Getting ready for E-commerce.

• Author: Gunyou, John

Governments and communities need to take advantage of E-Commerce by developing effective public-private partnerships, providing workforce development, facilitating technology integration, and planning for economic restructuring.

Electronic commerce (E-Commerce) is steadily changing the way businesses and communities function. Like technology revolutions of the past, E-Commerce is transforming how communities look, act, and feel. Some changes will be positive, and many people will enthusiastically take up the cause. However, some changes may catch communities and businesses off-guard, bringing them unexpected and undesired competition from across cyberspace.

Finance officers and public managers cannot afford to passively wait for the inevitable and breathtakingly rapid evolution that is taking place to form our brave new electronic world. Never before in history has technology been changing faster than projects can be implemented. And, these changes are as inevitable and profound as the industrial revolutions that transformed communities in the past century.

To capture the opportunities that E-Commerce holds, local leaders must learn as much as possible about E-Commerce, and with costs and benefits in mind, proactively review and plan for how E-Commerce will impact their communities' socioeconomic patterns and business practices. A few months ago, Internet business sales exceeded $1 billion, a fourfold increase from the end of 1996. By the end of this century, it is expected that commerce over the Internet will top $200 billion. Whether that is new money being generated or shifting of revenue from other sources, the effects of E-Commerce have implications for businesses and communities that cannot be ignored.

What is E-Commerce?

Electronic commerce is not some mystical new technology. It is simply the transfer of funds, goods, services, and information online - either over the Internet or across private networks, (e.g., intranets or extranets). In the business world, E-Commerce began in the 19th Century with the telegraph transmitting stock quotes. With the merger of computer and telecommunications technology, E-Commerce has evolved into today's highly complex and instantaneous electronic trading processes that can eliminate more time-consuming and costly paper-based transactions. Consider the following:

* a face-to-face banking transaction with a teller costs 76 cents,

* an ATM transaction with a kiosk connected via dedicated lines costs 43 cents,

* a telephone transaction costs 24 cents, and

* an Internet-based transaction only costs about a penny!

With those kinds of economic incentives, what does the future hold for financial transactions?

E-Commerce today has quickly moved beyond Web-based electronic brochures and catalogs (essentially electronic copies of paper-based media) to interactive, database-driven secure sites for business-to-business and business-to-customer exchanges. Many of the business applications readily translate into government business applications. Examples include: electronic procurement systems that improve vendor access and reduce the costs of obtaining supplies and equipment; smart cards that replace multiple government cards and improve security; electronic filing of licenses, registrations, applications and fee payments; and interactive Web sites that allow users to do everything from viewing development site information to registering their children for recreational sports. At the federal level, E-Commerce technologies are changing the spending and savings habits in government procurement. For example, by January 1999, all federal payments and benefits must be delivered using electronic funds transfer. This trend is expanding at the state and local levels with vendors increasingly doing business with government electronically.

A recent survey by the International City/County Management Association (ICMA) and Public Technology, Inc. (PTI) showed that 97 percent of U.S. cities use computers to support city operations, and depending on city size, nearly half reported having some sort of Web site. The site's primary purpose was information dissemination, a simple form of E-Commerce that saves personnel time in responding to routine requests for information.

To date, people typically surf the Internet for entertainment, knowledge, and to make small purchases using secure browsers that encrypt credit card numbers. One popular example is the rise of a virtual bookstore. Because these transactions take place on an open network, privacy and security remain the top concerns of persons using the Internet.

Soon, however, according to the American Bar Association, "the Internet will be used to conduct serious commercial transactions where it is not merely enough to encrypt the message, but make sure that the message originates from the entity sending it and has not been altered or garbled in...