternet bookseller and merchandiser, theMicrosoft Expedia and
Travelocity travel sites,and the online brokerage activities of
E*Tradeand Charles Schwab.
While the business-to-consumer side ofelectronic commerce
(E-commerce) offers tre-mendous entrepreneurial opportunities,
theimpact of business-to-business commerce iseven broader. For
instance,
Beginning late in 1996, the Boeing AirplaneCompany launched an
E-commerce site onthe World Wide Web to assist its global air-line
customers in acquiring spare parts. Theyare able to check pricing
and availability ofparts, order parts, and track the status of
theirorders. Within a year of opening the site, 50percent of Boeing
customers were using thesite for parts orders and service
inquiries. Notonly has usage of the site grown continually
since then, but Boeing has also been able togrow the parts
business with some 20 percentmore shipments every month while
maintain-ing stafng at 1996 levels.
In late 1998, the citynation of Singaporelaunched a plan to make
it a global E-com-merce hub. Adding to its long-establishedglobal
leadership in the use of electronicdata interchange, the Singapore
governmentenvisions some $2.4 billion in products andservices, and
one-half of the nations busi-nesses trading via E-commerce in less
thanfour years.
Motorola, as well as Boeing and other compa-nies, has warned
their suppliers that theymust develop an ability to conduct
businessover the Web. The warning is explicit. Sup-pliers not
changing to E-commerce over theWorld Wide Web within the next year
willprobably be locked out as a supplier for thelong term.
Business-to-business commerce is a funda-mental shift in the
manner by which rms areinteracting with buyers and suppliers. It is
muchmore than an Internet-based phenomenon.Rather, E-commerce is a
restructuring of thevery basis for conducting business. Unlike
somany other business developments in the past,E-commerce is not an
opportunity for only thelarge or multinational rms. Rather, the
smallest
C
JAMES A. SENN is director of the Informa-tion Technology
Manage-ment Group at Georgia State University, Atlanta, and a
member of the jour-nals Board of Advisers and Contributors.
THE E-COMMERCE REVOLUTION
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
entrepreneurial organizations can establish andbuild their
businesses around E-commerce. Asthey do so, geographic distance
disappears as abusiness barrier, for the global reach of
underly-ing communications technologies becomes aneasily accessible
resource for all rms.
This article explores the two forms of busi-ness-to-business
electronic commerce:
1. Interorganizational systems, a long-estab-lished, but rapidly
evolving part of businessprocesses in so many rms
2. Emerging electronic markets, an extremelyimportant vehicle
for expanding the base ofbuyers and sellers
For some rms, interorganizational systemsare the basis for
E-commerce activities as theunderlying technologies are evolving to
makethese systems accessible to a greater number ofrms large and
small than ever before.Others will gravitate toward electronic
markets,capitalizing on a new opportunity to create aproduct,
deliver a service, or get in touch withpotential customers. The
public, global Inter-net, and its principle application, the
WorldWide Web, provide a highly visible platform forelectronic
markets.
As this article illustrates, E-commerce meritscareful
consideration by executives and manag-ers alike.
INTERORGANIZATIONAL SYSTEMSThrough interorganizational systems,
buyersand sellers arrange for routine exchange of busi-ness
transactions without the necessity of directnegotiation. Because
information is exchangedover communications networks using
prear-
ranged formats (see Exhibit 1), there is no needfor telephone
calls, paper documents, or busi-ness correspondence to create and
carry outtransactions. Although interorganizational sys-tems at one
time involved proprietary commu-nication links exclusively,
throughout the lastdecade rms have opted to use public networksfor
these business-to-business systems.
Emergence of Interorganizational SystemsInterorganizational
systems were driven bybusiness needs and facilitated through
informa-tion technologys continuing advances. Thesystems are a
direct result of the growing desir-ability of interconnecting
business partners tostreamline business processes by:
reducing the costs of routine business trans-actions
collapsing cycle time in the fulllment ofbusiness transactions,
regardless of geo-graphic distance
eliminating paper and the inefciencies asso-ciated with paper
processing
creating application-to-application businessprocesses between
buyer and seller
Networks that interconnect the diverse desk-top and data systems
facilitated pursuit ofthese objectives by business partners.
Bothproprietary network solutions and the servicesof value-added
network carriers ensured thatany rm wishing to link up could do
so.
