World Telecommunication Day 1999 |
Using telecommunications for business in today's world means using the Internet - not just the Web and e-mail, the best-known ways of sending and receiving information over the global ''network of networks,'' but also voice communications, access to software applications and much more.
Electronic commerce - on-line sales to individual consumers - has attracted the most media attention, but Internet use within and among companies is having a much bigger impact on overall business trends. According to Forrester Research, business-to-business commerce on the Internet was worth $48 billion last year, while e-commerce generated $8 billion.
The advantages of going on-line are manifest. Establishing Internet links with customers and suppliers spawns significant cost reductions and gains in time-to-market.
According to a recent report by International Data Corp. (IDC), corporate Internet spending can only be described as frantic.
Spending frenzy
When you add up all that is being spent on developing Web infrastructure - including external spending on hardware, software and services, as well as spending on the salaries and overhead of Web development and management teams - the total will approach $85 billion in the United States alone this year. The sum is expected to grow to well over $200 billion by 2003.
IDC estimates that manufacturing companies will spend about $24 billion in Internet development this year, financial services $16 billion, on-line media and communications $10.7 billion and retail $6.2 billion
Across the board, companies are using the Internet to enhance and modify the way they do business. For example, Visteon Automotive Systems staged its first on-line bidding session last August to award nearly $150 million in circuit-board business to suppliers.
For four and a half hours, prequalified suppliers were invited to bid on-line to provide Visteon with the latest printed wiring board technology. Suppliers accessed the bidding site via a standard Web browser and a password. Once they were on-line, they could see the prices being floated for a particular commodity and what company they were bidding against. In the future, Visteon will use its electronic procurement strategy for early sourcing target agreements, on-line requests for quotes and design contests.
Bricks and bytes
Retail giant Wal-Mart Stores Inc. uses NCR Corp.'s Retail Link on-line system to give suppliers access to sales, inventory and shipping information about their products sold at Wal-Mart and Sam's Club outlets. Wal-Mart's ''data warehouse'' receives detailed information on each item sold in each store - some 8.4 million updates every minute during peak times. More than 7,000 suppliers can access the warehouse via Retail Link and get information on what is selling in each of the retailer's more than 2,800 locations.
Mobil Corp. (which is merging with Exxon Corp.) now uses the Internet to deliver used-oil analysis information to ship managers - which allows them to make their fleet maintenance programs more efficient and cost effective - through a program called PFA Inter-Link. Used-oil analysis tests the condition of shipboard oil as a way of monitoring the mechanical status of engines and other onboard systems to pinpoint the need for unscheduled maintenance and even predict costly breakdowns, in much the same way as doctors test blood to monitor the health of the human body.
''The Internet can seem intimidating, but it's nothing more than a global pipeline,'' says Michele Marakovits, marine technical adviser of Mobil International Aviation and Marine Sales. ''It's changing the way industries conduct business. For the marine industry, with its far-flung ships moving across oceans, it offers opportunities to gather information quickly, efficiently and cost-effectively.''
''The IT-based communications properties of a vehicle will soon be at least as important as, for example, its cargo capacity or fuel consumption,'' says Hakan Samuelsson, executive vice president and chief technical officer at Scania AB, a Swedish vehicle manufacturer. To this end, Scania is working with LM Ericsson AB to develop wireless Internet solutions for the transport industry.
Corporate Europe is lagging behind the United States in developing electronic commerce applications. At a Gartner Group conference on Internet and electronic commerce in Europe earlier this year, experts predicted that by 2001, only 30 percent of companies in Europe will have included e-commerce strategies into their operating principles.
According to the Gartner Group, by 2001, more than 80 percent of leading business sites on the Internet will belong to American companies. Alex Drobik, the group's research director, says that while 54 percent of chief executive officers questioned this year at the annual World Economic Forum in Switzerland agreed that e-commerce would significantly impact or transform their industry, the great majority had not gone beyond ''experimental'' use of e-commerce.
Julia Clerk