The B2B E-commerce Revolution: Convergence, Chaos, and Holistic Computing

The Internet has triggered the Fourth Information Revolution, which is leading to fundamental and irreversible changes in the way we do business and in the requirements for the supporting core technologies. Business-to-Business (B2B) e-commerce, the Information Revolution driver, is estimated to be between a $2.7 and a $7.3 trillion market in 2004. This pot of gold is resulting in massive competition in every business sector. Millions of Internet experiments (i.e., dotcoms) are testing hypotheses for more efficient business processes and technology solutions. No one knows which experiments will succeed or which technology requirements or solutions will emerge. At the heart of the revolution are two diametrically opposed forces— convergence and chaos, in both the evolving business processes and the enabling technologies. Technology and business convergence is redefining the entire problem domain, while Internet experiments are appearing like the chaos in a gold rush. For technologists, chaos manifests in myriad noninteroperable existing and emerging technologies. B2B chaos will persist as long as the business processes are in flux. The technology chaos may persist longer. How should technologists deal with the revolution and chart their map to the gold mine? What really matters in this revolution are the business processes that will come to dominate individual businesses. For technologists, what matters are the resulting technical requirements. These should be derived, from the top down, from the fundamental economic model, from the economic-chain, and then from specific business models and processes. This chapter offers ideas from the now inseparable domains of economics, business, and technology. It examines the revolution and its challenges, and it proposes a holistic orientation for information technology (IT). The holistic view attempts to provide guidance through the chaos for requirements for core technologies that will underlie the future Internet-connected world. 1 In Information System Engineering: State of the Art and Research Themes, Eds.S. Brinkkemper, E. Lindencrona, and A. Sølvberg, Springer-Verlag Ltd., London. June 2000. 2 The previous three Information Revolutions were based on writing 5,000 years ago in Mesopotamia; on the written book in 1,300 BC in China; and on Gutenberg’s printing press in 1455 [1]. 1 The Irreversible Information Revolution 1.1 The Fourth Information Revolution Peter Drucker [1, 3] argues that we may be able to predict aspects of the Fourth Information Revolution based on previous technology-based revolutions. Just as the steam engine was the trigger for and symbol of the Industrial Revolution, the computer and the Web triggered the current revolution. As with the Industrial Revolution, the fundamental and irreversible changes of the current revolution will be in the ways business will be conducted. Whereas train transportation reduced the costs of manufacturing and distribution in 1820, B2B e-commerce reduces the costs (e.g., time) of most business processes. In the Industrial Revolution, it took over 40 years for new opportunities to be understood and incorporated into new business processes. It will take five to ten years to understand and incorporate the emerging opportunities into a new generation of business processes. The revolutionary period will be marked by massive attempts to innovate and create better processes. A chief characteristic of this period of reinvention will be chaos in the affected businesses and in the supporting technologies. Existing processes will be improved directly by simple cost reduction. Drucker calls these improvements “routinization,” to which he attributes the associated economic boom. Other processes will emerge, unanticipated, due to new possibilities. He observes that, so far, the train boom is very similar in size and impact to the Internet boom. The economic boom and the related chaos will continue until the experimental business processes stabilize and new business processes emerge. Hence, there may be waves of chaos and economic boom as models and processes in each business sector evolve and mature. According to the theory of growth economics [2], these waves will continue as long as innovation leads to value creation. Some lessons are already clear. Connectivity and information access are leading to a shift in the balance of power from vendors to consumers. B2B leaders are using the Internet to increase customer value and build deeper relationships with partners and customers. This is a key characteristic of B2B business models. Drucker argues that the most profound change will arise beyond routinization in unanticipated areas. His candidate for the Fourth Information Revolution is e-commerce “... the explosive emergence of the Internet as a major, perhaps eventually the major, worldwide distribution channel for goods, for services, and, surprisingly, for managerial and professional jobs. This is profoundly changing economies, markets, and industry structures; products and services and their flow; consumer segmentation, consumer values, and consumer behavior; jobs and labour markets. But the impact may be even greater on societies and politics and, above all, on the way we see the world and ourselves in it” [3]. E-commerce may be the basis of a class of new economic models. In short, the economic boom and the associated chaos will continue for some time. More significantly, the chaos essential to innovation means that the ultimate business processes, business models, and perhaps even economic models are currently unpredictable. Entirely new industries may emerge. The long-term