BUSINESS-TO-BUSINESS E-COMMERCE ADOPTION: A CASE

STUDY APPROACH

Moses Niwe

Department of Computer and Systems Science, Stockholm University and Kungliga Tekniska Högskolan

Forum 100, SE-164 40 Kista, Stockholm, Sweden

Keywords: Business to Business e-commerce, adoption.

Abstract: This case study research presents the preliminary findings from an explorative study concerning challenges,

benefits and problems in adoption of business-to-business e-commerce. In this case study research two

United States (U.S.) organizations are analyzed. Case one is a sporting goods company that has been doing

Business to Business (B2B) based transactions since 1970s. Case two is a shipping and transportation

company doing B2B transactions for over 3 decades. Both cases have gone through B2B transaction stages

of growth; however management is still faced with tasks of understanding the drivers of B2B adoption.

1 INTRODUCTION

The value of business to business (B2B) e-

commerce technology as a solution to cutting costs

and maximizing profits is appreciated by most firms

in this digital economy. Traditional supply chains

with their inefficiencies have been responsible for

the recurrent need for firms to find better options

and hence the great keen interest in the B2B e-

commerce model that works at addressing these

problems. (Cox and Ghoneim, 1996; Archer, and

Yuan, 2000)

Despite the predictions and promises of B2B e-

commerce the road to B2B e-commerce adoption is

littered with failures (Teo and Ranganathan, 2004).

Hence understanding B2B e-commerce adoption has

become of paramount importance. Past failures has

been attributed with focusing only on operational

and implementation issues in some instances and

ignoring the strategic aspects (McEwan, 2001; Yau,

2001; Chan and Swatman 2004). Aspects would

include the people requirements as far as B2B e-

commerce adoption is concerned, key points of

strategic planning, where is the company, where do

you want to be and how the organisation competes

in relation to sector standard technologies, proven

methodologies, finding B2B collaborating business

partners and the process requirements as far as B2B

e-commerce adoption is concerned (Niwe, 2006).

Underlying this is a fact that the B2B sector is faced

by lack of common protocols and standardized

platforms, for communication of business messages

(McGann, et al 2005). Although XML is gaining

increasing use in today’s world, its extensibility is

causing some interoperability issues (Nelson, and

Shaw, 2005). Hence in this study we address the

problems pertaining to the adoption process and

strategy.

In previous work (Niwe, 2006), diffusion of

innovation theory by (Rogers, 1995) is proposed to

understand the adoption process. This theory broken

down in five stages starts with the awareness stage,

where the individual or organization learns about the

innovation; second, they must be persuaded of the

value of the innovation; then they must decide to

adopt it; the innovation must then be implemented;

and finally, the decision must be reaffirmed or

rejected.

With this background, the principal objective of

this paper is to examine the issues and challenges

faced by firms in adopting B2B e-commerce. To

understand the solutions qualitatively, we examine

cases from different industries namely a sporting

goods company plus a shipping and transportation

company. The data was collected through electronic

mail correspondences and company documentation.

The cases selected were largely due to their

willingness to participate in this study. From

previous work, (Niwe, 2006; 2007), the organization

adoption of X12 standard as the widely accepted

196

Niwe M. (2007).

BUSINESS-TO-BUSINESS E-COMMERCE ADOPTION: A CASE STUDY APPROACH.

In Proceedings of the Third International Conference on Web Information Systems and Technologies - Society, e-Business and e-Government /

e-Learning, pages 196-199

DOI: 10.5220/0001263201960199

 SciTePress

U.S. B2B e-commerce standard in the last 20 years

was used as the unit of analysis.

2 CASES

Case one is a leading manufacturer and distributor of

sporting firearms. This company has been in

business for over 200 years. Today they have

multinational presence and face the urgent need to

keep business partners abreast of important

information and responding to them accurately,

consistently and quickly. It has been using B2B

based transactions since 1970s.

Case two is a shipping and transportation

company. They have been doing B2B transactions in

form of Electronic Data Interchange (EDI) for over

3 decades. They have thousands of suppliers and

they use B2B technology to do their purchasing and

to sell products.

3 CASE EXAMINATION

The cases in point were examined on what model of

business to business works best for them. Case one

started with a transaction based model (main mode

of communication between the two businesses is

based on the transactions) but they believe that the

strategic relationship based model (two or more

organisations join with an aim of achieving strategic

advantage).works best for them. Strategic

relationship is more approriate because it is more

integrated enhances building particpation. This in

turn makes it more accomodating and also flexible.

Case two works with the transaction based model.

Item 2, examines where things normally go

wrong in the B2B e-commerce supply chain with the

business partners for the organization. Case one

cited third parties (such as a VAN) that perform the

translation as the main point of problems in the

supply chain with business partners. Case Two;

identified changes along the way which are forced

by changes in marketing, ways to differentiate

products/service.

Item 3 examines the most significant

opportunities with usage of B2B e-commerce. Case

one; they believe that coordinating internal systems

with the external environment would be the most

significant opportunities with the usage of B2B e-

commerce. In this case link their enterprise resource

planning (ERP) system-- SAP R/3--of the firm, to

include the firm's major suppliers. Case two; the

most significant opportunities include enhancing or

replacing traditional linkages between supply chain

participants (e.g. e-procurement); streamlining

internal processes (e.g. reducing costs); coordinating

internal systems with the external environment;

However cost avoidance and increased productivity

is the most visible (and appreciated) by

management.

Item 4 examines the level of B2B e-commerce

usage. Both cases exchange structured documents

with minimum human interference. Key data is

transmitted to receiver electronically.

