Types of E-Business Models and Markets

In the past two years, e-business seems to have permeated every aspect of daily life. In just a short time, both individuals and
organizations have embraced Internet technologies to enhance productivity, maximize convenience, and improve
communications globally. From banking to shopping to entertaining, the Internet has become integral to daily activities. For
example, just 23 years ago, most individuals went into a financial institution and spoke with a human being to conduct regular
banking transactions. Ten years later, individuals began to embrace the ATM machine, which made banking activities more
convenient. Today, millions of individuals rely on online banking services to complete a large percentage of their transactions.

The rapid growth and acceptance of Internet technologies has led some to wonder why the e-business phenomenon did not
occur decades ago. The short answer is: it was not possible. In the past, the necessary infrastructure did not exist to support e-
business. Most businesses ran large mainframe computers with proprietary data formats. Even if it had been achievable to
transfer data from these large machines into homes, the home computer was not yet a commodity, so there were few
terminals outside of business to receive information. As PCs became more popular, especially in the home, the ability to
conduct e-business was still restricted because of the infrastructure required to support it, including backend customer and
supplier interaction along with credit card processing systems.

To set up an e-business even eight years ago would have required an individual organization to assume the burden of
developing the entire technology infrastructure, as well as its own business and marketing strategies. Today, the challenge of e-
business is integration. There are industry-leading companies that have solved the difficult task of developing individual
Internet-based products and services that handle many of the issues surrounding customer and supplier interactions. However,
the ability to integrate these technologies and services based on sound business and marketing strategies, operating on a real-
time basis, can be a monumental undertaking.

As e-business continues to be fueled by both organizations and consumers who have access to the Internet from their homes
and offices, the excitement grows and the potential for success increases. But explosive growth of the Internet has also led to a
growing number of integration challenges for e-businesses of all sizes and types.

In phase one of building an e-business, companies scrambled to get an e-commerce Web site up quickly. The operative word
was “quickly,” because usually there was little or no regard given to how scalable or reliable the site needed to be—or even
how captivating the content. It was just a matter of beating the competition. These first-to-market consumer sites were rarely
integrated with the manufacturing side of the business, which was establishing its own Internet-based relationships with
suppliers. This lack of integration has proved to be a significant challenge for many organizations as the customer base has
grown, real-time order status has been requested, and products have been returned.

In phase two of building an e-business, having an e-commerce site is now a commodity, not a way to differentiate a business.
Customer and supplier expectations are rising, forcing organizations to start thinking about backend integration and real-time
transaction processing. Businesses must actually maintain complete customer and supplier relationships using Internet-based
technologies and tie those systems to the interpersonal aspects of the business transaction when required. Organizations that
realize the promise of e-business are the ones that have begun to address the complete business cycle and are leveraging
Internet technologies.

It is no secret that today’s e-business has the potential to transform the business landscape. Whereas in the past, a company’s
business model was the primary determination of its value, today, a company is valued on its strategy, business model, and
ability to market. With technology driving new competition, a Fortune 500 stalwart that once seemed unstoppable is now
challenged by a start-up that uses Internet technologies and integrates their systems and processes more effectively. By
capitalizing on a sustained business proposition and correctly applying technology, these start-ups are able to significantly
reduce the barriers to entry while dramatically increasing their market reach. For e-businesses, the premise “first to market
equals first to success” is often the case; however, the foundation needs to be laid carefully. A disciplined approach to
evaluating the business opportunity, and correctly assessing how a competitive advantage may be gained using Internet
technologies combined with leveraging the existing investment, is key to a successful e-business.

Defining the Real E-Business Models

An e-business model is simply the approach a company takes to become a profitable business on the Internet. There are many
buzzwords that define aspects of electronic business, and there are subgroups as well, such as content providers, auction sites,
and pure-play Internet retailers in the business-to-consumer space.
Many Internet firms witnessed a meteoric rise in their stock values in the late 1990s, only to crash in 2000. For instance,
Drkoop.com Inc. in Austin, Texas, announced its initial public offering at $9 per share in June of 1999. The price rose to more
than $30 per share, but then plummeted to less than $1 per share.

