Electronic Commerce

Electronic commerce or e-commerce is technically defined as electronic sharing of information at any point during a sales transaction. Large businesses have engaged in a form of electronic commerce called electronic data interchange (EDI) since the 1970s. However, not until the early 1990s and the invention of the World Wide Web (WWW) did electronic commerce proliferate. The WWW is the portion of the Internet that supports graphics, audio, and video as well as links to other documents. Accordingly, to conduct basic e-commerce on the WWW requires capital investments that are a fraction of those required previously. The relatively low cost and user friendliness of the WWW spawned numerous innovations in electronic business communications that quickly rendered too narrow the technical definition of electronic commerce.

In the late 1990s the term electronic business (e-business) was coined to refer more broadly to inter- and intra-organizational sharing of any type of information through electronic means. Although e-commerce and e-business differ technically, e-business progressed naturally from organizational investments in e-commerce, so the two terms are often used interchangeably.

E-business activities are commonly classified by their strategic design. At the highest level, the two most common strategic classifications are business-to-consumer and business-to-business, although there are additional categories such as business-to-government and consumer-to-consumer. The category with the greatest economic potential is business-to-business. Through economic ups and downs, businesses continue to migrate significant portions of their operations to the Web. According to the Gartner Group, business-to-business investments will reach 7.3 trillion (or 6.9% of the global economy) by 2004.1 At the same time, by 2004 an estimated 35% of U.S. firms will bill customers online, saving on average $3.35 per transaction.

Some potential benefits of e-business investments include the following:

• Less administrative paperwork
• Streamlined business processes
• Dramatic long-term cost savings
• Improved customer service
• Improved cash management
• Ability to attract business from new markets
• Stronger relations with trading partners

Being tightly coupled to the Web also presents a number of complex challenges to the business community:

• Identifying appropriate practices for management, organization, and control of e-business activities
• Developing solutions to connect two or more companies with highly complex and very different organizational and technical infrastructures
• Identifying appropriate marketing strategies for products and services
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• Governing the myriad activities in e-business, including complex challenges to accounting and legal institutions

Numerous e-business initiatives are currently applied in health care. Insurance companies, hospitals, and provider offices often consider investments in complementary e-business strategies as they invest in applications and infrastructure to become compliant with the Health Insurance Portability and Accountability Act of 1996. Examples of specific e-business efforts in health care include the following:

• Partnerships among providers and other health care companies to create health care content and communities targeted to specific audiences
• Web sites designed to facilitate physician–patient communication
• Creative employment of the Web for telemedicine applications