WHAT IS E-BUSINESS?
Electronic Business (e-Business) is, in its simplest form, the conduct of business on the internet. The first usage of the term was by IBM, in 1997, when it launched a commercial campaign on the internet, forcing many corporations to reconsider their perspective of their extant businesses with relation to the internet within its supposedly definable boundary of capabilities. This concept can be expanded by redifining it as the conduct of online business processes on the web, internet, extranet or a combination thereof. These customer and management-focussed business processes include buying and selling goods and services, servicing customers, processing payments, managing production and supply chains, collaborating with business partners, sharing information, running automated employee services and recruiting employees. With the evolution of the internet with time to a seemingly limitless entity, e-Business is the focussed harmonisation of Information and Communication Technologies (ICT) in furtherance of an overall business aim.
E-business is similar to e-commerce but encompasses much more than online purchasing transactions. Functions and services range from the development of intranets and extranets to the provision of e-services over the internet by application service providers. Enterprises conduct e-business to buy parts and supplies from other companies, collaborate on sales promotions and conduct joint research.
Corporations are continuously rethinking and reshaping their business models influenced by advanced technologies, hybrid workforces, heightened customer expectations and, specifically, the internet's availability, reach and ever-changing capabilities. The growth of e-business in recent decades has given rise to new business requirements. Consumers expect organizations to provide self-service options to conduct transactions, personalized experiences, and speedy, secure interactions. New regulatory laws and best practices for keeping electronic data secure have been established. Companies have adopted stringent security protocols and tools, including encryption, digital certificates and multi-factor authentication, to protect against hackers, fraud and theft.
Different Types of E-Business Models
2. Business-to-business (B2B) model. Companies use the internet to conduct transactions with one another. Unlike B2C transactions, B2B transactions usually involve multiple online transactions at each step of the supply chain.
3. Consumer-to-business (C2B) model. Consumers create their own value and demand for goods and services. Examples include reverse online auctions and airline ticket websites such as Priceline and Expedia.
4. Consumer-to-consumer (C2C) model. Consumers are buyers and sellers via 3rd-party-facilitated online marketplaces such as eBay. These models generate revenue through personal ad fees, charges for memberships and subscriptions, and transaction fees.
Examples of e-Business
- E-business encircles older companies that digitally transformed from legacy processes to data-centric operations and newer digitally oriented companies. The latter are organizations that advisory firm Gartner has defined as starting after 1995 with "operating models and capabilities [that] are based on exploiting internet-era information and digital technologies as a core competency." Since then examples of e-business organizations of different shapes and sizes have flooded the digital landscape.
- Amazon, the world's largest online retailer and marketplace, has used its e-business model to disrupt and expand into numerous well-established industries, including publishing and supermarkets.
- Uber and Ola, both of which built businesses that match drivers with people needing rides, disrupted the taxi and livery services industries. And in 2014, Uber went one step further in the USA and expanded its e-business with the launch of a food ordering and delivery platform, Uber Eats.
- Travel sites like MakeMyTrip, Yatra and TripAdvisor enable consumers to research, plan and book all or pieces of their trips based on personalized criteria, such as price, consumer ratings and location.
Advantages of e-Business
E-Business has drastically changed how enterprises, government agencies, nonprofit organizations and other institutions operate, allowing them to increase productivity, lower costs, move more quickly toward digital transformation and upgrade processes.
Electronic invoicing, automated billing and digital payment systems lower the amount of time workers devote to these tasks, many of which were handled manually just a few decades ago. That kind of time savings allows businesses to decrease department head count or shift workers onto higher-value tasks. Digital systems also streamline workflows, reducing the time between invoicing and payment and improving cash flow for the business.
Electronic communication systems, such as email, video conferencing and online collaboration platforms increase productivity by decreasing delays between inquiries and responses -- whether the communication is among employees, employees and external business partners, or employees and customers. Decision-making is faster, resulting in more agile companies that are responsive to stakeholder needs and market demands. Electronic communication has also eliminated, in some cases, employee business travel and supported more open, collaborative cultures so any employee can contribute ideas.