Given the carnage among dot-com stocks recently, what type of online business models are expected to succeed in the future?
Businesses need to make more money than they spend. The new model is the old model, but technology is essential to
maintain a competitive advantage, and cash flow is more important than ever.

For example, Yahoo Inc. in Santa Clara, California, has always operated a successful portal site, providing content and an
Internet search engine. However, many portal sites, such as Go.com, MSN.com, and AltaVista.com, have fallen on hard times.

The idea behind portals is the same as that behind television advertising: aggregating eyeballs and directing them toward
advertisements. But, television viewers are passive, and people need to wait through the ads to see the shows they want to
watch.

However, the Web doesn’t work that way. Content presentation is not serial. Viewers are active, not passive. There are always
millions of places to go. No Web advertisement can match a 20-second TV spot.

When First-to-Market Fails

Many of the failing companies were operating on a first-to-market strategy. Their hope was that by getting their ideas out
ahead of the market, consumers would develop brand loyalty before competitors arrived.

For example, Priceline.com Inc. in Norwalk, Connecticut, is a good example of a company that attempted this strategy, with its
name-your-own-price scheme for buying airline tickets and other goods. However, the closing of Priceline.com Inc.’s
Greenwich, Connecticut-based Web House Group licensee (which applied the same model to groceries and gasoline), combined
with increased competition from airlines and other travel sites, led Wall Street to trade Priceline.com’s stock down to less than
$3 per share in December 2000, from a high of $104.25 in March 2000.

First-to-market as a business model has always been risky. You are vulnerable because you have nothing proprietary, need vast
funding, and rely on rapid deployment.

So why did investors and venture capitalists get caught in such speculative and irrational investments? Investors felt they were
investing in technology, when they were really investing in retailers and distributors. These companies have small profit
margins. They couldn’t justify their valuations in typical price/earnings ratios. When does it turn profitable? Companies such as
Amazon.com have yet to answer that.

One segment of the business-to-consumer world that’s thriving is niche markets. For example, Red Envelope Gifts Inc., which
launched in 1997 as 911gifts.com, began as a last-minute gift site, but now markets more than 5,000 items that are unique to
the site. Customers seem willing to pay a premium for Red Envelope-edited selection and enhanced customer service. The
company has $70 million in sales, with a 57-point profit margin.

There needs to be a quick path to profitability. And, the ultimate metric is margin. There are three levers to achieving margin:
edited selection, customer service, and inspirational branding.

The B2B Way

Is the model buyer- or seller-centric? What is the driving force of the business?

The greatest strength of the Internet is its ability to bring together people, governments, and businesses and facilitate the flow
of information among them. This is one of the main reasons why business models for business-to-business online marketplaces
are expected to succeed.

It’s clear that the Internet is a viable platform for B2B trade. According to Forrester Research Inc. in Cambridge, Massachusetts,
a projected $4.9 trillion in business-to-business (B2B) transactions will be made online by 2004.

But private marketplaces being formed by industry leaders represent a more successful model. These real-time supply chains
and e-business design systems are phasing out the more expensive and inflexible electronic data interchange networks.

The real surprise here is how hard it is to become profitable. The cost of branding technology is so high that consumers still use
a catalog. A Web site is just another channel.
E-Business Models

The emerging e-business market affords companies of all sizes and types the opportunity to leverage their existing assets,
employees, technology infrastructure, and information to gain or maintain marketshare. For example, in the
telecommunications industry, service, rather than technology, is now the key differentiator. With lower barriers to entry, new
competitors are rapidly entering the market offering new services, such as online bill presentment and payment, and leveraging
their unique digital assets.

