E-Business today and tomorrow

What Is E-Business?
Hundreds of companies claiming to offer the same thing - software that will turn your company from a business into an e-business. But wait a minute. Look closer at those advertisments. One company makes a piece of software that allows customer services representatives to chat to customers online. Another makes a piece of software that lets employees buy office supplies on the web. This one makes an enterprise portal. That one sells firewalls.

Sure, all of these things are elements of what makes a successful e-business. But buying any one of them won't turn your business into an e-business. Buying all of them - and others - might, but it wouldn't happen overnight. It wouldn't even happen over a year, because once you'd bought the bits of software, you would then have to make them work together. That takes a long time, and it costs a lot of money. And by the time it was finished, you can guarantee that at least one of the companies whose software you'd bought would have come out with a new version, which would then have to be made to fit with all the other pieces all over again. It would be a complex, mutant system, which would never be finished and never quite work properly.

The term e-business has been maligned, misunderstood and misappropriated over the last few years. A firewall isn't e-business, neither is an online help center or an e-commerce storefront. E-business is the complete reorientation of a company's business - both its internal and external operations - around the internet. It's a simple idea, but people keep trying to make it complicated. What can be simpler than having one single data centre running one complete and integrated set of business applications, which everyone can access through a browser? No more incompatible software packages, no more isolated pools of data, no need to install a new data centre here, a new departmental server there, no more uncontrollable IT admin costs.

Save, Don't Spend
E-business is about saving money, not spending it. Buy all the different bits of software from the magazine advertisers, and you generally end up spending 80% of your IT budget on integrating all the pieces together. This is not what e-business is about. It's about simplifying and centralising IT operations for more efficient business. It's no secret that Oracle saved $1bn internally by doing just this, but we've seen plenty of other organisations doing the same. The UK National Health Service, for example, is currently replacing a staggering 67 separate personnel and payroll systems with one single system that will manage all of its 1.2 million employees . This means that the NHS will know for the first time where all of its employees are and what they do. The Department of Health estimates that the new system will save £400m, which can be channelled straight into frontline patient care. When your data is all locked up in little parcels here and there, distributed throughout your company, not only is it difficult and time-consuming to get a global perspective, it's also a very big waste of money. Centralising IT systems on an e-business model can save huge sums that can be much better spent elsewhere.

Automated Economies
That's the beauty of e-business inside the enterprise. But what we're seeing now is companies extending e-business outside of their own operations to encompass their customers, their partners, their suppliers, their suppliers' suppliers and so on - what you could call a company's whole economy. We're seeing huge long chains of business processes being automated so everything flows automatically into everything else, smoothly, quickly and accurately. A customer places an order on the web site, it transfers automatically into the order entry system, into accounts for invoicing and into the warehouse management system for fulfilment. At this point it can be published on the company's external e-marketplace for suppliers to view along with other orders in the pipeline and plan their inventory accordingly, it may be put up for auction for suppliers to bid to supply components or for partners to take on the service contract. If it is a custom product, the company can collaborate with suppliers on the e-marketplace to design it using an internet-enabled CADD application.

Supply Chain Collaboration
The idea of the e-marketplace as a hub for collaboration in the extended enterprise has come under a lot of media fire recently, but at Oracle we are actually seeing our Exchange customers enjoying great success. In the Netherlands, for example, there's an e-marketplace called Proclare that was initially set up as an internal site for employees of the leading telecoms operator KPN to source office supplies. Now Proclare is a separate, profitable company with several large corporates using the site to buy everything from pens to furniture to contract IT staff. Proclare turns over EUR1.5bn annually, and in the process it saves its customers around 15% on procurement costs by offering them a complete service that manages the whole procurement process from sourcing to payment. The key to success here is total integration - a single, integrated, internet-enabled software system that manages every aspect of the procurement process. The fewer disparate components that comprise such a system, the sooner it is going to be up and running, and the better it is going to work. That's not rocket science, just common sense.

Software Outsourcing - The Final Model of Computing
While the basic tenets of e-business - automated processes, business transparency, centralised operations, single instances of software - will remain, the benefits will increase with further technological developments. For example, wireless access to existing e-business applications and e-marketplaces will further increase productivity, timeliness and efficiency. The real benefits, though, will come with the delivery of software as an online service. Why go through the pain and expense of buying, installing and managing hardware and software in-house, when you can pay a company a monthly fee to manage it for you? For your monthly fee you always have the latest software version, it is managed and supported by the best professionals in the business, and it's stored on top-class servers in a secure data centre. Your employees access the same e-business applications through the same browser - it's just that the software is no longer actually on your premises. And the cost of installing and managing it is no longer on your books. I believe that once the natural human resistance to change is overcome, hosting will become the new paradigm of business computing.

In short, e-business is a holistic approach, involving not just everyone within the enterprise, but also everyone who is involved with it at any point. Turning your extended enterprise into a lean, efficient, transparent business machine, before the competition does, should be the goal of any e-business strategy. That's not something that you're going to achieve by buying some company's e-commerce storefront and trying to stick it on to some other company's supply chain management software and someone else's order management system. That's horribly complex computing, Frankenstein computing. At Oracle, driving out the complexity in our IT systems helped us save $1bn in a single year. How much you save will be up to you.