Types of Interorganizational SystemsThe term interorganizational
system describes avariety of business activities rather than a
single
EXHIBIT 1 Interorganizational System for Electronic Data
Interchange (EDI)
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
entity. Following are ve of the most promi-nent types of
interorganizational systems:
1. Electronic Data Interchange (EDI).Computer-to-computer (or
application-to-application) exchange of standard, formattedbusiness
documents transmitted over computernetworks where translation
systems overcomedifferences in information technology used
bytrading partners.
2. Electronic Funds Transfer (EFT).Automated exchange of money
between partiesin a commercial transaction or between
banksrepresenting businesses responsible for con-ducting the
settlement portion of a businesstransaction.
3. Electronic Forms. Online completion andtransmission of
business forms (e.g., claimsforms and contracts, complete with
electronicsignature) that the recipient can route to theappropriate
in-house destination for properhandling.
4. Integrated Messaging. Delivery of elec-tronic mail and
facsimile documents through asingle electronic transmission system;
it mayinclude the combining of EDI, electronic mail,and electronic
forms for transmission.
5. Shared Databases. Information stored inrepositories shared
between trading partnersand accessible to both; such databases are
oftenused to reduce elapsed time in communicatinginformation
between parties as well as toarrange cooperative activities.
Other types of interorganizational systemswill undoubtedly
evolve as businesses reneand capitalize on their IT
capabilities.
Scope of Interorganizational SystemsAll interorganizational
systems share commoncharacteristics (see lefthand column ofExhibit
2). The principal activities of the sys-tems are
business-to-business or business-to-government in nature. In many
instances,intermediaries operate the networks that carrythe
information or provide transaction process-ing services or database
access.
The communications infrastructure of aninterorganizational
system is predetermined. Allparties know the links over which
transactionswill be transmitted and where and how they willbe
received, including the use of electronic mail-boxes. Whether
public or private networks areused varies from situation to
situation.
Parties participating in electronic commerceinteract on the
basis of a relationship that isdened and preestablished. Terms and
condi-tions of that relationship are often set fortheither as
contracts or in briefs that specify theexpectations and
responsibilities of each party.
Interorganizational systems are rmly estab-lished in business.
The transfer of funds elec-tronically is becoming the norm for
suchsystems, both nationally and internationally. Inthe United
States alone, approximately 100,000rms conduct business by way of
electronicdata interchange. Such well-known companiesas Wal-Mart,
The Home Depot, and CircuitCity, known for dominating their
business cate-gory, could not operate as they do without theirEDI
capability and interorganizational systemsoperating between them
and their suppliers.
Although some businesses use the term EDIvery broadly,
electronic commerce encompassescapabilities much broader than EDI.
All formsof interorganizational systems promise to con-tinue
growing at an accelerating rate.
Firms seeking to establish ongoing businessrelationships with
buyers or sellers, where infor-mation will be exchanged regularly,
shouldbuild interorganizational systems. If business-to-business
activity, however important, is notrecurring in a predictable
manner, electronicmarkets may be a more appropriate tool.
THE BUSINESS CASE FOR ELECTRONIC MARKETS
Electronic markets are rapidly emerging along-side
interorganizational systems as a vehicle forbusiness-to-business
E-commerce. A market isa network of interactions and
relationshipswhere information, products, services, and pay-ments
are exchanged. When the marketplaceis electronic, the business
center is not a physi-cal building, but rather a network-based
loca-tion where business interactions occur.
Exhibit 2 summarizes how electronic mar-kets differ from
interorganizational systems. Inelectronic markets, the principal
participants transaction handlers, buyers, and sellers arenot only
at different locations, but they seldomeven know one another. Nor
are relationshipsbetween buyers and sellers likely to be
predeter-mined by agreements. The means of intercon-nection varies
between parties and may changefrom event to event, even between the
sameparties. The interactions themselves are man-aged by a broad
array of IT applications (seeExhibit 3).
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
EXHIBIT 2 Distinguishing Features of Interorganizational Systems
and Electronic Markets
Interorganizational Systems Electronic MarketsBuyer
Relationships
Buyer/supplier relationship is determined in advance with the
anticipation it will be an ongoing relationship based on multiple
transactions.
Buyer RelationshipsTwo types of relationships may exist: 1.
Buyer/seller linkage is established at time of
transactions and may be for one transaction only (i.e., purchase
transaction).