Information technology research analysts agree that e-business is any net-enabled business activity that transforms internal
and external relationships to create value and exploit market opportunities driven by new rules of the connected economy (see
sidebar, “Defining the Real E-Business Models”). However, today’s e-business requires more. Industry analysts further point out
that e-business involves the continuous optimization of an organization’s value proposition and value-chain position through
the adoption of digital technology.

The challenge for an organization is to turn the vision and the market opportunity into a viable business. Developing the
marketing strategy and plans and designing and deploying the business solution is key. Those who successfully architect,
develop, and deploy e-business solutions will need to formulate and adopt a comprehensive business plan. Because of the
critical role of Internet technologies and integration requirements, it is recommended that organizations need a comprehensive
planning framework—an actual e-business model. This structured planning approach enables the organization to assess, plan
for, and implement the multiple aspects of an e-business.

Building an e-business (an integrated value chain) that leverages the Internet’s communications capabilities is a complex
undertaking. The complex integration requirements of the business solutions, all performing at extremely high levels of
availability and scalability, require an e-business model architectural approach. The value chain (comprised of the traditional
supply chain management functions, planning, procurement, and inventory management, coupled with the customer-facing
functions, typically referred to as customer relationship management) has integration and performance demands that exceed
the requirements seen in traditional businesses. In a successful e-business, all of these areas are tightly integrated to provide an
organization the ability to quickly and efficiently sell, manufacture, and deliver products or services.

Furthermore, in a successful e-business, this value chain rests on a foundation that leverages the organization’s existing core
operational business systems, as well as meets the new business-critical operational requirements for reliability, scalability,
flexibility, and 24 × 7 × 365 availability in a highly volatile, electronic marketplace.

 Solid strategies
 Knowledge management techniques applied to a company’s information and intellectual assets
 Effective e-business processes typically grouped in the customer relationship management (CRM), supply chain
management (SCM), and core business operations domains

Solid Strategies

Strategy and execution are key to developing and sustaining a successful e-business. Only those organizations that successfully
integrate key business strategies and processes dramatically increase their efficiencies. To be successful, organizations must
also form the right strategic relationships and develop efficient business processes with robust backend solutions that are able
to meet users’ demands for real-time service today and into the future.

In the past, businesses had the luxury of developing business strategies in the boardroom and IT strategies in the IT
department. They then brought these strategies together to run the overall business. E-businesses cannot afford this luxury.
The ability to react and change direction is critical. Speed is everything. Grounding the organization with sound, winning
strategies is key.

In the new economy’s competitive electronic environment, it is easier for an organization to be global, but it is also harder to
maintain consistency in the levels of services offered around the world. E-businesses must be ready and able to adjust their
business and IT strategies rapidly, depending on unpredictable competitors and market pressures. Today’s e-business climate
requires the continuous optimization of an organization’s business and IT strategies. Because IT now has such a significant
impact on every business process (from order taking to inventory to billing), both business and IT strategies are now developed
in parallel.

The best example of this is Dell Computer. From the start, the company’s business strategy was tightly aligned with its IT
strategy, allowing Dell to successfully integrate every aspect of its business (from order taking to inventory to billing) with both
its customers and suppliers. Dell vaulted to the forefront of its industry when it came to market with a winning strategy, the
unique just-in-time-delivery model. Unlike traditional computer suppliers, Dell’s business strategy was founded on the premise
of zero inventory.

Similarly, online brokerage companies have been leaders in the area of integrating IT and business strategies. The rapid
adoption of Internet technologies combined with market globalization, industry deregulation, and media convergence has
afforded these companies the opportunity to gain share and create value in the e-business marketplace.

