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Doing business online may have lost some of the appeal it had not long ago, but there's no doubt that it is still a powerful yet not fully deployed weapon in today's business strategies.
To the end user, the customer or the web surfer it may appear that each and every company is already into e-Business or e-Commerce, since nowadays even the smallest enterprise seems to have a website.
The truth, however, is that no matter how well presented and flashy a web site is, being online doesn't exactly mean the same as having an e-Business implementation.
E-business today
According to a recent survey in which companies were asked to describe the purpose of their websites, 48% of respondents stated that their current website was just a front end. This means a passive promotional window to the company's activities. With one way communication flow (there can be limited user-to-company communication in the form of email links and forms, but little more) and with the sole purpose of providing static information about standard topics: clients, product range, services, company info, etc.
Some 40% of respondents felt that their website was somehow integrated with core business applications, but most of these have to be seen as mere online sales systems-customer automation. Online selling is often the first step companies take towards the achievement of an ideal e-Business status. The reasons are straightforward: companies want to sell, so any new way to increase sales is welcomed. Therefore, the natural development of a passive website into an active one with integration of core applications starts by moving to an online sales model. Most technological developments started this way: to provide read/write access to a database with a parallel secure payment system, often based on credit cards.
But even if it seems that online sales provide a good starting point to becoming integrated into an e-Business model, the reality is that these databases, the ones that have been filled with customer requests for a certain product, are often the end of the existing e-Business implementation. It is amazing the way some of these online sales systems are still handled: databases are simply printed off onto sheets of paper and sent to the appropriate department for the orders to be handled in the traditional way. Many companies still have staff whose sole function in the company is to retype the data from the online database into the real database, the one that has been around in the company, perhaps for 10 or more years. This is not exactly process integration.
From the same survey, 10% of respondents stated that they had integrated all their core business applications with their website.
Partially web-enabled organisations
These figures have to be taken carefully. If we compare similar surveys from different years, we can easily appreciate that the trend is to gradually increase the number of core business applications that are becoming web- enabled. From a careful study of the 40% who are "partially" web-enabled it’s easy to appreciate which core activities have priority in this process and what are the key drivers pushing towards the e-Business model. Areas in which web-enabling technologies are rapidly growing are recruitment, internal information management, research activities, B2B marketing, and procurement processing.
After online order processing, the natural step would be to fill the gap between databases. Integrating logistics and distribution into the e-Customer driven process sounds very sensible but, in fact, many integration issues and problems arise when trying to establish the link between different proprietary databases and transaction systems. This is due to the fact that most commercial databases want their users to use their software, thus creating a certain level of incompatibility with other commercial software packages.
If a company was to start a complete e-Business from scratch, it would make sense to use fully compatible software and hardware, but this is quite an unreal business situation. The most frequent case is that of an existing company with different types of databases,many of them legacy systems, and with a need to build bridges between different technologies that involved heavy investment and that they cannot afford to change.
The other side of the coin involves core business applications that haven't even started the web-enabling process. The big loser is, without doubt, CRM. 60% of respondents state that their CRM systems are 'not at all' integrated with web technologies, and 36% admit they have started but that "there is a long road ahead". The next black spot is integration between web activities and the traditional transactional system.
What about the key drivers of change? Customer service and costs are the main concerns, followed by revenues and competitive pressure. So why are CRM and the enterprise transaction system out of the group of core applications going online?
The three big problems
“what do we need, how to build it and will it be used?”
These problems are the lack of vision by today's management, the lack of a technological standard and the irrational fear in the mind of the user.
The first problem involves how managers perceive web-based activities, how they understand the relationship between these and core business activities and how they perceive this in relation to where the business is going.
The second issue has to do with the actual implementation of the system once the need is perceived and the theoretical solution is defined. If we add to this the fact that the number of e-Customers is still relatively low, mainly due to security concerns, we will end up with a three-fold problem: a financial/managerial one: costs, ROI and vision, a technical one: what and how to integrate, and a sociological issue: why should someone trust a cable?
The decision to build an IS: do companies need such a thing?
It has to be clearly understood that building infrastructure requires investment and that, as is often the case, the mere existence of an IT/IS infrastructure doesn't automatically translate into a sheer volume of business traffic. It is the first step, but is not enough to generate acceptable ROI. It is the way it is used which can make the difference. These ideas have to filter to the key decision makers, and have to be well understood.
This last word is the other big problem. Not only does it have to be made clear that the initial investment has to take place, but also where and how these resources have to be deployed. One recent IBM television advertising campaign portrayed a war room in a major corporation on a Saturday morning full of the responsible people for the different elements of the IT infrastructures. The last question was "and who is supposed to make all these elements work together?" followed by "I'm afraid that'll be you". This is exactly the problem: putting everything to work together.
Designing the system Is there a unique route forward?
If we think in terms of ten years time from now, we might end with the following scenario towards which some extremely innovative companies are going today.
If(Information.equals("the right interpretation of the right collection of data")){
companyHasFuture(workToAchieveIt);
}
else{
System.exit(0);
}
Interpretation will be department or industry dependent as will be the concept of "the right collection of", but data will necessarily follow a standardised pattern when transmitted. These standards will provide the solution to seamless inter-communication between systems.
Today, companies like jBASE, Striva, Primeur and others are providing the solution to make old and new standards compatible while moving towards the future. Tomorrow a single standard will comply with exact specifications (like those dictated by the w3 consortium) to ensure that no-one breaks the norm in order to pursue private interests (as happened with the DHTML specification as part of the so-called "browser wars" which led to Netscape's sinking in the mud). This common inter-communication system would be periodically reviewed and updated to reflect technological improvements, but backwards compatibility should be granted. It is agreed that the new standard will be the eXtensible Mark-up Language or XML.
The sensible route, then, is vertical re-focusing of solutions plus departmentalisation instead of generic packages that try to cover every possible aspect in any kind of corporation. This way, specialisation will make sure all needs are perfectly satisfied while maintaining seamless compatibility with all other intra and inter corporate information systems. Even if databases have different data structures (this is unavoidable, since technological progress implies structural change) or interfaces become incompatible, a common communication dialect has to be in place. This way, software companies will still have room to develop proprietary architectures to suit specific needs, but commitment to be compatible will be required. So, although the way forward will be a collection of different methodologies and architectures, in actual fact all roads will lead to Rome.
Irrational fears and misconceptions
In relation to security concerns of online transactions, the human being has the incredible capability of not being able to distinguish between probable and improbable threats. Banks have operated through EDI lines for decades now. People have used roads and railways to travel for more than a century. Risk is inherent to any activity, but our own imagination magnifies the perception of some of the risks and threats involved in "electronic" transactions. We tend to think of an electronic monetary transaction as more dangerous than crossing the street to do the same operation in person at the bank.
In Conclusion
Even when these key issues are solved and the whole supply chain starts to interact efficiently with the customer, and the huge mechanical structure reaches cruise speed, then revenues and profits will not necessarily improve. The traditional forces of the economy will once again be in charge of organisational success or failure, only that this time the "modus operandi" will be fully based on ever improving information systems. IS are still in a very early stage, but we shouldn't try to hold back their development. Those who resist change will be dropped from the system, just as always happened.
Until corporate management has a clear image of the future they have to shape and until these irrational fears vanish, that is until the road is built and people decide to use it, ROI will remain highly elusive and this will remain a hot topic.
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jBASE Software Ltd, a subsidiary of the new publically traded Swiss group, Temenos, have used SSP’s services to accelerate their European expansion into Italy. jBASE specialise in transaction based web development systems that are not only scalable across the Enterprise but coexist and significantly enhance all legacy and relational databases.