ELECTRONIC COMMERCE BETWEEN BUSINESSES
Internet commerce is growing fastest among businesses. It is used for coordination between the purchasing operations of a company and its suppliers; the logistics planners in a company and the transportation companies that warehouse and move its products; the sales organizations and the wholesalers or retailers that sell its products; and the customer service and maintenance operations and the company's final customers.
Early computers were used for scientific and military purposes, not for commerce. They first made their way into commercial applications in the 1960s, with ERMA (the Electronic Recording MachineAccounting). Banks were swamped with the growing volume of checks that needed to be processed (between 1943 and 1952, check use had doubled from 4 billion to 8 billion checks written each year). By automating the function with ERMA, the first bank to use the computer, Bank of America, reported that nine employees could do the job that previously took 50 people.1
The commercial use of computers quickly spread as companies in a variety of industries used them to keep accounting ledgers, administer payroll, create management reports, and schedule production.
In the 1970s and 1980s, businesses extended their computing power beyond the company's walls, sending and receiving purchase orders, invoices and shipping notifications electronically via EDI (Electronic Data Interchange). EDI is a standard for compiling and transmitting information between computers, often over private communications networks called value-added networks (VANs). The 1980s also brought the introduction of computer-aided design (CAD), computer-aided engineering (CAE) and computer-aided manufacturing (CAM) systems that enabled engineers, designers and technicians to access and work on design specifications, engineering drawings and technical documentation via internal corporate communications networks.
The cost of installation and maintenance of VANs put electronic communication out of the reach of many small and medium-sized businesses. For the most part, these businesses relied on the fax and telephone for their business communications. Even larger companies that used EDI often did not realize the full potential savings because many of their business partners did not use it.
The Internet makes electronic commerce affordable to even the smallest home office. Companies of all sizes can now communicate with each other electronically, through the public Internet, networks for company-use only (intranets) or for use by a company and its business partners (extranets), and private value-added networks.
Companies are quickly moving to utilize the expanded opportunities created by the Internet. For instance, Cisco Systems, Dell Computers and Boeing's spare parts business report almost immediate benefits after putting their ordering and customer service operations on the Internet. They are so convinced of its benefit to their own companies and their customers that they believe most of their business will involve the Internet in the next three to five years.2
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