Beyond the e-business revolution

E-businesses are not in decline, rather they are growing up. Governments should take note. With astonishing speed, the mood on e-business has swung from hysteria to hangover. Pick up a newspaper these days, and you get a distinct sense that there is almost a gloating about the gloom.

A randomly chosen issue of the Financial Times in March included a front-page story predicting a massive shakeout of business-to-business (B2B) exchanges; a report on a survey showing that e-commerce among US manufacturers is still tiny; and a column on the imminent closure of eToys, not so long ago a dot.com darling. Not to mention an article on the results of a major company whose profits had been held back by its Internet investments – its share price slipped on the news, whereas a year before (when web investments were all the rage) the same story would have produced exactly the opposite effect.

It would be tempting to conclude from such a barrage of dreary headlines that the e-business “revolution” is over before it even really got going. Tempting, but wrong. As in the currency markets, it seems, sentiment on e-business overshoots. Just as the initial hype was overdone, so is the current doom and gloom. The Internet still represents an enormous upheaval for business, but its impact will be felt in rather different ways, and perhaps at a different pace, than many people originally assumed.

What makes me so sure? For one thing, on closer inspection the message from the media is not quite as gloomy as it seems at first glance. A few of the fledgling B2B exchanges are likely to succeed, says that same Financial Times article, and will grow very fast. E-commerce may still represent a small share of business among US manufacturers, but their recent heavy investments suggest it could be about to surge. And the column on eToys argued that, although it would be harder work than before, there were still plenty of opportunities for smart investments in the new economy.

Next, there is the experience of my own company, which tells me that the e-business revolution is very real. Four years ago, the Economist Intelligence Unit sold well over 90% of its business information in print form, mostly in reports published to a quarterly rhythm. Now, more than half of the company’s sales are electronic. Customers’ expectations have changed dramatically, and so has our pace of analysis: we have introduced daily services, data services, e-mail alerts, an Online Store for instant delivery over the Internet, and even a website (www.ebusinessforum.com) entirely on the subject of global e-business. Under the impact of the Internet, every part of the company’s operations, from editorial to marketing and sales, has undergone a radical transformation.

Is my company’s experience exceptional? Stories from other industries suggest it is not. E-business conferences, for example, though no longer full to overflowing as they were in the days of Internet fever, are still infused with a deep conviction about the sweeping scale of change that is under way. As the keynote speaker from a multinational company put it at one recent event, he remains an e-business “evangelist”.

But the gospel being preached has changed, in several vital respects. First, it is no longer about dot.coms (this revolution, like others, is devouring its children). The real story is about the e-transformation of traditional businesses, from the big carmakers setting up B2B exchanges to the major retailers reorganising their supply chains and their distribution channels. If even a diversified industrial giant such as GE (General Electric Company) sees the Internet infusing every aspect of its business – to the extent of having managers from the chief executive downwards tested on their e-knowledge – then every company must reckon on becoming, to a significant extent, an e-business.

Secondly, the heady talk of brave new business models (let alone of new laws of economics) has faded. Instead, the focus is on how best to apply the potential of the Internet to existing operations. Intensified competition is compelling companies to examine afresh where their true strengths lie, and to see how these can be web-enhanced.

A third change is a return to the discipline of the bottom line and return on investment. Gone are the days of wild spending on Internet schemes with overly optimistic revenue assumptions. But that still leaves ample scope for investments whose benefits can be carefully calculated. Some of the clearest Internet-related benefits may come in cost savings rather than new revenues: as companies like Oracle and BT have shown, such savings can be huge.

The important point about these shifts in e-business thinking is that they do nothing to diminish the magnitude of the phenomenon. If anything, they merely make the challenge deeper and more pervasive. Governments should take note: as every business becomes an e-business, investment will flow to countries where such companies can flourish. The dot.com crash does not get governments off the hook of needing to provide a business environment suitable for the digital age.

©OECD Observer No 226/227, Summer 2001 




Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.6% May 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Mar 2018
Last update: 06 Jul 2018

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • International co-operation, inclusive growth and digitalisation lead the themes of the 2018 OECD Forum in Paris on 29-30 May, under the banner of What brings us together www.oecd.org/forum. It is held alongside the annual OECD Ministerial Council Meeting on 30-31 May, chaired this year by France with a focus on multilateralism www.oecd.org/mcm.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018