In recent years most organizations have incorporated the Internet as part of their information technology strategy. The Internet is a global collection of computer networks linked together for the exchange of data and information. The World Wide Web (WWW) is a set of central servers for accessing information on the Internet. Originally developed for use by the US military, the internet and the World Wide Web have become household words and an important part of our personal and work lives. Both business and non-profit organizations quickly realized the potential of the Internet for expanding their operations globally, improving business processes, reaching new customers and making the most of their resources. E- Business began to boom. E-Business can be defined as any business that takes place by digital processes over a computer network rather than in physical space. Most commonly today, it refers to electronic linkages over the Internet with customers, partners, suppliers, employees or other key constituents. E-commerce is a more limited term that refers specifically to business exchanges or transactions that occur electronically.
Some organizations are set up as e-businesses that are run completely over the Internet. These companies would not exist without the Internet. However, most established organizations make extensive use of the Internet and I will focus on these types of organizations. The goal of e-business for established organizations is to digitalize as much of the business as possible to make the organization more efficient and effective. Companies are using the Internet and the Web for everything from filing expense reports and calculating daily sales to connecting directly with suppliers for the exchange of information and ordering of parts.
The key components of e-business for two organizations, a manufacturing company and a retail chain. First, each organization uses an intranet, an internal communications system that uses the technology and standards of the Internet but is accessible only to people within the company. The next component is a system that allows the separate companies to share data and information. The two options are: an electronic data interchange network or an extranet. Electronic Data Interchange (EDI) network links the computer systems of buyers and sellers to allow the transmission of structured data primarily for ordering, distribution and payables and receivables. An extranet is an external communications system that uses the Internet and is shared by two or more organizations. With an extranet, each organization moves certain data outside of its private intranet, but makes the data available only to the other companies sharing the extranet. The final piece of the overall system is the Internet, which is accessible to the general public. Organizations make some information available to the public through their Web sites, which may include products or services offered for sale. Dealers and consumers can place orders for furniture online and also check order status or make changes with just a few mouse clicks.
The first step towards a successful e-business is for managers to determine why they need such business to begin with. Failure to align the e-business initiative with corporate strategy can lead to e-business failure.
Some companies embrace e-business primarily to expand into new markets and reach new customers. Others use e-business as a route to increased productivity and cost efficiency. These strategies are implemented either by setting up an in-house Internet division or by partnering with other organizations to handle online activities.
An Internet division allows a company to establish direct links to customers and expand into new markets. The organization can provide access around the clock to a worldwide market and thus reach new customers. E-business helps reach new customers and markets.
An e-business division also enables customization of offerings at significantly lower costs than traditional distribution channels, helping a company differentiate its product and services. The market expansion strategy is competitively sustainable because the e—business division works in conjunction with the established bricks and mortar company.
Productivity and Efficiency:
With this approach the e-business initiative is seen primarily as a way to improve the bottom line by increasing productivity and cutting costs. An automaker, for example, might use e-business to reduce the cost of ordering and tracking parts and supplies and to implement just in time manufacturing. GM is now using wireless Internet technology to increase productivity in 90 of its plants, where Wi-Fi devices are mounted on forklifts and used by assembly workers to track the movement of engine parts and car seats tagged with tiny chips that emit electronic signals. This approach can have immediate short term effects and produce measurable productivity hikes and cost savings. Even the smallest companies can realize gains. Rather than purchasing parts from a local supplier at premium rates, a small firm can access a worldwide market and find the best price, or negotiate better terms with the local suppliers. Service firms and government agencies can benefit too. People can log on to pay their taxes, water bills, electricity bills, phone bills and other fees. The convenience enables the government and authorities to collect overdue payments, increasing revenues and saving the time and expenses.