Home Asia-Pacific III 2001 Making Sense of the E-conomy

Making Sense of the E-conomy

by david.nunes
Bill BarneyIssue:Asia-Pacific III 2001
Article no.:9
Topic:Making Sense of the E-conomy
Author:Bill Barney
PDF size:24KB

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Article abstract

Does inserting an ‘e’ for electronic in front of a word make a real difference? Bill Barney, the President of Worldcom, is no cynic in this respect: there is substance rather than style in the growing e-conomy. Here he charts the shift towards customer focus that is the hallmark of the new business environment. This new environment is evolutionary rather than revolutionary with flexibility and responsiveness opportunities for all, particularly workers and customers.

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Sometimes, it seems that all an enterprise has to do to make itself sound forward-looking is to recycle a traditional business term by putting an ‘e’ in front of it. E-commerce, e-business and e-services are all terms that currently dominate the market place. Even if few people would deny that the Internet is destined to change the face of the economy in the twenty-first century, the more cynical among us could be forgiven for wondering whether these new ‘e’ labels are not in fact merely an exercise in style. The simple truth is that the Internet has already changed the way many businesses operate by providing an open framework through which enterprises can interact with their customers in a more direct and productive way. The e-conomy, far from being about replacing traditional commercial practices, is about using Internet technology to allow enterprises to make operations more efficient, build stronger supply chains and improve the quality of their customer service. This is of particular importance given the clear shift in the balance of power in favour of the customer. Enterprises that do not understand how the Internet impacts their business are potentially losing millions of dollars of revenue every day. “In the e-conomy, the barriers to market entry in many industries become much lower,” said Audrey Mandela, managing director of telecommunications analyst firm, Mandela Associates. “A new player can enter a market and become a very effective competitor in record time. No company, no matter its size, can afford to remain complacent in this environment.” The Gartner Group forecasts the global business-to-business e-commerce market will explode to a value of US$7.29 trillion in 2004 from US$145 billion in 1999 and that by 2004, business-to-business e-commerce will represent 7 per cent of the total US$105 trillion in global sales transactions. At its most fundamental, the Internet allows enterprises to take the concepts of supply and demand and eliminate many of the traditional limitations governing business growth. Markets, for example, are no longer defined by geography or proximity to the enterprise. The potential client becomes anybody who has access to the Internet and, while in practice much online commerce is currently being driven by the business-to-business sector, the widespread uptake of new technologies such as Web-TV and set-top boxes will soon see more individuals using the Internet as a channel to make purchases. The Internet is moving rapidly beyond the static PC terminal into an ‘anytime, anywhere’ environment. Industry analyst Ovum forecasts that the use of mobile devices to access the Internet (such as mobile phones, palm-top devices and other terminals) will outstrip the use of personal computers by 2004. As markets increasingly become truly global, so the concept of ‘regular’ business hours has become redundant. A company that is not open when a customer knocks on its website door can expect to lose that client to a rival enterprise that proves more accessible and capable of immediately responding to the customer’s request. The Internet renders business practices transparent, thereby putting the pressure on all players in the market to adopt the very best standards of operation. Potential Internet clients can quickly make the rounds to see who offers the shortest delivery times, the best guarantees and the most comprehensive after-sales service without even meeting a salesperson. In short, the business of tomorrow needs to be prepared to serve a truly global market, be open 24-hours a day and employ best-practice standards as a matter of course. “The Internet enables the development of totally new models for commerce that weren’t feasible before,” said Mandela. “New services can be launched in days instead of weeks or months. Most of these Internet services would not be possible without Internet protocol (IP) technologies and the networks that serve as their backbones. Telecom companies with high-quality, flexible bandwidth services will become key partners for businesses working in the e-conomy.” Fortunately, the very technology that has thrown up these challenges is also helping enterprises to meet them. The strong growth in investment in inform-ation and communication technologies and a rapid increase in high-capacity, broad bandwidth at relatively low prices per unit of capacity, are enabling e-commerce web sites to enhance their attractiveness and give potential customers much faster access. Those businesses that thrive and prosper in the new e-conomy will not necessarily be those that invent new Internet strategies and goals, but those that grasp best