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January 31, 2000

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Putting The "E" Back In Business
It's time to realize that all business will soon be online

By Clinton Wilder and Marianne Kolbasuk McGee

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ary Hargreaves knew the world had changed when he learned that dealers had ordered tires online on Christmas Day. "I never thought I'd see that," says Hargreaves, manager of E-commerce for the North American tire business unit of Goodyear Tire & Rubber Co. In the last three to four months, Hargreaves says, he's seen online participation on the part of the company's dealers increase dramatically. "Dealers really feel comfortable with it," he says.

So much so that by the middle of next year, Goodyear plans to have its entire dealer channel doing business on its extranet, Xplor; 1,200 independent Goodyear dealers and 800 company-owned outlets are already on it, and the remaining 1,000 independents will be online by the end of June. In the 12 months starting in July, the Akron, Ohio, company will add about 1,200 dealers of tires made by Kelly-Springfield and Dunlop, two companies acquired by Goodyear. Anticipating that, Goodyear will start cutting back all of its paper mailings to dealers this summer. "That was our vision back in 1996, but we really weren't sure of the timing," Hargreaves says. "Now we're there. It would be hard to fathom doing business any other way."

That said, maybe it's time to drop the "E" from E-business and acknowledge that soon--sooner than anyone expected--all business, or at least a part of every business process, will be conducted online. Certainly, the proliferation of "E" initiatives represents a profound and irrevocable shift in the way business is conducted. The rate of Web-enablement of business processes, while virtually impossible to quantify at a macroeconomic level, is growing tremendously, even in the most traditional industries. Is it a gross exaggeration to think of E-business and business as one and the same?

No, analysts and observers say. "This is Manifest Destiny," says Yobie Benjamin, Ernst & Young's chief global strategist for E-commerce, who works with clients such as American Express, Coca-Cola, General Motors, Johnson & Johnson, and Merrill Lynch. "At the end of the day, any type of commerce, no matter how brick-and-mortar you are, requires a transaction--and all transactions are going to be done online."

Clearly, we're not there yet. Despite the dizzying growth rates of E-commerce, the percentage of total sales conducted online today, even in leading E-commerce sectors such as books and music, is in the single digits. And wider questions remain: Are all business processes better off being online? What's the right mix of E-business and traditional business methods? Has channel conflict been adequately addressed?

Still, the acceptance of the Internet is propelling business toward a stage in which every process or transaction--from product development to supplier negotiations to volume sales--will use online communication in some form. "E-business will be standard operating procedure for standard business practices," says Forrester Research E-commerce director Laurie Orlov. "In about three years, everything will lose its 'E' and it will just be business."

Like many waves of IT innovation before it--but far more quickly--E-business has made the leap from competitive advantage to competitive requirement. "Timeless, 24-by-7 access to information is becoming the standard way of doing business," says Ed Kilroy, general manager of E-commerce for IBM's software group. "Companies' business partners are demanding it, and just as important, their competitors are driving them to provide it."

chart For example, health-services provider UnitedHealth Group Corp. in Minneapolis has transformed its approach to medical procedure approvals. Instead of having a service representative make a phone call to a customer to check on coverage--a time-consuming process (average call length: 20 minutes) with an approval rate of 99%--UnitedHealth now receives the data online and checks for irregularities later. Rather than bogging down the process in an effort to catch the small number of anomalies, UnitedHealth accelerates approvals while reducing employee and customer hassles.

There are a number of areas of business that lend themselves readily to Web processes. "What makes the most sense for E-business are processes that are very paper-based and transaction-intensive--and initiatives that make doing business more convenient for your customers," says Lisa Richard, VP of strategic business planning at Toshiba America Business Solutions in Irvine, Calif. "If customers want to be able to access certain information or place an order 24 hours a day, you should build the capability to provide that."

Toshiba has followed its successful FYI dealer-ordering extranet with Service Information System, an online application that schedules technical training sessions for dealers' technicians and lets dealers keep track of which technicians have learned which skills. In May, Toshiba plans to launch a dealer-accessible Oracle8i database with all the company's product manuals and technical data.

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