Mastering e-Business

Paul Grefen

• Publisher: Routledge
• Year: 2010
• Print ISBN: 9780415557856
• eBook ISBN: 9781136953156
• Topic: Business
• Subtopic: Business General
• Index: Business

e-Business – business collaborations enabled through information and communication technologies – is an essential activity for any business organization and constitutes a significant and growing sector. This textbook presents an innovative teaching framework to help students gain a thorough understanding of the principles of this vital aspect of business and management.

Casting aside the over-complicated and narrow introductions of other textbooks, Grefen presents, analyzes and explains the principles of e-Business with refreshing clarity. The book covers both the business and technology aspects of this topic, using a unique framework integrating:

• Business – focuses on why a specific e-Business scenario exists and how an organization can profit from it
• Organization – analyzes how organizations and their processes are structured to achieve strategic goals
• Architecture – explains the high level design of advanced information systems to describe how e-Business functions
• Technology – examines the technological implementation of e-Business scenarios using a wide variety of ingredients from IT

Mastering e-Business offers a well-structured overview of all aspects of e-Business and is an essential read for all students and professionals interested in this central aspect of modern, global business.

1
Introduction

Learning goals

By the end of the chapter you should:

• Be able to precisely define and explain what e-business is;

• Know the essentials of the history of e-business;

• Be able to explain the relation of e-business to related concepts;

• Understand the role of business and technology in e-business.

1.1 INTRODUCTION

Electronic business (or e-business for short) is all around us nowadays. As consumers, we buy all kinds of things through electronic channels: books, music, electronics, airplane tickets, complete holidays, etc. We receive more and more information from a broad spectrum of organizations in ‘the digital way’. Companies collaborate more and more using automated systems that exchange information digitally. They also engage in digital business networks that become increasingly dynamic and complex. Government organizations are moving to digital business processes, creating e-government initiatives. The Internet and the Web are the default means of communication for many – be it for professional or private goals. We all live and work in the global village that has been enabled by the advance of the Internet.

Although the extreme e-business hype (also referred to as the Internet Bubble (Perkins and Perkins 1999) of the turn of the century has passed, it is clear that the combination of computers, networks and business has a high impact on how the modern economy (and the entire society, for that matter) operates (Pieper et al. 2001). Some argue that this is actually the most important development of the past decades. But when one takes a more thorough look around, the question ‘what exactly is e-business?’ quickly comes to mind. Clearly, not any combination of computers and business constitutes e-business – if this were the case, we would have had e-business back in the 1960s, when business organizations started using computers to support basic administrative tasks.

In the first section below, we deal with the question what e-business is and try to provide some clarity. Next, we briefly discuss the history of e-business. In the third section, we compare the term e-business to a number of related terms. Then, we take a closer look at the relation between business and technology in the e-business context. In Section 1.6, we explain the purpose and structure of our exploration of e-business and hence the structure of this book. We end this chapter with the introduction of the running case studies that we use throughout this book for illustrative purposes, the chapter summary and a few questions and exercises related to the contents of this chapter.

1.2 WHAT EXACTLY IS E-BUSINESS?

As we have stated above, e-business is not just any combination of computers and business. A company that only uses a computer to perform its salary administration clearly does not constitute an e-business. Below, we first work towards a basic definition that distinguishes e-business from non-e-business. Next, we extend this definition to identify an interesting subset of e-business, which we address later in this book.

1.2.1 Towards a basic definition

To start, we must observe that we do not use the term e-business to denote an organization form or information technology. The term e-business denotes specific kinds of business activities performed by one or more organizations with the use of information technology. To call a combination of business activities and information technology e-business, a number of criteria have to be met to make sure that we deal with a truly important combination of business and information technologies:

1 The activities must be core activities (also called primary activities) for the business, i.e., they must be directly related to the reason of existence of the organization(s) involved. For example, for an airline company, selling tickets and transporting people are core activities, but bookkeeping and cleaning their offices are not.

2 The use of information technology must be essential for the way the activities are performed, i.e., the activities must be IT-enabled. Activities for which efficiency or effectiveness are only improved by the use of IT are called IT-supported activities – hence, they do not qualify for e-business.¹

3 The information technology must be used in an integrated fashion for both processing and communication of information. In other words: information must be both transformed and transported digitally. If only one of these two aspects is enabled by IT, we do not call it e-business.

