The Changing Face of E-Commerce

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					                                                                                                             At first, people saw e-commerce
E-BUSINESS



                                                                                                          as synonymous with online con-
                                                                                                          sumer shopping (business-to-con-
                                                                                                          sumer, or B2C). Success in that area
                                                                                                          required search capabilities, graphic
                                                                                                          portrayal of products, payment pro-
                                                                                                          cessing functions, personalization,
                                                                                                          and fulfillment, as well as concern
                                                                                                          for privacy and security. New user
                                                                                                          interfaces have been honed in the
                                                                                                          B2C space, as have online functions
                                                                                                          like auctions.
                                                                                                             Public interest then shifted to con-
                                                                                                          sumer portals, which aim to create

                  The Changing Face                                                                       “stickiness” and encourage return vis-
                                                                                                          its through engaging content (includ-
                                                                                                          ing audio, video, and 3D images),

                     of E-Commerce:                                                                       social interactions like chat, easy navi-
                                                                                                          gation tools, and preferential access to
                                                                                                          selected business participants.

              Extending the Boundaries                                                                       As it became clear that an order of
                                                                                                          magnitude of more money would
                                                                                                          move in B2B channels than in B2C,

                         of the Possible                                                                  attention moved to interbusiness
                                                                                                          commerce. B2B transactions are
                                                                                                          dominated by high business value,
                        Stuart Feldman • IBM Institute for Advanced Commerce • sif@us.ibm.com             long-term relationships, complex
                                                                                                          business processes, intercomputer
                                                                                                          communications (first EDI, then
             E-commerce is growing at an expo-                 few months; if you want to use a dif-      XML-based messaging), security, and
             nential rate—literally. According to              ferent currency (Canadian dollars,         a multitude of transaction models.
             one study, the Internet economy grew              Australian dollars, Euros), just shift        In a remarkably short time, B2B
             at a rate of 174.5 percent annually               the time base a little.                    portals morphed into exchanges and
             from 1995 to 1998.1 This growth fol-                 An interesting fine structure under-    more recently into complex market-
             lows the equation                                 lies this smooth curve. Much of con-       places that combine aspects of negoti-
                                                               sumer buying is seasonal—think of          ation, information, business processes,
                      Internet economy ∝ e year                back-to-school textbooks, Christmas        and social interaction. Marketplaces
                                                               toys, St. Valentine’s Day flowers.         will provide basic support for auction,
             almost exactly (remember, the natural             Every so often a special event occurs      search, payment, insurance, and secu-
             log, e, = 2.718...).                              (such as the Super Bowl with its dot-      rity, enabling participants to construct
                A number of analysts forecast that             com ads) that leads to a sudden jump       highly profitable but more complicat-
             the Internet economy will exceed US               in e-commerce activity. Business-to-       ed deals.
             $1 trillion (1012) in 2002; Forrester             business (B2B) commerce has grown             In general, interest has expanded
             Research (http://www.forrester.com)               in a different way: When a large orga-     from the limited functions of e-com-
             recently predicted that the worldwide             nization decides to use the Internet       merce (consummating purchase trans-
             Internet economy will reach US $6.9               for procurement and marketing (sup-        actions on the Web) to much more
             trillion in 2004.                                 ply chain and customer relations), bil-    general e-business (executing the
                Media hype seems to follow a simi-             lions of dollars are quickly added to      many processes within and between
             lar exponential curve.                            the Internet economy.                      organizations through networked
                                                                  To provide satisfactory service         computing systems). The next phases
             Real Economic Change                              despite these cycles, ramps, and spikes,   are likely to include mobile or perva-
             Nonetheless, strong forces are driving            we need new system, application, and       sive e-business (m-commerce) and
             real economic change. Minuscule                   network management approaches.             interorganizational business (virtual
             transaction costs, obliteration of dis-                                                      enterprises).
             tance, and easy sharing of informa-               Evolution of E-Business
             tion all enable new ways of doing                 Investors and the media have focused       Challenges and Changes
             business. The explosive speed lets us             on several areas in quick succession,      This litany of evolutionary phases
             be sloppy about details—if you don’t              each with its own computing require-       masks a number of growing technical
             like a forecast, change the date by a             ments.                                     challenges, including


