OR/MS Today - December 1999

December 1999

E-Business: A Road Just Begun

By ManMohan S. Sodhi

We have never traveled the e-business road before, but is there something in the past economies that we can learn from? One of my favorite songs is "Telegraph Road" by the rock group Dire Straits. It describes the organic growth of any economy around a channel of transportation, which could be a river, a road or (why not!) the Internet. How well does it describe e-business? Check for yourself:

A long time ago came a man on a track
walking thirty miles with a sack on his back
And he put down his load where he thought it was the best
he made a home in the wilderness

The Internet was started for many different reasons — military communications, research communications, sharing expensive computer resources — but none of them had anything to do with business. (My alma mater, UCLA, played a very important role in the creation of the Internet!)

and the other travelers came riding down the track
and they never went farther and they never went back

Other researchers from universities (and some companies) joined in. And some travelers made the road easier to travel like University of Minnesota researchers who created Gopher, and CERN physicists in Switzerland who created World Wide Web (WWW).

Then came the churches then came the schools
then came the lawyers and then came the rules
then came the trains and the trucks with their loads
and the dirty old track was the telegraph road

And there were newsgroups, including one for OR/MS professionals, sci.op-research and newsletters (see my October 1996 and December 1996 columns). There were communities like the Well. There were hackers and spammers and pornographers. There were politicians trying to figure out how to control the Internet. And the phone companies were figuring out ways to make it more expensive to get on the Internet. But the e-economy only began when the industry recognized the potential of the Web and began to use it.

The Internet did not create the trains and the trucks, but e-business has connected these to the Internet. Before e-business, there were still electronic communications using EDI (see my October 1998 column on EDI) to send messages to carrier companies. And you could call FedEx to track your packages. And within companies there were ERP systems to connect different parts of any large corporation, and more recently, there are supply chain planning systems. Now you can use the Web in conjunction or instead (see the April 1998 and June 1998 columns on Internet-enabled supply chains).

then came the mines then came the ore

There were the e-companies — Amazon.com, eBay, eTrade, AOL and others — and they all found new uses to mine the new e-world. Their stock prices are sky high presumably because nobody knows how deep and how rich this mine is. (See the April 1999 column on Internet stocks.)

The latest hottest items are exchanges and ASPs (Application Service Providers). Exchanges, like mySAP.com announced by SAP and another announced by i2 and HP, allow companies to trade using the web not only for one-off purchases, but also the regular long-term contractual purchases. (Refer to my April and June 1998 columns.) ASPs rent applications by the minute (or by transaction) so you do not need to have your own application installed on your computers. Sun's web-based offer of their Star Office suite is just the beginning. Imagine not having to invest in and maintain your own systems!

telegraph road was so deep and so wide
like a rolling river...

A new Agilent ad says that they are creating technologies to help the Internet handle 20 times more traffic. And you can move Internet bits over ether. And cable is being brought to you by your long-distance company. Your Palm Pilot is connected to the Web and so is your Nokia cell phone. And ADSL downloads the Web to your home at very high speeds via the regular telephone line. I used to like to go to work
but they shut it down...
yes and they say we're gonna have to pay what's owed
we're gonna have to reap from some seed that's been sowed
Are there bumps in this e-business road? Are there people in this wonderful e-economy who will not have jobs? Can it change even for those who do? Why are investors so cheerful and confident.com? What about the Digital Divide and new haves and have-nots? Will e-business increase the divide? You can bet on it, but there is nothing stopping you from volunteering to help, and you can start by visiting www.helping.org.

but believe in me baby I'll take you away
from out of this darkness and into the day...
from all of these signs saying sorry but we're closed
all the way down the telegraph road.

But right now it seems unlikely the e-Party will end. On the contrary, it has hardly begun. We have plenty of opportunity to use optimization and supply chain planning inside and across companies. We will have even more opportunities with the new marketplaces and exchanges. You might even start your own ASP and watch the money dribble into your bank account. How far do you want to take the new telegraph road?

Dr. ManMohan S. Sodhi is president of the Logistics Section of INFORMS and manager in supply chain planning with Andersen Consulting in Chicago. He is the founder of the OR news group, sci.op-research, and helped design and create INFORMS Online. He welcomes your comments at MohanSodhi@AOL.com.

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