Turning an organization’s intellectual assets into knowledge is a key business differentiator. In addition to a continually
optimized business strategy, successful e-businesses must establish solid knowledge management practices. Knowledge
management is the definitive way to leverage an organization’s information and intellectual assets for business advantage. It is
the formalized, integrated approach that every organization must take to “know” its business

Knowledge Management Techniques

Every business has both tacit and explicit knowledge. One is undocumented, and the other is documented about what is
“known” in the company. This knowledge may include information about products and services or information about how the
company works with a particular supplier. No matter what type of knowledge an e-business has, the company must put into
place processes for organizing that knowledge.

Knowledge management includes managing intellectual capital, such as best practices, critical business processes, and
operating metrics. Establishing ongoing processes for acquiring, organizing, and distributing this knowledge about customers,
products, and processes is critical to success. The business domains, CRM, SCM, and core business operations, are dependent
on this information and these intellectual assets.

Effective E-Business Processes

In every successful e-business, the business process domains (CRM, SCM, and core business operations) are an integral part of
the continuous optimization process. The advantage and, thus, the return on investment for an e-business integrating its
business process domains is that it extends the organization’s business directly to customers and suppliers.

When business process domains are integrated, they can increase productivity and improve customer and supplier satisfaction.
For example, when a repeat customer views a successful e-business’s Web site, an integrated CRM system presents that
individual with offers or items of interest based on previous orders. After the customer places an order, this same e-business
allows that individual to view the status of his order in real time as it moves through the supply chain.

Business process domains are aggregations of core business processes. Although there is growing popularity of business process
domains as their own entities (CRM, SCM, and core business operations), they are commanding a mind-share in the
marketplace (and each has attracted various vendors and products to support it). These domains must operate together as a
key component to the overall e-business strategy.

In a successful e-business, convergence is the driving connection of all of the business process domains. When there appears to
a customer or a supplier to be no barrier between departments, the business process domains are tightly integrated with the
business and IT strategies

Customer Relationship Management

Customer relationships are becoming a more important factor in differentiating one business from another. In order to stay
competitive, e-businesses in every industry have begun to analyze these relationships with customers using CRM solutions.

In the past, customers would place an order via the telephone and wait until the company’s purchasing department processed
and shipped the order. Today’s customers place an order electronically and then demand to be able to check the status of their
order within minutes.

CRM enables an organization to adopt a comprehensive view of the customer and maximize this relationship. These CRM
systems enable a business to identify, attract, retain, and support customs centers, direct mail, and retail facilities. In an
efficient e-business, there are CRM processes in place to handle:

Analytical CRM: The analysis of data created on the operational side of the CRM equation for the purpose of business
performance management; utilizing data warehousing technologies and leveraging data marts
Customer interactions: Sales, marketing, and customer service (call center, field service) via multiple, interconnected delivery
channels and integration between front office and back office

Operational CRM: The automation of horizontally integrated business processes involving “front office” customer touch points

Personalization: The use of new and traditional groupware/Web technologies to facilitate customer and business partner
communications

Supply Chain Management

Integration of the SCM functions is emerging as one of the greatest challenges facing today’s e-businesses. SCM is the
integration of business processes from end user through to original supplier. The goal of SCM is to create an end-to-end system
that automates all the business processes between suppliers, distribution partners, and trading partners. The new mantra for
this process, according to industry analysts, is “replacing inventory with information.” In an effective e-business, the following
SCM independent processes must be highly integrated

Demand management: These are shared functions, including demand planning, supply planning, manufacturing planning, and
sales and operations planning.

Inbound/outbound logistics: These include transportation management, distribution management, and warehouse
management.

Supply management: These include products and services for customer order fulfillment

Core Operations

E-businesses also need to develop and operate complex transaction processing systems that support their core business
operations. These core operations include the operational systems that support their particular business, such as claims
processing, trade execution, enterprise resource planning (ERP), and enterprise resource management (ERM).

