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Electronic Commerce, Internet and Cultural Changes

By Mario deSantis, July 26, 1998

In the last two weeks, the Star Phoenix of Saskatoon, published articles reporting that racism is rampant in Saskatchewan. Aboriginal people make up 80% of the jail population and the related causes have been attributed to poor social and economic conditions, oppressive government policies and insensitive and inaccessible justice system. I am not going to take part in the current debate between John White, Deputy Minister of Justice, and John Hylton, Executive Director of the Canadian Mental Health Association, in regard to the present state of racism in Saskatchewan.

My perception is that our main social problem is not in being racist but in our resistance to change outdated mental models. Many years ago, I took a health administration program at the University of Saskatchewan, and I recall that in my very first meeting with my mentor I was told about the importance of power. I remember of being told of the different sources of powers: power of hierarchical position, power of religious affiliation, power of professional affiliation, power of memberships in community organizations, power of political relationships, power of knowledge, power of education, and so on. The bottom line was that we were educated to accept the status quo, to do what we were told to do, and not to think!

I still remember of one health care leader who prided himself of his achieved power by saying that "...education is not needed to be successful...." He was right, today he is the CEO of a Saskatchewan health care district board! By the way, I am still laughing--sadly--in recalling that this same health care leader implemented computerized word processing at his health facility through the purchase of a main frame computer in the early 90's! This despicable attitude versus citizenship, education and spending of taxpayer money was not an isolated incident, it was the result of our outdated mental model to see the role of power as the centre of our lives.

As a father, I want my two sons, James and Eric, to be educated, free thinkers and happy, and you know what I tell them every time I see them?.. I tell them "...earn your freedom through education,... and learn and practise the WWW..." As we enter the knowledge economy, education becomes life itself, and the learning of the WWW allows us to appreciate a new way of behaving and thinking, which is democratic, dynamic, live, communicative, global and which transcends race, religion, time and geography. To hell with all the definitions and sources of power, today we live in another age, we have the Internet and with it the opportunity to do business and express our individual voices!

I am currently planning the publishing of my new "Web Site/Page" and it is therefore a pleasure for me to entertain few thoughts about "E-Commerce" or about doing business with the Internet. The globalization of our economy and the application of the Internet related technologies have dramatically reduced the barriers to enter new markets and have altered for ever the way we are going to do business. The changes are taking place in every industry and it is affecting any dimensional business, big and small. The changes which are taking place are not only transactional changes but they contribute to the development of a new economy characterized by a different corporate culture, and by a new level of intimacy between businesses, suppliers, customers and governments. We are defining the new "InterNet value added product" (an impromptu new invented economic term) and a new value economic chain where we are cutting out the superfluous intermediaries to become customers of each other.

In order to have a tangible appreciation of the changes we are currently experiencing I am providing some future trends and examples of how some leading companies are redefining business and the economic value chain.

"We restructured our entire company around the idea of connectivity," says Rob Rodin, CEO and president of Marshall Industries Inc., a $1.3 billion electronic components distributor in El Monte, Calif. "The Internet is not the end-all, but connectivity is." Among the many changes, Marshall scrapped the traditional sales and management incentives in favour of one reward criteria: overall organizational profits. "...many organizations were set up for business the way it was done 40 years ago," says Rodin. "Internet technology is there to deliver what your customers want-timeliness, accuracy, lower cost. You can't let your organizational structure stand in the way."

Once electronic business takes hold, enthusiasm for it can be infectious. "When you first get a new technology, you still do what you're comfortable with, but now we're starting to see more out-of-the-box thinking," says Sue Unger, executive director of IS at Chrysler Corp. "People see one success and start asking, `What else can we do that we couldn't do before?' With the Internet, nothing is sacred."

Companies that have embraced E-Commerce have undergone cultural changes by supporting unconventional thinking, flattening their business organizations, and challenging existing structures and relationships. E-Commerce is not fundamentally about the technology, it's about customers, costs, profits, and business change. "E-Commerce walks straight into the office, talking to customers, partners, regulators," says Glover Ferguson, co-director of an 18-month-old E-commerce program at Andersen Consulting, "This is not some back-office `dweeb technology'; this is the real enchilada."

The economic need to become customers of each other, and therefore interconnect businesses with their suppliers and customers, has materialized with the design and implementation of Web-based applications. Many companies are using Web applications that link into their manufacturing, financial and marketing functions. Some companies, such as Wal-Mart, use Web applications to share just in time demand forecasts with their suppliers and therefore cut inventories and increase stock performance. A year ago, Boeing launched the PART (Part Analysis and Requirements Tracking) Page, a secure Web site that its customers can use to order spare parts. The three automakers are lowering their competitive barriers by sharing the Automotive Network Exchange (ANX), an Internet technology system which will establish standards of communication between suppliers and manufacturers. Other companies, including Fruit of the Loom, Amazon.com and Barnes and Nobles are bypassing altogether the traditional distribution system and are selling their products directly to retailers and customers. For quite sometime banks and brokerage firms have implemented electronic payments, on line investments and web stock trading; now consumers at large will be able to orderpizzas on-line from Pizza Hut, and this widespread trend to on-line shopping will receive a critical boost as the technologies of video-conferencing and video-mail are going to be implemented.

In conclusion, sharing of information is becoming the most important feature within and outside a business. We are establishing partnerships with suppliers, customers, competitors and governments. This convergence of interest among different businesses is also realizing through the establishment of Internet communities, electronic shopping malls, and it is further enhanced by the emergence of the ESP Enterprise Service Providers, (a play off of ISP, or Internet service provider), which are building their company's information architecture around Web-based technologies. Bill Raduchel, chief strategy officer at Sun says "In five years... customers, suppliers, partners and employees will be on the same network..."

REFERENCES AND READINGS

The Star Phoenix, "Racism rampant in Sask.", by Trevor Sutter, July 15, 1998

INFORMATION WEEK ON LINE, "More Than Electronic Commerce: Leading-edge companies are leveraging IT to redefine business models, change corporate cultures, and improve customer relations", by Clinton Wilder, Bruce Caldwell, and Gregory Dalton. December 15, 1997

@ComputerWorld, "Where there is a web there is a way" by Alan Alper. July 13, 1998

PC Week, "Forging Flexible Links", by Jeff Moad, PC Week, September 1997

http://www.internetworld.com/daily/stats/1998/06/0503-video.html, [June 5, 1998] From ActivMedia's study of "The Evolving Online Consumer,"

http://www.internetnews.com/ec-news/1998/07/2403-pizza.html, "Pizza Hut to Offer Online Takeout and Delivery Orders" [July 24, 1998]

McDonnell, John. (Ed.) "@BRINT Is One Useful Research Site", infoAlert (The Economics Press), 100, April 1997, pp. 3.

http://e-comm.internet.com/solutions/swguide/esoftware.html, "A Guide to E-Commerce Software", by Nelson King