Frederick J. Riggins and
Hyeun-Suk (Sue) Rhee
Toward a Unified View of
Electronic
Commerce
Is it strictly a selling tool or does it encompass a spectrum of telecommunications technologies?
That’s the debate between practitioners and researchers over what constitutes e-commerce.
The recent emergence of extranets, however, promises to bridge the
T
here has been an unprecedented
growth in the usage of telecommunications applications recently such as
electronic data interchange (EDI),
email, and the Internet. The commercialization of the Internet has led
many to believe that a new era of electronic commerce
has dawned. However, there is confusion regarding
what constitutes e-commerce and how companies
can best formulate Internet strategies. As we
will report, the results of a recent pilot survey
suggest that some practitioners view e-commerce as simply buying and selling over the
Internet. On the other hand, many researchers believe
the practice includes a wide variety of presale and
postsale activities [1, 6, 12].
In addition, there are few frameworks to guide
managers in choosing which Internet applications are
most suitable to their given situation, how implementation of these interorganizational systems (IOS) will
alter their business relationships, or how companies
can use Internet technology to gain competitive
advantage. While the popular literature has touted the
88
October 1998/Vol. 41, No. 10 COMMUNICATIONS OF THE ACM
potential to gain competitive advantage from the use
of EDI, the Internet, and intranets [4, 5, 10], there is
little direction concerning whether or not long term
advantage can be achieved.
Applegate et al. [1] identify three classes of e-commerce applications as customer-to-business, businessto-business, and intraorganizational. Currently, most
commercial Internet applications focus on using the
Web to direct a company’s marketing message
to end customers. On the other hand, the
intranet is an internally focused application
used to disseminate information throughout
the company. While EDI has been the dominant business-to-business application, companies are just beginning to implement Internet
technology that could dramatically alter their trading
partner relationships. These business-to-business
applications of Internet technology are called
“extranets” [2]. We believe the development of
extranets provides a link between the firm’s intranet
and Internet strategies that will broaden the relatively
narrow definition of e-commerce currently employed
by many managers.
MARC MONGEAU
gap between internal and external uses of the Internet.
COMMUNICATIONS OF THE ACM October 1998/Vol. 41, No. 10
89
Perspectives On E-commerce
Zwass [12] defines e-commerce as “…the sharing of
business information, maintaining business relationships, and conducting business transactions by means
of telecommunications networks.” He points out that
e-commerce includes not only buying and selling
goods, but also various processes within individual
organizations that support that goal. Applegate et al.
also view e-commerce as more than simply buying and
selling goods electronically [1]. They point out that ecommerce involves using network communications
technology to engage in a wide range of activities up
and down the value-added chain both within and outside the organization. In addition, Kalakota and
Whinston state that four different types of information technology are converging to create the discipline
merce as mostly customer-to-business applications.
This difference in viewpoints raises concern that
managers may view e-commerce too narrowly and
therefore may not consider the potential strategic
importance of e-commerce technologies. This may
result in managers diverting funds away from e-commerce applications if selling products over the Internet does not initially prove profitable [10]. In
particular, we agree with the researchers’ view that ecommerce should be used to support the total delivery
of products and services to the customer, rather than
just another marketing tool. We suggest a possible
explanation for this difference in viewpoints based on
a new framework which defines four types of e-commerce applications. Understanding where these two
views fit within this framework helps to understand
We believe the development of extranets provides a link
between the firm’s intranet and Internet strategies that will
broaden the relatively narrow definition of e-commerce
currently employed by many managers.
of e-commerce [6]. These include electronic messaging such as fax and email, sharing a corporate digital
library to promote collaborative work, electronic document interchange utilizing EDI and electronic funds
transfer, and electronic publishing to promote marketing, advertising, sales, and customer support.
