In a short time span, the Internet has rendered
many business models obsolete. Despite highly publicized
setbacks for many Internet-related companies, the broad
category of web-enabled business models continues to advance.
The success or failure of local and global
businesses may be determined by how well they adapt to the
new electronic business paradigm. Factors such as time-to-market,
customer retention, and operational efficiency will define
the chances for survival, and customers will control the
value chain for just about every product and service.
The emergence of electronic commerce will
lead to the convergence of technology and products, less-predictable
customer demand, shortened product life cycles, and price
transparency. To meet these challenges, businesses must
improve operational efficiency, report channel activity
on a real-time basis, and build strategic partnerships and
The process by which a company implements
these changes and acquires e-business capability is often
called a digital transformation. On one level, digital transformation
encompasses the conversion of all information—text,
images, audio, and video—into digital formats that
can be exchanged, stored, and indexed. Digital transformation
also means profound changes in the very structure of business
The transformation process involves the
Commerce: how businesses conduct transactions;
Content: the information businesses use;
Community: the people that businesses interact with; and
Collaboration: how a business interacts with those communities.
The process also encompasses two small Cs:
cost and culture.
To fully realize the benefits of speed and
efficiency that Internet-enabled operations offer, companies
must integrate their value-added partners and suppliers
into an e-business system (community and collaboration),
while the customer-support system moves information (content)
online. As this happens, the enterprise should expect to
sell more goods and services via the Internet.
Many companies are concerned that a transformation
into an e-business means having to replace their entire
employee base. In fact, if employees are willing to embrace
change, they may be trained to handle the new operating
modes, and management can decide how to implement that changeover.
For example, does management consider digital transformation
a disruptive technology, or a sustaining one?
Disruptive technologies refer to advances
such as online procurement and sales systems that may be
beneficial to the company in the long term, but currently
have limited or no appeal to the company’s customer
base. This condition may pose a problem for managers accustomed
to extrapolating product sales from certain indicators,
including total available markets, price/performance targets,
and predictable applications. This resistance can delay
a business’ migration to an e-business format.
Companies that view the digital transformation
as a sustaining technology, however, will tend to have an
identified market that readily accepts an online approach
to commerce, and may already have systems in place to enable
it. These and other issues may determine whether the company
should keep the e-commerce segment in-house or spin it off.
While each case must be considered on its own merits, it’s
generally best to spin off or launch a new entity when e-business
would be disruptive to the company. When a digital transformation
is sustaining and consistent with a company’s cost
and culture, however, it may be preferable to keep it within
the existing company.
Many businesses are still in the early stages
of e-commerce or have not yet migrated to an electronic
format. The stunning growth of the global Internet-user
population, however, has motivated both start-ups and existing
companies to include the web in their growth models. With
e-commerce on the path to a $100 billion market, the ability
to become competitive now is more than a pathway to expanded
profits—it is also a strategy for long-term survival.