E-Business it is primarily about using information and communications technologies (ICTs) to enable new ways of doing business. This process has been going on for decades (if not longer), but the commercial exploitation of the internet and related technologies since the early 1990s has significantly accelerated and deepened the process. Today, the internet has already radically reshaped the way we work, play, learn, communicate and entertain, but more radical and more pervasive changes are yet to come. Available evidence suggests that we are probably on the verge of a ‘Second e-Business Boom’, which is more robust, more rational but by no means less radical than the first one. Business and IT Executives need to be adequately prepared for such changes, particularly in understanding how the internet and related technologies can be used innovatively to transform organisations.
Why Does e-Business Matter Today?
E-Business is based on two closely interrelated premises. One the one hand, the nature of the economy has changed from an industrial economy to an information economy, where information (or knowledge if you prefer) has become the most critical resource upon which the efficiency and competitiveness of all organisations depend. On the other hand, the continuous rapid developments of ICTs in general and internet related technologies and applications in particular have enabled individuals and organisations to manage information (i.e. the most critical resource of our economy) in ways that were not feasible – or not even conceivable - in the past. The effective combination of these two developments has resulted in the emergence of a wide range of radical and incremental innovations in the strategies, business models and organisational designs, as well as in the products and services, of both private and public sector organisations. These developments have not only challenged established management theories and practice that have been developed in the context of the industrial economy, but also called for the development of a new generation of organisation and management theory for the knowledge-based, increasingly networked, information economy.
‘The Second e-Business Boom’: What‘s Coming Next?
The dot.com bust at the turn of the century did cause considerable confusion and pessimism about the future of e-Business, even though e-Business is much more than dot.com and internet only companies. However, the recovery from the technological downturn since 2001 has been stronger and more robust than even the most optimistic forecasts. By 2005 there were already talks of a ‘Second e-Business Boom’, which has since become more firmly established. The new boom is not only reflected in the steady and rapid rise in both ‘old’ dot.com companies and new dot.com entrants, but also in the rapid development and proliferation of a wide range of new technologies and applications across different sectors. The latter includes social networking and user generated contents; mobile business and m-commerce; RFID, SOA (service oriented architecture), grid computing and web services, and the broadly defined Web2.0 and a wide range of other new technologies and applications. Amongst these new developments, perhaps one of the most significant is the rapid development of various virtual worlds and metaverses associated with the so-called MMORPGs (Massively Multi-Player Online Role Playing Games).
Today, MMORPGs have evolved far beyond mere online computer games, and they are played by people of all ages, genders and backgrounds, and are rapidly becoming alternative realities and the next generation user interface with the virtual worlds and the 3-D Internet. Some of the larger MMORPGs, such as World of Warcraft (http://www.worldofwarcraft.com/), are not only generating billion dollar revenues for their developers, but also creating numerous business – and social - opportunities for the players themselves, and for new and existing businesses (and other organisations) to promote their products and services within these virtual worlds. Furthermore, we have probably just reached the beginning of an exponential growth and the significance of this development could be as far reaching as the development of the internet itself. From a management perspective, MMORPGs and the virtual worlds and metaverses they create could perhaps be seen as direct extensions of our business and social environments. The interplays, and crossovers, between the physical, the electronic and the virtual spaces and places are creating a complex and rapidly expanding new business and social environment for individuals and organisations.
The combination of old and new old e-Business developments is creating a whole range of new opportunities and challenges for organisations and individuals, which are increasingly manifested in the ‘Second e-Business Boom’. The business management implications of these developments need to be systematically understood, and the technological and infrastructural challenges are immense. Furthermore, these development are also creating a whole series of social, political, economic, legal, ethical, psychological, cultural and policy challenges, and these issues need to be systematically investigated and their implications clearly articulated. Many of these issues have been explored in a recent book I edited: Social Implications and Challenges of e-Business.
Strategic Re-Orientations and Organisational Innovations
E-Business has facilitated radical changes at all levels of organisations. At the strategic level, e-Business has not only challenged the basic assumptions of several widely used strategic frameworks, but also enabled many organisations to explore new strategies and business models that are profoundly different from existing ones. Examples include using the internet to create disruptive innovations in a number of industries; the pursuit of the so-called web strategy (also known as cluster or platform strategy) where independent organisations cluster around a particular technological standard or customer segment to collectively deliver unique values to customers; and the strategic re-orientations from products and services, to integrated solutions, and more recently, to the co-creation of unique consumer experience through a network of independent product and service providers. This is not an exhaustive list, and their adoption in different sectors is increasingly reflected in emerging organisational forms, particularly through the deconstruction of traditional business processes.
At the organisational level, a wide range of organisational innovations have been introduced across different sectors, resulting in both incremental and radical changes in the structures, processes, work organisations and inter-organisational relations of many organisations. From a structural perspective, for example, despite repeated predictions about the demise of the hierarchy and the continued search for alternative organisational configurations, today almost every large organisation remains hierarchical. They have become flatter, more flexible, more responsive, and they increasingly deploy project-based or virtual teams to address traditional problems associated with the hierarchy, but so far nobody has been able to identify an organisation that is not a hierarchy. This is not to say, however, that the characteristics of the hierarchies and the way these hierarchies work have not changed. The widespread adoption of ICTs has significantly improved the transparency of the entire organisations to business leaders and managers. This on the one hand leads to further centralisation of power, but at the same time it enables senior managers to have the confidence to delegate responsibilities and activities to operational managers and frontline employees without worrying about losing central control. The shape of the organisation may have not changed beyond hierarchies, but the way the new hierarchies work is radically different. ICTs have enabled some organisations to resolve conventional problems inherent in the hierarchy, allowing radical structural changes to take place within the parameters of the hierarchy. These changes are increasingly reflected in the changing principles of organisational designs.
From a process perspective, many organisations have been using ICTs to facilitate the redesign of various business processes, from radical business process reengineering (BPR) to more incremental process improvements and operational innovations. In fact, many key business processes have been commoditised, some of which are based on industrial best practice that have been built into various information systems, which provided the basis for business process outsourcing. Changes in micro-level work organisations (from teleworking to virtual teams), and in inter-organisational relations (from strategic collaborations to lean production and consumption) are equally significant. Important lessons can be learnt from the pioneers who have introduced such organisational innovations, and in understanding the roles that ICTs played in the process.
These changes require all organisations to re-assess the way they are organised and managed. Internet and related technologies have a key role to play in enabling strategic re-orientations and organisational innovations, and in linking together the communities of users and suppliers cheaply, conveniently and globally. Many of these issues have been explored in my books - What is E-Business? How the Internet Transforms Organisations, but new opportunities and challenges are emerging constantly. We need to understand how the Internet and related technologies can be innovatively used to transform organisations and change the way we do business. Those who can do so effectively and consistently will reap the greatest rewards.
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