While the terminology may differ, it is clear that a
variety of researchers hold a broad view of e-commerce
that encompasses a wide spectrum of telecommunications applications with the overall goal of providing
sales and services to the customer. On the other hand,
practitioners may have a much narrower focus of ecommerce. In a recent pilot survey of attitudes concerning e-commerce, individuals who identified
themselves as managers were asked to consider each of
the four categories identified by Kalakota and Whinston and indicate the degree to which they believe the
application constituted e-commerce (www.cc.gatech.
edu/gvu/user_surveys/). In that pilot, managers were
more likely to define e-commerce as the fourth category (electronic publishing to promote marketing,
advertising, sales, and customer support) as opposed to
the other three categories. For the most part, these
managers viewed e-commerce as simply buying and
selling goods over the Internet. Within the Applegate
et al. classification, these managers would view e-com90
October 1998/Vol. 41, No. 10 COMMUNICATIONS OF THE ACM
how the emergence of extranets may bridge the gap
between the two views.
A Framework to Identify
E-commerce Applications
To understand the differing views of e-commerce it is
useful to consider two different dimensions that characterize Internet technology applications.
Location of application user relative to system
firewall. Information technology applications utilizing Internet technology can make information available to users both inside and outside the system
firewall. For example, businesses can extend their geographical reach into new market territory by implementing an online storefront on the Web. In many
industries this is fast becoming a competitive necessity.
While much of the popular press has been devoted to
these Web marketing efforts, many IS managers are
finding real cost savings can be achieved by implementing internal intranets. These intranets are used to
post information for employees inside the firewall,
such as project schedules and updates, employee points
of contact, and company benefits information.
Type of relationship affected. Based on the work of
Malone et al. [7], Benjamin, DeLong, and Scott-Morton categorize IOS as either supporting existing rela-
tionships between trading partners
(technology enhanced relationships) or
Improve
Market
coordination with
creation to
establishing new relationships which
existing trading
reach new
were not feasible before the implementaExternal
partners
customers
tion of the IOS (technology facilitated
Location of
Cell 3
Cell 4
Application User
relationships) [3]. For example, EDI can
Relative
to
enhance existing relationships by proImprove
Information
System Firewall
coordination with
exchange to work
moting closer integration of current
internal business
with new team
Internal
trading partners. On the other hand, IT
units
members
has been the catalyst to facilitate the creCell 1
Cell 2
ation of entirely new relationships previously not feasible. Besides reaching new
Technology
Technology
customers, the network can promote
Enhanced
Facilitated
new decentralized virtual work teams,
Type of Relationship
both within and outside the company.
Figure 1. Electronic Commerce Domain Matrix
By combining these two dimensions
we can distinguish several current uses of Internet
technology using the Electronic Commerce
Domain Matrix shown in Figure 1. Many early
Internet
Internet applications were externally focused to
Customer-tofacilitate new business relationships and attract
Business
External
new customers via the company’s Web site. These
Location of
consumer-to-business applications are located in
Intranet
Application User
Cell 4. Most intranet applications are, by definiBusiness-to-Business
Relative to
System Firewall
tion, internally focused to enhance the existing
relationship between parties within the company,
Internal
Intranet
typically by promoting the efficient exchange of
Intraorganizational
information. These intra-organizational applications are located in Cell 1. These two types of
Technology
Technology
applications have received extensive attention by
Enhanced
Facilitated
managers and Web masters.
Type of Relationship
However, today’s competitive business climate
requires a team of separate business partners working together to meet the diverse, complicated demands Figure 2. A unified view of e-commerce
of today’s markets. This team of partners has been
termed the “business ecosystem” by Moore [8]. He can be viewed as part of a company’s intranet that is
asserts that only a team of cooperative partners is suited made accessible to other companies or that is a collabto assemble the creative ideas necessary to develop oration with other companies.”
complex new products, achieve manufacturing agility,
The distinction that an extranet can be part of a
and attain a long term customer focus. Much of this proprietary system where trading partners receive concooperation can only be achieved by using IOS such as trolled access to certain portions of the firm’s intranet
Internet technology. As shown in Figure 2, there is a or a collaborative network linking trading partners
vast region of opportunity that is largely untapped in together to engage in cross-application information
terms of applying Internet technology. The recent messaging is an important one. Using this distinction,
emergence of extranets may fill this void and bridge we can classify extranets as either intronets, which are
the gap between intranet and Internet applications.
mostly Cell 3 applications, or supranets, which can be
In the past year, the term “extranet” received the classified as Cell 2 applications (see Table 1 for a commost hits on an online glossary of computer and Inter- parison of the two).