2. Buyer/seller purchase agreement is established whereby the
seller agrees to deliver services or products to buyer for a
defined period of time (i.e., a subscription transaction).
NetworksInterorganizational systems may be built around
private or publicly accessible networks.
NetworksElectronic markets are typically built around
publicly accessible networks.
When outside communications companies are involved, they are
typically value-added carriers (VANs).
When outside communications companies are involved, they are
typically online service providers (which function as market
makers).
Buyer/Seller AgreementsAdvance arrangement results in agreement
on the
nature and format of business documents that will be
exchanged.
Buyer/Seller AgreementsSellers determine, in conjunction with
the market
maker, which business transactions they will provide.
Advance arrangement results in agreement on the nature and
format of business documents that will be exchanged.
Buyers and sellers independently determine which communication
networks they will use in participating in the electronic market.
The network used may vary from transaction to transaction.
Joint guidelines and expectations of each party are formulated
so each knows how the system is to be used and when transactions
will be submitted and received by each business partner.
No joint guidelines are drawn in advance.
EXHIBIT 3 Electronic Markets
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
Executives and managers should evaluatethe potential of
electronic markets on the basisof ve business benets:
1. Extending the rms reach2. Bypassing traditional channels3.
Augmenting traditional markets4. Boosting service5. Advertising
Each of these benets is described below.
Extending the Firms ReachThe ability of a rm to interact with
customersor with business partners is dened by its reach.The
ultimate objective is to be able to reachany potential buyers,
regardless of location,without the need for prior arrangement.
Eventhough they are valuable business tools, interor-ganizational
systems cannot achieve this objec-tive because they depend on
predenedrelationships and communications paths.
Firms are often limited in their ability toreach buyers by their
sales and marketing pro-cesses. The size and location of their
salesforce, the breadth and depth of their distribu-tor network,
the extent of their dealer chain,the number of business locations,
or the sizeand effectiveness of the mailing list all deter-mine a
rms reach. These factors also deter-mine the nature and extent of
informationexchange. On the other hand, the innovativeuse of
communications networks for electronicmarkets can create the most
dynamic form ofreach: anyone, anytime, anywhere.
Bypassing Traditional ChannelsHeightened competition and
shareholder pushfor return on investments make it
increasinglyimportant for a rm to assess the value added,as well as
the costs incurred, in working with itsbusiness partners. This is
particularly true fordistribution channels. If the services of a
bro-ker, representative, or distributor do not addvalue, rms will
seek to bypass them to elimi-nate costs, delays, and other
inefciencies.
Largely for this reason, a growing number ofrms are attempting
to deal directly with man-ufacturers, passing along savings to
buyers inthe form of lower prices. Electronic marketsfacilitate
bypass if they enable rms to dealdirectly with actual and potential
buyers. More-over, rms can enter the market even when theydo not
have, do not wish to create, or cannotestablish access to
traditional channels.
Augmenting Traditional MarketsCatalog companies have competed
successfullyagainst traditional retailers for many years
bybypassing both traditional channels and mar-kets where items are
bought and sold (i.e., retailstores and other types of sales
centers). Elec-tronic markets are a natural evolution of
catalogselling and direct dealing, except that both thecatalog and
order-entry process, and in somecases, actual fulllment, are
online. In fact, thebest known catalog companies, including
L.L.Bean, Lands End, and Spiegel, are expandingwell beyond their
traditional markets to com-pete in electronic markets.
Among the most effective electronic marketalternatives are
Direct sales outlets Electronic storefrontswhere buyers deal
directly with the supplierto create and carry out a sales
transaction.
Online catalogs A special case of the salesoutlet where
companies can create databasesthat can be browsed by buyers and
used bythe rm to distribute information.
Direct service centers Electronic locationsfrom which customer
service, advertising, mar-keting, and technical support are
provided.
Electronic shopping malls (cybermalls) havealso been developed
as some rms tried to emu-late the traditional malls encompassing a
vari-ety of stores, services, and information
guides.Business-to-business and business-to-consumerversions
generally fail, an indication that tradi-tional, nonelectronic
business forms, do notnecessarily transfer to an E-commerce
format.
