E-commerce: Post Y2K: The Real E-Commerce Revolution Begins

Fortunately, Y2K turned out to be a bust – no power failures, no erased Social Security accounts, no blinking traffic lights. Like the majority of Americans, I took some extra cash out of the bank in case the ATM was DOA. (Actually, it was down when I went to get the extra money, but that was a couple of days before the dreaded date change.) I also bought a few extra bottles of water and had some tuna fish on hand. I was happy not to use them.

Although the second-guessers are now making the argument that, perhaps, the whole Y2K bugaboo was overblown – after all, even countries that did not invest heavily in remediation did not seem to get bitten – I doubt that. I am in the camp that the IT community rose to meet a significant challenge, and did so successfully.

Despite the benign outcome, I think the over-the-top doom-and-gloomers like the economist Edward Yardeni, who projected that Y2K would spark a worldwide recession, served a useful purpose. Their Cassandra-like warnings forced people to focus on the notion that information is the fuel of the Information Age and that IT is the engine of information and, therefore, the world economy.

In fact, although there were no reports of widespread disruptions, the Y2K effort has yielded long-term lessons for large and small companies, and those lessons will have a significant impact on the development of e-commerce.

Since Daniel Bell wrote The Post-Industrial Society in the 1970s, everybody has known that information is at the center of the economy. But, it took the Y2K crisis to teach everybody that the notion of an information economy is more than a platitude. The decisions to spend a collective $100 billion or so on Y2K remediation in the United States were made by CEOs and senior managers across the country. Those managers learned that they had to continually monitor the progress the IT teams were making. A missed deadline was not an option. Executives learned that IT had to be at the very top of the corporate agenda.

At the same time that the Y2K scare taught senior managers to look at IT in a different way, IT professionals were forced to reconceptualize their role in their organization. Many IT professionals worried that joining the Y2K team would relegate them to a backwater, repairing obsolete technology. They worried that they would miss the cutting edge in corporate IT. Instead, for many, the opposite has happened. Instead of being trapped in an obscure corner, the Y2K teams interacted with every part of their organizations. Many report that they understand the needs of their organizations more deeply than they ever have before.

Another lesson to be learned from the Y2K experience is just how much money it took to adequately address the problem. No matter how you cut it, $100 billion is a hefty price tag. Even as the Federal Reserve Board raises interest rates in an effort to slow the U.S. economy, most analysts believe that companies recognize that they have to continue a very high level of investment in IT.

These lessons will be applied in the build-out of the e-commerce infrastructure over the next three to five years. First, senior executives realize that the development in e-commerce is really an investment in e-business. That is, e-commerce cannot be looked at solely as a method to facilitate buying and selling over the Web. Instead, senior managers realize that they may have to restructure their entire business to maximize the use of new information technology.

Oracle is a prime example of this kind of radical restructuring. Over the past nine months, the company has made a concerted effort to go "e." The result has been threefold. The company has lowered its own costs, increased the markets in which it can successfully compete and has closed a series of innovative deals with a couple of Fortune 50 companies. Along the same lines, the directive to go "e" at General Electric came from Chairman Jack Welch himself.

Of course, going "e" is not the same as, say, upgrading an e-mail system. For companies to successfully incorporate new e-business systems into the IT infrastructure, IT professionals are going to have to understand their companies’ business processes more completely than they ever have before. Successful e-business implementations are going to require closer consultation and collaboration between senior IT managers, senior management and line-of-business management.

This trend toward breaking down the communication barriers between IT and the rest of the organization is not new. Unfortunately, many companies’ experiences with ERP and data warehousing projects demonstrate how difficult it is to bridge the gaps between the different cultures. The drive to e-business raises the stakes exponentially.

Finally, restructuring information systems to capitalize on the opportunities of building an e-business infrastructure is going to be costly. Not only does every business process have to be rethought, but new concerns have to be addressed as well. For example, investing in customer relationship management must be coupled with an investment in online customer identification management technology. Clearly, it is going to be a complex and expensive business.

Fortunately, the $100 billion investment in Y2K remediation has come pretty much to a close. The next $100 billion will be used for restructuring the IT infrastructure to go "e."

About the Author: Elliot King is an Associate Professor of Communications at Loyola College in Baltimore. He can be reached at (410) 356-3943, or via e-mail at eking@prodigy.net.