E-Business as a Revolutionary Paradigm

May 28, 2017 | Autor: Harman Singh | Categoria: E-Business, E-Commerce
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Mumukshu Journal of Humanities Referred Journal Vol. 8, No. 1, June, 2016, ISSN 0976-5085

Dr. Harman Preet Singh

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E-Business as a Revolutionary Paradigm Dr. Harman Preet Singh*, Utsav Kumar Singh** and Dr. Anurag Agarwal***

1. Introduction As the twentieth century has drawn to a close, observers of business environments in the leading industrial nations of the world reported two salient trends. First, e-commerce, rather than being a passing fad, has become an established part of emerging post-industrial economy. Second, e-commerce has been enlarged to become e-business. As the name suggests, e-commerce is commerce conducted using a digital medium and includes e-storefront and e-catalog, e-billing and e-payment, and rudimentary forms of e-procurement. E-business improves business performance by using electronic information technologies and open standards to connect suppliers and customers at all steps along the value chain. It describes all of the business relationships that exist between trading partners driven by and operating with the Internet. According to Ross (2003a), “The term e-business includes all electronic based transactions, documents, and fulfilment functions transferred through electronic data interchange (EDI) or web based mediums. The range of e-business content is almost unlimited and consists of activities that span the spectrum, beginning with market research, through collaborative product development, and ending with billing, payment, and channel transaction and data analytics”. E-business can significantly improve business performance by strengthening the linkages in the value chain between businesses, and between a business and ultimate consumer. Whereas e-commerce focuses on efficiency in selling, marketing,

and purchasing; e-business focuses on effectiveness through improved customer service, reduced costs, and streamlined business processes. It has been observed that traditional production management information systems (like Materials Requirement Planning, Manufacturing Resource Planning and Enterprise Resource Planning) have focussed on movement of information within an enterprise, e-business facilitates movement of information from business to business (B2B) and from business to customer (B2C), as well as from customer to customer (C2C). Internal information systems like Enterprise Resource Planning (ERP) focus on internal process efficiency and effectiveness. They are adaptive technologies and support current business strategy. E-business focuses on external, cross-enterprise process efficiency and effectiveness. 2.  Necessity of E-Business It has been observed that ERP has been able to provide consistency of information across the global enterprise. It has been able to integrate resource planning which includes forecasting and planning, purchasing and material management, warehousing and distribution management, product distribution and finance; supply chain management which includes understanding demand and capacity, and scheduling capacity to meet demand; knowledge management which includes creating a central warehouse, a central repository for the enterprise’s data and performing business analysis to provide support for enterprise leadership; finance; manufacturing; logistics; sales and marketing; and human resources.

* Department of MIS, College of Business Administration, University of Ha’il, Ha’il, Saudi Arabia ** ICSSR Doctoral Fellow, Department of African Studies, University of Delhi, India *** Head, Department of Commerce, S.S. (PG) College, Shahjahanpur, U.P., India

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Dr. Harman Preet Singh

Mumukshu Journal of Humanities, Referred Journal Vol. 8, No. 1, June, 2016, ISSN 0976-5085

Despite all these virtues, ERP falls short of meeting today’s customer’s demands for better service. Customers demand speed and self-service; ability to do their own product configuration; more integration of product and service; lower costs and high quality; and highly personalized relationships. Companies are finding that they must work more closely with their business partners to meet customer demands. Ever increasing customer’s demands are pushing companies to new levels of e-business initiatives. Strategic partnerships based on trust and respect must be forged with capable and reliable business partners committed to changing the way they do business at all levels and willing to share risks and profits appropriately. E-business collaboration with customers and suppliers can have the most immediate impact on planning and forecasting, order entry and tracking, product design and configuration, order settlement etc. One significant example of the growing importance of e-business is covisint, a giant automotive exchange being built by General Motors, Ford and Daimler Chrysler. 3. E-Business Models An e-business model represents the conceptual and architectural implementation of a business strategy and lays the foundation for the implementation of business processes. Through its e-business model, a company offers value to one or several segments of customers and its network of partners for creating, marketing and delivering this value and relationship capital, in order to generate profitable and sustainable revenue streams. There are three dominant e-business models based on: •

