The Boom In E-Business

A couple of years ago, few business people had given much thought to the implications of the Internet

A couple of years ago, few business people had given much thought to the implications of the Internet. Now, suddenly, "e-business" is everywhere. Yesterday, Irish company, Enba, announced that it was merging its Internet bank, First-e, with Uno-e, a similar operation now getting underway in Spain, owned by Banco Bilbao Vizreya Argentania (BBVA) and Internet company Terra Networks. The aim is to create an international leader in on-line banking.

It is just the latest example of how Internet business is intruding on what long-established firms would traditionally have seen as their patch. However this distinction between traditional and Internet business is becoming increasingly irrelevant. E-business is now a key consideration for almost every company. The Internet is becoming increasingly pervasive in the dealings which companies have with their customers and with each other.

Enba's business illustrates the kind of opportunities opened up by the Internet. It is an Irish holding company, operating with a French partner and selling mainly into the UK market. Its link with Uno-e will create a new entity, Unofirst, which will target the main international Spanish speaking markets, as well as developing business in the UK, Germany, France and Italy.

Enba's executives deserve credit for their vision in moving early into the Internet banking business. Along with their new partners, they now face the challenge of expanding their business in competition with the main banks in Europe, most of which are themselves now moving to offer some kind of Internet-based service.

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Other Irish companies are also moving into this area. Eircom's bid for one of the new mobile phone licences in the UK, for example, is motivated by the potential of the next generation of mobile phones to access information and undertake transactions from around the globe. Some analysts even believe that transactions conducted over mobile phones - so called "m-commerce" - could become even more important than those conducted on fixed Internet devices, such as PCs or television sets.

The implications of these new technologies for business are enormous. And there are important messages for both management and investors. Any company ignores these new trends at its peril. Electronic commerce is now a fact of business life; it is not just the latest fad.

That said, the impact of technology must be kept in perspective. The Internet will change the way many companies conduct their business and the way they interact with suppliers and customers. But the businesses which survive and prosper will still be those which can deliver goods and services to customers at a reasonable price.

In the rush to make money, many investors are overlooking this and forgetting the importance of a strong underlying business. Dot.com companies are now fashionable and many are floating on the stockmarket at extraordinary prices. Meanwhile traditional firms are rushing to add an Internet dimension to their operations.

Not all will succeed. Many of the newer companies will fail and many older firms will not adapt to the new technology. Smaller investors, in particular, should tread warily. But even after the inevitable shake-out, the far-reaching impact of the Internet on business life will remain.