Types of E-Business Models and Markets
In the past two years, e-business seems to have permeated every aspect of daily life. In just a short time, both individuals and organizations have embraced Internet technologies to enhance productivity, maximize convenience, and improve communications globally. From banking to shopping to entertaining, the Internet has become integral to daily activities. For example, just 23 years ago, most individuals went into a financial institution and spoke with a human being to conduct regular banking transactions. Ten years later, individuals began to embrace the ATM machine, which made banking activities more convenient. Today, millions of individuals rely on online banking services to complete a large percentage of their transactions.
The rapid growth and acceptance of Internet technologies has led some to wonder why the e-business phenomenon did not occur decades ago. The short answer is: it was not possible. In the past, the necessary infrastructure did not exist to support e-business. Most businesses ran large mainframe computers with proprietary data formats. Even if it had been achievable to transfer data from these large machines into homes, the home computer was not yet a commodity, so there were few terminals outside of business to receive information. As PCs became more popular, especially in the home, the ability to conduct e-business was still restricted because of the infrastructure required to support it, including backend customer and supplier interaction along with credit card processing systems.
To set up an e-business even eight years ago would have required an individual organization to assume the burden of developing the entire technology infrastructure, as well as its own business and marketing strategies. Today, the challenge of e-business is integration. There are industry-leading companies that have solved the difficult task of developing individual Internet-based products and services that handle many of the issues surrounding customer and supplier interactions. However, the ability to integrate these technologies and services based on sound business and marketing strategies, operating on a real-time basis, can be a monumental undertaking.
As e-business continues to be fueled by both organizations and consumers who have access to the Internet from their homes and offices, the excitement grows and the potential for success increases. But explosive growth of the Internet has also led to a growing number of integration challenges for e-businesses of all sizes and types.
In phase one of building an e-business, companies scrambled to get an e-commerce Web site up quickly. The operative word was “quickly,” because usually there was little or no regard given to how scalable or reliable the site needed to be—or even how captivating the content. It was just a matter of beating the competition. These first-to-market consumer sites were rarely integrated with the manufacturing side of the business, which was establishing its own Internet-based relationships with suppliers. This lack of integration has proved to be a significant challenge for many organizations as the customer base has grown, real-time order status has been requested, and products have been returned.
In phase two of building an e-business, having an e-commerce site is now a commodity, not a way to differentiate a business. Customer and supplier expectations are rising, forcing organizations to start thinking about backend integration and real-time transaction processing. Businesses must actually maintain complete customer and supplier relationships using Internet-based technologies and tie those systems to the interpersonal aspects of the business transaction when required. Organizations that realize the promise of e-business are the ones that have begun to address the complete business cycle and are leveraging Internet technologies.
It is no secret that today’s e-business has the potential to transform the business landscape. Whereas in the past, a company’s business model was the primary determination of its value, today, a company is valued on its strategy, business model, and ability to market. With technology driving new competition, a Fortune 500 stalwart that once seemed unstoppable is now challenged by a start-up that uses Internet technologies and integrates their systems and processes more effectively. By capitalizing on a sustained business proposition and correctly applying technology, these start-ups are able to significantly reduce the barriers to entry while dramatically increasing their market reach. For e-businesses, the premise “first to market equals first to success” is often the case; however, the foundation needs to be laid carefully. A disciplined approach to evaluating the business opportunity, and correctly assessing how a competitive advantage may be gained using Internet technologies combined with leveraging the existing investment, is key to a successful e-business.
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