Digital systems that power e-Business can also extend an organization's reach beyond its brick-and-mortar walls. Cloud-based business applications enable remote and hybrid workers to perform their jobs in the office, from their home and other locations. Similarly, cloud-based apps and the internet allow business transactions 24/7 so even solo practitioners and small businesses can conduct business globally.
Advanced technologies like big data, AI, machine learning, the cloud, automation and Internet of Things (IoT) have improved the ease, speed and effectiveness of numerous e-business tasks. These tasks include archiving information, deriving data insights, recording financial transactions and personalizing interactions with customers.
E-commerce software and services have delivered new capabilities to organizations like email marketing and created new avenues to sell their goods and services, such as online stores. It has enabled the creation of entirely new business models, such as eBay's capacity for B2C and C2C sales, social networking sites like Meta (Facebook), X (Twitter), Linked-In and Shopify, which offers the infrastructure and e-commerce platform for customers to create online stores and sell their own goods.
Zuboff (1988) argued that the computer, initially designed to replace lower echelon jobs by automating them had, instead, led to an unexpected outcome: a focus on what she called ‘informating’. A close look reveals that the technology implementation that Zuboff describes can be seen from two angles. One aspect concerns automation of arduous manual and repetitive tasks. The other facet, more central to Zuboff, involves informating or re-designing work well beyond automated tasks so that any new data generated by computerisation could be developed by workers into a strategic company asset. Informating calls for collecting, organising, analysing and creating a database, the domain of IT specialists, who then administer it. This information flow is, de facto, edifying to those with access to the computers, thereby precluding the planned laying off of staff. I agree with Zuboff, but find that I have to go beyond her. I believe that computerisation works at two levels:
The first and most important level is its output of information. It is this information that guides decision making authorities to an optimal business strategy, i.e. minimal cost and maximum efficiency. Information is of many types and impossibly diverse to pen. From an organisations’s point of view, the field could be narrowed, depending upon its raison d’être, to departmental productivity rates; cross-channel interaction, particularly in supply chains; delivery schedules/bottlenecks; market demand and performance, etc.
The second level is a mix of information and linked automation, fed downwards through a network, an indication that the management believes in informating. Workers are granted access to role-specific data and overall section-wise performance, creativity is encouraged. Workers now have the opportunity to explore different patterns in the information, perhaps bringing ideas to the company that will increase productivity, decrease operating costs, create new products, or serve customers better. Feedback is welcome. Workplace ethos also changes to an unshackled approach.
Next, consider the case of the world's second largest enterprise software company, Oracle. The first sentence that stares at you in big bold letters when you download their brochure at oracle.com is their USP: INFORMATION GENERATES VALUE, the Cornerstone for Sustainable Compliance and Growth. Today’s branch heads in an organisation are constantly carrying out a balancing act. On the one hand, they must comply with increasingly stringent regulations, which require a consistent flow of information. On the other, they must help guide the enterprise to a profitable future, investing in new opportunities and equipment while hedging risks to maximise Returns on Investment (ROI) and economies of scale. What is of great help here is that the information is fully transparent and the data presented is exactly the same to all heads. They are on a level playing field as a cohesive unit if called upon to make either objective or selective judgments.
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Boeing engineers also use ‘informating’, which they describe as a collaborative, distributed and multimodal system. Their perspective is slightly different, as should be the case in two vastly differing industries. Boeing believes informating strategies emerge as industries move beyond an emphasis on productive efficiency, where ‘automating’ strategies tend to be at the forefront− like the production of Intel chips− to an emphasis on innovation and competitive advantage in which interpretation and manipulation of information to suit the organisation’s aims can be as important as the production of material goods.
