THE ROLES OF E-BUSINESS IN BUSINESS

The Internet and related technologies and applications have changes the way businesses are operated and people work, and how information systems support business processes, decision making, and competitive advantage. Thus many businesses today are using Internet technologies to Web-enable business processes and create innovative e-business applications.

The Internet and Internet-like networks - inside the enterprise (intranets), and between an enterprise and its trading partners (extranets) - have become the primary information technology infrastructure that supports the e-business applications of many companies. These companies rely on e-business applications to:

  • Reengineer internal business processes.

  • Implement electronic commerce systems with their customers and suppliers.

  • Promote enterprise collaboration among business teams and workgroups.

E-business is defined as the use of Internet technologies to internetwork and empower business processes, electronic commerce, and enterprise communication and collaboration within a company and with its customers, suppliers, and other business stakeholders. Enterprise collaboration systems involve the use of groupware tools to support communication, coordination, and collaboration among the members of networked teams and workgroups. An internetworked e-business enterprise depends on intranets, the Internet, extranets, and other networks to implement such systems.

Management must be abreast of recent developments in e-commerce. Electronic commerce changes and in some cases replaces nonelectronic ways of doing business, product and service delivery, and customer involvement. Organizational considerations include building infrastructure to share information, using intermediaries, and managing knowledge. EC involves many functional responsibilities including design, building, manufacturing, and controlling.

Business-people and information technology staff must be familiar with online applications in electronic commerce to effectively do their jobs and remain competitive. The ultimate survival and success of the business may depend on its involvement with EC. Staff must get involved with recent developments in interactivity and real time transactions. Staff must have a working knowledge of related hardware, software, and communications technology. They must know how transactions are processed and secured through electronic web-based systems. The business should be flexible when dealing with EC applications and usage. The objectives of EC include shorter manufacturing time, faster customer response, better service quality, cost reduction, and shorter product cycles

Exhibit 1:

Role of e-business in business

There are different definitions of EC depending on the perspective involved such as:

  1. Business process viewpoint. The use of technology to automate business transactions and workflow.

  2. Online viewpoint. The facilitation of the purchase and sale of goods or services over the Internet and other online services.

  3. Communications viewpoint. The delivery of data, goods or services, computer network payments through telephone lines, and other communication modes.

  4. Service perspective. The providing of quality services and products to satisfy the wants of business entities and customers consistent with the goals of reducing service costs and expediting delivery.

EC is of interest to business managers, marketers, accountants, financial executives, financial analysts, investors, creditors, lawyers, and consultants. The parties involved with EC include:

  • Manufacturers, wholesalers, and retailers.

  • Sellers of Internet commerce products such as Oracle, Microsoft, and Netscape.

  • Financial institutions including banks.

  • Insurance companies.

  • Government regulatory agencies.

  • Standards bodies.

  • Industry associations.

Because of digitization, the electronic marketplace requires no physical stores or market institutions. The electronic marketplace allows for seller innovation of the entire business process from manufacturing to customer service. The ordering of goods and advertising are being digitized and carried out over the Internet. In other words, EC relates to sellers and buyers meeting to trade digital products with the use of digital processes. Products are being released from physical constraints and limitations into digital form to be delivered through the global network and paid for with digital currency. Whatever goods or services can be digitized or otherwise transferred electronically will find EC a very quick and cost effective means to reach consumers. Goods and services very suitable for EC include software (via electronic downloading to the consumer), video, cable television, music albums, books (via electronic transmission), newspapers and magazines (in electronic format), information databases, education and job training, home banking, bulletin boards and chat rooms.

E-commerce affects manufacturing, marketing, consumption, finance, and investments. There will be user interaction with products through downloading business problem solving software, exchange of personal settings, and e-mail. EC may be used for noncommercial functions such as filing and paying taxes, and personal finance.

Electronic commerce includes:

  • Order processing to vendors. EC provides data about goods or services such as where to buy them, prices, warranty contracts, quantity available, delivery terms, and legal provisions. There is even online auctions for products such as eBay (electronic bay) which is a company having a giant virtual flea market. At the web site (www.ebay.com) companies and individuals trade their goods. For this service, eBay only gets a small transaction fee when a trade is made between the seller and buyer.

  • Distribution of employee or product information such as through e-mail and the Web.

  • Corporate financial management.

  • Production logistics.

  • Project performance and data.

  • Online searches of information via search engines and/or surfing the Net.

  • Personnel information.

  • Warehousing information including inventory stocking levels.

  • Online publishing of company information such as reports, analyses, and documents.

  • Subscription services.

  • Electronic mail and messaging. E-mail is the most widely used form of electronic commerce. About 75% of all online consumers use e-mail services.