net terms called “whatis.com,” as managers investiIntronets are extranets where external trading partgate the potential impact of this new application. The ners receive controlled access behind the initiator’s
glossary (whatis.com) defines an extranet as “a collab- firewall and into the initiator’s intranet. These
orative network that uses Internet technology to link intronets are essentially interorganizational decision
businesses with their suppliers, customers, or other support systems where an external trading partner
businesses that share common goals … An extranet uses a standard Web browser to drill down and pull
COMMUNICATIONS OF THE ACM October 1998/Vol. 41, No. 10
91
the desired information into the client application. In
this way, the user controls the usage of the system,
while the initiator controls the system’s content and
functionality. Typically, the external party will gain
access to unique information maintained in a database
within the initiator’s intranet. If the initiator is able to
provide unique, up-to-date valuable information, the
initiator may be in a position to gain competitive
advantage from the extranet. In particular, if the
intronet results in changes at the user’s organization,
the initiator may be in a position to lock-in the trading partner and create a dependency on the intronet.
In contrast, a supranet is a consortium sponsored
and controlled, interorganizational network providing
seamless communication services between member
organizations across multiple types of applications.
The typical goals of these supranets are overall consortium efficiency and reduced time to market of business-to-business virtual team deliverables, such as new
product design. These extranets function as interorganizational groupware systems where information is
electronically pushed to the next phase of the value-
external customers with online access to several types
of engineering documentation. These can be standard
drawings and central office drawings, including floor
plans, equipment, and network specifications. The
newest implementation of the system allows internal
and external users to access engineering documentation
via the Internet using a standard Web browser and a
configured viewer plug-in. By utilizing in-house security protocols, Lucent allows external customers controlled access to their internal intranet where the
Telco’s records are maintained. This creates an opportunity for Lucent to achieve significant internal operating efficiency improvements and improve customer
service to its customers, while developing a new online
market of engineering records.
Prior to the implementation of the AllView system,
any vendor seeking to bid on a contract with one of
these Telcos would request the pertinent documentation concerning the Telco’s current equipment configuration. The Telco would route the request to Lucent
who would provide the manual copies of the existing
configuration. To improve the efficiency of their own
bidding and customer service process, Lucent began
Table 1. Two types of extranets
automating the documents management process in
1994. Lucent, then AT&T,
selected Network Imaging
Type
Intronet
Supranet
Corporation (NIC) as the
Consortium Sponsored
Sponsorship
Owner Sponsored
software vendor to help
Semi-Open Network
Gateway Access
Proprietary Network
develop AllView. Using
Many-to-Many
Relationships
One-to-Many
NIC’s 1ViewTM suite of prodCommunication Medium
Service Offered
Information Product
ucts as the basis for the new
Efficiency/Timeliness
Primary Justification
Provide Unique Resource
system, the initial implemenAll Consortium Members
Primary Beneficiary
Initiator with Information
tation of the AllView system
Consortium Competitiveness
Long-Term Objective
Lock-in Partner
went online in 1995 for
Push Application
Nature of Application
Pull Application
internal Lucent use. The
internal usage of the system
added process. The overall objective of the consor- grew from 200 users in 1995 to 1,000 users in 1996
tium’s supranet is to promote the overall with approximately two million objects of varying
competitiveness of the entire consortium versus other data types being stored in AllView.
Having realized significant efficiency savings in
ecosystems.
both time and effort to manage these documents, the
Examples of Extranet Applications
Telcos realized they need not act as a go-between for
Lucent Technologies, formerly a part of AT&T, has Lucent and their other non-Lucent vendors. With the
been the primary supplier of network and switching cooperation of the Telcos, Lucent opened up AllView
equipment to numerous telephone companies (Telcos). to be accessible to the Telco’s other vendors in fourth
With this background, Lucent acts as the primary quarter 1997. Using a standard Web browser and a
engineering documents manager for many Telcos. As plug-in, any Telco vendor, with the appropriate level
such, Lucent is responsible to release, update, and of security clearance, can access the appropriate documaintain engineering documentation as it relates to ments from Lucent’s intranet, activate a set of markthe particular customer’s equipment configurations, up tools, make changes to the documentation, and
including that provided by other vendors—many of electronically submit the marked-up version to
which are direct competitors to Lucent. To facilitate Lucent. Rather than the Telco functioning as the
these responsibilities, Lucent’s AllViewTM system is an intermediary, Lucent has created a market where it
intronet that provides internal engineering teams and controls the functionality of the system, sets the pric92
October 1998/Vol. 41, No. 10 COMMUNICATIONS OF THE ACM
ing of the information goods, and provides various
levels of support to the Telco vendors. Lucent has created this new market where it can set pricing for various levels of system support, training, and
consultation with the other Telco vendors.
