In the business to business sphere, the net may create a radically different corporate fabric says Jon Woolven Business to consumer has generated most of the e-commerce excitement. It's the revolution in retailing, the new medium of marketing, the force that's turned the stock market upside down. Business to business e-commerce? Haven't we seen it all before? Isn't it just Electronic Data Interchange with a few bells and whistles and isn't it, well, boring? Business to business represents as much as 80% of all e-commerce. And it's about much, much more than EDI. In the Industrial Age, companies depended on their product expertise. Design the best mousetrap, build it efficiently and develop a few good sales channels, and sit back and count your profits. But today a groundbreaking product could be obsolete in six months and a state of the art factory undercut by a copycat operation. So remaining successful depends on finding the best information, interpreting it skilfully, and acting on it rapidly. We're leaving the Industrial Age and entering the Information Age in which the rules of business are completely rewritten. We're bombarded with information from a vast number of sources that usually arrives in little fragments. We receive more information than we can make use of and the most critical news item can pass us by. Plus, we struggle to piece together the fragments of news, to understand the bigger picture. Fortunately, help is at hand in the form of knowledge management ­ dealing with the deluge of information in a logical and structured way. The internet can help both to collate information from many sources and to share it between co-workers anywhere on the planet. In future, sophisticated filters will distinguish valuable information from the background noise. They will also search the net to find news that interests us. The most clear cut application of e-commerce is to support buying and selling. It's important to distinguish between regular and occasional trading relationships. Both will be deeply affected by the information revolution, but in very different ways. For occasional purchases, the net is a powerful tool. It brings the perfectly competitive' conditions of the street market to the desktop. Search engines can do the hard work, scouring the net to find the lowest prices. So for stationery, airfares, office furniture and all the commodity products that companies buy intermittently, the writing is on the wall. You'll either be the cheapest supplier or you won't sell at all. Prices are already dropping for many products and services, and the fallout will be rapid and ruthless. For regular and stable trading relationships, the net will be used in a very different way. It will be applied to help create an integrated supply chain with a single purpose ­ satisfying the end customer. Cynics will smile at that familiar claim, but the first generation of collaborative databases including Tesco's TIE, Safeway's SIS and Sainsbury's Collaborator is already pointing the way. When Asda implements Wal-Mart's RetailLink, the ante will be raised further. The ultimate solution would be a single, standardised and international net based service, available to all, through which trading partners can share data securely. It could offer farm to fork' product traceability, continuous quality feedback and projections of sales and production. The new communication technologies apply equally to other business relationships. In the Industrial Age, stakeholder management ­ communicating with customers, suppliers, investors, the media, government and staff ­ was an onerous distraction from the main task of producing and selling. In the Information Age, communication is the main determinant of success and stakeholder management becomes the primary business task. Currently, most companies have a different department to manage each type of stakeholder, with very little coordination between them. The internet can be used to integrate communications, avoid duplicating effort, allow an almost instantaneous response to events, provide equal and fair access, and save on most of the distribution costs. But I've left the most radical impact of the net until last. According to Charles Handy, today's corporate models grew out of the Machine Age and are quickly becoming obsolete. He advocates a new federal model, enabled by the new technologies. Each company occupies a certain economic territory. They own capital and employ staff to carry out certain tasks, but they buy in other products and skills from outside. Clearly, there's an economic equation at work. Generally, businesses prefer to focus on their areas of core expertise. Many companies, for instance, contract out their staff restaurant. Yet every relationship with an outside organisation involves costs and risks ­ particularly when complex information is exchanged. According to Handy, though, that economic equation is very different in the Information Age. With greater competitive intensity than ever before, he believes focus and specialism will be increasingly important. So a company that's quite good at several things will be defeated by several companies, each of which are excellent at one thing. If the internet allows two companies to improve their business relationship through the sharing of data, then it also allows a business to fragment itself, to subcontract its peripheral tasks and improve its focus. Already there's a growing trade in computer programmers, based in India, but working on contracts for Western companies. We can expect to see a greater number of experts setting up their own consultancies. But if the economic forces are strong enough, we may even see the break up of today's large and complex corporations, replaced by a new network of interlinked but independent small companies ­ Handy's federal model of business. n Jon Woolven is IGD director of research. For information on IGD's e-commerce services contact {{MANAGEMENT FEATURE }}