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With economic uncertainty looming above us like dark storm clouds, it's a good time to take the pulse of e-commerce ? or as it's now called, e-business ? one of the foremost drivers of the Internet revolution.
No longer does the saying, "if you build it, they will come" hold water. The idea of creating public exchanges for commerce and information sharing died with the dot-coms that went belly up over the past couple years.
Companies are now focused on improving efficiency and cutting costs. Financial returns, not strategic positioning, are the top priority for companies engaged in e-business.
Culled from analyst and media reports as well as in my dealings with companies conducting e-business, I've found that CEOs are only approving projects if they have an attractive return on investment. They are not trying to keep up with real or once-feared (e.g. dot-com) competitors.
So how are things playing out in the consumer and business markets?
According to an April Giga Information Group report, business to consumer (B2C) e-business has "slowed to a trot" while business to business (B2B) e-business continues to grow mainly in older e-channels and extranets.
The B2C market has seemed to reach its peak. Obviously, there is a continuing need for consumers to conduct personal affairs online, i.e. shopping or banking. The eBay's and Amazon.com's of the world will continue their successes. However, improved ways of conducting such affairs seem to be at a standstill.
In the B2B market, things appear to moving steadily, but cautiously. Return on investment is a major concern and short-term, clear paybacks are required to justify IT investments.
A recent Giga report discussed the increased importance of optimization in customer relationship management systems, the demand for enterprise systems to be connected directly to increased sales or reduced costs, or investments that can demonstrate quick payback will be chosen over those that can't.
At the same time, previous investments in major systems are being scrutinized, and implementers are increasingly being asked to prove that systems can deliver on their promise. The days of frivolous spending on a "good idea" are over.
One way that companies can embark on e-business initiatives within budget and on time, is the use of offshore outsourcing. This e-business trend has shed a beacon of light on gloomy market.
Buyers of offshore outsourcing IT services can gain competitive advantage by leveraging an onsite, offsite, offshore delivery model to achieve rapid deployment, top-notch quality and reduced costs. Speed, quality, flexibility and round-the-clock productivity are the hallmarks of this type of outsourcing services.
Giga recently reported that offshore outsourcing will grow by at least 23 percent in 2002. The number of large firms using offshore IT providers will grow by 50 percent during the next two years, while offshore budgets will more than double, according to Forrester Research.
And according to IDC, companies will spend more than $17.6 billion on offshore outsourcing by 2005 ? more than more triple the current spending ? with electronic commerce and Web-based application development becoming the fastest-growing offshore outsourcing segment.
As evidence from recent analyst reports, offshore outsourcing is a great way for companies to implemented e-business solutions, while not having to worry about cost over runs and time constraints.
Another trend on the rise in e-business is seen in the public sector. While the adoption of Internet technologies and enterprise applications to redesign core business processes in the business sector has piqued, it is spreading like wildfire in national, state and local governments in North America.
The public sector isn't too far behind the private sector, as it is positioned to learn from its mistakes and to take advantage of the proven technologies created by private companies. In some technologies, like smart cards, biometrics and electronic records management, the government is ahead of business.
E-government initiatives are a top priority for governments. To date, these initiatives have focused on providing online information to citizens and access to government services. Governments are moving toward extending access to services via the Web by all citizens, 24 hours a day, seven days a week.
Yet, citizen adoption of these electronic channels is unbalanced. For example, use is high in areas like transportation and tax filings where high-income citizens with Internet access use online government services to save time.
Conversely, usage is low in areas like social service benefit enrollments, where many low-income citizens lack the means or knowledge to use online channels.
While the public sector beefs up its e-government initiatives and the private sector holds tight, it appears that state of e-business is riding out the economic wave with every other industry and holding its own. However, where and when the ride ends, no one knows.
Tom Hopcroft is the president of the Massachusetts Association for Electronic Commerce (Mass eComm), a trade organization that brings together companies and organizations that use information technology, e-commerce, and e-business.
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