E-BUSINESS The Internet in Action The ballooning of e-business opportunities

E-business vendors, from commercial necessity, always position e-business technologies and models as “ready to roll”. However, problems can occur if the model is not mature enough to deliver expected business benefit, the technologies need ‘babysitting’ by very qualified IT people, or customers, business partners, or internal employees are unwilling or poorly prepared to respond or interact with an otherwise sound e-business initiative.

Even employees who are e-business “champions” can be derailed if the business hasn’t thought to modify internal processes to cope with the extra demands an e-business initiative can generate.

However, the flip side of this particular coin is mature e-business models delivered to well-prepared users and employees have the potential to deliver enormous business benefit and significant competitive edge.

There are plenty of case studies, national and international, to show the positive effect of e-business on sales and production efficiencies, customer knowledge, intimacy and management, business partner communications and profitability.

So it’s not surprising Fairfax Business Research (FBR) surveys of the New Zealand market reveal New Zealand businesses to be quite solidly committed to e-business investment.

According to 2002 survey by FBR, e-business projects account for slightly less than nine percent of total IT projects in New Zealand (the third largest IT investment area after financial management systems and industry vertical development).

Research from the IDC Asia Pacific Continuum Survey for 2003 has security, storage and ERP projects at the top of the list, while investment in e-business applications grew by 15 percent. IDC believes Asia Pacific businesses are keen to seek the efficiency gains e-business can deliver within “recessionary climate”.

FBR says the ongoing desire for pro-cess change and process automation that cuts business overheads will continue to drive e-business forward.

What about my business?
Here are 10 e-business avenues for which the orange cones and “work in progress” signs have been removed and cautious thoroughfare can be now recommended.

As you peruse, you may find “super highway” or two that’s just right for your business. By all means accelerate. But first word of caution: accidents happen on the best of roads and more so when driver or vehicle is not up to scratch. So plan, research, check e-business vendor references, and monitor and review your e-business project regularly to ensure its “warrant of fitness” remains current.

1. Business to business e-procurement
Research reveals e-procurement, an agreement between company and its suppliers to procure goods and services electronically over secure network, to be the largest area of e-business interest in New Zealand.

E-procurement tools are built into modern versions of ERP and financial management software (or can be “added on”) and can allow for the automatic initiation of orders following link with an inventory system, the authentication of suppliers, and the issue or payment of invoices and financial transactions.

What’s progressed: New technology formats – notably Microsoft BizTalk, XML and XBRL have made it easier for the different brands of software used in and around e-procurement systems to communicate. There’s heightened awareness of the value of e-procurement amongst potential procurement partners.

Internal management benefit: Significant cost savings typically result from the re-engineering of supply chain. E-procurement helps control purchasing practices including the minimisation of off-contract purchasing. Other benefits include reduced manual processes, transparency via reporting tools, and reduction in procurement time and errors.

Customer benefits: Procurement savings can be re-invested in customer relationship strategies. Delivery delays are reduced and order completion cycles sped up. Product costs can also be reduced.
Problems: E-procurement may prove more expensive to establish than expected and may not suit all business partners. Traditional systems may need to be maintained in parallel.

Who’s doing it: E-procurement has been widely adopted among large enterprises and medium sized businesses are cottoning on. Small businesses may get involved with e-marketplaces (see below) but dedicated e-procurement growth in the SME space is slow.

2. e-Marketplaces
E-marketplaces are industry-specific internet sites offering online catalogues of information, goods or services sourced from number of suppliers.

The e-marketplace accepts online orders and payments on behalf of suppliers. Once an order is received, the relevant supplier is responsible for its delivery and support. Once the purchasing cycle is complete, the supplier is paid, less the e-marketplace provider’s fee.

What’s progressed: Market acceptance for “vertical” or industry-specific e-marketplaces is growing. Technologies that enable the financial systems of buyers and vendors to transact with those of the e-marketplace have markedly improved in recent years.

Internal/Customer benefits: E-marketplaces benefit vendors that want to leverage the internet as channel but don’t have the ability to set up, market and sell online. And they benefit buyers by providing main point of online contact and e-commerce for specific industry.

Problems: For buyers, B2B e-procurement may be more beneficial because special rates can be negotiated and relationships fostered. For vendors, products are listed alongside those of competitors, and the e-marketplace – rather than the vendor’s brand – is marketed to the industry.

Who’s doing it: E-marketplaces are owned and managed by industry groups, ASPs, or well-established “bricks and mortar” businesses. Examples include Supply Solutions (engineering), SupplyNet (government), Fencepost (agriculture), WoodNet (forestry).

3. Voice over IP
Voice over IP qualifies as an “e” business initiative as it is telecommunications model based on the Internet Protocol (IP).

Voice signals are sent as “digital packets” over an IP network as opposed to the circuit-committed protocols of switched telephone networks.

Research conducted by network hardware specialist Cisco shows that, internationally, sales of PABX systems have declined 30 percent in the past two to three years. Correspondingly, research into the top 100 IT user organisations in New Zealand by MIS magazine last month, reveals as businesses realise return on investment from legacy PABX investments, interest in Voice over IP is escalating.

What’s progressed: The number of VOIP trials in New Zealand is increasing and the market is ready to invest.

Internal benefit: Network flexibility and reduced telecommunications investment (data and video can travel across an IP network along with voice), call savings, and call productivity improvements.

Customer benefits: Call savings can be passed onto the customer in the form of lower prices or increased phone services.

Problems: SME case studies are light on the ground; savings may be negligible if local calls dominate business telecommunications traffic.

Who’s trialling it/doing it: University of Auckland, New Zealand Police, IAG New Zealand, St Kentigern School, Wrightson Group, Gullivers Pacific, Auckland College of Education.

4. e-tail
Although research and analyst opinion suggests the New Zealand market is too small to support successful e-tail ventures (and local e-tail failures are all too evident) number of businesses continue to use e-tail in unique ways that work for them.

For example, Noel Leeming plans to set up PCs inside its stores so customers can access its e-tail site to view an extension of the product range available in the store. Other e-tailers have started selling information or charging fee to belong to an online community instead of selling goods and services.

What’s progressed: E-tailers

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