how new technologies can support their existing strategies and goals. Recent evolutions in the corporate data networking environment, for example, are already allowing enterprises to decentralise the decision-making process and develop flatter, more dispersed organisational structures. Internet and associated technologies, such as Virtual Private Networks (VPNs), enable workers to access easily the information they need in order to carry out their tasks, regardless of where they are based – be they near a local client, working at home, or a partner in the supply chain. This empowerment of the worker creates the virtual team-groups of people united around a project because of their individual competencies rather than the fact they work in the same office. Even if team members are based in different time zones, work continues around the clock as members forward their project contributions at the end of their working day to colleagues in another country in a ‘follow-the-sun’ approach. Quite simply, in the new e-conomy, work becomes an activity rather than a place. This is the only way that enterprises will achieve the levels of flexibility and responsiveness that are required. The Internet and its attendant technologies are also crucial for developing the customer service tools that are required in the new e-conomy. One significant trend to which enterprises must respond is the clear preference online customers have for being able to ‘do-it-themselves’. At the simplest level, well-designed web sites allow prospective clients to find key information quickly and place orders online. At a more complex level, extranets let major clients and partners review more specific, and often more sensitive, information through password-protected web sites. This information can include the status of orders or updates on expected delivery dates. Add on new Internet-based software packages and the level of customer service can be raised to an even higher level. New ‘data-mining’ technologies build up a detailed view of a site user’s behaviour, preferences and buying patterns, thus allowing minute individualisation of the service to match their tastes and requirements and paving the way for a higher volume of repeat purchases. Visitors returning to a site are greeted by name and offered new products that might appeal to them based on what they have already purchased from the site. From the enterprise viewpoint, these technologies allow unique opportunities for cross-selling and direct-marketing. Particularly where customer service is concerned, the e-conomy is not about using technology to do something different, it is about using Internet technology to do something better. Every enterprise is conscious that customers respond positively to an efficient, individual service that is tailored to their requirements. The tools of the new digital era allow this issue to be addressed on a commercial scale. But the term e-conomy does not refer only to the way in which companies will be expected to deal with demand generated by the Internet revolution, it also applies to the way they will control their supply. Extranet technology will be an enabler in this respect. If enterprises use the Internet to source supplies and obtain the best deals, it is the extranet that will allow them to work more closely with their suppliers to create huge efficiencies in the supply chain. Companies will be able to order electronically new parts or stock from the supplier as soon as they receive a major order, saving days or even months compared with the traditional paper-based ordering processes and thus improving time to market for the finished product. Suppliers will able to consult their customers’ inventory and pre-emptively deliver stock before their client runs out, contributing to enhanced customer service. Internally, enterprises can co-ordinate their purchasing processes so that every division in the organisation benefits from best prices. The Internet alone, of course, will not be the only technology driving the e-conomy. People will still need to talk to their colleagues, customers will still want to speak to sales representatives, and enterprises may still wish to continue using part of their existing data networks-either because they need to achieve a return on their existing data investments or because they consider some information to be too sensitive for transmission via the Internet. In reality, therefore, companies may have to run a range of networks including voice, data and Internet over a variety of technologies. Furthermore, as the e-conomy increases reliance on the transfer of information by electronic means, enterprises will require new levels of reliability and increased bandwidth from their data and IP-based networks. Conclusion There are only three options open to enterprises as they face the tidal wave of change being unleashed by the e-conomy: do nothing and hope it will go away; wait and see what your competitors do and then try and react; or plan to benefit from the change by embracing the e-conomy as a way achieving a competitive advantage in the market place. We see the third option as the only viable choice. We also believe that our extensive experience of the Internet and other communications technologies makes us the perfect partner to help enterprises join the e-conomy and deploy the advanced communications solutions needed to prosper in it.

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