E-Commerce Commission Press Kit

CHAPTER THREE:ELECTRONIC COMMERCE BETWEEN BUSINESSESInternet commerce is growing fastest among businesses. It is used for coordination between thepurchasing operations of a company and its suppliers; the logistics planners in a company and thetransportation companies that warehouse and move its products; the sales organizations and thewholesalers or retailers that sell its products; and the customer service and maintenanceoperations and the company’s final customers.Early computers were used for scientific and military purposes, not for commerce. They firstmade their way into commercial applications in the 1960s, with ERMA (the Electronic RecordingMachine—Accounting). Banks were swamped with the growing volume of checks that needed tobe processed (between 1943 and 1952, check use had doubled from 4 billion to 8 billion checkswritten each year). By automating the function with ERMA, the first bank to use the computer,Bank of America, reported that nine employees could do the job that previously took 50 people. 38The commercial use of computers quickly spread as companies in a variety of industries usedthem to keep accounting ledgers, administer payroll, create management reports, and scheduleproduction.In the 1970s and 1980s, businesses extended their computing power beyond the company’s walls,sending and receiving purchase orders, invoices and shipping notifications electronically via EDI(Electronic Data Interchange). EDI is a standard for compiling and transmitting informationbetween computers, often over private communications networks called value-added networks(VANs). The 1980s also brought the introduction of computer-aided design (CAD), computeraidedengineering (CAE) and computer-aided manufacturing (CAM) systems that enabledengineers, designers and technicians to access and work on design specifications, engineeringdrawings and technical documentation via internal corporate communications networks.The cost of installation and maintenance of VANs put electronic communication out of the reachof many small and medium-sized businesses. For the most part, these businesses relied on the faxand telephone for their business communications. Even larger companies that used EDI often didnot realize the full potential savings because many of their business partners did not use it.The Internet makes electronic commerce affordable to even the smallest home office. Companiesof all sizes can now communicate with each other electronically, through the public Internet,networks for company-use only (intranets) or for use by a company and its business partners(extranets), and private value-added networks.Companies are quickly moving to utilize the expanded opportunities created by the Internet. Forinstance, Cisco Systems, Dell Computers and Boeing’s spare parts business report almost12