Introduction
E-business is the newest trend in the high-tech world of business and in the age of intense of globalization. It is a term that applies to a business using the virtual world of computers and the Internet.
E-business uses several applications in order to be effective like enterprise resource planning (ERP), the Internet or its private version, the Intranet.
First, we define what e-business and e-commerce are. In detailing the history and origin of e-business, Li (2007) said that IBM was the first to mention the word e-business in its advertising program back in the 1990s.
E-business, according to the IBM definition, refers to business processes using the Internet as a tool or as a way to conduct business. E-commerce refers to businesses conducted by firms with the use of electronic tools such as computers and the Internet.
But in comparing e-commerce and e-business, we can say that the latter has a much broader definition in that its scope includes buying and selling, collaborating or cooperating with partners through the internet, or such other electronic processes.
It may also include transactions inside and outside the organization. Most organizations now use tools or computer software that connects the internal departments, or organizations to other organizations. (Li, 2007, p. 9)
The application of Information Technology is another process in e-business. Industries use computer software in their processes and in conducting business. Organizations conduct business through the internet and with the application of a software.
Businesses conducted through the Internet utilizing emails, chat, virtual shopping carts, is ebusiness (Kurtz, 2009, p. 114; Boone and Kurtz, 2009, p. 215). Rosen (2002) include the word ‘integration’ of products over internet.
The question that this essay will answer is: what factors led to the growth of ebusiness? There are underlying facts over this question.
For example, like in any other business application, environmental factors have to be considered, as in the security, privacy, legal and ethical issues. One important factor is trust, and a follow up question is this: is it instrumental to the growth of b2b ebusiness?
The question can be simplified as: can b2b ebusiness grow with trust?
The Rise and Growth of E-business
Technological advancement and continuous innovations have motivated organizations and businesses to react to changes in the global competition. Organizations have to reorganize, reevaluate and reprogram outdated functions and activities, and realign them to the present trends for improvement and competition.
Personnel and field people, ordinary employees, including middle-level and top management have to refocus along the line of technological innovations. IT applications provide easy handling of strategic operations and other supervisory and managerial functions of the organization.
Changes in the system demand new ways to integrate functions in the organization. Successful system integration efforts provide competitive edge. Motivations to integrate revolve around technological issues and globalization.
Organizations however have limited options, and have to migrate to newer technologies. With enterprise resource planning (ERP), activities with corresponding data/information are made available to almost every function of the organization.
New products have been invented as a result of technological advances and new ways to produce them. The many changes in the system demand new ways to integrate the functions in the organization.
The role of IT has become much more dominant from both strategic and operational perspectives. (Jenson and Johnson, 2000, p. 29)
The popularity of ebusiness started with the emergence of IT applications such as the ERP. Enterprise resource planning started around the 1960s at the onset of technological advances and new systems used by industries in their inventory.
During the 1970s, technological innovations were introduced with automation in the production and inventory, scheduling and planning.
O’Gorman (2004, pp. 22-25) traced the development of materials management techniques from the industrial revolution to present day ERP systems, by examining the role and function of the more significant materials and inventory control techniques.
There were initial attempts at optimizing industrial activities and the need for materials control.
During its early stages, ERP was used for manufacturing and production systems, while providing weak support in “less data-intensive” areas such as supply chain planning, customer management, marketing, and sales (Chen, 2001, as cited in Sammon and Adam, 2004, p. 7).
It then expanded to include “back-office” functions, such as operations, logistics, finance, and human resources, and “nontransaction-based systems (Davenport, 1998, and Chen, 2001, as cited in Sammon and Adam, 2004, p. 7).
The inclusions result from the emergence of Supply Chain Optimization (SCO), or SCM and CRM strategies and systems.
E-business has emerged as the primary tool in conducting business while the traditional one has taken a back step further and is confined to smaller roles of delivering products and services. E-business can be conducted anywhere and whenever; this is the age of the Internet and the Information Revolution.
In e-business, information is easily shared, and even in the remotest areas of the globe business can be conducted, either through a computer with internet connection, or through one’s cell phones that can communicated to a desktop computer.
Wifi laptops can provide easy access to the vast information via the internet. Other means of conducting ebusiness include groupware packages, the EDI, telecommuting, and many others. (Kalakota and Robinson, 1999, p. xvi)
Business-to-business (or b2b) transactions are an effective means to provide fast-paced supply chain. The network produced out of the different systems can be called the “eSociety”. (Graham Peace, 2002, p. 42)
There have been reports of growth in ebusiness particularly in IT spending. Businesses are spending more on website infrastructure (IDC, 2001). This is because of the growth in e-business firms are using in their supply chain to deliver products and services to customers with speed and accuracy.
