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By: Hamid Zangeneh, Ph.D

The Internet has permanently changed the way we communicate with each other and e-commerce will, in the same fashion, change the way we do business. One could assume it is an extension of the old economy or as a whole new economy, but either way, it is not going to disappear and, as we learn to use its power, it permeates all aspects of our personal and professional lives. As a matter of fact, new applications of the Internet to the new uncharted territories are expanding while the old applications are becoming the flagship industry. Many dot.com start-ups, just like great many other entrepreneurial initiatives have been created and gone by the wayside. A few, however, have prospered and become icons of the economy. They have created new products (physical, service, and information products) and new values and prospered immensely from these new enterprises. The question, then, for the managers and entrepreneurs of today is not whether they should harness and exploit the power of the Internet, the question that must be asked and answered is how.

Ecommerce seems to be the answer. Ecommerce is becoming important in many interconnected areas such as business to customer interaction (B2C), customer to business activities, business to business interaction (B2B), business to government (B2G), and intra-business interactions. Companies expect ecommerce to increase efficiency in finding and interacting with customers, trading partners, and development of new products and markets. Some of these have actually materialized for some of the early players in the marketplace. This new business methodology is a process that deals with the needs of all those involved in any transaction, i.e., merchants, producers, customers, etc. It promises to reduce cost of doing business while improving the quality of goods and services delivered and rendered while shortening the delivery time. This new method of buying and selling products and services through Internet is expected to increase productivity, profits, and standard of living in our global village. It is neither a local nor a company specific phenomenon. Those who hesitate to harness its power will most probably lose their markets to first movers. One thing that managers and entrepreneurs must understand, and this is very important to know, is that the electronic business should not be considered as a technological problem to deal with. It is a business process that must be understood and incorporated into the company's vision and goals. If we deal with it as if it were a technological problem, we might purchase and invest in equipment and technology that does not serves the best interests of the company. Therefore, in order to successfully initiate and incorporate ecommerce into a firm, the organization, before anything else, must have a clear outline of its strategic goals and objectives. Only after they have decided on their business' strategic goals, they could deal with the technological aspects of ecommerce and invest in the type of equipment and software that would suit their needs best. That is, the business reengineering that is needed for ecommerce must take place after they understand their business process and not before. If they do not understand their goals, vision, and business process clearly, they could spend a great deal of money and time and buy things that will be unprofitable and wasteful.

Another aspect of ecommerce that need to be addressed is the understanding that it is not a panacea. It will not create something out of nothing. It functions as an enabler (enforcer). It enables (forces) the company to change the way it does business and establish a more efficient doing its business. That is, it requires a dynamic strategic planning accompanied by reorganization of the company and procurement of necessary technology to match the ever-changing vision of the company. In the process of doing these dynamic planning, reorganizations, and restructuring, one would find inefficiencies, duplication, cross purpose operations, unnecessary bureaucracy, and most of all, procedures that stifle inventiveness and innovation within the hierarchy of the company. A dreadful sight for the owners and stakeholders of the company to see under any circumstance specially in this current cut throat global environment where old and new world are thrown into the pool to compete and many will have to parish.

One of the common mistakes of those who want to dive feet first in the ecommerce business, is the delegation of it to the technical department. More often than not, the technical department does not have either the expertise and/or authority to deal with many issues that need to be addressed in the process. Doing business electronically must be developed by a group of individuals from all departments so they could make sure that everything and anything that could become a hindrance in the future is dealt with in advance. This does not mean that we will not encounter unexpected or newly discovered problems in the future. Any project of any kind must have enough flexibility and malleability to deal with new and old unresolved obstacles. If not, the business is doomed to fail in the long run. There are many areas of ecommerce that need exploration by old participants as well as by the newcomers in this environment. Some issues, such as technical standards, are firm specific and some of them are related to public policy. Supply-Chain Operations Reference model (SCOR) is dealing with some of these technical issues such as standard terminology, which are vital to the evolution and seamless operation of ecommerce. These standards need to be worked out so we do not encounter bottlenecks such as the one we face in the railroad systems of eastern and western blocs where the widths of wagons and rails are not similar. Therefore, when a train must pass the border in either direction, they have to unload and reload their entire cargo so they could proceed through. Another similar example of bottlenecks is in distribution of electricity that is hampered by the 110 versus 220 volts standards. In this case, electricity produced in one country could not be sold to another, perhaps a neighboring country, because of the voltage incompatibilities. Public policy on privacy, commercial codes, information pirating, consumer protection from fraud, and policing of global information traffic without intrusion into the process and without compromising the privacy of individuals in any transaction are cans of worms that are under consideration and evolution around the world.