Boosting ServiceService knows no boundary when markets
areelectronic. Time windows are eliminatedbecause online services
can be delivered 24hours a day. Important buyer and
supplierinformation is available around the clock. Yetinquirers
need not wait for an assistant to pro-vide the details. Careful and
creative use ofinformation technology also means that
theinformation can consist of much more thannarrative explanations,
for drawings, photo-graphs, animated descriptions, and full
multi-media presentations are all within the scope ofservice
support in the electronic market.
Other important service options includeonline sections that
provide answers to themost frequently asked pre- and post-sale
ques-tions. Support can go well beyond trouble-shooting concerns.
Organizations have foundthat their descriptions of product updates
or
he ultimate objective is to reach any potential buyers,
regardless of location, without the need for a prior
arrangement.
T
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
new service features can be much more detailedand offer better
explanations when provided inthis manner. Of course, e-mail and
fax-backresponses are easily provided as well.
Even if a company chooses to never make asingle sale by way of
electronic commerce, it canstill build its business. Boosting
service by wayof electronic markets has the potential to bemuch
more than just another business tactic.
AdvertisingAwareness, visibility, and opportunity all-important
benets of advertising take onspecial importance when markets are
elec-tronic. Firms are not constrained by the bound-aries of a
printed document or by the length ofa time slot, both common
constraints of adver-tising through conventional broadcast
media.
Carefully chosen listings in online catalogsand databases enable
a rms buyers to learnabout the company and its products even
whenthey lack prior knowledge of their existence.Electronic links
make it possible for shoppers tojump from the advertising spot to
the rmslocation in the market. There is a seeminglyunlimited range
of alternatives that can be usedto inform, educate, and perhaps
convince thecustomer of the companys capabilities. Prod-uct samples
and colorful demonstrations, deliv-ered electronically, are highly
effective vehiclesfor gaining attention and garnering goodwillwhile
building the business.
CREATING ELECTRONIC MARKETS USING THE INTERNETThere is little
doubt that both the expandingreach of the Internet and the
accelerating inter-national interest in national information
infra-structures will stimulate creation of electronicmarketplaces.
As more and more rms takesteps to move the electronic marketplace
fromconcept to reality, a broad array of innovationswill emerge,
making it possible for rms andindividuals to capitalize on
communicationsnetworks and overcome the traditional
businessbarriers of time and distance.
Because the Internet has captured the atten-tion of many IT
users and observers, it is usefulto examine the Internets value in
terms of elec-tronic markets. The following sections explorethe
reasons why rms may want to include theInternet in their electronic
market plans.
Internet FeaturesThe characteristics of the Internet are
widelydocumented, but a moving target (see
Exhibit 4). Some have predicted that it willsurpass the global
telephone network by theyear 2006. More than 80 percent of the
CEOsin the worlds largest companies expect E-com-merce to
signicantly reshape the way the com-panies in their industry
compete.
Six key features are of greatest importance tobusinesses
interested in participating in elec-tronic markets.
1. Public Resource. The very public natureof the Internet is
among its most important dis-tinguishing features. Thus, the vast
majority ofbusiness practitioners are aware of the Internetand its
widespread accessibility, even thoughmany have not yet considered
its businessvalue. The skyrocketing attention to the Inter-net by
the print and broadcast media is certainto fuel the growth in
public awareness. Poten-tial customers and business partners will
expectrms to be accessible on the Internet.
Because virtually anyone can participate inthe Internet as a
business by making only amodest start-up investment, the number
anddiversity of rms participating will continue toincrease rapidly.
Moreover, the opportunities toannounce new products and services
and toreach potential customers or partners (televi-sion home
shopping services pale by compari-son) are abundant.
2. Global Reach. Approximately 30 percentof the worldwide
Internet user population isestimated to originate from outside of
theUnited States (see Exhibit 4). In addition, asubstantial number
of host sites reside in non-U.S. cities, making it a truly
international net-work. Both sectors are growing rapidly.
The broad international reach of the Inter-net means much more
than business access toindividuals and rms in developed
countries,even though that alone is sufcient for manyrms to
integrate E-commerce over the Inter-net into their businesses. For
the rst time,individual shops in many underdevelopedcountries can
interact online as telephone linksto the Internet make it possible
to span vastgeographic distances. No one knows how largethis vastly
undeveloped market will be.
3. Capability to Link. The Internets capa-bility to link rms has
not been fully discov-ered. Many business users of the Internet
stillview it primarily as an electronic mail or pub-lishing system
that is, a communicationstool. Hence, only a fraction of companies
con-
arefully chosen listings in online catalogs enable buyers to
discover a company and its products.