Turner Broadcasting Sales, Inc. (TBSI) manages
all of the advertising operations for the entire Turner
Broadcasting System. With revenues over one billion
dollars, TBSI is one of the world’s largest advertising
sales operations. In the fall of 1996 TBSI launched
Turner Mania, an intronet that allows advertising
executives, with minimal password security, to
directly access a portion of TBSI’s internal intranet to
gather information needed to develop targeted advertising campaigns (www.pcweek.com/builder/0902/02
turner.html). Using a standard Web browser and the
communities within the customer-to-business application domain [5].
Turner Mania shows how intronets can alter business relationships. Because all external advertising
agencies have the same access to Turner Mania, TBSI’s
smaller customers can access the same information as
larger agencies. This equalizing effect allows smaller
advertising agencies to imitate larger agencies. In
addition, TBSI uses the system to gather information
concerning the approximately 12,000 advertising
agencies with which it interacts. Information gathered on Web site usage includes hit rates by job title,
agency name, and geographic location. This information allows TBSI to modify the system to offer better
targeted value-added services and gives TBSI an information edge over its competitors and customers.
A supranet is a consortium sponsored and controlled,
interorganizational network providing seamless
communication services between member organizations
across multiple types of applications.
Internet, advertising executives outside TBSI can
access Turner Mania to retrieve summary information
to support managerial decision making.
The primary benefit from Turner Mania is the system creates competitive advantage by allowing TBSI to
provide superior customer service to its customers in
the form of an interorganizational decision support system. In addition, the system has resulted in significant
efficiency improvements within TBSI. Because of the
pull nature of the Web, the user is able to control the
system to access, search for, and drill-down to needed
information. This releases the TBSI customer service
representatives from numerous telephone inquiries
from the advertising agency managers. In addition,
Turner Mania offers suggestions and advice to advertisers concerning what advertisements work well on
which stations. This allows TBSI to influence their customer’s decision-making process while allowing the
customer to control the use of the system. Finally, the
system enhances communications between the advertising executives and TBSI by providing an easy email
connection with the appropriate TBSI customer-service
representative. In this way, Turner Mania encourages
the feedback and two-way communications functionality that make Web sites so attractive in building virtual
Countrywide Home Loans, Inc. developed the Platinum Lender Access system that links banks and mortgage brokers to Countrywide’s internal intranet to
improve the mortgage application process [9]. This
intronet allows the lender’s trading partners to check
the status of specific loan requests, inquire into the history of specific mortgage accounts, and check the latest
interest rates being offered. In addition, Countrywide
allows registered realtors to access Countrywide Realtor
Advantage, an online set of decision support tools tailored to meet the information needs of realtors.
A major benefit of the Platinum Lender Access system is the reduction in information float time by providing Countrywide’s trading partners with
up-to-the-minute information regarding market conditions and interest rates. Questions concerning
account history that previously took days to answer
can now be answered immediately without the aid of
a customer-service representative. With this valueadded service, banks and mortgage brokers are more
likely to choose Countrywide as a lender, providing a
competitive advantage for Countrywide, and are able
to process a loan application quicker, providing
advantage for the bank or broker as well. The result is
a tighter linkage between these trading partners.
COMMUNICATIONS OF THE ACM October 1998/Vol. 41, No. 10
93
This system is an example of how the output of an
intronet often elicits some change in behavior at the
trading partner facilities. As the initiator, Countrywide has used the extranet to develop a strong degree
of trading partner commitment to the business
ecosystem it seeks to lead. For example, using the
Platinum Lender Access system, Countrywide can
develop a large database of proprietary information
that would be difficult to duplicate by its competitors. In this way, Countrywide may be in a position to
move beyond the tighter linkage with these trading
partners and lock-in banks and mortgage brokers who
may become dependent on Countrywide’s system for
account history, economic forecasts, and customer
preference trends.
