Business-to-Business on the Internet:
Back for Round Two

 

By Mary J. Cronin, Ph.D.
Professor of Management
Boston College
Strategic adviser of Mainspring Communications USA

Edition for portuguese EXPRESSO/Copyright Expresso/XXI translation
Translation published 4 October 1997 suplement XXI
Edition on line Copyright Janela na Web

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Long before analyst reports and electronic commerce surveys started predicting a multi-billion dollar bonanza of business-to-business transactions on the Web, back even before the Web was commonplace, savvy network managers knew that you could save time and sometimes make money by communicating with vendors and customers on the Internet. If you worked in a big company, the Net provided a fast, economical e-mail channel to systems and support services, software upgrades and bug fixes. If your small company was trying to sell its services, using an Internet connection for customer support could put you in the same ball park as the major league players. No one expected these connections to replace EDI one day, and they didn't have a catchy name like "extranet" but they did facilitate lots of nitty gritty commercial interactions.

Now that the Internet has elbowed its way into marketing, sales, internal information management, and every other aspect of business, higher expectations for explicit cost savings and growth opportunities in the business-to-business space are clearly in order. The current wave of enthusiasm for setting up extranets reflects the maturation of Internet technology and security solutions on the one hand and the momentum of applications that yield a significant return on investment on the other. Consumer readiness for buying on the Web is still in question, but many companies are ready to embrace electronic commerce primarily to streamline their interactions with each other. A quick look at the numbers makes it obvious that this is not a passing fad. Forecast of consumer-based Web commerce by the year 2000 range from $4 billion to $10 billion in transaction value, while business-to-business Web commerce projections range all the way up to a hefty $150 billion according to a May 1997 Economist Survey of Electronic Commerce. Clearly buying books and cds online will be a pretty small tail on the extranet dog for years to come.

Market size aside, there are compelling reasons for companies to take extranet development seriously. As it has from the start, the Internet provides multiple opportunities for driving down the cost of doing business while improving the speed, flexibility, and quality of commercial interactions. Extranet deployment today tends to fall into a variety of categories: