To understand the underlying concepts that are the foundation of the B2B commerce effort is not for the faint of heart; one may not be satisfied with the status quo or quick to dismiss change in order to grasp the potential of this technology. Technology is no longer an afterthought in forming business strategy but rather the cause and driver.

Electronic data exchange has posed the most significant challenge to the business model since the advent of computing itself. Although the computer has increased business speed, it has not fundamentally altered the business foundation as the internet has. If any entity in the distribution chain begins doing business electronically, companies up and down the chain must follow suit or risk being substituted or excluded from the chain's transactions. The majority of business executives are too busy dealing with, and reacting to, current operational problems to think of the future. Time is tight; resources are tighter. The executives who see the future and the coming technological changes, but choose to ignore their importance, are also at risk. In order for executives to operate successfully in the new age of e-business, business itself must be viewed and executed differently.

Unfortunately, too many companies develop a pattern of reasoning, learning and attempting to innovate only in their own comfort zones. It is as if we view the coming change and ask, "What will my new office space look like?" when instead we should ask, "Will the building be standing once the quake passes?" Never mind what did or did not work in the past. The playing field has changed and is no longer level.

A Brief History

For many years large businesses have used electronic commerce to conduct their business-to-business transactions. Electronic data interchange (EDI) on private networks began in the 1960's, and banks have been using dedicated networks for electronic funds transfer (EFT) almost as long.

The rise of the internet and its increased acceptance and popularity has allowed electronic commerce to become available to individual consumers and business of all sizes. However, the impact of web based e-commerce has happened in phases

In its first phase (1994-1997), e-commerce was about presence; having a website was important, but content and functionality were secondary. Businesses just wanted something on the internet. People were not certain why they were doing it or where it was going to go, but they knew that they had to have an online presence. Remember the urgency of registering your own Domain name? Aren't you happy you did it while you still could?

The second phase (1997-2000) of e-commerce was about transactions; buying and selling over digital media. The focus in this phase was on order flow and gross revenue. Some of that was the matching of buyers and sellers who never would have found each other in the past. Some of it was simply taking transactions that would have gone through paper purchase orders and saying that this business was done on the internet. But in this phase, the announcements were all about orders at any cost; why-sell-it-when-you-can-give-it-away business models. As a result, many of the first movers in this phase are gasping, have gasped their last gasp, or are sinking in a sea of red ink. Remember HomeGrocer.com, Value America, and DotBomb.com? Hopefully not too many of those companies were your clients when they closed their doors.

Today, e-commerce has entered the third phase (2000+), with a focus on how the internet can impact profitability. Profitability is not about increasing gross revenues but rather increasing gross margins. This new phase is called e-business, and it includes all the applications and processes enabling a company to service a business transaction. In addition to encompassing e-commerce, e-business includes both front and back office applications that form the core engine for modern business

Thus, e-business is not just about e-commerce transactions or about buying and selling over the internet; it's the overall strategy of redefining old business models, with the aid of technology, to maximize customer value and profits.

To paraphrase Business Week,

"Forget B2B or B2C, business is about P2P -- path to profitability."

Everyday, more and more individuals and companies are linked electronically. This digital binding of business partners in a low-cost way is as significant a technological advance as the invention of the steam engine, electric power generation, telephone or the assembly line. The rules of the business game are being rewritten to include the rules of technology.