The above criteria lead to the following basic definition of e-business that we use in this book (we extend it in the next subsection):

Electronic business is conducting core business activities in a way that is enabled by the integrated use of information technology for processing and communication of information.

If you prefer ultra-short definitions, you may use the following abbreviation:

E-business is IT-enabled business.

Given the above definition, the use of IT is the discriminating factor in distinguishing e-business from ‘traditional’ business. As we will see later in this book, this discriminating use of IT can either be realized by using ‘general’ IT in a way that is specific for e-business, or by using new types of IT in a technology push mode – we revisit this issue in Section 1.5.

1.2.2 Towards an extended definition

The above definition separates e-business from non-e-business by stating the minimum requirements that have to be met. Using minimum requirements implies including quite a lot, the interesting as well as the not-so-interesting cases. To distinguish the not-so-interesting cases from the really interesting cases, we have to discuss two aspects: scope of activities and dynamism of relations.

The scope of activities determines whether activities are executed entirely within the boundaries of a single organizational (intra-organizational) or are executed across the boundaries of organizations (inter- or cross-organizational). If activities are inter-organizational, they are part of collaboration between organizations. Interorganizational e-business helps in transforming the nature of collaboration in business markets. Inter-organizational e-business has much greater consequences than intra-organizational e-business, making it more complex but also more interesting.

The dynamism of relations determines how dynamic the relations are between organizations that engage in e-business activities together. e-Business can help in decoupling dependencies between organizations because it enables new forms of collaborations, thereby enabling highly dynamic partnerships. Dynamism of relations is obviously only of interest to inter-organizational e-business. Highly dynamic partnerships are clearly more interesting than static partnerships, as they have to rely to a larger extent on specific characteristics of e-business.

Given the above discussion, we provide an extended version of the basic definition of e-business given above, which delineates the interesting field of e-business:

Electronic business is conducting inter-organizational core business activities in dynamic collaborations, such that these activities are enabled by the integrated use of information technology for both communication and processing of information.

In our terminology, e-business is conducted in e-business scenarios. An e-business scenario is a setting in which two or more parties engage in e-business to achieve a specific business goal. This implies that one organization can be involved in more than one e-business scenario (to achieve more than one business goal).

In this book, we concentrate on e-business conforming to the above definition.² We start the discussion of the e-business domain below with a brief discussion of the history of e-business.

1.3 A BRIEF HISTORY OF E-BUSINESS

Although e-business is not per se coupled to the use of the Internet (as we have seen in the definitions of the previous section), its development is closely related to the development of the Internet. Therefore, the development of the Internet plays an important role in the history of e-business. Below, we first briefly look at e-business before the Internet era. Then, we discuss how the Internet became the communication platform of choice for e-business. After that, we pay attention to two important periods after these initial developments: the e-business hype and the ‘steady times’ that we have witnessed after the hype.

1.3.1 Before the Internet

The use of information technology to allow companies to collaborate in business goes way back into the previous century. In the early days of this development, we find dedicated systems for very specific business activities. An example is the SABRE airline booking system, which was used from the early 1960s to connect airline ticketing offices to a central data center³ (Wikipedia 2009a). Another example is electronic business between banks, which has been supported by the SWIFT network since the 1970s (Wikipedia 2009b).

Before the rise of the Internet, high-volume e-business scenarios typically relied on dedicated digital communication channels, i.e., communication channels that were created for specific business activities between specific pairs of business partners. Low-volume e-business typically relied on using existing phone lines and modems to connect computers to each other.

Often, dedicated channels were dedicated both conceptually and physically, i.e., both in their logical design and in their realization in hardware (physical wires). With these channels, standards like Electronic Data Interchange (EDI) (Sokol 1995) and Electronic Funds Transfer (EFT) (Kirkman 1987) were supported to allow business organizations to perform business transactions in an electronic fashion.

The dedicated channels were usually very expensive and time-consuming to set up (and maintain). Therefore, they typically only supported long-term, stable business ...

Table of contents

• Contents
• Illustrations
• Preface
• Acknowledgments
• 1 Introduction
• 2 An e-business classification space
• 3 The BOAT framework
• 4 Business aspect
• 5 Organization aspect
• 6 Architecture aspect
• 7 Technology aspect
• 8 BOAT as an analysis instrument
• 9 Concluding remarks
• Notes
• References
• Index