Revenue / Product specific aspects



Business actor and network specific aspects



Marketing-specific aspects

Revenue / Product specific aspects based models classify companies among the nature of their value proposition or their mode of generating revenues. Rappa’s (2000) business model spells-out how a company makes money by specifying where it is positioned in the value chain. His classification consists of nine generic forms of e-business models, which are Brokerage, Advertising, Infomediary, Merchant,

Manufacturer, Affiliate, Community, Subscription and Utility. Business actor and network specific aspects based models describe business actors and their roles, value flows between several actors and description of sources of revenue. Timmers (1998) classifies the eleven generic e-business models according to their degree of innovation and their functional integration. He describes the business model as architecture for the product, service and information flows, a description of the various business actors and of their roles, as well as a description of the potential benefits of these actors and finally a description of the sources of revenue. Marketing-specific aspects based business models view the overall picture of the firm and put forth concepts that can be put to practice. Hamel’s (2000) business model identifies four main components: core strategy, strategic resources, creation of value networks and customer interface. These components are inter-related and present the overall picture. 4.  Enabling E-Business Technologies Since the 1950’s, companies have looked to the e-business technologies to drive the collection, computation, dissemination, and decision-making power of business information. In the beginning, the first computerized applications for such areas as payroll, general ledger, costumer billing, and inventory, were stand alone systems, each having its own application logic, database and user interface. They were useless when it came to coordinating activities across departmental functions (Devenport, 2000). Later on, Material Requirement Planning (MRP), Manufacturing Resource Planning (MRP II) emerged. The limitations of MRP and MRPII were overcome by Enterprise Resource Planning (ERP) solutions. The goal of the emerging technologies is to optimize an enterprise’s internal value chain by integrating all aspects of business, from purchasing and inventory management to sales and financial accounting. By providing a common database and the capability to integrate transaction management processes, data is made instantaneously available across business functions, enabling the visibility necessary planning and decision making. Internet

Mumukshu Journal of Humanities Referred Journal Vol. 8, No. 1, June, 2016, ISSN 0976-5085

is playing a key role in the emergence of powerful e-business technologies. According to Smeltzer (2001), the technology tools and vision in the process of happening are: •

New XML-based solutions, which will allow quick generation of transaction documents, while enabling sophisticated business rules to be built and modified faster and operated in real time



Business intelligence tools capable of supporting, extracting, and validating data in and out of multiple, heterogeneous systems



Electronic catalogs with multimedia elements capable of synchronized product update and dynamic market-based pricing



Operational and supply chain applications capable of enabling coming real-time collaborative planning, forecasting and replenishment systems



Technology application providers offering collaboration application services

It was seen that B2B e-commerce growth over the Internet was constrained by HTML’s inherent limitations like minimal content structuring, application coupling with back-end systems, and limited options to customize electronic business documents. XML is providing an avenue to overcome many of HTML’s obstacles and substantially improves the ability to conduct B2B e-commerce via the Internet (Sliwa, 2000). To fully leverage the B2B e-commerce benefits that XML offers, industry groups and business partners must agree on common sets of electronic business documents, field definitions, data attributes and communication protocols. A significant example of such XML-based standards setting organization is RosettaNet. RosettaNet standards are bringing unmatched efficiency to the supply chain. Companies must carry out similar processes, such as ordering and shipping and receiving, in order to bring an entire universe of parts and components together and deliver finished goods to the end customer. These XML-based shared business standards form point to point connections, via the Internet, that enable execution of the relevant business processes within and different organizations on a global basis.

