Give the summary of this case in 500 words.

e-business: a strategfic approach John A. Rodgers Department of Decision Sciences and MIS, Miami University, Oxford, Ohio, USA David C. Yen Department of Decision Sciences and MIS, Miami University, Oxford, Ohio, USA David C. Chou Department of CIS, Eastern Michigan University, Ypsilanti, Michigan, USA (Follit, 2000). This improved relationship scheduled to arrive in the near future. This causes increased loyalty, and then results in will enable IT managers to make significant increased profits and a competitive changes to their system architectures advantage for the firm. (Wagner et al., 1999). System or server E-business functions consolidation has also emerged as an E-business provides links to customers, approach to solving these problems. suppliers, business partners, and employees Infrastructures will then become more through the Internet, intranets, and important to managers as systems are extranets. Web systems handle transactions re-engineered to become more flexible. forcustomersandalsoprovidethemexperiencecontinuouspressuretoexpandManagersalsolookforscalabilityasthey e-commerce services. Intranets and Web hardware and software service levels portals are used to link employees so they (Wagner et al., 1999; Roberts and Hersch, canhaveaccesstomoreinformation.2000).Theylookforhardwareandsoftware Intranets are commonly used for that can handle performance scalability as transactional and interactive processes and well as maintaining the flexibility required information sharing purposes. The increased to handle a mixture of workload data availability improves corporate requirements. Partitioning of architectures productivity. Information flowing to and from business has been one approach to addressing these partners is facilitated through the growth data center requirements. Also, many and improvement of extranets. Extranets computer firms are striving to provide allow more and more firms to implement various servers that are able to handle e-business solutions. The suppliers of a firm e-business functions. Sun Microsystems and are also linked to their customers through Hewlett-Packard make servers available and these extranets. This allows for logistics IBM has just recently presented its RS/6000 improvements such as systems S80 server, which is expected to be a large interconnection, production streamlining, success (Garvey, 2000; Simison et al., 2000). and automatic material order. The These products are more powerful, reliable, integration of logistics is commonly referred and scalable than previous systems, thus to as supply chain management. improving the quality of e-business E-businesscomponentsOrganizationswillhaveaneedforsolutions. With the expanded functionality, e-business alliances from their hardware, software, and has gradually increased its complexity. It is service providers. As a result of the increased evidenced by the problems occurring at reliance on these systems, managers will dotcoms during the holiday season, such as focus closely on their infrastructure's quality Toys-R-Us (Bury, 2000). E-business sites were assurance and performance (Evans, 1999; originally focused on their customers. Garvey, 2000). Expanded e-business applications are expected to handle other parties such as partners and suppliers, thus increasing complexity. highly available computing platforms (Day, seplexity separe concepts, there are some 1999; McGee, 2000). The increased complexity of e-business applications has made many similarities between the two. E-business and believe that: e-commerce solutions incorporate newly Client/server applications are not going to do developed Web technology into the job in the near future (Vizard, 2000). organizational and business processes. The As a result, organizations may be forced to use of Web technology results in improved dispose of legacy systems if they wish to meet efficiency. the requirements of e-business. If they Since new technology is required for decided to keep legacy systems, it is likely e-business and e-commerce implementation, that they would be unable to compete in the the firm needs to improve its system long term because their success is tied to the hardware, software, and technological efficiency of their IT infrastructure. infrastructure. While similarities exist E-business technology consists of between e-business and e-commerce, there operating systems such as Windows NT, are differences that distinguish server hardware, and management platforms both concepts. quicker speed. This allows a firm to solutions was their budget (Management substantially reduce its inventory levels. By Accounting, 1999). This shows that the cost of bringing the organization closer to a e-business is too high to handle in many just-in-time (JT) inventory scheme, storage corporations. They simply view e-business as costs as well as the cost related to obsolete a luxury, not a necessity. inventory would become virtually The chance of being attacked by hackers nonexistent. This technology provides a will increase as corporate information is positive impact on the profit figures of a transmitted electronically. Thus, security corporation. E-business also allows for becomes another concern while organizations to continually track their implementing e-business. As evidenced by orders. This makes a large impact on the recent service outages on prominent Internet planning and scheduling functions. Once sites such as Yahoo, eBay, Amazon.com, again, operations become more efficient as a CNN.com, and Buy.com, the Internet is result of the improved scheduling extremely vulnerable and: capabilities of e-business applications Determined hackers can wreak havoc across (Yasin, 2000). the global computer network (Nickles, 2000). Another advantage of e-business is the This concern becomes significant since interconnectivity that it creates for organizations. The Internet allows information assets are now exposed over the organizations to get in touch with suppliers Internet via e-business applications. who never had access to them. However, the Another problem associated with Internet also increases competition among e-business is the lack of a common suppliers and thus results in lower profit framework to help companies efficiently margins. E-business provides all suppliers execute transactions over the Internet. While with the information necessary to bid on there are not