InfoTEST International is a private consortium
of several major corporations that seeks to illustrate
reduction in time to market for new products. The
complex business ecosystem required to produce
many of today’s products requires the research and
development collaboration of multiple companies
such as those participating in the project. By collaborating together in this virtual team environment the
project members hope to reduce response time to customer requests from months to days.
Competitive Advantage From Extranets
Because an unprecedented level of cooperation is
required to succeed in today’s complex business ecosystems, InfoTEST hopes to demonstrate that a group of
networked organizations can be more competitive as a
group than competing groups not utilizing this technology. The supranet serves as a communications system within the consortium whereby each partner adds
While the use of a supranet promises significant efficiency
improvements and better interorganizational team
coordination, a consortium-sponsored supranet may
easily be copied by competing ecosystems.
the commercial opportunities of using Internet technology (www.infotest.com). The InfoTEST Enhanced
Product Realization (EPR) project is a case study
designed to illustrate the viability of using the Internet to link consortium members via a supranet to
engage in seamless interorganizational product design
and development in a manufacturing environment.
Unlike the previous intronet examples which are
entirely Web based, the 15 InfoTEST members participating in the project can collaborate using a variety of applications including computer aided
design/computer aided manufacturing, product data
exchange systems, electronic whiteboarding, and
videoconferencing. While each of these systems have
been used by many manufacturing companies, the
EPR project creates an environment where consortium members can engage in seamless interorganizational collaborative product development as a virtual
work team. In particular, one of the primary goals is
to show that the Internet, with its non-proprietary,
open standards protocol, can be used to create a virtual
organization encompassing the entire value-added
supply chain, even if consortium members use different systems internally.
The primary benefit of this supranet is a dramatic
94
October 1998/Vol. 41, No. 10 COMMUNICATIONS OF THE ACM
value to the entire process and sends, or “pushes,” the
product to the next partner, which then adds its portion of value to the product. Here, the firewall for the
extranet is the boundary around the consortium members utilizing the network. In this way, supranets are
Cell 2 applications in the Electronic Commerce
Domain Matrix where new interorganizational team
relationships are possible, but users of the extranet
operate within the overall network firewall.
While the use of a supranet promises significant
efficiency improvements and better interorganizational team coordination, a consortium-sponsored
supranet may easily be copied by competing ecosystems. The history of EDI shows that once the technology is widely disseminated long-term competitive
advantage is difficult to achieve. At that point, it may
be possible to achieve advantage by engaging in
interorganizational business process reengineering
[11]. What is more likely is that intronets, where
individual companies maintain proprietary access to a
unique information product, are better candidates for
achieving significant competitive advantage.
The intronets we’ve described function as interorganizational decision support systems. For example,
Turner Mania is a service that may alter the way
advertising executives make decisions regarding
advertising campaigns. A company seeking to be an
ecosystem leader by offering this type of intronet
would publicize, train, and possibly provide some
usage incentives to encourage their trading partners to
utilize the intronet. Because external users are allowed
controlled access behind the intronet firewall,
extranets of this type are Cell 3 applications.
The goal of the intronet initiator is to alter the way
in which the users, typically external managers, make
decisions related to the use of the extranet and make the
trading partners dependent upon this information. In
this way, the trading partner may become locked-in to
the intronet. Two critical aspects of this strategy are the
scarcity and value of the information being provided,
and allowing the external entity some initial access and
encouraging alteration of their internal processes in
order to take advantage of the information. If the user
of the intronet becomes locked-in to using the system,
the initiator may be in a position to charge for usage of
the system or shift the balance of power in the business
relationship. By keeping the information current the
intronet initiator can gain significant competitive
advantage in its business-to-business relationships.