Most businesses also use this in b2b transactions. Another new innovation is mobile transaction, using cell phones that connect or communicate to computers. Conducting business through the internet has enabled rapid growth in businesses. B2b is a business that needs fast and effective supply chain.
The Impact of E-business
Ethical Issues
The common practice of business firms nowadays is the installation and use of websites for businesses to interact with customers and other organizations or businesses.
This has been applicable to almost all businesses, whether large or small and whatever kind of business, product or service. In ebusiness, managers and employees communicate through the Internet, via chat or emails, and others through the use of cellular phones or mobile communication.
Enterprise Resource Planning (ERP) is an Information Technology tool applied in the different functions in an organization. ERP systems involve processes that begin with planning and installing the project team who embarks on a series of phases. There are various benefits for implementing ERP systems.
Advancement in technology is so fast and competition between organizations continues to be stiff. Organizations are struggling to integrate new systems, introduce different ways to survive, and acquire the latest strategy possible.
Successful system integration efforts have provided a competitive edge for businesses particularly in the supply chain. Through ERP and other integration tools using computer software, supply chain has been made faster and more effective.
The implementation of the ERP systems provided problems for organizations. There are the so-called ethical issues. Some problems were reported as abnormal.
Implementation is problematic for many organizations, despite the software’s potential and relevance for learning and company strategies. The implementing process involves several phases that have to be followed step by step and by a trained team of qualified staff.
The team has to be meticulous and must deviate from the standard settings provided by the supplier. The main business options revolve around the issue of compromise over fitting the system to the organization or vice versa. (Holland and Light, 2003, p. 1987)
One example is the case of Fox Meyer Drug, a multi-billion dollar drug company, who filed a multi-million dollar lawsuit in 1996 against SAP, the company that installed the ERP.
Fox Meyer went into bankruptcy but said that the cause of bankruptcy was the failure of the ERP system to deliver the necessary functions it was supposed to do for Fox Meyer. The case went dragged on for years, and so ethical issues linger on regarding the capability of ERP to provide benefits to its clients.
Another victim is Mobil Europe, and the case is because of wrong implementation of ERP. The company spent millions of dollars only to abandon it afterwards.
There were many other improved and successful companies that experienced problems as a result of their ERP projects that went problematic after a period of time. (Sammon and Adam, 2004, p. 2)
One of the reasons for the failure in using ERP may be because of long use of the software package. The software becomes more unserviceable after a period of time (Oliver and Romm, 2002, p. 47).
Some organizations report success and significant process gains in ERP implementations. However, others argue that ERP implementation is no easy task, while others have found out that implementation of ERP is disastrous for the organization. (Grabski et al, 2003, p. 1991)
Ebusiness is now commonly practiced by organizations, not only by for-profit organizations but by academic institutions. Popular and traditional universities have spent a large sum on ecommerce initiative.
Graduate and undergraduate programs are being offered in educational institutions providing millions of dollars in tuition revenue. (Graham Peace et al., 2002, p. 43)
Privacy
The main concern is privacy. At the onset, information technology was only used as an aid or tool in business, but now it is the mainframe because of the complexity and interconnectedness of businesses and organizations.
The Internet has connected or wired the world of computers, and there is not such safe website or database. Hackers and programmers with malicious intent will continue to find ways to penetrate. There is no ‘safe’ or ‘trusted’ network in organizations.
The ‘untrusted’ network which refers to the external connection of organizations will continue to expose the privacy of peoples and organizations. (Kelly Rainer and Cegielski, 2011, p. 83)
There are companies which collect information from website guests. Majority of the websites of business firms collect information from their customers.
There are complaints that you cannot really know how much of the personal information one has provided via the internet or other means using IT tools has been passed on to others in exchange for money or something. Sharing of information amongst organizations is not impossible.
Spam emails, which are hacked information, are appearing everywhere through everybody’s private email databases. In the information revolution, sharing of information is the most common occurrence. (Pride and Ferrell, 2009, p. 92)
Technologies such as iPod, iPhones, and other Mac products provide features called ‘recommenders’ or recommendations to consumers.
Consumers can have access to so many items on sale over the internet and recommender systems are installed to make the right choice or pick according to their taste after having provided personal information. This feature is invasion of privacy since personal information is shared to other databases.
Recommenders are intelligent systems which employ prediction techniques to determine what is and is not interesting by learning from the user and sometimes other users. The techniques used are information filtering, social filtering, item-filtering, etc. (Setten et al., 2004, p. 13)
Recommender systems are also used by Amazon.com when customers use their system to find books and other products. In spite of the recommenders’ usage and practicality to both consumer and business, there are negative sides to the sharing of information. (Weng et al, 2006, p. 32)
Trust
Trust is defined as “the factor that moderates the use of verifiable attributes to form beliefs about unverifiable attributes” (Konana et al. cited in Graham Peace, 2002, p. 46).
