By Rao, Raj
European Business Forum , No. 7
There are two powerful and related trends that are fundamentally reshaping the global economy: the exponential growth in internet connectivity, fueled by the widespread dispersion of information technology, and the growth in electronic commerce networks as a channel for conducting international business.
By 2005 it is expected that one billion people will be connected to the internet, more than 75 per cent of them outside North America. At about the same time, electronic commerce networks will exceed seven trillion dollars in annual transactions. Most experts agree that we are at the early stages of the internet revolution and the emergence of an increasingly networked global economy. Faster, less expensive and smaller computers, appliances and intelligent devices, combined with expanding communications capabilities, are enabling more people and institutions to connect to the network.
The internet's openness, however, poses problems as well as great promise. It has been generally recognized that commercial transactions require a high level of trust and confidence in the integrity and security of the Net, before individuals will provide 'meaningful' or accurate personal data to electronic commerce networks.
The knowledge era
Many giant, vertically integrated manufacturing firms, which were the product of the Industrial Revolution, are currently morphing into internal and external knowledge networks. These managed networks promise superior information processing, knowledge creation, and adaptive properties to conventional firms. But they also create unique operating environments distinguished by reciprocity, interdependence of ties, and non-hierarchical means of control. The key linkages between such networks is knowledge about customers and consumers, and advanced technologies to manipulate information into valuable insights and to make that available to network participants--more specifically, the use of customer relationship management (CRM) systems incorporating data mining techniques.
The growth of electronic commerce involves two such networks: opportunity and customer. The opportunity network is organised around customer knowledge rather than supplier data. At its core is a marketing organisation specialising in collecting and disseminating market information about customers, markets, and suppliers. It negotiates, brokers, and processes transactions and co-ordinates custom purchases and projects for customers. It plays the key role in regulating product standards, network security, and exchange behaviours for its customers and participant supplier companies. The quality of its market knowledge (about consumers, consumption, and lifestyle-related information, products, and suppliers) represents its primary source of coordinating power. The goal of the focal marketing firm is to obtain the best match between customer needs and available products and services at the best value.
A customer opportunity network is a body of customers organised around a central information company that serves as a clearing-house for the marketing transactions it brokers and regulates on behalf of its member customers and participating suppliers, which represent a range of products, technologies, and services.
There are early signs of a few companies re-calibrating their performance around such networks, using metrics that bear out their customer-focused strategy. …