C
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
nected to the Internet have sought to capitalizeon its vast
capabilities.
When viewed as a connection tool, ratherthan as a communications
network, many otherintriguing possibilities emerge. A variety of
dif-ferent business-to-business transactions can bepassed through
the network, and EDI docu-ments are increasingly being
transmittedthrough the Internet. Several traditional EDIvendors
have developed capabilities to supportInternet EDI.
4. Shared Ownership. No company, society,association, or
individual owns the Internet.Rather, some thousands of
independentlyowned and operated networks are intercon-nected to
form the Internet. As a result, theInternet is distinguished by
collaboration, notproprietary designs. The broad base of
publicparticipation means that new initiatives can besuccessful
only if the majority of participants areinterested in using them.
Even more, it means
that virtually every individual and rm, large orsmall, has the
opportunity to participate.
Shared ownership does mean, however, thatthe Internet has some
awkward features, espe-cially in the areas of security and
reliability.
5. Platform Flexibility/Diversity. There arefew limits on the
nature of the computing andcommunications that can be
interconnectedwith the Internet. Companies are thus free touse the
systems of their choosing (e.g., UNIX,NT, Windows, Linux, and
Macintosh). Yet thechoice of system platform places no
restrictionon others using the system or wishing to inter-connect
with them.
In many instances, the computing systemsattached to the Internet
are less sophisticatedthan those used in proprietary systems.
Net-working and applications software compensatesfor differences in
systems capabilities even asthey accommodate the diverse computing
andcommunications platforms.
EXHIBIT 4 Internet Characteristics
Internet Growth and Usage Hosts on the Internet 44 million
Estimated Internet users 150 million
United States/Canada 70%Europe 19%Asia 12%
Worldwide percentage of Internet user population
Rate of Internet growth Number of pages doubling annually since
1988
Number of users estimated to exceed 300 million (5% of global
population) by year 2000
Expected to exceed size of global telephone network by 2006
Business-to-Business CharacteristicsE-commerce Sales Volume
Forecast 1998/1999 2000
($50 Billion) ($1.317 Trillion) Business-to-Consumer 30% 14%
Business-to-Business 70% 86%
CEO ExpectationsPricewaterhouseCoopers World Economic Forum;
sample of 377 CEOs of worlds largest 2,000 companies (1998)
Global CEOs expecting E-commerce to significantly reshape
competition in their industry 80% European and Asian CEOs
expecting E-commerce to
completely transform their industries 28% North American CEOs
expecting E-commerce to completely
transform their industries 16%Sources: CommerceNet
Consortium/A.C. Nielsen; International Data Corp.; The Internet
Society; Vinton
Cerf
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
6. Cost Advantages. The cost of conductingbusiness on the
Internet is quite modest. Theprincipal requirement is to create a
businesssite, typically on the World Wide Web(WWW) portion of the
Internet. Getting onthe WWW may cost as little as $100. Low-cost
kits are readily available to construct thenecessary features (such
as home pages, onlinecatalogs, and communication links). For
amodest fee, the development of such featurescan be contracted.
Because of the many companies that haveemerged to provide access
to the World WideWeb or other portions of the Internet, it is
notnecessary to even operate a computer networkto be able to
participate in business-to-businessE-commerce (see Exhibit 5).
These companies,which in effect function as on ramps to thenetwork,
will provide all services, at a cost thatdepends on the frequency
of use for the service.Representative companies providing
E-com-merce service are listed in Exhibit 6. Somecompanies are
investing heavily in their Inter-net resources, dedicating several
staff membersand a signicant hardware and software invest-ment into
supporting their presence on the net-work. They are choosing to do
so because,compared to other alternatives, includingdeveloping and
maintaining a proprietary com-puter network or supporting a direct
dial-upbulletin board, they view the Internet as a cost-effective
resource.
CAPITALIZING ON THE INTERNET FOR ELECTRONIC MARKETSOngoing
monitoring of rms using the Internetprovides growing evidence that
those who arecapitalizing on the networks electronic
marketpotential appear to follow several principles:
They treat the Internet as a new medium. They use the Internet
to leverage existing
business and support capabilities. They formulate clear business
objectives for
Internet use.
