PartC

To start a realistic ecommerce project it is necessary to understand something more than just the needs of the market and the need of the company. The profile of the company and the state of its Information Technology (IT) knowledge will influence the success of any project. It is known that the activities of innovation and organisation are quite contradictory. Staff attitude towards innovation within a company, and the character of the kind of Information Technology (IT) that is already in use, fall to be analysed. This analysis is crucial to finding appropriate ecommerce solutions.

C-1 Impact of Information Technologies on companies

Innovation can spring from the use of new technologies and the evolution of computing. New technologies change the life of cyberworkers and of consumers - the mobile phone is a good example of such a lifestyle revolution. Nevertheless, it is important to understand also how they revolutionise the world of companies.

During the IICE (International Institute of Electronic Commerce) in Paris on 14 January 1999, M P. Lemoine, Manager of the Galeries Lafayettes commercial web site offered a model of IT (Information Technology) use and its global impact on the company organisation. Dataprocessing, he stated, modified the daily activity of any company at three levels:

ðProduction: The way goods are produced is being transformed by new technologies. The best example is probably the car industry. In the Mercedes factory in Germany, for example, the factory floor now looks more like a laboratory. Computers are in control of most parts of production. Workers have a variety of different skills and are therefore able to operate at different levels of the production. They are no longer specialised in one task. It is clear that in terms of cost-effectiveness, thanks to computerisation, the optimum is being achieved

ðAdministration: New technologies impact also on the administrative department of a company. Cost-effectiveness is being reached here, not by downsizing but by improving the information system. Basically, a map of all tasks is drawn, and from this status survey, improvements are contemplated, particularly those involving IT.

ðProducts and Services: Data processing as part of services or products themselves is also a key element which drives change within companies. Last Christmas, 18 % of toys had interactive functions, and could be connected and used anywhere. The influence of computerisation also changes the nature of the market. The use of computer systems in cars will sooner or later produce unemployment among garage owners. Only the firm that produced the car will be able to repair it.

It is important to note that dataprocessing has also, though EDI, increased the speed of trade: In the car industry, an example of a successful EDI system is CALS (Computer Assisted Lifecyle Support). Telecommunications have therefore a great impact on the shape and development of companies. The main challenge is how to master the evolution of the use of dataprocessing at different levels in the company, in order to change the value chain of work, and thus increase turnover.

C-2 Innovation and Organisation – a Clash of Forces that Generates Conflict

The task of company organisation can be characterised the following way: Its aim is to reduce to uncertainty to a minimum. The objective of organisation is to programme, to standardise and to co-ordinate. The fundamental basis of company organisation is generally based on the Taylor theory of industry and Crozier’s theory for bureaucracy. However, the current market is changing quickly; the life of a product is becoming shorter and shorter. Therefore, organisations must acquire new skills - they not only need to know how to programme the work, but also how to innovate.

What is innovation? According to J. Schumpeter, it is a process that constitutes the set of steps which are required to transform a new concept into a product or service which is ready to be sold on the market. To discover a new concept, intuition may be more helpful than the ability to organise. Sometimes too a creative idea emerges from a simple insight. Finding solutions hardly ever come from long mature thoughts. In addition, innovation often involves destruction of the old.

Frequently, thus, it seems that managers have a dilemma - organisation and innovation are two opposite logics. The objective of organisation is to reduce uncertainties in all process whereas innovation uses uncertainties to be able to change the order of things! Managers are thus faced with a conflict. The more they try to formalise working methods, the more they limit their capacity to evolve and innovate. On the other hand, the more they promote change, the more difficult it becomes to control the company.