standards associated with it, orders. As the number of bids increases, the many organizations are using extensible price of each will tend to decrease. This will markup language (XML). XML is a widely lead to lower costs of materials and thus used strategic technology for implementing significantly increase the profitability. e-business. XML can be used to categorize By connecting the extended organization, and tag data for exchange within e-business improves the capability of heterogeneous systems. internal communication. As each employee Although XML appears to be promising, it can interact with others, it will enhance does have inherent problems. XML has the workgroups' collaboration and coordination. following three layers: technology, protocols, This significantly reduces the possibility of and document layers. The technology layer is work overlapping and delay in an the bottom one and it provides the common organization. It also allows separate building blocks for XML-based integration. departments to work together. The Unlike the other two layers, the technology collaboration and coordination capabilities layer standards have reached stability, thus among departments tremendously improve making it common to all XML. The second productivity in the workplace. layer, protocols, and the third, the document layer, are not common yet. This situation Disadvantages causes different technology frameworks and Development cost is one of the primary data definitions to be created by various concerns for e-business. A significant standard and industry groups as well as expenditure is needed in order to make vendors. These variations across different e-business proficient. Because e-business organizations result in incompatibility in applications are complex, a firm may need to e-business applications. The lack of standards completely restructure its current systems. causes work duplication, conflicting data This means new hardware and software to be exchange protocols, and incompatible purchased and new employees to be hired business models within an organization. The and trained. The adoption of an e-business lack of standards could increase the cost of solution implies a high risk of failure. The e-business solutions by requiring additional investment in time and resources for the development and maintenance of their own projects has made many executives and standards. The wide use of XML is causing managers apprehensive of it. In a recent new XML-based vocabularies and protocols to survey, 87 per cent of European firms rated be introduced by users and vendors who e-business as a medium or low priority and attempt to establish their own standards not a fundamental part of their business. (Costa, 1999). This wide array of standards Also, 90 per cent of the firms in this survey then weakens the value of XML as a tool to be stated that the main concern of e-business used in e-business. [187] John A. Rodgers, David C. Yen systems. If an organization can observe all of wins. This marketplace significantly reduced and David C. Chou the above critical success factors, the procurement cost for GM and Ford, and their Developing e-business: a expected e-business solutions can be cost of production materials has been strategic approach Information Management \& decreased substantially (Simison et al., 2000). Computer Security GM, Ford, and DailmerChrysler have 10/4[2002]184192 recently announced a plan to create a Web marketplace to be used for all their purchases. This marketplace is projected to Althoughe-businessisarelativelynewtechnology,firmsareinvestinginsuchhandlearound$240billionfromtheautomakersand$250billionfromtheir projects related to business-to-business suppliers in annual purchasing volume. This transactions at an alarming rate. For project is expected to set a global standard for example, to reduce the cost of raw materials, online purchasing. As a result, the prices of numerous industries have begun the creation the products will be forced down, thus of Internet marketplaces (see Table I). The reducing profit margins. volume of these transactions is expected to This case exemplified a major trend in increase significantly in the future as well e-business. The trend is for traditional (see Table II). A recent report concluded companies to start setting up their own that business-to-business on-line sales will trading communities over the Internet. They expect to: are no longer allowing technology companies ... rise to nearly $2.7 trillion in 2004, up to come in and reap the rewards that they almost sevenfold from the $406.2 billion in could be realizing. Firms recognize that the B2B Web sales (Blackmon, 2000). real value of e-business is not created by technology suppliers, instead, it is by the GM, Ford, and DailmerChrysler trading communities. The role of technology Currently, both GM and Ford offer Internet companies is being scaled back accordingly. exchanges. On their Web sites, suppliers bid Traditional companies figure that if: for providing these automakers with the _...there's a fortune to be made putting parts they need. Usually, the lowest bid price industrial purchases on the Internet, industrial companies want it for themselves (Gomes, 2000). As a result of this effort, economists estimate that online transactions between companies will account for 10 per cent of the total transactions by 2004, up from the current 0.5 per cent. The big five As the big five accounting firms have attempted to switch their traditional consulting practices to e-business, they have experienced many challenges. They have attempted to replace their traditional consultants with e-business experts, however, it caused many consultants to be laid off recently. Among them, PricewaterhouseCoopers cut 1,000 jobs, Ernst \& Young laid off 5 per cent of its total consultants, and KPMG cut 350 consulting staffers. While these job cuts occur, there are many new consultants hired later. These new hires come from a background of e-business.This change allows their workforce's skill sets to match with the new Internet economy. The reason these consulting firms changed was due to the stiff competition from smaller consulting firms. While it is advantage to be a large organization when performing traditional consulting services, it is also a disadvantage when dealing with e-business. [190] In e-business, being small and flexible is a such initiatives now. The benefits [191]