Because the majority of these business-to-business
applications are not accessible to most readers, a wellknown customer-to-business Web service—CNN
Interactive (cnn.com)—may be illustrative. CNN
Interactive provides more than just current news articles found on their cable TV stations. CNN Interactive is developing a historical archive that is becoming
increasingly valuable due to its compressive coverage
and links to related articles. While CNN Interactive
is currently available free of charge on the Web, the
news organization may eventually charge a fee for full
access to its historical archive. As news journalists,
educators, students, and others become accustomed to
free access to the news service they will alter their
process of gathering historical information to take
advantage of the technology. Once the historical
archive is so massive as to make it unlike any other
historical database available on the Web and once
users alter the way in which they use the information
and become locked-in to the service, CNN will be in
a position to charge a fee for access and allow only certain external entities access to their intronet. At that
point the company will likely implement a two-tier
pricing scheme where some initial information is free,
while other information is available only to those who
have access to their intronet. The pay-for-access service
may become a requirement for many information
intensive organizations, making that portion of CNN
Interactive a business-to-business intronet similar to
the examples described earlier.
The framework presented here provides a unified
view of what constitutes e-commerce and illustrates
the differing viewpoints held by many researchers and
managers. As more and more companies recognize the
opportunities for using extranets to improve their
business-to-business relationships, we believe that
managers will realize that an overall e-commerce strategy involves linking their internal intranets to their
external Internet applications using extranets.
With the emergence of extranets as a strategic tool to
alter the company’s business-to-business relationships,
recognizing the two types of extranets and their differences becomes increasingly important. While supranets
promise various efficiency improvements across a business ecosystem, the opportunity for a single dominant
organization to gain competitive advantage within
their ecosystem is much greater using intronets. Industries and ecosystems that do not have a single dominant
player should organize under the auspices of a consortium or trade association to form supranets. Individual
organizations that seek to dominate an industry or
ecosystem may use intronets to leverage an information
product that it has proprietary control over. The extent
to which this will be possible will depend on the
scarcity and value of the information, as well as encouraging users to alter their internal processes to create
dependency on the information resource. c
References
1. Applegate, L.M., Holsapple, C.W., Kalakota, R, Radermacher, F.J. and
Whinston, A.B. Electronic commerce: building blocks of new business
opportunity. J. Organiz. Comput. Electr. Comm. 6, 1 (1996), 1–10.
2. Baker, R.H. Extranets: The Complete Sourcebook. McGraw-Hill, 1997.
3. Benjamin, R., DeLong, D. and Scott-Morton, M. Electronic data interchange: how much competitive advantage? Long Range Planning 23, 1
(1990), pp. 29–40.
4. Cortese, A. Here comes the intranet. Business Week 26 (Feb. 1996), p. 76–84.
5. Hagel, J. III and Armstrong, A.G. Net Gain—Expanding Markets through
Virtual Communities. Harvard Business School Press, Boston, Mass., 1997.
6. Kalakota, R. and Whinston, A.B. Frontiers of Electronic Commerce. AddisonWesley, Reading, Mass., 1996.
7. Malone, T.W., Yates, J., and Benjamin, I. Electronic markets and electronic hierarchies. Comm. ACM 30, 6 (June 1987), 484–497.
8. Moore, J.F. The Death of Competition: Leadership & Strategy in the Age of Business Ecosystems. HarperCollins, N.Y., 1996.
9. Nash, K. Extranet: Best of both ‘nets. Computerworld 30, 33 (Aug. 12, 1996).
10. Rebello, K. Making money on the net. Bus. Week 23 (Sept. 1996),. 104–118.
11. Riggins, F.J. and Mukhopadhyay, T. Interdependent benefits from
interorganizational systems: opportunities for business partner re-engineering. J. Manage. Info. Syst. 11, 2 (Fall 1994).
12. Zwass, V. Electronic commerce: structures and issues. Intern. J. Electr.
Comm. 1, 1 (Fall 1996), 3–23.
Frederick J. Riggins (fred.riggins@mgt.gatech.edu) is an
assistant professor of information technology management at the
DuPree College of Management at Georgia Institute of Technology.
Hyeun-Suk (Sue) Rhee (sue.rhee@mgt.gatech.edu) is an
assistant professor of information technology management at the
DuPree College of Management at Georgia Institute of Technology.
© 1998 ACM 0002-0782/98/1000 $5.00
COMMUNICATIONS OF THE ACM October 1998/Vol. 41, No. 10
95