The Impact of E-Business

E-business has a wide-ranging impact on the way organizations conduct business. It has automated and streamlined internal processes and communications, delivering productivity and efficiency improvements. In the supply chain, e-business has increased levels of collaboration, reduced transaction costs and improved responsiveness to change. E-business has transformed retailing, with the growing preference for online shopping and the availability of digital delivery of a wide range of products and services. In some sectors, such as finance, new forms of competition have emerged from organizations adopting e-business techniques.

The European Commission reported in “ICT and e-Business Impact Studies -- 2009” that e-business components were now an essential element of business. Many organizations have taken the strategic decision to integrate e-business solutions into production processes, quality management, marketing, logistics and customer services. In fact, 97 percent of respondents to the study reported that their new processes are supported by information and communication technologies.

Productivity gains are an important benefit of e-business. A report by the U.K. Office for National Statistics found that organizations with automatic links between key business process and their e-commerce activities have higher average labor productivity than firms without the links. The productivity gains result from e-business investment in processes, such as workflow, access to data and communication tools.

E-business has had a significant impact on the efficiency of supply chain operations. Partners exchange transaction data, schedules, requests and market information over secure networks. The ability to share information on market changes ensures that the entire supply chain can respond effectively, reducing risk and eliminating waste. A study by Ruhr-Universität Bochum -- "The Impact of e-business on the Organization of the German Automobile Supply Industry" -- found that e-business helped to reduce transaction costs and improved the efficiency of the most critical supply chain activities -- exchange of information and workflow.

Figures from the U.S. Census Bureau highlight the importance of e-commerce, particularly in the business-to-business sector, which accounted for 92 percent of e-commerce activity. The E-commerce Report showed that in 2008, e-commerce grew faster than total economic activity in three of the four sectors covered by the Bureau’s E-Stats report. Retailers’ e-commerce sales increased by 3.3 percent with a volume of $142 billion.

Many organizations have used e-business processes to transform the delivery of customer service. Facilities, such as online ordering, self-service technical support and community forums, have improved service quality and reduced costs.

Organizations in many sectors face new forms of competition from businesses that utilize e-business processes to offer customers a high-quality service at lower cost than established businesses. In the financial sector, for example, a study by Bruce Perrott of the University of Technology, Sydney, Australia, found that e-business was transforming the structure of the banking industry with the emergence of non-traditional competitors, such as retailers or other financial institutions.