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TheStrategicChallengesofE-commerceIntroduction11thCenturyEuropesawtheemergenceofcredit-basedbankingsystemsandfinancialinstrumentssuchasbillsofexchange.Theseconceptsremainwithus,intheirmodifiedform,tothisday(Chown,1994).Theyunderpinallmodernformsofcommerce.Thearrivalofinformationtechnology(computersandtelecommunications)hasraisedtheprospectofradicalchangetothistraditionalmodel.TheriseoftheInternet(electroniccommerce),sincetheadventoftheWorldWideWeb,hasprovidedaneasytousecommunicationchannelforbusinessestocontactcurrentandpotentialcustomers.TheemergenceoftheInternetasageneralcommunicationchannelhasalsogivenrisetothepossibilityofwidespreadelectroniccommerce.Eventhoughthereisstillmuchdebaterelatingtoelectronicpaymentforcommercialactivities,thisisclearlyanareaofgrowth.ItisdifficulttosayhowlargetheInternetis.Hoffman&Novak(1996)quoteanumberofsurveys(O'Reilly,FIND/SVP,TimesMirrorandCommerceNet)whichsuggestthatthereareatleast10millionInternetusersintheUnitedStatesalone.Thenumberofcomputers(hosts)connectedtotheInternettopped9.47million(NetworkWizards,1996)asofJanuary1996.Notethatasinglehostsupportsanywherefromasingleuserto,insomecases,thousandsofusers.AsofMarch21,1996,24,347firmswerelistedinOpenMarket's(1996)directoryofCommercialServicesontheNet,andtherewere54,800entriesintheCompaniesdirectoryoftheYahooGuideto(Yahoo,1996),withthetotalnumberofWebsitesdoublingapproximatelyeverytwomonths.JimClarke,thechairmanofNetscape,estimatedtheInternethas40millionusersin1995withgrowthat8%permonth(Clarke,1995).TheInternetisonlyoneaspectoftechnology.Businessesrequireinformationandsupportingsystems(processes)tohandlethedata-overtimethesesystemshavebecomecomputerised(IT).Moderninformationtechnologycanbothsupporttheprocessesandhelpcaptureusefulinformationfortheenterprise.Thesetechnologiesinclude:1.Organizationalsupportsystems,suchasworkflowandgroupware-makingbusinessesmoreefficient.2.Customercontactdatabases-helpingcaptureinformationaboutcustomersandfacilitatenewmethodsofmarketing.3.Electronicpaymentsystemsforgoodsandservices-theseareemerging,althoughthemajorityofpaymentsarestillbasedonrelativelyexpensivetraditionalchequeclearance.Collectivelyandindividually,theseareaswillcontributetomajorchangesinthewayacompanyconductsitsbusiness.EnixhavecoinedthetermWorkwaretodescribethecombinationofthesetechnologies.Figure1-TheemergenceofElectronicCommercewillbeunderpinnedbythreekeycomponentsHowever,thereisstillwidespreadmisunderstandingonthevalueoforganisationalsupporttechnology.Arecentsurveyof437largeenterprisesbyresearchcompanyXephon(1996)indicatedthatanastonishingproportion(44%)hadnoimmediateintentionofintroducingmoderninformationhandlingsystems(GroupwarewasdefinedbyXephonasLotusNotes,MicrosoftExchangeandNovellGroupWise).Ofthese,65%saidtheywereunsurewhatthesetechnologiescoulddeliver.Fromthesestatistics,itisclearmanyorganisationsarestillscepticalaboutthebenefitsoftechnology.Theefficientcollection,utilisation,handling,storageanddisseminationofinformationisavitalcomponentofcorporatesuccessinthemodernbusinessworld.However,thegatheringanduseofinformationmusttakeintoaccountissuesofprivacyandsecurity.ArecentfeatureintheFinancialTimes(1996)notedthat…inordertothriveinthe1990s,financialservicesorganisationsareasmuchinthebusinessofmanagingandmanipulatinginformationasmanagingandmakingmoney.Furthermore,theinterestshownintopicssuchasTQMandBPRhasdemonstratedtheimportanceofprocessesasafundamentalbuildingblock.Inevitablyafewsavvyorganizationsineachsectorwillutiliseallthreecomponentstochangetheirmarketordevelopnewmarkets.Thosewhodonotadaptquicklytothenewwaysofworkingarelikelytobedisadvantagedastheirstrategiesbecomeredundant.Allbusinessesshouldinvestigatetheimplicationsofthesetechnologiesforthemandthemarketswithinwhichtheyoperate.MarketingChampy,BudayandNohria(1996)arguethattheriseofelectroniccommerceandthechangingconsumerprocessesbroughtaboutthroughelectroniccommunitiesarelikelytoleadtoanewwaveofreengineering,mergersandacquisitions.Moreover,organizationsmayexpandintonewbusinessareas,takingonrolesunforeseenpriortotheriseoftheWeb.Forexample:amagazinepublisher,CondNaste,hasmovedintothetravelbusiness;BillGatesisnowanelectronicrealestateagent;andarecruitmentadvertisingagency,BernardHodes,hasnowbecomeanelectronicrecruitmentcompany.Theemergenceofelectroniccommercewillsignificantlyimpactwhatwecurrentlycall‘marketing’.Clearly,theappearanceofelectroniccommunities(ArmstrongandHagel,1996)impliesthatmarketingprofessionalsmustexpandtheirhorizonsastheadventofthistechnologywillthreatenexistingchannelsofbusiness.Thoseinvolvedinmarketingneedtounderstandthefullrangeofproductsandservicesrequiredbytheelectroniccommunity.Theymustlearntotakeadvantageofthetechnologythatallowscustomerstomoveseamlesslyfrominformationgatheringtocompletionofatransaction,interactingwiththevariousprovidersofproductsandservicesasnecessary.Anumberofinterestingquestionsareimplied:1.Whatkindofinformationisavailableforcollection?Isitappropriatetogatherthisinformationandforwhatshoulditbeused?2.Areinformationsystem