World Telecommunication Day 1999 |
Internet-based commerce is arguably the most talked-about subject in the technology world, yet its long-term effects may be more far-reaching than many caught in the heat of the moment - have yet realized. The impact of electronic commerce goes far beyond the estimated $50 billion in revenues generated by sales on-line in 1998 - the figure includes sales initiated on-line and completed off-line, which cannot be calculated precisely. It also encompasses advertising (e.g., banners, sponsorships and linkages), which accounts for 75 percent of on-line revenues today, and subscriptions (like those for Internet service providers such as France Telecom or America Online, or for privileged access to specific Web sites like The Wall Street Journal).
More than meets the eye
This is still just the view above water. In 1998, information technology, which creates the infrastructure for e-commerce, was responsible for 15 percent of growth in the galloping U.S. economy, up from 9 percent five years earlier. The Internet economy generated an estimated $301 billion in U.S. revenue and was responsible for 1.2 million jobs in 1998, according to a study conducted by the Center for Research in Electronic Commerce at the University of Texas (sponsored by Cisco Systems).
The same study says the U.S. Internet economy grew at an estimated cumulative annual rate of 174.5 percent from 1995 to '98, compared with the overall worldwide average economic growth rate (which includes the U.S. Internet economy) of 3.8 percent in the same period.
According to ''The Emerging Digital Economy II,'' a report issued by the U.S. Commerce Department in June 1999, almost half of the U.S. workforce will be employed by organizations that are either major producers or intensive users of information technology products and services by the year 2006.
Thomas Malone, the Patrick J. McGovern professor of information systems at the MIT Sloan School of Management, suggests that the digital economy has the power to ''fundamentally change the way work is done.''
Real change...
The fundamental unit of such an economy, Mr. Malone says, ''is not the corporation but the individual. Tasks aren't assigned and controlled through a stable chain of management but rather are carried out autonomously by independent contractors,'' whom he dubs ''e-lancers.'' The rising importance of e-lancers could define work in the 21st century as the industrial organization defined it in the 20th century. If it does, ''business and society will be changed forever,'' Mr. Malone says.
The European Commission, in its 1998 study entitled ''Content and Commerce-Driven Strategies in Global Networks'' takes similar note of the underlying changes wrought by network commerce. They will require, says the report, adjustments in the workforce, changes in education at all levels, a rethinking of the concept of regional competition, profound changes in culture, and a redefinition of the roles of government and global approaches to legal and regulatory policy.
..and how to prepare for it
Former EU Commissioner Martin Bangemann, who has been a shaper of the Commission's policies on e-commerce, has advised European thinkers to ''reinvent education'' and encourage open standards and universal access. ''People don't lose their cultural identity by participating in a global system,'' Mr. Bangemann said in a speech last March, ''but they need to learn that. If a culture is a closed shop, it will die.''
Ben Petrazzini, a policy analyst for the International Telecommunication Union (ITU), points out that in Asia, privatization in the telecommunications sector is occurring rapidly because of the regional economic crisis. ''In Latin America,'' Mr. Petrazzini says, ''70 percent of countries are privatized and others are on the way. Of the 15 countries in southern Africa, 10 are in the process of privatization and 30 percent are already privatized.''
Donald Johnston, secretary-general of the Organization for Economic Cooperation and Development, says: ''E-commerce will facilitate entrepreneurs all over the world in a way that has never been possible before.''
Welcoming the global market
Alexander Ntoko, project manager, electronic commerce, for the Telecommunication Development Bureau of the ITU, notes: ''The convergence of the financial, networking and business services brought about by e-commerce results in the increased effectiveness of business relationships between retailers and consumers. The direct-marketing model used by many manufacturers means consumers in both developing and industrialized countries can benefit from the enhancements in the value chain, potentially lower prices and multivendor shopping options.''
E-commerce, in theory, is not only an equalizer between wealthy nations and developing nations, but also between large companies and small companies. Although large interactive Web sites command large budgets, there are cases where even modest investments have yielded satisfying results.
Mr. Petrazzini recalls being in Cuba recently, where there are only two car rental companies. ''One of them went on the Web last year, a very simple site, and in the first year they earned $400,000 from Internet bookings. That represents a fortune for that country,'' he observes.
Claudia Flisi