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5.  Impact of E-Business E-business has dynamically transformed the way business is conducted. It has completely changed the basic interface between a company and its customers, and also has changed the profit margins earned by companies throughout the entire value chain. The very nature of e-business technologies gives enterprises unprecedented capabilities to focus on the customers, enhancing all activities concerning customer acquisition, retention and services. The value of these benefits is readily quantifiable. There are however intangible benefits like brand image, reputation, and goodwill. On the B2B side, e-business systems provide competitive advantage by increasing the bargaining power of buying organization, better coordination among supply chain partners and making greater information available about the business processes and demands across the whole supply chain. On the B2C side, e-business systems generally are aimed at helping improve the whole cycle of customer relations, i.e., the acquisition, enhancement, and retention of customers. Activities involved in these different phases include direct marketing, sales force management, customer services, call-center coordination, and personalization. E-business initiatives can also help to enhance organization learning because of its focus on enterprise integration, customer facing, and supply chain coordination. Garicano and Kaplan (2000) posit that the key impact of B2B e-commerce is to change the costs of transaction via changing/ improving processes, the nature of marketplace, decisions, the degree of information incompleteness and the ability to commit. The ubiquitous nature of information for customers has had a deflationary impact on prices. In order to drive down costs, product information is needed to move from the retailer back through the supply system. As better consumer data flowed back from the customer to the raw material supplier, better forecasts could be anticipated and the right material put in place for finished product manufacturing. With information shared between the manufacturer and the retailer, the manufacturer can use the information about the inventory level of the retailer to manage the frequency, quantity, and timing of shipments. This Continuous Replenishment Process (CRP)

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Dr. Harman Preet Singh

Mumukshu Journal of Humanities, Referred Journal Vol. 8, No. 1, June, 2016, ISSN 0976-5085

enables the manufacturer to reduce the inventory necessary and to plan the shipments more efficiently, as has been implemented by Proctor & Gamble and Wal-Mart. At the same time, the Internet and the Web also provide a cost-effective apparatus for organizations to seek out, negotiate and coordinate with suppliers. It is quite interesting to note that the e-business tools within a short amount of time brought about this transformation. The typewriter was not commonly used for at least twenty-nine years after its invention. The telephone, perhaps the twentieth century’s single most important communication invention, took thirty-five years to reach fifty million people. By contrast, it took only four years for the Internet to reach the same number of users (Ross, 2003b). E-business has also prompted the companies to enlarge their role tremendously. For example, priceline.com is worth more than the largest U.S. airlines because it has moved beyond its original role as an on-line air ticket sales company to include hotel rooms, groceries, shopping spots etc. This has further impelled the traditional and Internet companies to forge closer alliances with each other, so as to make the best use of each other competencies. For example, the alliance between Border’s bookstore and Amazon. com, in which consumers can order books online and then pick them up at a Border’ local store is noticeable in this regard (Gordon, 2001). Moreover, conducting B2B e-commerce over the Web has made e-business better connected in the global network that matches sellers and buyers. Clearly, e-business technologies are facilitating manufacturing process synchronization, B2B supplier management, Collaborative Planning, Forecasting and Replenishment (CPFR), Collaborative Product Commerce (CPC), Collaborative Strategic Planning (CSP) and Internet driven design collaboration driven by Peer-to-Peer (P2P) technologies. 6.  Approach to E-Business Implementation The impact of e-business are neither guaranteed upon implementation of the system nor they are uniform across the organization. For example, the contribution of the e-business system depends upon other resources, such as people and investments in associated processes

