Introduction

The New Paradigm

Over the last few years the Internet has evolved from a scientific network into a platform that is enabling a new generation of businesses. The first wave of electronic business was fundamentally the exchange of information. But, with time, more and more types of businesses have become available electronically. Nowadays we can buy goods online, book vacations or have texts translated over the Internet in an instant. Home banking, for example, is one application that is already provided by most banks around the world. Looking up an account balance, transferring money and performing other transactions are done every day by millions of people. Public administration has discovered the Internet as a means to talk to the general public at election times. And it will not be long before we see general elections decided on the Internet.

The reason I have called this book The E-business (R)evolution is twofold. Technology has revolutionized the way we can do business, but business itself is only slowly adapting to the new possibilities. The New Economy needs a new paradigm, but the process of conversion will take some time to complete. The necessary technology is ready and waiting. The e-business in the title is not the same as IBM uses it; it is much more, as you will discover by reading this book. There is a reason why the ``B" in e-business is not written in capital letters, as in IBM's case.

The Internet is changing the concept of programming applications. We are moving toward pervasive computing and electronic services. Jini technology is one of the first implementations of what one could call "one world, one computer." Jini allows every device to talk to every other device in a common language (a device in this case can be anything with a silicon chip inside it and an Internet connection). Other companies have started to develop similar paradigms, technologies and visions, such as IBM's T Spaces technology and Hewlett-Packard's E-Services strategy.

You have probably already heard of the empty refrigerator that sends an e-mail to the grocery with a request for fresh milk to be delivered to the doorstep before breakfast in the morning. Prototypes have already been built. A bar-code reader is able to detect which products are put into the fridge and taken out afterward. For many people, this may not be a necessity. The grocery store is more than just a place where people can buy food. It is a social place where people meet, which cannot be simply replaced by two chips. But for those who do not have the time to do the shopping, or are not able to walk to the store, this may become a valuable option.

New technologies are emerging slowly. In Helsinki, for example, it is already possible to pay for a soft drink with a cellular phone. Instead of inserting coins into the vending machine it is possible to call the machine with a cell phone, using a special number that in turn releases a can of soda. In Europe more people have cellular phones than computers, therefore the crossover of communication technology and information technology is on the verge of happening. Through cell-broadcast people with GSM cellular phones are able to receive news flashes, which can keep them up-to-date on the latest political and financial developments. The future of computing lies in devices---not stand-alone personal computers.

Other applications may be more useful to all of us, but the Internet is generally not designed to be a mass medium such as television or radio. The Internet is an infrastructure for many mass and niche markets. Two applications, which may be suitable for many car owners, are the following:

• Cost Saving - Imagine your car sending a request to all gas stations within ten miles to find out which one is the cheapest. The navigational system of the car will then direct the driver to that gas station.
• Life Saving After an accident the car is able to detect how severe the crash was and will call an ambulance and the police, if appropriate.

Pervasive Computing

Pervasive computing is therefore the next logical step in the evolution of computers. The Internet has enabled the connection of computers and allowed them to exchange information. Connecting all types of devices will create a network that is thousands of times larger than the current Internet, offering more than a simple exchange of information. It will enable businesses to offer services, which can be as basic as, "print something onto the nearest printer" or as complex as, "create a short document on the financial situation within the company."

In such an interconnected world everything becomes part of one huge system. This may sound like the evil Borgs in the Star Trek saga, who say: "You will be assimilated." The Borgs are a civilization that work and live in a collective; they have only one mind. Without the other members of the collective they are lost. Their mission is to assimilate all other cultures and to incorporate all other technologies into their own. They believe that resistance to change is futile.

Hopefully the introduction of new technologies will not be based on pressure, but on agreements, understanding and cooperation. It would be very worrisome if this goal were achieved on propriety standards, and it could be totally superfluous if this goal were achieved by wasting useful resources. But it can also mean a leap into the future if this New World is built on open systems, open sources, open standards and open services. It remains to be seen if Jini will succeed, but the general direction is set, and everybody will have to follow it over the next few years in order not to fall behind.

Pervasive computing is only just getting off the ground, but getting to know all about it will give you the edge over your competitors when it comes to implementing it. But before getting into pervasive computing, one should think about one's business idea. In order to be successful on the Internet it is necessary to get that right first, otherwise the best IT infrastructure will not be of any help.

