OR/MS Today - August 1999

August 1999

OR/MS, the Web and E-commerce: Eyeing Enormous Opportunities

By Thomas Magnanti
magnanti@mit.edu

The voyage of discovery lies not in finding landscapes but in having new eyes.
— Marcel Proust

As I opened today's newspaper, I read an article about collective purchasing power on the Internet. The idea is for people to collectively, and incrementally in real time, form a buying block to negotiate lower prices for products. The same newspaper contains an advertisement for free computers — simply purchase Internet service and receive the hardware at no cost. Some months ago, I had seen a similar advertisement — obtain a free computer by agreeing to a minimal usage per month and to permitting advertising banners to stream across your screen.

Today is not particularly unusual. Every day, we all learn about new services on the Web. Sites now permit us to easily purchase almost everything imaginable, to download music, and access news services as well as research libraries. URLs now routinely appear on our TV screens and in print ads. As we all know from such famous sites as Amazon.com, Travelocity and Ebay, the Web is fundamentally changing many industries, particularly those that rely on the distribution of information and physical products across space and time. How long will it be before we are reading our own individually tailored newspapers printed at our homes just as we awaken?

As will be no surprise, the growth of the Web is staggering. It currently has more than 100 million users. International Data Corporation (IDC) has estimated that the number of Web users worldwide will grow to more than 320 million by the end of 2002 and that the number of devices used to access the Web will grow from 78.8 million to more than 515 million over the same period. IDC has also estimated that the amount of commerce conducted over the Web will top $1 trillion by 2003. That's right, $1 trillion.

The Web and e-commerce should be important to INFORMS and the OR/MS profession. It is gratifying to see that our profession has begun to embrace the Web. INFORMS has a wonderful Web site, and as of this month, is now providing its journals electronically. It is working to use the Web more extensively in its operations, ranging from conference registration to electronic voting. INFORMS, and particularly its College of Marketing and its Information Systems and Computing Societies, have been offering conferences on e-commerce and promoting e-commerce research. Papers presented at our national meetings have addressed a wide variety of issues in e-commerce: electronic markets, intelligent electronic catalogs, quality management in electronic business-to-consumer services, electronic commerce and health care, networked organization partner selection strategies, negotiations in electronic commerce, knowledge brokering, logistics and information channels in electronic commerce, pricing digital products, and consumer psychology in Internet shopping.

And yet, it seems that as a profession, we should be doing more. What other profession has the capacity to contribute to almost all aspects of the Web and e-commerce — from infrastructure design to exploiting the Web for wider reach, greater collaboration, quicker response and better decisions? OR/MS researchers have the ability to contribute to the underlying technology, for example, in designing the Web's infrastructure, or in routing messages and information. OR/MS professionals have the capability to help in designing and managing the underlying databases. The profession's researchers have the potential to analyze and improve Web operations. Within the last 24 hours, response time on the Web in the United States has varied by a factor of four and the percentage of packet loses has varied by a factor of over 20. Shouldn't OR/MS analysts be able to help in understanding this phenomena and in improving performance? The community has certainly done so over the year in the closely related field of telecommunications. What about developing algorithms to improve Web search engines?

And, how about business on the Web? Is there another profession better able to contribute to marketing on the Web or to Web-based supply chain management? Doesn't OR/MS have the wherewithal to design and manage Web-based auctions? What about data mining and extracting usable information from the enormous amount of Web transactions? What are the implications of the Web for organizational forms or human interactions? Again, shouldn't INFORMS members be able to make substantial contributions?

The OR/MS profession has the potential to play a leading role in one of the most important and exciting societal developments of our lifetime. To do so, the profession needs to commit itself to understanding the Web's operations and its potential. It also needs to put a stake in the ground and unequivocally state that it will be a major player in this arena. Currently, some of our members are working to establish a subdivision on e-commerce — to facilitate greater interdisciplinary interactions within INFORMS in this contextual domain, to promote the integration of e-commerce into the OR/MS profession, and to increase INFORMS' visibility within the e-commerce community. This certainly is a very important step. INFORMS also needs to attract more Web and e-commerce research, and project a greater e-commerce presence. I am surprised that a search of abstracts at our national meetings from 1990 to the present turned up only about 20 papers on e-commerce or on the Web. Surely we should be doing more. As Proust has said, for a voyage of discovery, we need new eyes, eyes that will permit us to see how to tap on our methodologies, our modeling expertise, and our experiences in other topical arenas to contribute in significant ways to the Web and to e-commerce. The opportunities for the profession are, indeed, enormous.

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