Automating technologies seek to extract productive value (skill, technique, strength) from human bodies and invest them in machines, making human labour superfluous. Informating technologies− for example electronic mail and bulletin boards, telecom networks, etc. also extract or externalise workers' activity (e.g. planning and discussion,) but they do not seek to replace workers; they are meant to augment or enhance a worker's performance.
There is an inexorable but welcome concomitant to informating: A change in workplace ethos. Informating addresses the changing roles among managers and workers that occur with the influx of information technologies. In the informated work milieu, quite different from an industrial area of operations – a trio of specific operating conditions needs to be met.
1. Managers must ‘release’ workers to explore and interpret patterns in the central database's content. In many cases, this means that managers must loosen their grip on authority to give way to a more decentralised work environment. Workers should be encouraged to look for underpinning patterns that contribute to innovation and new directions and rewarded for their discovery.
2. Workers need access to participate. This mandates that systems' computer expertise be decentralised and distributed throughout the organisation so that workers have more direct, ongoing access to key, raw data, i.e. resources.
3. The management must make a conscious effort to develop and to train workers so they can determine context within the informational stockpile and participate in the planning process; this is especially valid at the brainstorming level.
The flexibility of Web tools for managing multimedia content, the relatively little staff required to design and maintain a site, and the technology's inherent accessibility by most users are the primary reasons behind the growing popularity of Web-based tools for informating projects. Interestingly, research has shown that information professionals - whether they are working in a corporate library or in another department as Webmasters - play a key role in designing and/or and maintaining a company's central information resource and in carrying out the informating process. Typically, the core database is the history of the organisation since inception. Even more interesting is a report that by placing most of their core database as ‘current awareness’ on their Web site, an organisation added a strategic edge by off-loading a lot of repetitious tasks/responses and directly saved millions of dollars annually in support calls.
Judging from the evaluation and analysis presented supra, there is no need to fear that e-business will morph to its retrogressive past by going back to the earlier wave of automation, with systems that either replace people or reduce the amount of skill that people need to do with systems that either replace people or reduce the amount of skill that people need to do their jobs.
Zorayda Ruth Andam, in her Report on the e-ASEAN Task Force UNDP-APDIP (2003), writes, “In the emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. The integration of information and communications technology (ICT) in business has revolutionised relationships within organisations and those between and among organisations and individuals. Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customisation, besides reducing costs” (http://www.apdip.net/publications/iespprimers/eprimer-ecom.pdf p.5).
Andam first defines e-commerce as a wide range of online business activities for products and services. It also pertains to any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact. (p.6)
E-commerce is usually associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network. Though used often, this definition is not exhaustive enough to integrate latest developments in this new and revolutionary business phenomenon. A more complete definition is: E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organisations, and between organisations and individuals.
Interestingly, e-business also deals with commercial transactions over the net. It has the same parameters, viz., Buyer, Seller or Provider, Internet contact and contract, Product and Sale. On the topic of whether the Internet economy is synonymous with e-commerce and e-business, she writes that the Internet economy is a broader concept than e-commerce and e-business. It includes e-commerce and e-business.
Andam defines e-business as: 'The transformation of an organization’s processes to deliver additional customer value through the application of technologies, philosophies and computing paradigm of the new economy.' Surely, this is just a matter of semantics, a play of words. What then is the difference between e-commerce and e-business?
Andam explains that internet economy pertains to all economic activities using electronic networks as a medium for commerce or those activities involved in both building the networks linked to the Internet and the purchase of application services such as the provision of enabling hardware and software and network equipment for Web-based/online retail and shopping malls (or 'e-malls'). It is made up of three major segments: physical (ICT) infrastructure, business infrastructure, and commerce. The CREC (Center for Research and Electronic Commerce) at the University of Texas has developed a conceptual framework for how the Internet economy works. The framework shows four layers of the Internet economy-the three mentioned above and a fourth called intermediaries.
Let’s look at the components of the four layers.
