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E-commerce is here to stay. In fact, not only is it a
permanent fixture, it’s soon expected to take over.
IDC estimated the world e-commerce market to have been worth $7.6 billion (approx. £4.75
bn) in 1997, half a billion of which was generated by Western Europe. By 2002, the
worldwide e-commerce market is expected to reach $333 billion (approx. £208 bn), with
almost $30 billion (approx. £19 bn) coming from Western Europe. Worldwide spending on
Internet and e-commerce site development is anticipated to grow from $11.8 billion
(approx. £7.38 bn) this year to $43.6 billion (approx. £27.75 bn) in 2002. Aside from
the oft-quoted Amazon.com example of an e-commerce success story, there are countless
others. Cisco, for example, which has been cited as one of the world’s best
performing companies, carries out 69% of its sales over the Internet and has reduced
annual operating expenses by $270 million (approx. £169 million) in doing so.
The Information department
Companies will no longer be able to operate in the same manner as e-commerce drastically
alters the day-to-day running of the business, making information, and its correct usage,
key to the success or failure of the enterprise.The traditional IT department will change
from running Information Technology to just Information. Martin Gandar, principal analyst
of Internet and e-business at the Butler Group, explains how jobs will change.
"It’s the sharpest gradient of change we’ve seen in IT, and it’s
moving away from being an IT issue," he says. "We’ll probably be seeing
fewer IT directors and more business strategists and information managers."
As information management becomes the most crucial issue in a business, the chief
information officer will be central to the decision-making processes. "He will have
to find out where the company fits in the information hierarchy and form
partnerships," explains Gandar. He will have to consider fulfilment very carefully as
it’s easy to bite off more than you can chew when embarking on an e-business
strategy. Martin Gandar elaborates: "The infra-structure has to be in place, if not
you must partner with someone who can deliver on your promises, they may put you low down
in their portal which means you take a lower place in the pecking order but at least you
will be there."
Changing places in the business world
The inevitability of e-commerce means that many partnerships will be formed and many
companies will indeed have to take a lower place in the pecking order as they team-up with
organisations which can manage their information flow better then they can themselves.
According to Martin Gandar, there is no option: "If you don’t join in, you will
eventually become a commodity, you will be treated as a commodity and your profit margins
will be reduced." He cites the "death spiral" in banking as an example
whereby high street banks are losing their best customers to Internet banks where moving
money around is extremely convenient. Banks are having to increase their prices as they
lose large clients and the resulting price increases drive more customers away. Markets
are being replaced by co-ordinated information flows and more and more companies are being
driven to the Internet in order to stay competitive. The Internet and e-commerce reduces
both internal and external transaction costs by facilitating the gathering of information,
financial transactions, deliveries, support and so on. Real-time environments are possible
and valuable as prices can be negotiated and monitored and the benefits passed on to
customers ensuring the longevity and health of a business.
Requests to industry analysts, Butler Group for information and advice about getting into
e-commerce have grown tremendously. As Martin Gandar explains: "Two years ago people
were coming to us about intranets, and last year, extranets were the thing. Now, setting
up an e-business is the next step and we are seeing a huge number of companies getting
invloved." Companies and jobs will change once e-commerce is as widely used as it is
expected to be and employers and company directors need to be aware of this. Markets
nowadays are moving towards being information based and, as Martin Gandar believes,
"The case is made. Either do it or die…or at least suffer." |
