The Institute for Advanced Commerce serves as
"idea central" for IBM's e-business
research and technology efforts.
Companies are discovering that
e-commerce is where the business is, but getting there requires careful planning. Many sellers have rushed onto the Web only to find that they don't know how to make the service pay for itself. Differentiating a Web site from the competition, attracting customers by offering added services, and managing the systems end of an e-business call for special skills. And, as online transactions grow more complex, the challenges will only mount. After all, a world in which computers can negotiate thousands of times a day over the price of a box of pencils won't be navigated with tools developed for Main Street business. But what will that world look like and how will it be navigated? To help anticipate the challenges facing business and the implications for the economy and society in general,
IBM
established the Institute for Advanced Commerce at the Thomas J. Watson Research Center in January 1998.
Functioning as an e-commerce think tank, the institute explores the emerging information economy and promotes research projects in the field, including those that link academic and corporate researchers. Five such projects are now under way, including work on advanced online negotiations and on the future information economy. The institute sponsors frequent conferences and workshops. A March 1999 technical workshop, for example, examined the emerging field of Web-based auction and negotiation technology. Another conference in March explored the impact of globalization and the technologies that are driving the trend. One in April focused on problems such as making e-commerce more dependable. The institute also investigates and develops e-business products such as electronic coupons and auction technology for IBM.
HOT TOPICS
Institute director Stuart Feldman and his colleagues try to anticipate the big questions that will arise as e-commerce spreads. By 2015 or earlier, Feldman believes, billions of people worldwide will be online, each represented by perhaps hundreds of intelligent agents. So one question is, How do you prevent the electronic economy from turning into a profitless free-for-all? Early research at the institute suggests
that agents will have to be carefully designed to avoid endless price wars (see IBM Research, Number 1 & 2, 1998). Another question, as yet unanswered, is, How much of that always-active market can be entrusted to agents and how much must remain under human control?
"Privacy is another hot button," says Douglas Dunn, an institute board member who is dean of the Graduate School of Industrial Administration at Carnegie Mellon University. "The question will be, Who are you willing to share your information with? If you enter a Web site to discuss marital difficulties, and this has been shown to correlate with default on a mortgage, your bank might well be interested. So people will inevitably become more concerned about who has access to their personal information."
It remains to be seen whether U.S. businesses are prepared to accept the level of regulation that might emerge to protect privacy. The United States, Feldman says, "has usually taken a far less regulated approach to this issue, especially compared with a 20-year history of protections on data privacy in some European countries." This distinction was brought into sharp relief by the Organization for Economic Cooperation and Development regulations that took effect in the European Union in October. While no compromise has yet been achieved, technology can help relieve the tensions that it caused in the first place.
In the nearer term, the most pressing questions have to do with how to succeed in e-business. "Those who flourish," Dunn predicts, "may have to combine tactics from the 3-D store with those that suit the Web. Imagine, for instance, a Web site that tells you about a product, then directs you to a store where it can be purchased across the street from where you're sitting."
While e-commerce technologies raise the sophistication of marketing, they also increase the premium on superb marketing ideas and execution. Great marketers will prosper by taking early advantage of Internet technologies. A common concern is how to prevent products from becoming commodities -- items purchased on price alone. "Everyone wants to sell high-premium differentiated goods but to buy inexpensive commodities," says Feldman. "Providing such distinctions in a world of easy comparison and low switching costs will be one of the great strategic business concerns of the era. And we want to find the technological keys that our customers can turn."
In its first year, the institute has established itself and IBM as major players in the rapidly growing arena of e-commerce research and technology. "We have brought people together, we have done deep research to be proud of, and also helped to create new capabilities for the IBM product and service lines," says Feldman. "It's great being part of a huge wave, and at the same time attempting to steer that wave as it rushes forward."
David Berreby is a freelance writer who lives in New York City.
