A Tale of Two Strategies

For some companies, the appeal of e-business was so strong that they rushed to adopt it before they had figured out exactly what it was.

Now they are learning.

It turns out e-business isn’t a magic bullet that instantly infuses a corporation with Internet-style speed and grace. It’s simply one of many tools firms can use to achieve the same business goals they’ve had all along.

“A lot of e-business historically has been about throwing away the past and putting in a shiny new future,” said Rob Reti, a business-strategy consultant with El Segundo-based Computer Sciences Corp. But that thinking missed the point. “E-business is about leveraging what you already have.”

Unlike its cousin e-commerce, which focuses on transactions between a company and its customers, e-business is all about applying technology to streamline the internal functions of a business, such as accounting, payroll, inventory and purchasing.

In effect, e-business allows companies to enhance their relationships with customers, partners and employees by using Internet technologies. Those range from e-mail to automated payroll systems to extranets that link manufacturers with their suppliers.

Early adopters of e-business technologies typically went after the low-hanging fruit. They put networked PCs on every worker’s desk, or built simple databases of customers and products.

About 56% of U.S. companies are already doing some sort of e-business, according to a survey conducted last year by Cutter Consortium, an information-technology consulting firm based in Arlington, Mass. So far, the most popular kind of e-business improvement is building a corporate intranet so a firm can connect all its employees on a single flexible network.

But what companies have discovered is that deploying technology for its own sake is expensive, and in many cases it isn’t particularly efficient, said Cyrus Hadavi, chief executive of Adexa, a Los Angeles e-business software firm.

The companies that have reaped the biggest benefits from embracing e-business--such as Wal-Mart and Cisco Systems--have revamped the way they operate.

But getting to that nirvana of efficiency requires small, measured steps and a clear sense that technology by itself won’t solve a company’s problems. In many cases, those who moved most quickly and ambitiously found themselves in trouble.

“Understanding what it takes to streamline a business process--and using technology as an enabler of that business process--is the key,” Hadavi said. “That’s not easy.”