How can managers then bring a functioning innovation culture to birth in a company? As capacity for innovation implies that a person will think or re-think by himself how the company can improve its process, it means that the organisation needs to be forgotten for at least a little while. Thus, this state of mind should be accepted within the company. There is less risk in this attitude. The staff feel more comfortable about thinking of new projects or simply in understanding new challenges for the company. According to Norbert Alter, a well-known teacher at Paris-Dauphine University, innovation is always characterised by non-adherence to rules within a company, but that this subversive behaviour is a unique source of unexpected efficiency. Innovation often flows, for example, from informal meetings.

Starting an innovation campaign within the company is, therefore, a priority. The usual reaction of staff, however, is to refuse to accept change. It is culturally very difficult for most people to accept that changing processes and trying new ideas is now the main source of development. They usually argue that the new system will be worse. In fact, changing systems will always imply additional work. This should be taken into account and acknowledged if success in the changing process is to be attained. In terms of business process re-engineering, the convincing staff is always the most time-consuming task, and the most expensive one.

The previous innovation processes that existed within the company must be analysed and, even if it is difficult, a framework created that allows new concepts and ideas to be discussed. Internet technology is a mechanism that is based not only on data transfer like EDI but also, and this is probably the most important factor, on information and ideas sharing. A good example of use of Internet technology in this way would be the creation of specific forums according to the company’s activity in order to allow the whole staff to exchange idea on line using a question and response model. Virtual brainstorming by all the staff on how to market a product, for example, could be an efficient way to help the marketing department.

Even if innovation generates conflict, skilled people have acquired experiences on leading such BPR (Business Process Reengineering) projects. Therefore, these aspects of innovation are increasingly well known, and much better managed. For instance, now we know that training people will, on average, correspond to 20 % of the budget. If this money is not spent on allowing people to learn how to use the new tools, the innovation project is likely to fail.

C-3 The Technological History of the Company

The extent of use of IT and software in one industry and country to another varies greatly. For example, in the retail sector in France and Italy most small shops use a simple cash machine whereas in the US, the use of software to handle cash and stocks automatically, and to deal with the majority of accountancy tasks, is widespread.

We can assume, however, that the use of Microsoft software such as Word and Excel has become commonplace. In terms of network use, most of people have used Internet at least once, especially within large companies. But very few people master information research skills, and far fewer use this tool for the economic development of their company.

What about the information system of companies? It can be defined the following way: It is composed of all activities that help to obtain the right data, to transform it according to the needs of each task within the company, and finally to diffuse it. This is achieved by taking into account all the constraints of the system. All inputs are from different sources but processed within the system, using the data previously archived. The result of this work is transmitted to several destinations and the datawarehouse updated. To achieve these goals, companies use IT of different levels of efficiency.

The main objectives of information systems are to maintain the global coherency of information flows and therefore internal work tasks. In this way, an efficient information system will help the company to interpret every signal received from the environment. The system deals thus with both external and internal information sources, in order that managers are able to accurately anticipate product demand.

According to H.Tardieu, D.Nanci et D. Pascot, édition, the information system in the organisation must provide access to all the information which has been used and tasks that have been performed by the company in the past. To support this task companies use:

According to Catherine Ledig, a company’s information system can be described in the following way:

By linking different parts of the information system, the organisation is improved. The R&D Departments of most industries use the most sophisticated CAO.

The administration department at the centre of the diagram uses the following tools:

üGroupWare tools (depending on the company size), such as Lotus notes, Exchange or GroupWise.

Depending on the position of the company in the distribution channel, the marketing and sales department will either use EDI, or no computer system at all, if they are selling to final consumers. However, electronic business will considerably change this, because, being able to order from home with a personal computer, a consumer can directly use the computer system of the company. The challenge for companies is to manage all the varieties of data entered into their system through this channel.

EDI is also in widespread operation between companies. In this area electronic commerce will have an effect too. In fact, EDI was used initially with proprietary protocols for each industry, such as the allegro protocol. A lack of standards limited its use, first to the companies of this sector and latterly to large companies. The EDI system that was used at its inception required specialised telecom connection and computers which SMEs could not afford.