Business on the Net Today

If you look at the current situation, you can divide the Internet presence of enterprises into six phases:

• Phase 1: "Hello, I'm online, too" - In this phase, the company has set up a Web page. However, no real structure is provided. There is no search engine, there is only some of the product information, and there is no link to the current stock price and no way to communicate with people within the company.
• Phase 2: "Structured Web site" - The Web site now has a decent structure; you can use a search engine to search for keywords, see all the company information, and exchange messages within the company.
• Phase 3: "Trying e-commerce" - The company is trying to sell information, goods, etc., online, but the system is not connected to the real databases on the company intranet. It is slow, costs a lot of money and is not really secure. There is no way to hook up your company's back-end system to the back-end of another company.
• Phase 4: "Doing e-business" - Your Web site has a direct link into the legacy systems of your intranet, allows retrieval of information from internal databases, and uses secure protocols to transmit data between your company and the customer or another business. You are able to save costs and start making a profit from your online business.
• Phase 5: "Pervasive e-business" - Using any device that contains a chip (cellular phone, car, etc.) people are able to connect to your data and transmit or receive the desired information to do e-business.
• Phase 6: "One world, one computer" - All chip-based devices are interconnected and create one huge information resource. The devices are able to interchange any type of information on an object-oriented level. Applications are transparent to these devices. Users won't know where the answer to their problems came from.

Most companies nowadays are somewhere near or between phase 2 and phase 3. Most of them are moving toward phase 4. One important part of this book is to show what will happen after phase 4. Pervasive computing is the most likely thing to happen. This book will show what such a world could look like and what the alternatives are. It tries to identify the standards and the owners, and tries to find out what the Internet will be like in five years time.

Who Should Read This Book

This book is intended for the electronic entrepreneur who is either thinking about setting up an e-business or has already set one up. It provides you with a checklist of all the important items in the e-business arena. You can check immediately how much of your business is ready to go online. After having read this book you will be able to build up your own e-business or enhance it dramatically to make it not only yet another Web page, but also a real financial stronghold for your company.

This book is the basis for your e-business decisions. The information given in this book is not technological hype that will evaporate next year; it will be the basis for your e-business over the next few years. The book covers all the topics required for a complete and secure e-business solution. It goes into great depth in each topic, so that you will be competent enough to decide which of the solutions described fits your needs best.

The major question for all technologies in this book is: "Why should I use it?" There are enough books on how to use a technology and many people know how to do it, but many people forget to ask why. Sometimes it makes sense to avoid new technologies, as it may only add extra overhead to the work that needs to be done. So, whenever people come up to you and explain a new technology, do not ask how it can be done, but why it should be done.

This book contains many examples and links to Web pages. As the Internet is changing every day, it cannot be guaranteed that every link will be available at the time of reading. As a convenience to the readers, a Web site has been set up that contains a list of all examples used in the book. The list on the Web site will be updated at regular intervals. In addition, the Web site will contain links to other e-business sites and more information on the topics in the book.

How This Book Is Organized

The book is divided into four parts. The first part is the foundation for online activities. It introduces the reader to the basic concepts of the Internet and how to do business via the Internet. It takes both technology and business into consideration, and does not forget to talk about the legal aspects of doing business via the Internet. Finally, it explains how marketing on the Web should be done in order to be successful. Without marketing, your online business will lack the visibility it requires to succeed.

The second part talks about how e-business applications are used for Internet-, intranet- or extranet-based applications. It looks at the questions from all perspectives: client software, middleware, and back-end systems. Its focus is on search engines, portals, shopping and ORM sites. Customer relationship management, content management and knowledge management are such important parts of an e-business solution that I created an extra chapter for these topics. Last but not least, one chapter is dedicated to communication possibilities via the Internet. Using this information you are prepared to go online and discover other businesses, what they offer and how they did it.

The third part explains the technologies that are below your applications. This is done from the technical and business points of view, to show you the business cases that are viable right now. Each chapter contains a set of business cases that are evaluated, and it is explained how Internet technologies help to resolve issues with the business cases and how to extend one's business through new technology.

The fourth part is an outlook into the future of electronic business, and gets into more detail on how software and hardware will be developed in the future. The Open Source\index{Open Source} model is explained, as well as how pervasive computing has been implemented. The last chapter of the book explores future possibilities.

Appendix A offers a glossary of e-business terms used throughout the book. In case you do not understand a certain term, look here. Appendix B describes how a business can be moved to the Internet, and what is required to do so. It not only lists the ideas, and the required hardware and software, but also goes into detail regarding costs and the benefits. Appendix C is a short list of my favorite Web sites, ordered by subject areas. Appendix D enters the world of localization and internationalization of Web sites and Appendix E offers some insight on the death of dot.coms.

Acknowledgments

There are many people I would like to thank who helped me to make this project a reality. This book is dedicated to Sabine, the woman I love. I thank her for her love, support and understanding. I really tried to write as much of the book as possible while she was asleep, but especially in the end I had not much time left for her. I worked on this book besides my real job as a consultant and project manager for Hewlett-Packard. Sabine, I want to tell you that I love you.