  • Inventory management and distribution.

  • Order tracking.

  • Examining shipments and deliveries.

  • Obtaining information to prepare a competitive bid.

  • There is electronic handling of the following:

  • Production.

  • Tracking and monitoring sales.

  • Product and/or service selection and delivery. Being online allows for product selection and selling prices to be updated instantly.

  • Advertising and promotion of online goods. For example, a new technology referred to as "virtual tags" allows consumers to view multimedia advertisements online and order a product just by clicking the mouse on the advertisement. Many goods and services lend themselves to being order via electronic catalogs such as computer products, food, travel services, and apparel.

  • Application engineering.

  • Payments. In an electronic payment system, a bill is sent electronically to a customer who then authorizes an electronic check. The customer`s bank then electronically transfers funds from the customer`s account to the biller`s account. The customer receives electronic monthly statements listing the payments. With regard to electronic money.

  • Consumer searches for product and service information.

  • Marketing research.

  • Shopping by online orders.

  • Dissemination of product data.

  • Accumulating customer data.

  • Customer service and support.

  • Pricing strategies.

  • Financial services such as online investing in stocks.

  • Distribution. For soft goods, distribution might simply be downloading while for hard goods distribution might be delivery.

Electronic data interchange (EDI) refers to the electronic purchase, receipt, and payment for inventory and supplies. EDI significantly reduces delivery time and related paper processing. Thus, reducing inventory and transaction costs.

Electronic data includes software. The following are suitable to Internet-based distribution: upgrades, program patches, and documentation.

Benefits of EC include:

  • Eliminates limitations on place and time.

  • Improves information flow.

  • Fosters better customer relations and better product distribution.

  • Allows data continuity which is having data created, altered, and distributed faster and at less cost. For example, companies can save money by using the Internet for business-to-business transactions than using private networks. Money can be saved from closing stores or less stocking of merchandise at existing stores by reducing overhead. Further, the company can minimize its transaction costs by improving the linkage between vendors, purchasers, and intermediaries. Areas of duplication may be eliminated along with better sharing of information to reduce costs.

  • Stimulates sales and improves the revenue base in a number of ways including providing new markets, new information-oriented products and services, better channels of service delivery, and fostering interaction with customers.

  • Reduces order processing time and inventory levels.

  • Improves how business transactions are processed over networks. Such improvements result in better performance, better customer satisfaction, better management decisions, higher quality, enhanced efficiency, and better interaction.

  • Provides business efficiencies such as upgrading technology, transferring content, transactional processing and payment, production processes, improved communication, more accurate transactions, better promotion and advertising, low-cost technological infrastructure, less obsolescence, enhanced sharing of information, and improved service.

  • Better internal integration of the business entity`s operations (e.g., improved interaction among departments within the company) as well as better external integration (linkage to the outside) taking the form of having a network of companies, contractors, suppliers and government agencies. With internal integration, there will be better coordination of decentralized decision making within the entity.

  • Provides the opportunity for a business to move toward a virtual value chain and to two-way interactive communication.

In implementing EC, consideration should be given to the user`s role, use of development mechanism, and nature of the applications. Implementation involves automating processes, using pilot projects, using data warehouses, and planning for growth and expansion.

Telecommunications companies such as wireless, satellite and land-based, cable-TV, and others are building the e-commerce communications infrastructure (information superhighway). Internet transmission speed (bandwidth), quality, and reliability must also be considered.

Internet service providers (ISPs) are the entities providing the basic connection to the Internet. There are numerous regional and local Internet service providers who provide custom web design, marketing, and other services besides e-commerce hosting services. ISPs offer "turnkey" e-commerce products in a single-ready-to-use package including hardware, software, payment processing and communications aspects. Turnkey solutions include providing for the connection, catalog maintenance, order and credit card processing, and other services. A determination must be made as to what information is on the company`s computers and what reside with the ISP. How is information with the ISP controlled and secured?

A business may need to evaluate and decide whether to outsource some or all of their e-commerce functions. E-commerce offers opportunities for small businesses, too, by enabling them to market and sell at a low cost worldwide, thus allowing them to enter the global market right from start-up.

Mobile Commerce

Mobile commerce (m-com­merce) is transactions conducted anywhere, anytime. M-commerce relies on the use of wireless communications to allow managers and corporations to place orders and conduct business using handheld computers, portable phones, laptop computers connected to a network, and other mobile devices. In addition to computers, many other devices can be connected to the Internet, including cell phones, PDAs, and home appliances. These devices also require specific protocols and approaches to connect. For example, wireless application protocol (WAP) is used to connect cell phones and other devices to the Internet.

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