In traditional business, many of the so-called attributes of business can be verified; not in ebusiness.
In traditional exchanges, we conduct business face-to-face, or we meet people and business partners personally, or even through letter and telephone. When people go to a supermarket to buy goods and other personal needs, they can verify what they are buying.
In e-business, communications is being done through emails and Internet chat. The seller and the buyer meet in the virtual world. Trust is very important. B2b business which involves millions and millions of dollars prospers and grows with trust.
For two business firms to agree there has to be a level of trust. Tan and Thoen (1999 cited in Graham Peace, 2002, p. 45) argued that the elements of transaction trust consist of “trust in the other party and trust in the control mechanisms that are in place”.
Security Issues
A security issue is that with the rapid growth technology, it is now easier to steal or hack information. This can be done with just computer storage devices such as flash drives or USB. High-tech devices are available to ordinary individuals and organizations.
Cyber crime is one of the worst ethical and security issues that plagued the internet. This refers to illegal activities of peoples using the internet. There is one company website known as iDefense whose primary objective is to protect governments and top businesses in the United States.
Organized crime has taken over a crime network using the internet. This is a billion-dollar business composed of cyber criminals with the skill of computer hacking or software developing.
This criminal network has been earning hundreds of thousands of dollars, contrary to ordinary criminals who earn only a few hundreds or thousands of dollars.
Criminals of this sort have no base; they have no weapons and can be found anywhere in the world with a computer and an internet connection. (Kelly Rainer and Cegielski, 2011, p. 84)
Another security issue is a scenario known as ‘downstream liability’. This particular occurs between organizations using Information Systems that are attacked by criminals or skillful hackers.
For example, if Organization A’s software has been attacked and used to attacked another, say Organization B’s information system, under the law Organization B has the right to file for damages against Organization A.
Under the law, plaintiff B has to prove that A’s information systems had been used to attack B’s information systems. The rationale behind this law is that any organization has the duty to keep its information systems secure so that they cannot be used by criminals or hackers. (Kelly Rainer and Cegielski, 2011, p. 85)
Legal Issues
Privacy issues include the transfer of data and information without the consent or knowledge of persons or the authorities. There are many underlying legal issues in this context, especially when the transfer of information and data involve organizations and nation states.
For example, when the transfer of information and data involves satellites in space which are used in the retrieving information; the question is which country has jurisdiction over such cases.
Governments of countries should meet along these issues and discuss which has jurisdiction over such transfer of information. (Kelly Rainer and Cegielski, 2011, p. 83)
The United States and the European Union have somewhat the same privacy protection laws, although there are some slight differences.
There has been a move from both governments as to privacy approaches; this was called the “Safe Harbor” framework. This provides a regulation on the transfer of information and personal data of European citizens. (Kelly Rainer and Cegielski, 2011, p. 83)
Another legal issue is that government legislation, particularly in the United States, states that almost all types of information must be protected under the law. For example, the Gramm-Leach-Bliley Act provides that companies conducting business should provide consumers of their organization’s privacy policies.
The law further states that consumers should be provided with a way in which they can be protected in case they do not want their personal information be divulged to others, especially outside of the organization which holds the information.
Medical records and other health information of persons are also protected by a law known as the Health Insurance Portability and Accountability Act (HIPAA).
Analyzing E-Business with ERP
A research was conducted on the success of ebusiness application entitled TAM-based success modeling in ERP. Bueno and Salmeron (2008) argued that the ERP systems were complex tools which provided negative impacts to businesses; the negative impact was more pronounced on b2b application.
The paper focused on the various studies that identified the reasons why ERP was acceptable by different companies and organizations. TAM was application program to test the reliability of the ERP.
The researchers used critical success factors which identified top management support, communication, cooperation, training, and technological complexity.
The Technological Acceptance Model, as explained by Bueno and Salmeron (2008, p. 516) tested the user’s behavior toward the applied IT system, based on the ‘perceived usefulness’ (PU), ‘perceived ease of use’ (PEU), ‘attitude toward use’ (ATU) and ‘behavioral intention of use’.
These factors are further explained.
‘PU’ refers to the perceived belief of the user that he has improved his/her performance due the benefits brought about by the system, while ‘PEU’ refers to the user’s belief that he/she has exerted less effort in using the system.
TAM was considered an improved IT application. But it registered positive effects on the user’s behaviour. The results and findings of the study revealed the applicability of TAM in relation to the user’s acceptance of ERP systems. The factors enumerated all contributed to the success of ERP systems.
Potential users should be actively involved in the introduction of the ERP systems. Training is another important factor for this reduces the ERP’s complexity, while top management support is a key factor in the ERP system’s successful implementation.
