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Web technology has become a standard, strategic component in business plans for small and large distributors around the world. It is more critical than ever that all executive officers understand web technology to an extent necessary to fully understand their own business plans.
Let’s be honest with ourselves. Day in and day out we hear words like E- commerce, E-business, E-this, and E-that, but do we really know what they mean and how they impact our businesses?
As a consultant, I’ve seen too many executives push technology education off to their CIO or CTO, only to have it come around and bite them later. A few years ago, this was possible. However, pure-play dot-coms are turning conventional business models inside out with the advent of new business models such as trading exchanges and reverse auctions. Web technology has become a standard, strategic component in business plans for small and large distributors around the world. It is more critical than ever that all executive officers understand web technology to an extent necessary to fully understand their own business plans.
Sound like a blinding flash of the obvious? Sure, but let’s do a quick test. Go around your office and ask what is e-commerce, e-business, and what is the difference between the two. I’m willing to bet that no two answers will be alike. Most people will hit on e-commerce, but you’ll get a bunch of long-winded answers about e- business as people try to make up definitions. To me this is silly since everyone seems to want to become an e-business. The problem is, how can someone become something that they cannot define?
Since I brought it up, what is the difference between e-commerce and e-business? E-commerce (electronic commerce) is the buying and selling of goods and services over the Internet plus the technology infrastructure and applications used to support those transactions. E-business (electronic business) is the use of technology infrastructure and applications to synthesize and optimize new and existing business processes.
Here are some examples of both to help you differentiate between the two.
E-commerce Examples:
Sound like a blinding flash of the obvious? Sure, but let’s do a quick test. Go around your office and ask what is e-commerce, e-business, and what is the difference between the two. I’m willing to bet that no two answers will be alike. Most people will hit on e-commerce, but you’ll get a bunch of long-winded answers about e- business as people try to make up definitions. To me this is silly since everyone seems to want to become an e-business. The problem is, how can someone become something that they cannot define?
Since I brought it up, what is the difference between e-commerce and e-business? E-commerce (electronic commerce) is the buying and selling of goods and services over the Internet plus the technology infrastructure and applications used to support those transactions. E-business (electronic business) is the use of technology infrastructure and applications to synthesize and optimize new and existing business processes.
Here are some examples of both to help you differentiate between the two.
E-commerce Examples:
- Business to Consumer (B2C): Buying retail goods online
- Business to Business (B2B): EDI between a manufacturer and distributor
- Consumer to Consumer (C2C): Selling at an online auction
E-business Examples:
- Business to Employee (B2E): intranet portal for Employee/HR relations
- Placing purchase order forms online with online approval
- Using online collaboration tools to increase the productivity between geographically separated offices
A key distinction is that e-commerce is a channel, while e-business is a process. E-commerce is also one of the many components within e-business.
One ideology we preach is that any e-business transformation must begin with education at the top. The first and foremost requirement for any e-business transformation is real senior executive involvement and LEADERSHIP. Much of this work requires direct executive coaching, interpreting, and handholding. To be honest, people are not going to like this. No one wants to admit that they do not know some very basic information about web technology. They will sit there and just nod as acronyms and concepts that build on those acronyms just fly over their head. Trust me this is happening all the time to one or more people at your staff meetings.
A few weeks ago, we were holding an executive seminar for a large group of distributors on e-business strategy and transformation. About three-quarters through the two day seminar, I was explaining how on our site, visitors click a link to spawn a chat applet for instant customer service. A hand was raised and a person asked the question, “What’s a link? ” I thought it was a joke at first. After all, we were into the second day of an e-business presentation. Well, it was no joke. After a brief explanation and discussion, it was obvious that the majority of the room needed some education. So I began a two-hour, impromptu presentation using a whiteboard and explaining everything from the history of the Internet to how data from a web site gets to your web browser. When we received the post seminar comments, many said the light came on about e-business concepts only after the two hour Internet explanation. They also said that the explanation was one of the most valuable pieces of information they took away from the seminar.
We had mixed emotions about this. On one hand, we were glad to adapt and provide a valued service to this group of distributors. On the other hand, it’s a little disconcerting to see that they came in under the false impression that they knew requisite material for the seminar. It was as if they came to us to try and obtain a “magic bullet” to make all this e-business noise go away. The answer to that is that it is not going to go away. You can’t just run down to the store, buy something called “E- Business in a Can," pop the top, let it fumigate your offices, come back the next day and you magically have an e- business. I said before that e-business is a process, but it is process supported by other processes, applications, and culture. You can buy some off-the-shelf components to make the infrastructure, but it takes time and evolution to get you there.
Many of the bleeding-edge technologies of today are built upon basic technologies that drive the Internet. Most are permutations that directly inherit features and flaws of the ancestor technology. “How can you deploy WAP applications if you don’t understand the concepts behind WML? How can you solve compatibility issues with WML if you don’t understand the concepts behind XML? How can you discuss XML if you don’t understand the concepts behind HTML?” Having a firm understanding of key, basic concepts is essential for creating the educational foundation necessary to fully comprehend economic impacts of technologies today and in the future.
If you think that your executive staff understands what they need to know about web technology and how it relates to your business, then test it. I’m sure it will be an eye opening exercise. Make a list by looking through your various plans, presentations, initiatives, emails, etc., and pull out web technology acronyms, keywords, and concepts. Maybe throw in some basic words like link, browser, or IP, and maybe some advanced buzzwords you may use like EDI, WAP, or XML. Assemble your executive staff in a room and for every item listed, have each member write down and explain, in their own words, what each item is and how each item works. Get one of your IT personnel to rate the accuracy of the answers. This should give you a good handle on how well your staff comprehends all of the “E-Stuff” that’s been thrown at them over the last few years. If the results were good, then congratulations on your well-educated team. If the results were poor, then some sort of educational crash course may be needed ASAP.
Why am I going to great lengths to point out executive educational deficiencies in an article about e-business? The reason is that building an e- business infrastructure is a relatively easy thing to do. In fact, you may already have everything you need. The difficult part is incorporating the use of e-business into everyday business practices. If you don’t understand the technology, then you cannot effectively map the technology to your business processes.
Since it is tough to change established business methodologies to fit shrink-wrapped applications, and it is tough to change shrink-wrapped applications to fit established business methodologies, a compromise between the two must occur. This hybrid business model can only exist after a universal embrace and understanding of technology and where the technology intersects with your business processes. This universal embrace and understanding is called a PC literate workforce, and it is up to you and your executive staff to lead this revolution.
And as I said a few paragraphs back, it all begins at the top with executive involvement and leadership. From there it should flow down to every employee in your company. E-business will begin to creep in naturally as employees find more efficient ways to do their jobs by using the technology at hand. Better company-wide understanding of technology use in business processes means lower costs and higher productivity rates.
I think a lot of distributors are jumping the gun on becoming a Digitally Aligned Supply House. A DASH is basically a distributor practicing e- business internally and externally with its suppliers and customers. Undue pressure from media and marketing is forcing distributors into dangerous positions where wrong assumptions about technology could cost hundreds of thousands to millions of dollars. My advice is to slow down before you get too far down the road and do a simple little checkup. Start at the executive level and work your way down to the evaluation and decision-making teams. Our economy is moving from industrial to digital, so making sure that your business teams have a firm grip on technology will help your company adapt to the future. Education is the key.
Indian River Consulting Group is an experienced based firm specializing in Distribution. Started in 1987 by J. Michael Marks, a current DREF Research Fellow, IRCG's specialists consult with distributors and suppliers to make the changes necessary to maintain competitive advantage. You can contact them by calling 321-956-8617, or visit www.ircg.com for more information.
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