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
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
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