This text outlines the impact of Information Technology (IT)and specifically the impact of the Internet on the 'world of business' in this new millennium.

A Historical Perspective (Networks and IT centric business)

The Personal Computer (PC) has become ever more powerful whilst at the same time becoming more affordable. The 'personal' tag is misleading because more than ever they are now most useful when in Networks, a means for sharing and communicating information.

Today PC networks are popular at 3 levels,1) the 'old' office Local Area Network has evolved into the Intranet 2) The Intranet has also been opened to special partners, customers and suppliers creating an Extranet and finally 3) there is the Internet with its global presence/ global access.

The internet originated in academic circles but the most public face is as a consumer channel. Information Technology (IT) development has been the key driver for the US economy in the past few years, and more recently in Europe

In the 90's, Companies had become structured around their information systems. The management consultancies have been re-born by delivering IT solutions and re-structuring to the larger companies, usually delivering Enterprise Requirement Planning (ERP) systems which create standardized process/ transaction flows, visibility and reporting (the main two ERP software solution providers are ORACLE and SAP).

The Net

The internet (World-Wide-Web www) has been seen primarily as a way of reaching consumers, in the future it will be the backbone for most business and communication interactions.

The Press and TV Media advertises the consumer face of the web and much of the focus is on useful tools like browsing software or search engines. Browsing software such as Explorer and Netscape has made web access easy for the masses, it has also led to a new way of working or 'surfing' state of mind.

Instant gratification and short attention span are common characteristics of a web-surfer, these should not be seen as a negative attitudes but are a reflection of the environment of limitless information/variety which is very time consuming and often distracting to travel through. Search Engines are service web-sites that guide web surfers to the items that interest them.

Consumers have been nervous about buying over the net, early transactions have focused quite naturally on commodity published material which is low value/low risk and also of predictable quality such as books or music. The search engine sites and the publishing sites have created valuable 'brands' by providing reliable service, customers are now repeatedly using their sites as a sort of 'window' to the web. Infomediaries is a new term for these types of web sites typified by brands like Yahoo, Amazon and Lycos, it describes how they continually seek to intermediate and expand information services to attract new visitors.

This site popularity increases the revenue from the advertising banners but there still isn't enough income to cover costs. Increasingly these Infomediary web-sites are looking to sell other merchandise via e-Commerce to generate a sustainable revenue. Informediaries are also sometimes referred to as Trusted Third Parties (TTP) because they become the popular choice for surfers and instill confidence for transactions through their web site.

e-Commerce

e-Commerce is simply buying and selling but using the web. In internet terms there has been a slow development of infrastructure, process and confidence but volumes are about to explode. There are three levels of sophistication:

1) Publish your catalogue of products or services and invite potential customers to view on-line but then go and buy through traditional 'bricks & mortar' stores.

2) On-line ordering and credit card transactions

3) Interactive-guided on-line transactions and machine to machine commerce.

The first to levels are now well established. The last stage will be facilitated by a combination of factors:

1) The new web page language of Extensible Mark-up Language (XML)

2) Common availability of broad-band accesss

3) Business System convergence

XML

XML is a development beyond HTML(the existing web-page authoring language). HTML is about pictures and text that are designed to be attractive and readable to the human eye, a search engine only looks for strings of characters, it does not understand the context of the source document.

XML is about standardizing and identifying (tagging) certain data in the web page. It will allow web authors to highlight essential transactional data such as price, delivery, unit of supply and short description. The XML tags 'contextualize' the data and will make web pages machine readable like never before.

This feature will revolutionize Business to Consumer(B2C) and Business to Business (B2B) on the web. The informediaries will offer analysis tools that go away and get you the best deal 'automatically' at any instant in time.

The markets for commodity products will become very fast moving because of the transparent trading, innefficiencies will be exploited much quicker than in the current imperfect marketplace.

Branding and differentiation of products/services will become even more important to justify the differing prices. Some complicated merchandise will still be difficult to compare using XML but even these products will be affected by the other infrastructure changes.

Broad Bandwidth Infrastructure

This is a telecommunications infrastructure improvement allowing ten times more data to travel ten times quicker. Cable modems will be available to most cable TV customers in 2000,

BT is already offerring ADSL technology to phone customers and soon mobile phones will have considerable bandwidth. The bandwidth allows more multi-media and interactive commerce, the 'flat' web pages will deliver full motion video clips,

Internet call centre sales people will command customers' browsers remotely and will engage in conversation to grow and close deals. Voice over Internet Protocol (VOIP) will enable this interactivity without requiring a second line, potentially leading to videophone solutions.

Business System Convergence (Machine to Machine Commerce or Silent Trading)

Today B2B commerce out numbers B2C commerce in a ratio of 4:1 by volume. It is clear that business has already grasped this medium. The forecast for B2B commerce growth is enormous and mainly because it is a low cost/efficient way of trading.

The extranets owned by companies are now becoming seamlessly interfaced with the internet using e-Commerce software packages. This networking process creates ultra-lean enterprises (reduction of waste /stock and improved responsiveness to the customer are key goals for best practice companies).

The resultant networks can create an electronic trading chain right from the third tier supplier of piece-parts up to the end user and at the same time support many different channels of trading to reach that end user. These networks are capable of handling all the transactions automatically, without any human intervention once the parameters have been set, this is referred to as Machine to Machine Commerce or Silent Trading.

These front end or 'sell-side' e-commerce packages such as 'Intershop' or 'Commerce One' automate and co-ordinate many of the non-value adding administrative tasks whilst at the same time collecting valuable Customer Relationship Management (CRM) data. The internet allows companies to trade directly with end-users, earn a higher margin and get a closer understanding of their needs.

This 'direct' business is a threat to existing 'bricks & mortar' distribution chains. The e-Commerce pacakages can handle many different business models simultaneously, for instance supporting the traditional 'wholesaler-distributor-retailer' model whilst at the same time carefully matching the prices on direct sales and even shipping directly to customers won through and electronic order taken from a Trusted Third Party.

It is also very important to recognize the opportunities on the backend or 'buy-side'. The full integration of the ERP system with the e-Commerce package means that once you have established your supply chain then all purchase orders can flow automatically throughout the extranet using the internet. See our Digital Trading Map TM

It replaces the un-wieldy Electronic Data Interchange (EDI) model that went before, provides a uniform and quick to install solution which will ultimately reduce batch sizes and inventory in the entire chain. There will be reduced costs and improved service for all involved.

A web-site development relevant to 'buy-side' is that of 'marketplace portals', a virtual marketplace is created to bring buyers and sellers together, similar to the real corn exchanges of old except that a far greater range of merchandise will be traded.

The 'Big Buyers' such as automotive giants are already setting-up portals to train their supply base and introduce more competition, see GM MarketSite or Ford AutoExchange. There are also Portal Sites run by independent companies such as MySAP or Chemdex. It will be easier for smaller players to co-habit with their supply chain inside of a large portal, they will gain the advantage of a coherent trading structure without the costs of setting up their own portal.

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