How to survive in e-business.

• Author: Pinsley, Mark
• Position: Business & Finance

"The need for companies immediately to establish an Internet business presence to stay afloat--and to have the resources on hand to do it right--has become critical."

INCREASINGINLY, companies of all types and sizes are being confronted with "make-vs.-buy" decisions. Which processes and production should be done internally and which should be outsourced?

The decision sometimes is. based on strategic considerations--doing internally those tasks that are "core competencies" and outsourcing noncore, but still profitable, initiatives. Other times, the decision is based on cost, and sometimes on expertise or "bandwidth." in other words, does a company have the necessary people, with both time and knowledge, available to perform the task at hand?

For companies transforming to e-businesses, the threat of rapid displacement by Internet upstarts and the irresistible lure of establishing favorable positioning among the Internet stocks are other important considerations. Dot.com firms, once thought the wave of the present and future in nearly every industry, are quickly losing their luster among jaded investors seeking increased proof of their future potential. Although many factors contributed to that downturn, experts predict that investors will hold Internet businesses accountable for increasingly stringent performance standards.

The need for companies immediately to establish an Internet business presence to stay afloat and to have the resources on hand to do it right--has become critical. Statistics speak for themselves. For instance, International Data Corp. predicted that, by the end of 2002, business-m-business sales will have soared nearly 12-fold to $331,000,000,000 from $28,000,000,000 in 1998. Fifty-five million consumers aged 16 or older are using the Internet to research purchases, and 28,000,000 of them are actually buying, say Nielsen Media Research and CommerceNet. The statistics present a compelling case for companies of all types to move speedily into the electronic marketplace.

Taking a business online involves managing complex technologies and infrastructures that require entirely new in-house skills and competencies, and mastering them with unprecedented rapidity to maintain competitiveness. Employees charged with managing an inventory system in earlier times may not be immediately prepared to do so with marketing information, product descriptions, and digital images when their company transforms itself into an e-business...