I also want to thank my family for their support and their suggestions. Although being half-English (father) and half-Czech (mother) I wrote this book for an American publisher in U.S. English. I still tried to keep the balance between U.S. American interests and the rest of the world. Although some reviewers complained that the book did not only provide American examples, I did not want to create a U.S. only book, as the world out there is much bigger and showing all ideas is so much more interesting.

I want to thank all readers of the first edition. Although some complained about the lack of editing (which had been resolved soon after the first reprints), many readers liked the way the book was organized. That was probably the reason why it got translated into so many languages. The book has been published in Bulgarian, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Russian, Spanish, with more languages to come. I appreciated the readers writing to me with suggestions and complaints and hope that this will continue with the second edition of the book.

I owe Hewlett-Packard, my managers---Isabelle Roux-Buisson and Albert Frank---and my colleagues a big thank you for their support and the many general discussions on business on the Internet that were conducted in coffee breaks and during meetings that made me change some parts of the book while writing it. A special thank you goes out to Susan Wright and Pat Pekary at HP Press for managing the internal HP publication processes. I also want to thank Rosie Chiovari, Phil Mindigo and Peter O'Neill in the United States for supporting the crazy European writing a book on business on the Internet.

The people at Prentice Hall were also very responsive and helpful and I want to thank them for the continued support during the writing of the book, without which this book would not have been possible. I want to thank Jill Pisoni, Linda Ramagnano, Gail Cocker, Camille Trentacoste and Vincent Jano\-ski for the production of the first edition and Jill Harry (former Pisoni), Justin Somma and Jennifer Blackwell for the production of the second edition.

And last, but not least, I want to thank Uta Winter of MediaTechbooks and Samantha Shurety of IBM for reviewing my book at various stages of the development, and for their invaluable support, ideas and suggestions.

E-Business Is Dead, Long Live E-Business

This section has been written for the second edition. In the second half of 2000 many startup companies went bankrupt and the stock exchanges around the world sank to record lows. Some people thought that this would be the end of e-commerce and e-business, just to be proved wrong. In April 2001 I started revising the The E-Business (R)Evolution although there was still a lot of bad press regarding the Internet and E-Business. Despite the bad press the Internet platform had been established at that time. More and more people use the Internet on a daily basis and it has become a commodity that can be used all around the world. During my last holiday in Asia I visited the United Arab Emirates, Malaysia and Singapore. In all of these countries I was able to find an Internet cafe within five minutes, connect to my mail server and check for new e-mails. But not only did the Internet work, also my mobile phone worked flawlessly. The GSM mobile phone standard makes it so I can use it almost all over the world (except for the United States).

At the same time more and more companies have realized that there is a need for a digital presence. The online retailers who survived the battlefield that was the year 2000 are emerging stronger, smarter and more competitive.

A Shop.org study, called ``The State of Online Retailing 4.0" conducted by The Boston Consulting Group shows that in April 2001, 72 percent of catalogers, 43 percent of store-based retailers and 27 percent of Web-based retailers are profitable at an operating level. Despite the dot-com shakeout, online retailers overall were able to reduce losses as a percentage of revenues. Operating losses decreased as a percentage of revenue, from 19 percent in 1999 to 13 percent, or 5.6 billion U.S. dollars, in 2000.

Customer acquisition costs for all online retailers fell from an average of 38 Dollar/Euro in 1999 to 29 Dollar/Euro in 2000, the report says. Web-based retailers, in particular, were able to bring customer acquisition costs down from a high of 82 Dollar/Euro to 55 Dollar/Euro over the same period. Indeed, the best performing Web-based retailers (the top 50 percent) reduced acquisition costs to an average of 14 Dollar/Euro per customer, rivaling the performance of catalog-based retailers.

If I look at the number of e-business projects we did in the E-Solutions Division Europe of Hewlett-Packard, I can see a clear increase in 2001, although 2000 was the year of hype. During 2000 many people talked about e-business, but only very few did something. This was one of the major factors that resulted in the crash of the stock market. Now more people really do something and talk less about it, reducing the expectations in these companies and increasing their stock value.

To make it easier for many of you to understand the reasons why so many companies failed, I have added Appendix E to the book, which contains a lot of information about famous dot.coms that failed. The second edition of The E-Business (R)Evolution is based on the reader's input and the changes in the market. I appreciate any input from readers and look forward to incorporate it into the next edition of the book.

The book contains a lot of common software products and interesting Web sites. The software packages and Web sites are most likely to change, so please use the references as a guide and indicator, and use a search engine or portal site to get more information about a Web site, if it is not available anymore.

Daniel Amor
http://www.ebusinessrevolution.com/
Stuttgart, Germany, June 16th, 2001