Doing Business in the Wired World

56 Computer E lectronic commerce—the application of information technology to support business processes and the exchange of goods and ser-vices—promises to radically transform business. Since 1993, use of the Internet and World Wide Web has exploded, spurred on by dramatically cheaper, higher performance hardware and software. This creates a global " infostructure " to support commerce. Today the Internet provides an inexpensive and information-rich, shared, multimedia network interconnecting more than 50 million users and 16 million servers 1 in more than 140 countries. Today in New York, costs to publish on this infostructure are as low as $3,000 for server hardware and software, and $650 per month for a shared T1 connection. Individual dial-up access costs around $15 per month and continues to fall. This and the Internet's usefulness will capture an estimated 377 million users by 2000. 2 The 1997 Nielsen-CommerceNet 3 survey of Internet demographics estimated 50 million people over the age of sixteen in the US and Canada had Internet access. About 37 million had access to the Web. Both the Nielsen and Hermes 4 project surveys found Internet users are well educated and afflu-ent—ideal targets for marketing. Survey respondents also said they gathered purchase-related information over the Internet and that it was more useful and effective than direct mail. Interestingly, an estimated 5.6 million users have already purchased products over the Internet, and this method was especially attractive to those who valued convenience more than price. Thus the Internet is rapidly becoming the largest interactive multime-dia infrastructure for marketing and is supplanting some traditional media. My research shows that firms use the Internet to improve enterprise information and workflows, redefine the way they communicate with customers, and leverage global resources. Companies like Cisco Systems, Amazon, Onsale, BidnAsk, and Virtual Vineyards are pioneering new business models with e-commerce. Internet technologies have dramatically lowered information publishing and dissemination costs within a firm. For example, Morgan Stanley, a major New York-based investment bank, uses the Web for access to routine information or to electronically route key reports. An analysis estimated that eliminating paper broadcasting processes could save the firm between $300,000 and $700,000 annually for each process. In the first 18 months of Web usage, the company documented over $1 million in annual savings, and nearly all of the company's 10,000 employees access its server on a weekly or daily basis. This example quantifies the savings provided by adopting …