Layer 1: Internet Infrastructure: Companies that provide the enabling hardware, software, and networking equipment for Internet and for the World Wide Web.
Layer 2: Internet Applications Infrastructure: Companies that make software products that facilitate Web transactions; companies that provide Web development design and consulting services.
Layer 3: Internet Intermediaries: Companies that link e- commerce buyers and sellers;companies that provide Web content; companies that provide marketplaces in which e-commerce transactions can occur.
Layer 4: Internet Commerce Companies that sell products or services directly to consumers or businesses. There is no mention of e-businesses here! Does Andam imply e-commerce has the same factors or components as e-business? Or that they are the same in different guises? No, we need to go back to basics here. I’ll give you a hint: Read page 7 of Andam’s PDF carefully.
If you want a slightly clearer understanding of the two, just remember that e-commerce is a subset of e-business. “E-business goes far beyond e-commerce or buying and selling over the Internet, and deep into the processes and cultures of an enterprise. It is the powerful business environment that is created when you connect critical business systems directly to customers, employees, vendors, and business partners, using Intranets, Extranets, e-commerce technologies, collaborative applications, and the Web.” Read about it online at: (http://www.ebusinessprogrammers.com/ebusiness/ecommerce_ and_ebusiness.asp). I don’t think you will have doubts anymore.
Globalization along with the boom of the internet era has led to the exponential growth of the eCommerce sector in the past two decades. The growth of the eCommerce sector has in turn become a catalyst for the growth of the economy as a whole. The impact that the internet has on the industry structure, as well as the competitive forces in the market, are as explained below:
- There is an increased rivalry among the existing competitors. As there is no geographical limitation for a virtual marketplace, the competitors can be from anywhere across the globe. This has led to a considerable increase in the number of competitors when it comes to eCommerce.
- The bargaining power of buyers has increased. There are quite a lot of products available in the market for a wide range of prices. This is because of a huge reduction in the switching cost and the powerful channels existing in the chain have also been removed.
- The bargaining power of the suppliers has also increased. Suppliers now do not have to depend on the wholesalers or manufacturers to get a deal to supply the products or raw materials. The internet has made it possible for the suppliers to come closer to the customers and the procurement process has also become easier.
- The barriers to entry have been drastically decreased. Any company or manufacturer willing to sell their product can do it so easier with the help of the internet. There is no significant barrier to entry present in the current market structure.
- Threats to substitutes have increased considerably. As discussed before, there are a lot of sellers available on the internet who offer the same product or close-enough substitutes. Because of this, customers switch from one company to another without giving it much thought.
- Disintermediation: eCommerce has eliminated traditional intermediaries in the supply chain, such as wholesalers and retailers. This has led to a reduction in cost and increased efficiency in the production and delivery of goods and services.
- Disruption of Traditional Business Models: The Internet has disrupted many traditional business models. Many businesses that ignored the digital revolution have faced severe challenges in meeting changing customer needs and adapting to new challenges.
E-commerce and e-Business are similar but not synonymous. E-commerce narrowly refers to buying and selling products online, whereas e-business defines a wider range of business processes, including supply chain management, electronic order processing and customer relationship management, designed to help companies operate more effectively and efficiently. E-commerce therefore should be considered a subset of e-business.
E-commerce describes any part of the business processes associated with online ordering and purchasing. An e-commerce transaction, for example, would be a customer ordering online and picking up the product at the brick-and-mortar store. By contrast, e-business processes can be handled in-house through a company's internal network or outsourced to providers that specialize in specific parts of the transaction.
IT business analysts can interpret working data, analyse key metrics, gauge the implications of changes in the supply chain environment and share these insights with senior management and other employees. They can also develop new processes based on the needs of relevant stakeholders.
Information is built on the automation process: today, to automate also means to ‘informate’. The automatic collection of data enables the recording of many more details. So automating the front end of a business provides an opportunity in the back end of the business to make better decisions with the information gathered.
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