Refining THE Rules OF COMMERCE.

• Author: Heffes, Ellen M.

While the "dot-com" train has come to a screeching halt, e-commerce forges forward, transforming the structure and changing the rules of commerce and communication.

The rules of commerce are undergoing a fundamental transformation as the structure and process changes, from brick-and-mortar shops to clicks-and-mortar entities. This emerging shift is redefining commerce and communication as the Internet becomes even more capable of supporting real-time electronic connectivity between every individual and every business in the world. To gain perspective on the critical issues, the opportunities, as well as the pitfalls, Financial Executive spoke with Peter S. Cohan, president of a management consulting firm, Peter S. Cohan & Associates, and author of books, including E-Profit (AMACOM).

EH: Let's get up to speed with your perspectives and definitions of e-commerce and today's environment.

PC: A key factor about the present environment is the huge impact of the dot-com crash. Before the crash, dot-coms were scaring traditional companies into moving into e-commerce without much thought; [they were] just investing in it, hiring consultants and "doing something" to feel like they weren't falling behind. In fact, looking at those companies with spin-offs, or Internet divisions created that they planned would spin off -- and are now either being closed down or spun back in -- it looks like many large companies perceived e-commerce as a fad they had to engage in. Now, they're not feeling that sense of urgency and are, in fact, looking at the Internet divisions they created as opportunities to save costs.

Now, we're moving into what I hope is a more mature phase, one in which companies look at e-commerce in a more rational and less emotional way. With the evaporation of $4 trillion of wealth over the last year or so, if the one thing that has been accomplished is to get financial executives to think about e-commerce from a more rational perspective -- that would, at the very least, be a benefit.

Now for some definitions. I define e-commerce as: using the Internet, which is basically nothing more than a global and relatively inexpensive wide bandwidth communications mechanism, to increase the value that a company provides to its key stakeholders. The term "value" is essentially lowering the cost or increasing the quality of service, or both, between a company and its "stakeholders." Stakeholders include a lot of people, but for the purpose of e-commerce...