Technology research firm IDC estimates that businesses in the Asia Pacific region will purchase more than US$516 billion of direct and indirect materials through the internet by 2005. The number of Asia Pacific internet users will reach 240 million – and will surpass the number of United States internet users for the first time. Yet that number will comprise only nine percent of the total population of Asia Pacific, compared to 76 percent of the population of the United States.
As countries like China, Korea and India progressively adopt e-business processes and technologies it’s not difficult to see that there is huge potential for e-business growth in this part of the world. “Rapid growth coupled with pool of potential users will work to ensure Asia’s place at the forefront of the internet revolution. Users and e-commerce revenues are increasing rapidly and wireless internet is poised to transform Asia into key global growth centre for e-commerce,” says Douglas Jaffe, an analyst with IDC Asia Pacific.
There’s no denying that e-business is important but, what exactly will it mean in 2002? How is it to be defined? These are questions that will be asked less often in the future as businesses and vendors drop the ‘e’ and simply define e-business as what it is – just business.
Specifically, e-business is the use of internet technologies to do business in new and better ways. If you sold cars before, you’ll still be selling them after you implement e-business. However, you may order and pay for parts without generating piece of paper. You may complete credit and insurance checks without once picking up the phone. And your customers may check the exact location and status of car being imported without ever speaking to you or the freight forwarder.
It does not require degree in rocket science to understand e-business, nor does it require information technology managers with 20 years’ experience. And that’s because an e-business implementation is not an IT project. Alasdair MacLeod, partner with consulting firm Deloitte, says that businesses need to understand that e-business is about processes and culture. “The whole ‘e’ thing is distraction. I still get brassed off with people who think that e-business needs to be dealt with separate to core business.”
So e-business must be understood and managed from the top. It requires careful analysis and planning, input and direction from the major business areas of an organisation. Adopting an e-business strategy involves new methodologies, technologies, communication networks and business processes. And you might need some help from consultants and information technology vendors. But e-business is not an ethereal intellectual concept best explained slowly by consultants. Senior management and staff are the people most qualified to assess the ways in which e-business is needed and why.
Just hype?
So why all the interest in e-business? The answer is not, as some believe, that e-business is ‘over-hyped’. Managers are becoming aware of both the global shift towards e-business, and of the need to evaluate what it’s all about and whether it is applicable to their unique business environments.
Along the way, they discover evidence that e-business can facilitate major business objectives, irrespective of the business size or industry sector. These are improved internal efficiency and improved customer service and relations. Once achieved, these objectives have the potential to both save money and generate greater profits, if (and it’s big if) the e-business strategy has been properly planned and implemented to meet business needs within an affordable budget.
So who’s got tangible evidence? Peter Davies, manager, supply group for Clear Communications, says his company saved $2.7 million in just one year after implementing an e-business strategy that included web-enabled ERP system and Oracle i-procurement system. “When we started we were processing 3000 purchase orders month at cost of $100.11 per order. Now orders cost $64 each to pro-cess and we’ve cut the number by two thirds to 1000,” says Davies.
To measure the difference, Davies and members of the Clear IT section, sat beside workers, timed how long it took for an order to be processed and then repeated the process after the e-business implementation. Purchase order numbers were cut because the new e-procurement system consolidates orders so that dozens of individual orders to the same vendor are grouped together. In September 2001, Clear received 1254 supply requests, yet distributed only 1100 purchase orders. The company also saved $200,000 that month through bulk buying.
In addition to e-procurement, Clear uses web-enabled financials including project accounting, accounts payable and inventory systems. Davies says the company began its e-business strategy six years ago and is now starting to reap the benefits of “six to nine months” of questioning and planning.
Justine Pallett, chief communications officer for Conduit International, an e-business vendor of purchasing and sales tools, says its research shows distribution-based businesses with manual processes have an error rate of between eight and 12 percent. “That means that if one in every 10 orders is wrong, the business must sell an extra six orders to make up for the error – so one of the key drivers for businesses to implement e-business is to increase accuracy.” Pallett says that managing the sales process, providing timely and relevant information and processing orders, is the most resource-intensive area of most organisations. “E-business processes and tools reduce double-handling and processing steps and deliver to customers more direct information source.”
Interest in e-business is also driven by anxiety. It’s widely held perception that waiting too long to initiate an e-business strategy is risky. Deloitte’s MacLeod believes that it is equally as dangerous to ignore e-business and underestimate its impact, as it is to plunge into it without proper planning. And Gartner Group warns business managers that “no enterprise should ignore the need to respond dynamically and in real time to its customers”.
Richard Jacobsen, an internet research manager for IDC Asia Pacific, says that while general resistance to change is common in countries like New Zealand where businesses are built on strong foundation of relationships, strong manufacturing and export-orientated economies together with increased competition through the deregulation of Asian industries will spur companies to innovate to survive. “Many will see the benefits of e-business as vital to acquiring or maintaining competitive advantage. Those who don’t run the risk of becoming obsolete as globalisation levels the playing field.”
But Clear’s Davies puts it most succinctly: “Get up and running. Don’t wait for the perfect solution – there isn’t one.”
Ready and right?
If by now you are wide-eyed and worried that you’re not doing enough in the e-business space, don’t panic. While some businesses are overly sceptical about the potential of e-business and have held back too long and too far, the flip side of the coin – being overly enthusiastic – can lead to expensive mistakes.
In its June 2001 report titled Applying E-business to Transform Critical Pro-cess, Gartner Group identified four distinct stages to e-business readiness. They were:
• an infrastructure that supports only manual processes
• automating existing processes within each business function (for example, standalone accounting system)
• automating business processes that cross organisational boundaries (such as when ERP systems are implemented)
• beginning to provide customers and suppliers with limited remote access to infrastructure and processes.
After this, businesses are ready to adopt an “inter-enterprise” view of business processes. They see how internet technologies can be used to link with trading partners. Eventually, the business gains
