Current situation

2.1 Definition of E-Business

Norming Consultants' definition of E-Business is "an enterprise designed for success in the Information Economy. E-Business brings into play an organization's resources and partners in new and innovative ways to create clear strategic advantage. The potential of E-Business goes far beyond new  technologies to impact and engage all aspects of a business strategy, process, organization, and systems to extend the business beyond its own boundaries where there are no boundaries..."

2.2 Projections for E-Business

According to interviews conducted by Forrester Research with 40 senior IT and eCommerce executives, Electronic business will explode by 2002 because they expect 78% of their customers and 65% of their trading partners to have global electronic connections with them, up from 40% and 43% respectively.

Online revenue growth has quadrupled each year. In 1998, it totaled $35 billion inter-company and $15 billion retail, worldwide. In 2000, out of 256 million users, 53 million buyers will average $4,090 each in  e-commerce business (combined inter-company and retail). By 2003, online revenues will exceed $1.3 trillion.

2.3 Challenges for established companies

The new technology offers a company the opportunity to build interactive relationships with its customers and suppliers, improve efficiency and extend its reach, all that at a very low cost.

Companies, which fail to seize those opportunities, become vulnerable if rivals establish themselves first in the electronic marketplace. They may eventually be forced to participate in Internet commerce by competitors or customers. 

For example, GE estimates to save $500 million to $700 million of its purchasing costs over three years and cut purchasing cycles by as much as 50%. Eventually, the company expects to buy the majority of its purchase through its Web-based bidding system.

Faced with these challenges, a company might feel compelled to act fast in order to avoid loosing ground against competitors.
A common mistake is to simply establish a website with a narrow focus to support an established business process, possibly as an add-on to an ongoing or productive ERP implementation. Establishing an isolated web-presence is likely to waste time and financial resources. Instead, an Internet presence or channel will  only be a successful investment if it is integrated with existing systems, typically an ERP system. It needs to be part of an overall strategy that encompasses the transformation of the entire value chain down to the process level towards truly integrating the enterprise with customers and suppliers. The development of the strategic plan is not subject of this document, however it cannot be overemphasized that it needs to be in place prior to embarking on E-Business.