Whether a company is just beginning to transform its business into an e-business or is an e-business strengthening its market
position, organizations must put in place architectures that support large and complex integrated solutions. E-businesses must
address the performance requirements for reliability, scalability, and high availability. These systems also require a high level of
flexibility, integration, and often the added complexity of operating in a global business environment. These e-businesses need
to integrate their customer relationship management, supply chain, and core business operational systems such as enterprise
resource planning, accounting, and general business support systems to operate efficiently.

Now, let’s look very briefly at types of e-business markets. In other words, let’s look at how Web developers respond to your
clients’ needs in an e-business-driven marketplace.

E-Business Markets

Web sites and intranets are designed for the same reason—to provide information. In the business world, this information
needs to be updated and changed constantly in order to stay abreast of a changing business climate. New product releases,
price changes, and marketing promotions are just a few examples of information that companies need to constantly provide to
their customers, suppliers, employees, and shareholders. In today’s world of e-commerce and intense corporate competition,
companies need the ability to instantly update published information in order to effectively communicate with their intended
audience. Today’s companies know that they have to have a dynamic and interesting Web presence, but they are struggling to
find ways to effectively manage their Internet strategy. Traditional advertising agencies and Web development firms are no
longer meeting the all-encompassing Internet requirements necessary for businesses in today’s e-commerce-driven
marketplace. Companies are looking for advertising agencies and Web development firms that address their initial Web
development needs while also providing them with viable, affordable solutions that are designed to address, implement, and
manage their overall Internet strategy.

Finally, historically, companies outsourced the development of their Web sites because creation and maintenance required
design and programming expertise. However, relying on third parties for all site maintenance limited a company’s ability to
quickly and easily update their published information. To solve this problem, many companies decided to bring Web site and
intranet development in-house. Companies then discovered that hiring the necessary skilled personnel contains its own set of
inherent problems. Information “bottlenecks” still occur when a company has one or two people in the internal IT department
who are bombarded with the responsibility of publishing all company information. In addition, companies are also finding that
Web site designers are hard to find and even harder to keep. The recurring theme in the market is that companies are
recruiting individual Web designers to build and maintain their Web sites and intranets in-house only to find that after several
months of development, the designer may be lured away by the promise of a more exciting and rewarding career. This “catch
22” has left companies looking for some additional alternatives. Companies are turning toward their advertising agencies and
Web development firms to provide the solution to this problem. Octigon provides the software that addresses this “catch 22”
and enables Web developers to meet the increasing demands of the business marketplace. Market trends have caused Web
site management to become an arduous task, with sites evolving to meet the needs of e-commerce and e-business.

To be successful, e-businesses must have a continuous optimization business strategy, solid knowledge management practices,
and integrated business process domains. No matter what the business, the e-business model processes are the same.

The e-business market affords organizations of all sizes and types the opportunity to leverage their existing assets, employees,
technology infrastructure, and information to gain or maintain market share. However, the challenge for the organization is to
turn the vision and the market opportunity into a sustainable e-business.

Finally, the need for an integrated value chain challenges the e-business to optimize its intellectual assets and its investments in
core business systems in order to deliver its products and services to an unpredictable market. It is this unpredictable nature
that challenges the IT organization to deliver the highly scalable and available infrastructure. Additional challenges include the
unique nature of an e-business and the tight linking of the business operations to a technical infrastructure. A disciplined and
architected approach based on an e-business model provides the framework needed to build complex business processes and
technical infrastructures that the market is increasingly demanding.

The emerging e-business market affords companies of all sizes and types the opportunity to leverage their existing assets,
employees, technology infrastructure, and information to gain or maintain marketshare. For example, in the
telecommunications industry, service, rather than technology, is now the key differentiator. With lower barriers to entry, new
competitors are rapidly entering the market offering new services, such as online bill presentment and payment, and leveraging
their unique digital assets.

Information technology research analysts agree that e-business is any net-enabled business activity that transforms internal
and external relationships to create value and exploit market opportunities driven by new rules of the connected economy.
However, today’s e-business requires more. Industry analysts further point out that e-business involves the continuous
optimization of an organization’s value proposition and value-chain position through the adoption of digital technology.

