E-Business is Dead, But Not Buried

In this Incarnation, E-Business Comes Back as a Serious Tool to Increase Business Effectiveness
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It's time to rejoice: E-business is dead! Long live e-business!

First, the obituary. E-business was born in 1995, and died in the summer of 2000.

At its birth, e-business was widely heralded as a magic elixir for businesses big and small. E-business promised to increase revenues, reduce costs, and attract a worldwide customer base—all for the price of a Web site. Messiahs preached e-business. Businesses converted to e-businesses in droves. And the press celebrated the "New Economy." E-business was going to change the world.

E-business grew rapidly as an infant. Leveraging its Internet ancestry, its first demonstrable skill was communication. Using Web sites to display marketing information, collect customer feedback, and give companies a 24x7 virtual presence was almost irresistible. These information sites, often called "brochureware," made everyone sit up and take notice of e-business.

During puberty, e-business grew like a weed and matured rapidly. Its success as a business communication vehicle led to the first e-business transactions—online sales. It turned out that brochureware whetted customers' appetites to consummate sales immediately. Electronic catalogs and online ordering capabilities—e-commerce—marked e-business's growth through puberty. Now e-business was affecting revenues. Customers, and companies, could do business 24 hours a day, 365 days a year. E-business attracted more and more converts. By 1998 all Fortune 1000 firms were using the Internet in some way and 63% were doing e-commerce (Survey of Advanced Technology—1998 by Chris Pickering). Enthusiasm for e-business bordered on the hysterical.

Businesses looking for venture capital jumped on the e-business bandwagon driven by venture capitalists. No business plan was complete without an e-business component. It even got to the point where business plans needed only e-business components. Startups selling the same old products but using the novelty of the Web to do it had no trouble getting funded.

Established economic principles were pooh-poohed by e-entrepreneurs, venture capitalists, and the press alike. Profits didn't matter—"mindshare" did. Cost control was for anal-retentive accountants—e-businessmen spent whatever it took to attract customers. Cash flow? Where'd you hear that tired old phrase? The trick in the new economy is to blow through the latest round of funding so you can go back for more. Besides, once we issue the IPO, those astronomical multiples will take care of all our cash needs for a long time.

By the time e-business reached adolescence its future looked bright. The naysayers grew silent, as experience seemed to support the prophets of the New Economy. Dot-coms were funded, and grew, in the absence of profits—in some cases, in the absence of even the hope of profits. Stock-market valuations soared, and soared, and soared. What could you say? It seemed that there was no end in sight. Maybe e-business was magic, maybe e-business could work miracles.


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