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e-Business Transformation to a Manufacturing Digital Enterprise

Pat Toole, Jr., IBM General Manager, Product Design Management
Joel Lemke, Chief Executive Officer, ENOVIA Corp.

e-business. It is a phrase we see and hear many times everyday: in the general, financial and industry press, in in-flight magazines, on radio and TV and, of course, in board rooms, conference rooms, factories and business offices around the world.

For an ever-increasing number of companies, e-business has become "the next big thing." And senior business executives are quickly learning that regardless of the size of their companies or the markets in which they compete, they must ensure for themselves a working knowledge of e-business: what is it, and what are the technological and economic forces behind the e-business explosion. Armed with this information, they can assess the value of e-business to the strategic future of their companies.

Defining e-business and the Digital Enterprise

The most common conception people have of e-business is buying or selling over the Internet. While this clearly is an important part of e-business, it is only one aspect of it, and more appropriately is referred to as "e-commerce." True e-business is much more than just having a web site. And it’s more than efforts manufacturers might take to move their operations to a "paperless environment," although that, too, is an aspect of e-business.

For any industry, business, organization, and especially manufacturers, e-business means:

exploiting the combined power of the Internet and information technology to fundamentally transform key business strategies and processes.

For manufacturing companies to successfully transform their strategies and processes means they must become digital enterprises – using CAx, VPDM, ERP, communications, and other digital-based technologies to conceive of, design, build, market and sell the most innovative, highest quality, most attractive products to its customers.

This succinct digital enterprise definition applies to all manufacturers, regardless of size, location or industry. Even small manufacturers – those who have long thought of their marketplace as being "around the corner" – are fending off competitors from around the world. They are quickly discovering that they cannot continue to use the traditional business models that have sustained them to date.

Business is Changing – The Digital Economy

Remaining viable means evolving the business – and the business model. That requires real time information sharing and management processes to leverage this information. Such new models, systems and processes have been available only for the past few years, as advances in technology finally enabled the merger of computing and communications to create what is often called a networked economy, or a networked society.

It also has brought about a revolution that involves nothing less than the rise of a new economy – a digital economy – and a new global medium that will be the single most important driver of business, economic and social change. In the economy of the 21st Century, this new technology structure, and the new business model that it enables, will underpin our nation's – and almost every other nation's – ability to drive production, productivity, profitable growth, and ensure the security and prosperity of its citizens. There is a strong correlation between US industry's investments in information technology and the lengthening cycle of economic growth. Federal Reserve Chairman Alan Greenspan recently put it this way: "...the evidence for technology-driven acceleration in productivity is compelling.... The breadth of technological advance and its application has engendered a major upward revaluation of business assets, both real and intangible."

While the e-business explosion may be looked on as a matter of survival, it also clearly is a matter of enormous opportunity for businesses, as well as their employees, suppliers and customers. The more fundamental the transformation, the greater the opportunity and potential return. If e-business truly is "the next big thing," "big" may be an understatement. Estimates are that between 1998 and 2003, Internet commerce in general - which barely existed just a few years ago -- will increase at a compound growth rate of 92 percent, from about $50 billion to $1.3 trillion. The business-to-business segment will dwarf the business-to-consumer segment, growing at an 86 percent CGR, from $36 billion in 1998 to more than $1 trillion in 2003. The number of Web users will grow from 142 million to more than 500 million in the same period. But don't hold to these estimates since consultants and industry analysts raise them almost on a daily basis.

The digital economy changes the competitive landscape for manufacturing companies. Companies that accept and adapt to this new paradigm will have a significant advantage over those that don’t. Manufacturers that understand the digital economy and how business will be conducted and act upon this insight will have a better chance to compete for the finite number of customer dollars. These companies will truly be digital enterprises.

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