The challenge for an organization is to turn the vision and the market opportunity into a viable business. Developing the
marketing strategy and plans and designing and deploying the business solution is key. Those who successfully architect,
develop, and deploy e-business solutions will need to formulate and adopt a comprehensive business plan. Because of the
critical role of Internet technologies and integration requirements, it is recommended that organizations need a comprehensive
planning framework—an actual e-business model. This structured planning approach enables the organization to assess, plan
for, and implement the multiple aspects of an e-business.

Building an e-business (an integrated value chain) that leverages the Internet’s communications capabilities is a complex
undertaking. The complex integration requirements of the business solutions, all performing at extremely high levels of
availability and scalability, require an e-business model architectural approach. The value chain (comprised of the traditional
supply chain management functions, planning, procurement, and inventory management, coupled with the customer-facing
functions, typically referred to as customer relationship management) has integration and performance demands that exceed
the requirements seen in traditional businesses. In a successful e-business, all of these areas are tightly integrated to provide an
organization the ability to quickly and efficiently sell, manufacture, and deliver products or services.

Furthermore, in a successful e-business, this value chain rests on a foundation that leverages the organization’s existing core
operational business systems, as well as meets the new business-critical operational requirements for reliability, scalability,
flexibility, and 24 × 7 × 365 availability in a highly volatile, electronic marketplace. An e-business model includes three essential
elements:

 Solid strategies

 Knowledge management techniques applied to a company’s information and intellectual assets

 Effective e-business processes typically grouped in the customer relationship management (CRM), supply chain
management (SCM), and core business operations domains
Solid Strategies
Strategy and execution are key to developing and sustaining a successful e-business. Only those organizations that successfully
integrate key business strategies and processes dramatically increase their efficiencies. To be successful, organizations must
also form the right strategic relationships and develop efficient business processes with robust backend solutions that are able
to meet users’ demands for real-time service today and into the future.

In the past, businesses had the luxury of developing business strategies in the boardroom and IT strategies in the IT
department. They then brought these strategies together to run the overall business. E-businesses cannot afford this luxury.
The ability to react and change direction is critical. Speed is everything. Grounding the organization with sound, winning
strategies is key.

In the new economy’s competitive electronic environment, it is easier for an organization to be global, but it is also harder to
maintain consistency in the levels of services offered around the world. E-businesses must be ready and able to adjust their
business and IT strategies rapidly, depending on unpredictable competitors and market pressures. Today’s e-business climate
requires the continuous optimization of an organization’s business and IT strategies. Because IT now has such a significant
impact on every business process (from order taking to inventory to billing), both business and IT strategies are now developed
in parallel.

The best example of this is Dell Computer. From the start, the company’s business strategy was tightly aligned with its IT
strategy, allowing Dell to successfully integrate every aspect of its business (from order taking to inventory to billing) with both
its customers and suppliers. Dell vaulted to the forefront of its industry when it came to market with a winning strategy, the
unique just-in-time-delivery model. Unlike traditional computer suppliers, Dell’s business strategy was founded on the premise
of zero inventory.

Similarly, online brokerage companies have been leaders in the area of integrating IT and business strategies. The rapid
adoption of Internet technologies combined with market globalization, industry deregulation, and media convergence has
afforded these companies the opportunity to gain share and create value in the e-business marketplace.

Turning an organization’s intellectual assets into knowledge is a key business differentiator. In addition to a continually
optimized business strategy, successful e-businesses must establish solid knowledge management practices. Knowledge
management is the definitive way to leverage an organization’s information and intellectual assets for business advantage. It is
the formalized, integrated approach that every organization must take to “know” its business.

Knowledge Management Techniques

Every business has both tacit and explicit knowledge. One is undocumented, and the other is documented about what is
“known” in the company. This knowledge may include information about products and services or information about how the
company works with a particular supplier. No matter what type of knowledge an e-business has, the company must put into
place processes for organizing that knowledge.