Assessment of success in ERP systems can be measured in different dimensions, according to Markus et al (2003, p. 24):
- There was success because a new technology had been introduced and running successfully.
- There was success because of the benefits incurred economically, financially, and strategically.
- There was success because the operations had been running smoothly.
- Success was seen by the organization’s customers and stakeholders.
Furthermore, users have to accept the technology. An ERP system is being introduced to an organization; it is revolutionary, it replaces old methods, and old methods involve culture and the usual things people do in the organization.
A system that meets the needs of its users naturally generates system satisfaction. Likewise, a system that does not generate user satisfaction cannot provide positive results and may not be used at all. (Hosapple et al., 2005, p. 325)
Success in IT often depends on people’s point of view. Success in ERP systems often comes up once in a while. The definition and measurement of success are bring to light the perceptions of some organizations regarding the ebusiness application.
The people whose job is to implement ERP systems, like for example, the project managers, consultants, and other middle managers, often refer to the completion of the project plan as success itself.
But others who are in charge of adopting ERP systems and use them to achieve business results, define success as having done a job regardless of the success of the ebusiness as a whole. (Markus et al, 2003, p. 24)
Successes and failures in ebusiness can be attributed to many factors some of these can be considered perceptions or beliefs. However, it is noteworthy that these factors are not for real.
More specifically, failures can be attributed to the implementation and the planning process of the ERP systems. We have provided three models for implementation and they are almost similar in the implementation. Ebusiness is affected in the success or failure of a software system.
Some of the failures in ebusiness applications that led to negative feedback from users were due to what is called process fragmentation, whereby many of the organizational processes were spread across functional boundaries. Members of the organization interact to complete a transaction, but there is no coordination.
No one knows the status of a transaction, and there is duplication. A conflict arises when managers or employees attempt to impose control on certain parts of the transaction.
The ERP system corrects this situation. There are those who consider ERP solutions as “best practice” software that has urged organizations to apply and integrate it in their system.
Conclusions
E-business principles were at the crossroads during its infancy. This was because at the onset businesses had to resort to some hanky-panky operandi especially in the different parts of the globe, in the once-apartheid Africa, in Asia and in the Third World countries. The methods involved some kind of bribery.
Ethical standards were in question and so businesses adapted some form of ethical principles. Some of these included the Sullivan Principles or the CERES Principles. (Graham Peace et al., 2002, p. 52)
Managers met many impediments and barriers in guiding their organizations to go along the way of ethical standards. There were those who wanted to abide by the moral standards of the times, but they were hampered by others who were merely looking for profits.
In ebusiness, partners do not see each other personally, thus trust is reduced. The more trust is reduced because of the presence of hackers and viruses and also the negative publicity that ebusiness has gained through the years. However, there are many benefits for all these.
The traditional office requires rents and insurmountable expenses. This has been reduced with the many features the Internet can offer, for example teleconference or telecommuting.
There is wider flexibility on the part of the salespeople in the field who can communicate through their mobile phones or via the Internet using their laptops. In many countries, wifi or wireless internet connection features are available for Internet users.
This phenomenon however has produced isolated workers, according to Graham Peace (2002) and associates who cited a recent survey wherein workers are isolated from other coworkers because of constant telecommuting.
This provides negative impact on the personal lives and careers of the workers. (Graham Peace et al., 2002, p. 47)
Ebusiness has also an impact on the organization. Some of the negative impact include: organizations can have access to the current market; consumers can have access to competitors’ products; and other organizations do not have enough resources in the competition and thus they are left behind.
Ebusiness also allows organizations to compete in the emarketplace, areas that were unavailable before. Entry barriers are reduced and customers have access to many of the organizations’ competitors.
A disadvantage is for small enterprises who cannot afford the Internet-based EDI technologies, and some do not have the technical people to do the technical job. Ebusiness has a great impact on society.
Some areas of the world are on the other side of the internet divide and do not have the capability to participate in the ebusiness.
Despite the skepticism and negative publicity, ebusiness has grown and will continue to thrive because of the positive impact in organizations.
There may be negative impact and other ethical issues, but still the growth is attributed to the continuous usage by many organizations and private users. Trust can be built as organizations continue to use it.
B2b and E-business growth have been hampered by the issues which involve privacy, ethical, legal and security issues.
The barriers to b2b ebusiness success and growth can be summarized in the following:
- Privacy – there are countless ways to retrieve information from customers using websites of companies;
- Security – cyber crime is being committed anytime and ‘anywhere’; cyber criminals don’t need sophisticated tools but just a computer with an internet connection and a skill to hack computer programs;
- Trust – b2b ebusiness can be built with trust in mind between companies and organizations, but trust is difficult to develop and hard to attain.
- Legal – Almost all information shared by organizations should be protected under the law.
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