Vladimir Zwass

The E-merging 
E-commerce Culture

A conversation with 
Vladimir Zwass

It’s pervasive in business, and it’s increasingly dominating our personal lives. The culture of e-commerce is rapidly changing our world. To help shed light on this revolutionary force, FDU Magazine’s Gretchen Johnson spoke with Fairleigh Dickinson University’s expert in the field, Vladimir Zwass, distinguished professor of computer science on the Teaneck-Hackensack Campus. Known worldwide as the editor-in-chief of the International Journal of Electronic Commerce and the Journal of Management Information Systems, Zwass shared his insights on the past, present and future of e-commerce.

When were you first aware of something 
called e-commerce?

These things are difficult to pin down, yet I’d say in 1994. It then also became clear that this term should be applied retroactively to a host of developments dating to prior decades.

As the editor-in-chief of the Journal of Management Information Systems, I followed the developments in the field very closely. Since I am also the author of texts on management information systems, I saw the rising profile of the new developments, and it was obvious to me that we were not dealing with a fad, but with a revolution with permanent results.

Back then, what was the thinking about this 
electronic vehicle?

The prominent lines of thinking centered on direct selling over the Internet. Most of the channel intermediaries would be bypassed, and the producers would sell directly to the consumers. We know better now.

How did e-commerce develop?

E-commerce can be traced back to the Berlin airlift in 1948–49, when a U.S. Army logistics officer set up a system of semiautomatic ordering of supplies via telex. This gave birth to the electronic data interchange (EDI), a computer-to-computer exchange of electronic documents for business transactions between firms.

Three developments gave birth to Web-based e-commerce, which can be dated to the spring of 1993:

“The brilliance of the Internet concept is in its accommodation to organic growth without central control.”
— Vladimir Zwass

  • The U.S. government’s decision to permit business uses of the Internet (which emerged from the ARPANET, commissioned by the government for research on computer networking).
  • Creation of the World Wide Web by Tim Berners-Lee at CERN [the European Organization for Nuclear Research] as a means of collaboration and exchange of information. This incorporated the idea of hypertext as a fundamental means of relating chunks of content.
  • Creation of the first popular browser by Marc Andreessen and others, which opened up the Web to mass use in the spring of 1993.

The brilliance of the Internet concept is in its accommodation to organic growth without central control. There is a profound lesson there (albeit one hard to learn).

How has the development of e-commerce differed from 
what you would have predicted?

The relatively slow uptake of consumer-oriented commerce as compared to the business-to-business segment was rather surprising. Although, as the French say, esprit d’escalier (or wisdom on the staircase — as you’re leaving) would tell me now there was no need for surprise. This reflects the volume of commerce in the bricks-and-mortar world.

What’s the most important thing happening now?

M-commerce (mobile commerce) — it’s opening a new frontier. I see an untethering from stationary access as one direction of natural development. Of course, it’s a part of e-commerce — m-commerce isn’t a substitute — it’s a subset.

“Wireless” means you aren’t tied to a place. You can do business anytime, anyplace. And when you are set free — untethered — you get new possibilities and new applications. We have all these people running around with cell phones and PDAs (personal data assistants such as Palm Pilot and Blueberry). There are a variety of services that are becoming available that didn’t exist before. For now, much of it is a matter of solutions looking for problems.

So it gives us freedom. Is that the extent of it?

No. Unless you disable it, they [marketers, salespeople and others who may profit from knowing information about you] know your position through GPS (Global Positioning System), which is embedded in PDAs, telephones or whatever, and it finds out where you are. You can’t sell much to me while I’m in my office — there is no context.

On the other hand, if I’m on Route 17 North and I’m going to pass a McDonald’s and they know I like McDonald’s, then they shoot me a coupon on my screen or a voice coupon (don’t forget, it’s a telephone) that gives me a discount at the McDonald’s just up the road, and it could cover the Mobil station on the corner. Or, they might know Zwass likes Coke, and he’s next to a Coke machine.

Some people would think it’s a living hell. They’ve got the device that can grab me in context and sell to me in context. Now that can be quite aggressive.

Does that frighten you?