Knowledge management includes managing intellectual capital, such as best practices, critical business processes, and
operating metrics. Establishing ongoing processes for acquiring, organizing, and distributing this knowledge about customers,
products, and processes is critical to success. The business domains, CRM, SCM, and core business operations, are dependent
on this information and these intellectual assets.

Effective E-Business Processes

In every successful e-business, the business process domains (CRM, SCM, and core business operations) are an integral part of
the continuous optimization process. The advantage and, thus, the return on investment for an e-business integrating its
business process domains is that it extends the organization’s business directly to customers and suppliers.

When business process domains are integrated, they can increase productivity and improve customer and supplier satisfaction.
For example, when a repeat customer views a successful e-business’s Web site, an integrated CRM system presents that
individual with offers or items of interest based on previous orders. After the customer places an order, this same e-business
allows that individual to view the status of his order in real time as it moves through the supply chain.

Business process domains are aggregations of core business processes. Although there is growing popularity of business process
domains as their own entities (CRM, SCM, and core business operations), they are commanding a mind-share in the
marketplace (and each has attracted various vendors and products to support it). These domains must operate together as a
key component to the overall e-business strategy

In a successful e-business, convergence is the driving connection of all of the business process domains. When there appears to
a customer or a supplier to be no barrier between departments, the business process domains are tightly integrated with the
business and IT strategies.

Customer Relationship Management

Customer relationships are becoming a more important factor in differentiating one business from another. In order to stay
competitive, e-businesses in every industry have begun to analyze these relationships with customers using CRM solutions.

In the past, customers would place an order via the telephone and wait until the company’s purchasing department processed
and shipped the order. Today’s customers place an order electronically and then demand to be able to check the status of their
order within minutes.

CRM enables an organization to adopt a comprehensive view of the customer and maximize this relationship. These CRM
systems enable a business to identify, attract, retain, and support customs centers, direct mail, and retail facilities. In an
efficient e-business, there are CRM processes in place to handle:

Analytical CRM: The analysis of data created on the operational side of the CRM equation for the purpose of business
performance management; utilizing data warehousing technologies and leveraging data marts

Customer interactions: Sales, marketing, and customer service (call center, field service) via multiple, interconnected delivery
channels and integration between front office and back office

Operational CRM: The automation of horizontally integrated business processes involving “front office” customer touch points

Personalization: The use of new and traditional groupware/Web technologies to facilitate customer and business partner
communications

Supply Chain Management

Integration of the SCM functions is emerging as one of the greatest challenges facing today’s e-businesses. SCM is the
integration of business processes from end user through to original supplier. The goal of SCM is to create an end-to-end system
that automates all the business processes between suppliers, distribution partners, and trading partners. The new mantra for
this process, according to industry analysts, is “replacing inventory with information.” In an effective e-business, the following
SCM independent processes must be highly integrated

Demand management: These are shared functions, including demand planning, supply planning, manufacturing planning, and
sales and operations planning.

Inbound/outbound logistics: These include transportation management, distribution management, and warehouse
management.

Supply management: These include products and services for customer order fulfillment

Core Operations
E-businesses also need to develop and operate complex transaction processing systems that support their core business
operations. These core operations include the operational systems that support their particular business, such as claims
processing, trade execution, enterprise resource planning (ERP), and enterprise resource management (ERM).

Whether a company is just beginning to transform its business into an e-business or is an e-business strengthening its market
position, organizations must put in place architectures that support large and complex integrated solutions. E-businesses must
address the performance requirements for reliability, scalability, and high availability. These systems also require a high level of
flexibility, integration, and often the added complexity of operating in a global business environment. These e-businesses need
to integrate their customer relationship management, supply chain, and core business operational systems such as enterprise
resource planning, accounting, and general business support systems to operate efficiently.