By Ellen Messmer
Network World, 9/28/98

Your company doesn't sell the latest best-selling books or albums, so you're safe from all the hype about electronic commerce. Right?

Wrong. Amazon.com and Music Boulevard may get all the media attention, but today the real action in electronic commerce centers around businesses doing deals with trading partners, not the sale of consumer goods to shoppers browsing the World Wide Web at home. Research firm International Data Corp. (IDC) of Framingham, Mass., says businesses conducted $12.4 billion in transactions over the Web last year, and that figure is expected to rocket to $32.4 billion by year-end. In contrast, Web-based retail sales stood at $5 billion in 1997, a figure predicted to more than double to $11.4 billion this year.

This startling growth in business-to-business electronic commerce makes it clear that if your organization isn't riding the electronic commerce wave yet, you'd better be thinking about how to catch it.

Electronic commerce promises to make life easier for you and your business partners, but only if you plan your efforts carefully. For example, offering Web-based catalogs could enable your customers to search more easily for products and place orders electronically, a process far less prone to data entry errors.

Most major U.S. companies have implemented systems for electronic data interchange - the oldest form of structured business-to-business data exchange - to share purchase orders and shipment notices. But EDI has been an expensive proposition, not to mention a technically challenging one, leaving small and mid-size organizations stranded outside the EDI circle.

However, with EDI now being adapted to work with Web servers by converting HTML into EDI formats, large corporations have begun reaching out to their smaller trading partners by posting purchase order forms on the Web. A newer Web technology called Extensible Markup Language (XML) may eventually replace EDI for sharing business data on the Internet because of the flexibility advantages XML promises.

The Internet - with its ubiquitous reach, lower costs and common IP protocol - is attracting entire industries, though security concerns have slowed its adoption for business-to-business transactions.

The Detroit-based auto industry is determined to use the Internet and is slowly, but tenaciously, constructing the Automotive Network Exchange to share EDI transactions instead of using multiple, incompatible value-added network services. The industry is pioneering the IP Security protocol, a new Internet Engineering Task Force standard that will be supported by a legion of vendors.

The Energy Policy Act passed by Congress in 1992 forced electric utilities to provide transmission services to competitors and to make it easy for companies to reserve power-grid time online. Today, almost 500 utility companies share energy delivery information at a private Web site called OASIS. In the near future, big consumers of electricity, not just the utilities, will also be able to buy power directly from OASIS, says Alexander Cavalli, chief security architect on the project.

Electronic commerce and the geeks

If the top executives haven't already, they'll soon be looking to your team to build extranets that give customers access to your corporate computer resources. You'll have to devise acceptable authentication methods that let buyers through your firewall but keep them from straying into restricted areas. And all of this is easier said than done.

Perhaps most important, you'll likely have to take on the task of facilitating these new online relationships with your company's most critical trading partners because electronic commerce doesn't just mean extending the corporate network to outside partners. It may well mean overhauling the company's business processes.

For example, deciding to sell products directly from your Web site could damage existing resale channels, possibly disrupting your company's cash flow. And it is in these areas, where technology can radically change an entire business, that danger lurks for network professionals leading the charge to electronic commerce.

A survey of 170 chief information officers (CIO) completed in July offers some insights into exactly how perilous electronic commerce can feel to the IT team. The survey was conducted by Cambridge Technology Partners, a systems integrator with experience in building commerce Web sites for merchants such as Sony.

Nearly 60% of the CIOs said they were already involved in electronic commerce projects. Another 24% expected to be jumping into electronic commerce this year or next. But of those already engaged in the game, more than one-third said they thought the project wasn't succeeding. The reason: They had failed to successfully connect the electronic commerce effort with their business goals. CIOs making electronic commerce decisions with their tech hats on were surprised to find their sales, marketing, customer service and fulfillment organizations suddenly undergoing substantial and unexpected shifts. Worse, the technology executives complained of a low level of involvement from CEOs, chief financial officers and sales and marketing managers. This disconnect has left the IT department in the dark about the impact of its technology decisions on day-to-day business processes.

The message from these findings and the real-world experiences of other customers is that network executives can advance their careers by pioneering electronic commerce, but they need to work hand-in-hand with other business unit executives to ensure that any major issues are resolved before hanging out the electronic shingle.