Electronic commerce thus introduces the opportunity to define standards right across all industry sectors and company sizes requiring no specific connection. Small companies, as well as connected consumers, can be integrated into the information system.

Nowadays, Intranet technology appears to be the necessary tool which will allow the information system to evolve towards a much more friendly users systems, more open and less tied to the company's environment.

At the origin of the Intranet is the client-server. But the client server emanated from the development of mainframes. The evolution of new information and communication technology depends therefore on the logical development of computer administration and management. A technology change never happens by chance but is created out of the need to find solutions to the challenges posed by the previous model. Examination of the drawbacks of the mainframe will clarify the accession of the client-server. Exploration of the latter will indicate the origins of the network oriented model (Intranet, Extranet, ecommerce).

The Origin of the Client-Server

During the 80's, as a result of new pressures on companies, the client server came into being. Marketing managers needed data about customers to start studying their needs. The mainframe had evolved from the challenge of production. But after 1973 the new challenge was to sell, not simply to be able to produce. The driving force of the client-server was the adoption of graphic interfaces such as Windows 3.11.

But it was Novell, a network oriented tool that boosted the technology. The principle behind the technology was to link applications hosted on remote servers and used on workstation, with the latter being tied to databases managed by large systems.

In 1996, one notion became highly important - the Datawarehouse. With this innovation data was collected, combined and saved in one place. The company could now start to analyse data about its customer. Naturally products change quickly. Customers, in comparison, generally remain the same in terms of needs.

The new trend was named "downsizing"; servers had to be specialised. Mainframes were becoming less important but still needed for large companies. The french revue Decision Micro & Réseau (8 September 97) noted the following, “It is hard to believe that some companies will stop using SNA sites, and DB2 Databases, with Unix”. In terms of computer change, things happen just like in any other field, changes are never sudden, and technologies pile. They superpose previous ones. In terms of BPR (Business Process Reengineering), new projects should, in most cases, be built on the company’s background.

The Limits of the Client-Server

Some problems arose for the client-server. In the first place, its communication protocols were not all using the same standards. And although linking different client-server architecture on different sites was technically possible, this technology was overusing the bandwidth. In addition, it was difficult to develop new applications on a large scale. In the end this model was mainly used internally at a company’s headquarters.The client server is an expensive technology, not necessarily to acquire, but to maintain over a long period. According to the Gartner Group, the initial acquisition of hardware and software only represent 15% of the total budget required to operate a client server.

It is noteworthy that only 16% of client server projects during this time respected the initial budget and that so many of them were a failure. It may be concluded that the main problem with this technology was the lack of standards. For example, MNCs experienced difficulty in sharing data between different type of platforms. A universal communication system was needed, no matter what the hardware used. A new technology offered a possible solution to this challenge…….

To conclude on the technological history of the company, we can use the following tables to sum up the three main stages of technologies that have been and will be used by the company :

Next step : The network oriented model

We could briefly summarise the evolution of data processing and its possible evolution with the following table:

Mainframes model	Client-Server	Networks oriented
Before 1980, architectures were centralised around used calculators such as IBM or BULL. Workplaces are only interfaces with no processing capacity. Applications were developed under Cobol or PL1 with large databases. The 80’s saw the beginning of transactions and database improvement. System started to be more open with UNIX, SQL…	Networks occupy the central place within the company. Workstations that are personal computers have an increasing power of calculation. The need to share data is increasing too. The client-server uses two types of computers : Servers that ensure the management of data the sharing between users. Clients manage the graphic interface of personal workstations. Both use standard protocols (OSI : 7 layers) to communicate.	The Internet networks system is very close to the client-server model. The difference lies in the fact the client does not communicate with a specific server but with the global network. The new model is the Intranet that uses all Internet technologies within the frontier of the company. The objective is the fusion of both models: client-server and Intranet plus Internet to come to a new third model. Computers become network computers and the intelligence resides in the network.