(Kauffman and Kriebel, 1988). If an enterprise with an integrated supply chain has not had the rigor to implement an integrated ERP solution, the company would most likely approach e-business in a fragmented way, with multiple e-business solutions on the horizon. Having multiple ERPs by business unit will mean additional organization costs, making the total greater than those in an enterprise-wide ERP system. Similarly, companies that try to integrate within an extended value chain before implementing their own ERP systems will find the benefits of value-chain integration to be elusive. Without ERP, e-business may do nothing more than create both upstream and downstream problems at Internet speed. If the companies focus only on the customerfacing applications of e-business rather than on improvements that an integrated electronic supply chain can bring to day-to-day enterprise-wide operations, they will miss out on considerable cost savings and revenue opportunities. The backend integration of customer applications is also critical. In the new market economy, e-business challenges include changing global economic factors; work force expectations and regulatory environments; more demanding customers; a globalizing marketplace; global competition, and continuing emergence of new technology. Organizational redesign is crucial in these circumstances. The organizational design elements include the reporting structure, roles, performance measures, work groups, and integrating mechanisms. While designing the organizational structure, the security of e-business architecture also needs to be taken into account. 7. Conclusion E-business is about strategy, not only about technology. Although e-business is rapidly changing the basic paradigm under which businesses operate, a company is able to fully realize the opportunities of e-business only if it has strong, integrated internal information systems (e.g. ERP systems). The better approach for e-business solution providers may be to seek to build their products so that they offer the easiest integration with current and next generation ERP technology.

Mumukshu Journal of Humanities Referred Journal Vol. 8, No. 1, June, 2016, ISSN 0976-5085

Evolving e-business tools has tremendous potential to transform businesses. But for the successful implementation of these transformational e-business tools, change management is the key issue. There are hurdles like technology and processes; people’s acceptance; organizational redesign; political resistance; cultural challenges; and change complexity etc. In order to be successful, the company needs the support of certain elements like senior executives; change linked to business strategy; talented staff; proactive teams; software and hardware integration; defined and refined business processes; data integrity; wisely chosen business partners; and ability to innovate (Norris et al, 2000). Above all, there must be a definite vision so that the organization could tread along this sensitive path successfully. The vision of change must be a coherent and powerful statement of what the company seeks to do in the e-business world, what place it will play in the extended enterprise, and what skills and competencies it brings to the extended organization. A clear and concise vision in the e-business world will align diverse organizational elements and will truly make e-business as a revolutionary paradigm. References 1. Devenport Thomas H. (2000), “Mission Critical: Realizing the Promise of Enterprise Systems”, Harvard Business School Press, Boston, pp. 1-54 2. Garicano Luis and Kaplan Steven N. (2000), “The Effects of Business-to-Business e-Commerce on

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Transaction Costs”, Working Paper 8017, National Bureau of Economic Research 3. Gordon Christine (2001), “Amazon.com Inc. Allies with Borders.com”, April, http://www. internetnews.com/ec-news/article.php/739981 4. Hamel G. (2000), “Leading the Revolution”, Harvard Business School Press, Boston 5. Kauffman R.J. and Kriebel C.H. (1988), “Modelling and Measuring the Business Value of Information Technology”, in Berger, P., Kobielus, J.G. and Sutherland, D.E. (Eds.), Measuring Business Value of Information Technologies, ICIT Press, Washington, D.C., pp. 97-119 6. Norris Grant, Hurley James R., Hartley Kenneth M., Dunleavy John R. and Balls John D. (2000), “E-Business and Enterprise Resource Planning: Transforming the Enterprise”, John Wiley and Sons, p. 144 7. Rappa Michael (2000), “Managing the Digital Enterprise - Business Models on the Web”, http:// ecommerce.ncsu.edu/business_models.html 8. Ross David F. (2003a), “Introduction to e-Supply Chain Management”, St. Lucie Press, pp. 50-51 9. Ross David F. (2003b), “Introduction to e-Supply Chain Management”, St. Lucie Press, p. 65 10. Sliwa C. and King J. (2000), “B-To-B Hard to Sell with XML”, Computerworld, February 28 11. Smeltzer Larry R. (2001), “Integration Means Everybody – Big and Small”, Supply Chain Management Review, Vol. 5, No. 5, p. 42 12. Timmers P. (1998), “Business Models for Electronic Markets”, Journal on Electronic Markets, Vol. 8, No.2, pp. 3-8

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