  82         MAY • JUNE 2000   http://computer.org/internet/                                                                  IEEE INTERNET COMPUTING
                                                                                                      E   -   B   U   S    I   N   E   S    S




s   security and authentication;           agents that can react at any time from
                                                                                trustworthy. Meeting the contradicto-
s   content management and publica-        any place. Yet businesses still need to
                                                                                ry requirements of continuously avail-
    tion;                                  be sensitive to local requirements   able, highly flexible, rapidly change-
s   reliable systems, messaging, and       because of cultural sensitivities, regu-
                                                                                able software that is at the same time
    data;                                  latory differences, and infrastructure
                                                                                perfectly reliable and stable calls for
s   complex interactions and transac-      capabilities. Strategic thinking is even
                                                                                innovative techniques and tools.
    tions;                                 more important when goals involve    Instead, most implementations today
s   business model implementation          more players and more rounds of      depend on energy, skill, and luck.
    and business process enactment;        interaction, as is common when the      Rather than buying and running a
    and                                    supply web becomes more complicat-   piece of software, a firm can now access
s   distributed processing and distrib-    ed, and many alternative business    an application through an application
    uted data.                             deals are possible.                  service provider (ASP) or business
                                              There has been a rebirth of interest
                                                                                process outsourcer (BPO) over the Net,
High-end sites may handle hundreds         in game theory. New approaches to    and use it as a short-term transaction or
of thousands of hits per minute, pre-      marketing, such as targeting individual
                                                                                as part of a long-term relationship.
sent and update catalogs                                                                     Although dynamic access to
with many millions of                                                                        services (including discov-
items, collect tens of giga-                                                                 ery, ad hoc workflows, and
bytes of behavioral data per              As the cost and delay of                           late binding) is a staple of
day, run hundreds of sepa-          messaging become negligible, research in distributed
rate processes or businesses                                                                 computing and network-
simultaneously, and utilize            negotiation and competitive                           ing, only now are business
thousands of processors to          bidding can be the norm rather cases starting to close and
carry the load.                                                                              enormous bets being
   Technical changes are                    than the exception.                              placed. Once specific ser-
enabling new ways of doing                                                                   vices are easily outsourced,
business. As the cost and                                                                    more complicated multi-
delay of messaging become                                                                    company projects and vir-
negligible, negotiation and competitive customers at specific moments based tual enterprises will be feasible.
bidding can be the norm rather than on very recent behavior or when they           The technical demands will be
the exception. Web technologies like are physically near a store, become enormous—and exciting. Researchers
authentication, standard messaging, profitable when new types of informa- are extending the boundaries of the
and rapid data sharing already support tion (such as customer clickstreams) possible in many areas of computing.
spontaneous, secure, and multiparty are available, but first patterns must be In coming issues, this column will
interactions among businesses. Groups extracted from terabytes of data (some examine these stresses and their likely
of consumers can band together as high-end companies already apply or hoped-for solutions.                                 s
easily as guilds of sellers, with the help rudimentary forms of this analysis).
of discovery technologies and online                                            REFERENCE
databases. Innovative forms of pay- Re-envisioning Software                      1. The Internet Economy Indicators,
ment and finance are being intro- Development                                       Indicators Report, June 1999, available
duced to meet new needs. New inter- The accelerating tempo of business              online at http://www.internetindicators.
mediary services will add value by and the pressure to get to market                com/features.html.
accumulating and analyzing informa- quickly are also revolutionizing the
tion and using it to simplify technical way commercial software is built and Stuart Feldman is director of the IBM Institute
and business problems. Intelligent managed. Some companies revise their             for Advanced Commerce, and manages a
agents will finally earn their keep by entire business model every six              research staff of more than 80 researchers
providing such services.                   months—faster than they can redesign     in network-related technologies including
   Of course, good business tech- their software by traditional means.              e-commerce, Internet media, and antivirus
niques are still important, and their Such firms must balance compressed            systems. Feldman is an IEEE Fellow, an
effects are amplified by Web tech- software development with customer               ACM Fellow, a member of Phi Beta Kappa
nologies. The marketplace is now satisfaction. On the other hand, when              and Sigma Xi, and is Chair of ACM
truly global and simultaneous, with significant sums are at risk, parts of          SIGecom. He recently joined the editorial
buyers, sellers, intermediaries, and the application must be thoroughly             board of IEEE Internet Computing.



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IEEE INTERNET COMPUTING                                                       http://computer.org/internet/               MAY • JUNE 2000       83

				
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