World Telecommunication Day 1999 |
A snail's-eye view of e-commerce can be found in the small town of Cherasco (pop. 6,200) in rural Piedmont, Italy. A visitor asks the mayor about his town's major industry, snail breeding. ''Would you like to see the text of our Web pages?'' responds the mayor proudly. ''We have them in Italian and English. We give information on snails and we invite subscriptions to our magazine, 'Farming Snails.' You know, there are 12,000 snail growers worldwide, and now we can reach them all.''
A different view is found in DaimlerChrysler's $300 million auto production plant in Tuscaloosa County, Alabama, built in 1997. The state-of-the-art facility encompasses a fully integrated enterprise-wide information technology system to support the plant's business processes, with links to outside suppliers and an import/export program that allows companies operating in a foreign trade zone to maintain financial, inventory control and other data about products
Both snails and sport vehicles illustrate the growing impact of e-commerce on the business sector.
''Business-to-business e-commerce is eclipsed in the public eye by the glamour of business to the consumer,'' says Connie Lindgreen, vice president of global e-commerce solutions for IBM. This is understandable, she says, but unfortunate, for the ramifications of business-to-business electronic commerce can be felt by virtually every economic player in society.
The backbone
Today, business-to-business dealings may account for almost 80 percent of all e-commerce, according to estimates by International Data Corporation (IDC), and in Europe, business-to-business attracts more attention than its consumer counterpart.
There are two basic reasons for this, says Ferenc Szelenyi, manager of electronic commerce for IBM in Europe/Middle East/Africa. On-line costs are higher in Europe than in North America, so consumers are more reluctant to spend their time - and money - on-line.
On the other hand, European businesses are very familiar with electronic data interchange (EDI, a private network that predates the Internet for commercial use), and therefore have been more open to the advantages of networked commerce.
Compared with EDI, Internet-based exchange is much less expensive, and the protocols are easier to learn and manage.
There is an even more fundamental reason behind the growth of business-to-business e-commerce. It simply makes sense to put technology to work ''in house'' before taking it out to customers. John Noakes, e-commerce business manager for Microsoft, poses the question: ''Before you put up your Web site, doesn't it make sense to get your supply chain in order?''
In addition, the timing is right for economic transformation in Europe. Deregulation, liberalization, the introduction of the euro, economic restructuring, new competition, and mergers and acquisitions are pushing companies to reconsider traditional ways of doing business.
''Two fundamentals of business used to be 'price' and 'product,''' says Charles Wang, founder and chief executive officer of Computer Associates. ''But today, there are no less than four fundamentals: product, service, quality and speed.'' Effective e-commerce is able to deliver all four.
Ms. Lindgreen explains: ''Business-to-business is about reintegrating the supply chain and managing the flow of goods and services through collaboration, procurement and inventory management. It allows you to restructure your business relationships and your relations with your customers.''
Virtually no overhead
Starting simply, a small business can engage in international trade without a major investment. The International Telecommunication Union (ITU) cites the example of a Kenyan farmer who sells chili peppers to a British supermarket chain. Or a farming village in Peru that ships its vegetables to New York for sale, and was able to quintuple its income in two years - both thanks to e-commerce.
On a more sophisticated level, manufacturers are linking up to collaborate with their parts suppliers and distribution outlets. ''The proactive strategy will come after 2000, and will be more aggressive, opening up applications with push-based applets,'' or mini-applications pulled off the network, says Kyle Pound, a research analyst for the Gartner Group. ''Customers will be able to solicit manufacturing schedules and demand plans. Suppliers can release new product specifications and implement design changes to posted specs.''
A key to the future growth of business-to-business e-commerce will be the ability of telecommunications operators and IT vendors to package and distribute e-commerce solutions to small and medium-sized enterprises. Italy is a good case in point, because it has 3.4 million companies - but only 236,000 have more than 10 employees.
Antonio Romano, research director for IDC Italia, says that the growth rate for IT/telecommunications in Italy could be much higher than current estimates (9 percent for 1999) if vendors could reach these smaller businesses.
Claudia Flisi