The Internet as a New MediumMany businesses tend to consider the
Internetsfeatures as supplementary to what they alreadydo. Although
this approach may offer attrac-tive possibilities, greater
opportunities may befound by taking a fresh approach to the
Inter-net as a medium for reaching out, linking up,and delivering
something entirely different.Hence, management should raise
stimulatingdiscussion by asking questions that will unleashcreative
possibilities, such as:
What are the current limitations in linking upwith business
partners or supporting custom-ers? What is the impact of those
limitations?
What new products, services, or supports canbe offered?
What opportunities exist to aid the rmscustomers in being more
successful with theircustomers?
EXHIBIT 5 Architecture of the Global Internet
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
How can the rms current competitors turnthe Internet into a
competitive weapon thatis detrimental to the rm?
What new businesses can be developed as ameans of offering
Internet capabilities to others?
Leveraging Existing Business and Support CapabilitiesFirms
creating value through the Internet aredoing so because they are
able to leverageresources and expertise already present in therm.
Hence, it is vital that rms directlyaddress these important
questions:
What is it that the rm does best theproducts or services that it
delivers andhow can they be leveraged into new businessarenas or as
new products and services to adifferent market?
What important resources is the rmunderutilizing and how can
they be put tonew or extended use by making them avail-able through
electronic markets?
How can the knowledgebase of the rm beenhanced through access to
new customersor business partners who are willing to share
their insights and needs in an interactiveenvironment?
How can the knowledgebase be leveragedinto a product or service
that will be accessi-ble to virtually every individual rm
throughthe power of electronic markets?
Formulating a Business CaseUnless a companys journey onto the
Internet isdesigned to be nothing more than an explor-atory
adventure or distraction, any rationale formoving onto the network
should be formulatedas a business case. This means establishing
andthen measuring against clear objectives, prefer-ably with a
timetable describing expected mile-stones. The business case should
identifypoints of success, whether they be potentialcustomer
contacts, information inquiries, reve-nue generation, or prot
margins. It shouldclearly answer two key questions:
1. What will the company gain?2. How will success be
measured?
It is all too easy to seek to justify new initia-tives through
such nebulous terms as visibility,
EXHIBIT 6 Representative Commercial Electronic Market Providers
on the Internet
Firm World Wide Web AddressBest Internet CommunicationsMountain
View, CA
http://www.best.com
CyberGate, Inc.Deerfield Beach, FL
http://www.gate.net
CTS Network ServicesSan Diego, CA
http://www.cts.com
Icon CMP Corp.Weehawken, NJ
http://www.icon.com
The Internet Access Company, IncBedord, MA
http://www.tiac.net
iXL EnterprisesAtlanta, GA
http://www.ixl.com
Macquarium, Inc.Atlanta, GA
http://www.macquarium.com
MCIWorldcomJackson, MS
http://www.wcom.com
MindSpring Enterprises, Inc.Atlanta, GA
http://www.mindspring.com
Open Market, Inc.Cambridge, MA
http://www.openmarket.com
Teleport Internet ServicesPortland, OR
http://www.teleport.com
Web CommunicationsSanta Cruz, CA
http://www.webcom.com
XMission Internet AccessSalt Lake City, UT
http://www.xmission.com
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4
-
I N F O R M A T I O N S Y S T E M S M A N A G E M E N T
S P R I N G 2 0 0 0
THE E-COMMERCE REVOLUTION
public relations, advertising, and public aware-ness. Yet if
these are important reasons forjoining the network, as they often
are, theyshould be cast in measurable business termsthat will
enable even the strongest (or weakest)supporter to gauge
success.
CONCLUSION
Electronic markets and the Internet are in theirinfancy.
Although it is not clear how either willevolve, both represent
fundamental shifts inelectronic commerce with signicant
implica-tions for business in general. An ever-greater
portion of business will be conducted online,with extensive
reliance on communicationsnetworks.
Waiting to see how the promise and possi-bilities of electronic
markets will evolve mayappear the safest strategy in the short
term,particularly for mangers averse to high risk.Yet,
organizations must have ample time togain insight into the
potential of electronicmarkets and to create the necessary
experienceand knowledge to capitalize on the opportuni-ties that
may emerge. Organizations that beginlearning early may gain
long-term advantagesthat latecomers will never overcome.
Dow
nloa
ded
by [C
entra
l U L
ibrary
of B
ucha
rest]
at 10
:32 01
Apr
il 201
4