Lesson 15: The Internet

What Is the Internet? | The New Business Model | Intranets | Extranets | E-Commerce |

Technology Implications of Internet Applications

The New Business Model

The Internet Is Changing the Way Everyone Does Business

From simple electronic mail to extensive intranets that include online ordering and extranet services, the Internet is changing the way everyone does business. Small and medium-sized companies seeking to remain competitive into the next century must leverage the Internet as a business asset.

The Internet is forcing companies adopt technology faster. You’ll discover several themes that are driving the new Internet economy, as follows.

Compression—Everything happens faster: business cycles are shorter, and time and distances are less relevant to your customers.

Time—Some companies have reported a 92 percent reduction in processing time when an item is ordered via an online system.

Distance—Using networked commerce, BankAmerica has widened its customer base so that now 30 percent of customers are outside the traditional geographic reach.

Business cycles—Adaptec, a manufacturing firm in California, used networked commerce to reduce their manufacturing cycle from 12 to 8 weeks, slashing their inventory costs by $10 million a year.

Market turbulence—Customers suddenly have more choices. They can shop farther afield in search of good values. You have to compete even harder to retain customers.

Networked business—Many deem that networked commerce applications will “make or break” companies in the next century. The ability to solicit and sustain business relationships with customers, employees, partners, and suppliers using networked commerce applications is critical to success.

Rapid transformation—Building relationships, business processes, and operating models that can quickly adjust to accommodate shifting market forces is essential. This requires an infrastructure that provides the ability to change rapidly.

Forces Driving Change

Shorter product life cycles are required to stay competitive.

Industry and geographical borders are changing rapidly:

   - Companies today must be able to swiftly “go to market” in new and expanded locations.
   - Moreover, the rigid border or boundaries of manufacturers are changing: manufacturers are      becoming retailers and distributors.

The need to “do more with less” is essential to accommodate narrowing margins, intensifying competition, and industry convergence. The network must raise the productivity of the workforce.

Traditional Business Model Versus New Business Model

The Internet is transforming the way companies can use information and information systems. Historically, businesses have “protected” company information and allowed limited sharing of systems.

Creating these “silos” of information has meant that each “link” of the “extended” traditional business has lacked access to relevant information to make profit maximizing decisions. That means your employees, suppliers, customers, and partners were kept from information, not always by intention, but because limited access created barriers to sharing it. The result was:

   - Closely held knowledge base
   - Limited access to relevant and timely information
   - Costly duplication of effort
   - Limited transaction hours to conduct business

The Internet and networked applications have changed all that. They allow all companies, no matter the size, to break the information barriers—to “let loose the power of information.”

Now we are experiencing a transition to a new business paradigm. In order to compete effectively in this rapidly expanding Internet economy, we must reshape our business practices.

Companies today are now:

   - Sharing knowledge with suppliers and partners
   - Ensuring that relevant and timely information is available to all employees
   - Removing redundancies
   - Conducting business 24 hours a day, 7 days a week (24x7)

Accelerating this shift is the explosive growth and rapid adoption of Internet usage.

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