“Doing business truly anytime and anyplace is the ultimate objective. M-commerce allows us to
do that.”
— Vladimir Zwass

I’m not easily frightened but it does make me somewhat uncomfortable. It will take some getting used to, and some things we may not want to get used to. It’s hard to see what your posture will be until you try something. For example, it makes me very uncomfortable that you or anybody else can get an exact route to my house without my knowledge. On the other hand, I can tell my guests to get that route — how convenient. Go get a map off the Web. Someone who doesn’t know me can do the same thing.

Doing business truly anytime and anyplace is the ultimate objective. M-commerce allows us to do that.

Aside from m-commerce, what else is new?

In larger terms, I see what may be called “embedding”: the virtual processes and thinking related to the Internet become embedded in the existing physical world, just as major parts of the physical world move into cyberspace. The new economy to me is not something separate and apart from the old one. A more inclusive notion, it is a broader economy transformed. Supply chains of established firms are morphing into supply networks, with the ubiquitous common infrastructure of the Web facilitating outsourcing of business processes. With wireless communication and with sensors and actuators connected to the Internet, it becomes embedded in our everyday routines — in our banking, in our driving, in our homes, in our leisure and in our health seeking. With bar-coding technologies, newspaper and magazine articles in the physical world become linked to the Web pages in the virtual world. “Click-and-mortar” retailers and service providers [those using the Internet to expand their physical facilities] become formidable competitors for the purely virtual firms [those only existing on and via the Internet]. The embedding will truly change our lives. And the way we perceive our world and ourselves in it is changing profoundly.

“Any massive technological development contains, ipso facto, an element of danger. Global dependence on the Internet exposes us to a variety of risks.”
— Vladimir Zwass

What applications seem most dangerous?

Any massive technological development contains, ipso facto, an element of danger. Global dependence on the Internet exposes us to a variety of risks. We are fortunate that the original design of the ARPANET had as its principal objective the avoidance of a single center of vulnerability. So, if we are to be vulnerable to an information infrastructure, it’s good it is the Internet.

There is also the loss of privacy that we talked about. I had a long conversation a couple of months ago with Arno Penzias, a Nobel Laureate in Physics (and now an e-venture mentor in California, which is a fine comment on e-commerce). He feels, paradoxically, that the Web will fracture connections among people, because of the progressive loss of privacy.

What kind of company is most impacted?

The one that deals with information or its equivalents. Look at the floor of the New York Stock Exchange or at the publishing industry. However, the impact is vast.

Think of the pressures that are going to be put on even the “first-wave” firms that deal with agriculture or extraction. Take a company that mines bauxite. Now people will buy those things by open bidding. So the traditional suppliers must become more efficient, even though they are well established and have been doing the same thing for a number of years. It will impact their operations profoundly.

What do large businesses need to do?

Change the way they do business, or else. Larger firms are already wide awake to the opening of their business to the Web. General Electric is a good example. Outsource anything in which you cannot lead. Move the rest to the Web — and do it differently. They need to continually learn by doing.

Small businesses?

Take a careful look. See what e-commerce means to your niche and think where you can fit in. For e-commerce small companies, seek to enlarge your footprint by attracting investment or partnerships. All businesses need to look for alliances and partnerships, to share resources, with knowledge and time being the most important of those. There is no place to hide.

What’s going to change in the next year or two? 

I still do not see profits in most of the business-to-consumer commerce. I see the increasing movement to the new frontier of m-commerce. I see continuing kaleidoscopic change in the reconfiguration of companies. This includes the emergence of new, entrepreneurial firms and their absorption by larger companies, which find it more expensive and more difficult to innovate. I also see fracturing of larger firms as they outsource in order to tap the core competencies of others. The common infrastructure of the Web makes this reconfiguration easier.

In a global vein, I see (or hope for) a concerted international effort to include certain parts of the world that have not yet joined this revolution. I see more intertwining with the other momentous development of today — that of biotechnology.

In the near future, how will our lives change? 

Anytime between 2005 and 2010, I see less separation between work and play (which means we need to like our work even more than today); more learning on the go; more varied stimuli; more fragmented time (no, you can’t relax for an uninterrupted day); more stress; greater ability to choose a place to live; and further globalization of our daily lives.

Vladimir Zwass | Study E-commerce at FDU

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