Technology is being harnessed in many ways by businesses. In this section we will discuss two of these ways—e-commerce and enterprise systems.

E-Commerce

Since the collapse of the dot.com bubble in 2001, e-commerce has slowly been rebuilding momentum. Internet advertising is projected to exceed $12 billion per year before the end of the decade.⁸ And while e-commerce has already had a major impact on the sale of books, music, and airline tickets, it appears that companies such as Blue Nile, eBay, Amazon.com, Lending Tree, and Expedia will continue to disrupt and redefine other markets such as the jewelry, real estate, and hotel industries.⁹ In addition to dot.com companies, established brick-and-mortar companies such as General Electric, Wells Fargo, and Target will undoubtedly continue to expand into cyberspace—both for business-to-business transactions and for retailing.

The growth in e-commerce is occurring because the Internet has important advantages over more conventional marketplaces for many kinds of transactions. For example, the Internet is an ideal technology for streamlining the mortgage lending process. Customers can complete loan applications over the Internet rather than tying up the time of a staffperson in an office. And data and funds can be sent back and forth electronically.

Nevertheless, while building a successful dot.com business remains a tenuous and high-risk proposition, e-commerce is here to stay. The stock prices of dot.com companies will rise and fall, but the benefits that the Internet provides to businesses and their customers will ensure that e-commerce grows.

Enterprise Systems¹⁰

Historically, most companies implemented specific software programs to support specific business functions. The accounting department would select its own software applications to meet its needs, while manufacturing would select different software programs to support its needs. The separate systems were not integrated and could not easily pass data back and forth. The end result was data duplication and data inconsistencies coupled with lengthy customer response times and high costs.

An enterprise systemA software system that integrates data from across an organization into a single centralized database that enables all employees to access a common set of data. is designed to overcome these problems by integrating data across an organization into a single software system that enables all employees to have simultaneous access to a common set of data. There are two keys to the data integration inherent in an enterprise system. First, all data are recorded only once in the company's centralized digital data repository known as a database. When data are added to the database or are changed, the new information is simultaneously and immediately available to everyone across the organization. Second, the unique data elements contained within the database can be linked together. For example, one data element, such as a customer identification number, can be related to other data elements, such as that customer's address, billing history, shipping history, merchandise returns history, and so on. The ability to forge such relationships among data elements explains why this type of database is called a relational database.

Data integration helps employees communicate with one another and it also helps them communicate with their suppliers and customers. For example, consider how the customer relationship management process is improved when enterprise-wide information resides in one location. Whether meeting the customer's needs requires accessing information related to billing (an accounting function), delivery status (a distribution function), price quotes (a marketing function), or merchandise returns (a customer service function) the required information is readily available to the employee interacting with the customer. Though expensive and risky to install, the benefits of data integration have led many companies to invest in enterprise systems.

⁷ Time line published by BBC News at http://news.bbc.co.uk.

⁸ Stephen Baker, “Where the Real Internet Money Is Made,” BusinessWeek, December 27, 2004, p. 99.

⁹ Timothy J. Mullaney, “E-Biz Strikes Again!” BusinessWeek, May 10, 2004, pp. 80–90.

¹⁰ Enterprise systems is a broad term that encompasses many enterprise-wide computer applications such as customer relationship management and supply chain management systems. Perhaps the most frequently mentioned type of enterprise system is an Enterprise Resource Planning (ERP) system.