E-business Report Card

Software Magazine, Dec, 2000 by Chris Pickering

E-BUSINESS IS MATURING. Where once it seemed enough to put an "e" in front of a product or a company name or to append a ".com" to just about anything, now it is recognized that e-business success requires something more. At the most fundamental level, successful e-businesses recognize that e-business is a business issue. Business strategies lead to e-business strategies. Once an e-business strategy has been developed, business practices and supporting technology must be defined and implemented. And e-business requires a long-term commitment to a perpetual process of market awareness, product and strategy development, implementation, and execution.

Inflated market capitalizations might happen overnight, but c-business success does not. E-business, it turns out, is just as subject to economic laws as any other industry.

Another sign of e-business's increasing maturity is the growing promise of e-business. Early e-business opportunities were fairly discrete: a Web store front, an intranet human resources application, or a utility function like e-billing, for example. These days we're talking about fully integrated e-businesses, with customers, suppliers, and internal operations linked seamlessly through the power of the Web. In this fully integrated world, the opportunities--and the challenges--often affect the entire business, making c-business that much more compelling--and more dangerous.

No one who follows e-business news can be unaware of the collapse of many dot-coins during 2000. Nor of increasing doubt that a Web-only business model leads to, much less maximizes, profitability. Nor of growing concerns over privacy and security. Nor a hundred and one other issues that have beset e-business. These growing pains are a natural part of e-business's maturation. Nonetheless, they present a red flag to many considering the state of e-business today.

Against this backdrop, there is always the question of what is really going on with e-business. Is everybody jumping on the bandwagon? What are the true benefits and costs? What are the essential technologies? Does c-business require Java? XML? And what about the relationship between the business and IT? Who owns e-business projects? Who manages them? And how are they funded?

As part of my work with Cutter Consortium, I conducted a survey to answer these and other questions. Cutter has published the complete survey results under the title E-Business: Trends, Strategies, and Technologies (see www.cutter.com/itgroup/reports/ebustrend.html for more information). This article draws on survey findings to present an e-business report card, a summary of the state of e-business today. Existing e-businesses can use the report card to see how their experience stacks up to that of others and to identify the next steps in their e-business efforts. Companies that have yet to take the e-business plunge--yes, there are still plenty of these--can use the report card to better understand if, when, and how they should embrace e-business.

Taking Over the World?

One persistent theme with almost any new trend is that of a tsunami, swamping everything in its path. This claim is usually followed by a corollary claim: If you don't adopt the trend now, you're going to end up as fish food. Considering these claims against reality, however, paints a different picture.

Certainly this is the case with e-business. Depending on how you define it, e-business began in 1994 or 1995. Right from the beginning, e-business pundits lost no time in repeating the age-old refrain about taking over everything and relegating non-adopters to the dustbin of history. But here we are five or six years later, and we're still a long way from total adoption of e-business.

Only 42% of our survey respondents (drawn from an international sample) are currently doing e-business. U.S. firms are almost twice as likely to be doing e-business as non-U.S. firms: 56% of U.S. respondents are doing e-business versus 29% of non-U.S. firms. It is interesting that almost everyone (87%) has investigated e-business, so it is on most companies' radar screens.

The original e-business applications were generally customer-facing: brochureware, Web store fronts, online customer service, etc. The momentum from these early applications still colors industry's attitude toward e-business. When asked to rank potential e-business benefits, respondents gave much more weight to customer-facing possibilities than they did to supplier-facing and employee-facing options. The highest-ranked benefit is as a new channel for existing business; second is to improve customer service; third is to enable a new line of business. Efficiency-enhancing benefits--improving cycle time, reducing operating costs, and reducing cost of sales, for example--were judged to be far less promising.

Customer-facing applications take top billing among applications deployed, too. Among respondents doing e business, 43% are using customer-facing applications, 36% are using employee-facing applications, and 30% are using supplier-facing applications. Brochureware (publishing marketing information on the Web) is far and away the most commonly used customer-facing application, followed by self-service sales, integrated call centers, and e-billing (sending bills over the Internet). Virtual office functions, self-service human resources (over an intranet), and electronic time-and-expense (T&E) reporting are the most commonly used employee-facing applications. Purchase-order entry, c-payment (making payments over the Internet), and e-billing (receiving bills over the Internet) are the most commonly used supplier-facing functions.