Item 5 deals with stage of B2B e-commerce

adoption. In this section we examine the progress in

B2B usage. Case one; use standard based EDI for

supply chain execution or management. Case two;

processes and logistics are largely automated using

Internet technology, creating a seamless chain of

communication and management. However most is

data transferred by EDI via mainframe processes or

Value Added Networks (VANs). They do some

secure File Transfer Protocol (FTP) transfers via

internet or by web-portals in their applications, but

most communication such as mail boxing, protocol

conversion, standard conversion, and other value-

added services like reliability, security,

administration, implementation assistance, auditing,

is via VANs.

Item 6, addresses Internet use; case one; the

Internet usage is still in terms of a basic website in

terms of e-commerce activities. Case two; uses

Internet for technical data exchange, interactive

website, web based customer service, website

payment systems, extranet – supply chain

management, Internet EDI, Inventory/stock

management, supply chain logistics, and B2B trade

exchanges.

Item 7, addresses application areas; case one; the

applications area in the B2B e-commerce practise

includes order receiving; logistics; invoicing and

payment. Case two; application areas in their B2B

ecommerce practice vary from e-procurement, to

office banking. Just about everything done is at

some point conveyed via EDI, from transportation

tender from shipper, to inter-carrier movement

instructions, to interchange advise to billing of

customer.

Item 8, deals with how the organization rates the

benefits in their B2B technology usage, case one;

B2B technology usage has been used to eliminate

clerical tasks, speed information transfer, reducing

data errors, and eliminate business processes. Case

two; the Internet is allowing the company to save

money in the buying process. They post what we

BUSINESS-TO-BUSINESS E-COMMERCE ADOPTION: A CASE STUDY APPROACH

197

they need done, and contractors that are qualified to

do that kind of work respond.

Item 9, examines the main incentives to

increasing the use of B2B e-commerce within the

company. Case one; the main incentive to increase

the use of B2B e-commerce within the company

includes maximizing supply chain economics. Case

two; cost avoidance and increase productivity.

Doing it faster, easier, and cheaper are the main

triggers to increasing the use of B2B e-commerce

within the company.

Item 10 deals with the main barriers to increasing

the use of B2B e-commerce within the company.

Case one; Lack of understanding of supply chain

concepts are concerned as barriers in increasing B2B

usage in the organisation. Case two; the main

barriers to increasing the use of B2B e-commerce

within the company were identified as

implementation with major partners, probably

working around the implementation costs for the

small and medium enterprises. They are

increasingly pushing these to web-portals for input

which feeds into current EDI processes rather than

pushing to do conventional EDI.

Item 11, deals with how the company is planning

for the future in terms of utilizing B2B e-commerce

tools. Case one; as for the future they plan to have

B2B e-commerce tools incorporated in the overall

strategic plan. Case two; the organization is planning

for the future in terms of utilizing B2B e-commerce

tools by cost avoidance of VAN charges, and direct

transfer options via Internet.

Item 12 addresses the motivation for adoption in

terms of benefits that can be seen from effective use

of B2B e-commerce i.e. in day to day operations,

administration, internal communication etc. And

subsection to that the main external incentives in

relationships with customers and suppliers, when

conducting research or marketing, etc. Case one;

lowering costs of the supply chain were identified as

the main motivation behind internal incentives for

effective use of B2B e-commerce. While external

incentives include increasing sales and closer

relationships with customers. Case two; cost

avoidance and increase productivy for them too,

allows transfer of information in a usable format

without human intervention.

And final Item 13 examines the major obstacles

presented for the business in the transition from the

traditional methods of communication (mail, email,

fax, etc). Case one; the major obstacles presented for

the business in the transition to B2B e-commerce

include lack of understanding by business personnel

of e-commerce supply chain best practices. Case

two; obstacles include implementation costs and

lack of data collection within the implementation

process.

4 DICUSSION

The initial perception of case two was to act as an

individual or with industry competitors through

creating its own network in an attempt to leverage

buying power more successfully. Hence they had to

deal with numerous interoperability issues and

struggling financially to meet the heavy costs

involved in the private network VANs. With time

the company addressed these problems though using

internet-based applications. For example sending out

requests for service contractor bids via Internet; with

repairs needed to be done on something, such as a

bridge, contractors are able to submit proposals over

the Internet. They also use Internet based B2B e-

commerce to auction scrap and surplus materials.

Qualified scrap buyers submit bids into the company

mainframe. Buyers are then given instant feedback

as to the status of their bids. Whoever has the

highest bid at the specified closing time is awarded

the material and given a quote for transportation

costs. The company uses the Internet frequently to

find competitive prices. For example, when they

were not happy with a vendor's quoted prices for

communication equipment, a new qualified source

was found on the Internet, and money was saved.

While case one like many other organizations was

pressured into adopting by the Industry rather than

seeing the benefits. Global market and industry

pressure coming from trading partners (distributors,

suppliers, and customers) that invest heavily in

introducing systems for business-to-business

transactions are responsible for pressuring

organizations into joining to cut their trading costs.

The problem is most companies do EDI because

they have been forced into it and it is not because

they see the value.

The industry pressure forces

firms that want to keep the business relationships

going, to do this. Hence failure rates attributed to

failure to change the internal procedures. Therefore

case one sees the urgent need to map strategic

Business Process Reengineering (BPR) plans for

their B2B technology to be taken to another level.

All this said and done, Internet based B2B does

not necessary buy you anything. B2B is a very

complex heavy set of message standards, with so

many variations that they differ from VAN to VAN,

from Industry to Industry, and are quite expensive to

interface with all its variations. They have generally

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been designed for batch transmission and

processing. As case two has proved over the years of

their Internet B2B applications, that just adding their

EDI to the Internet doesn't really do much to solve

the problem, or to add any real benefit. It has been

like saddling the Internet with a heavily laden paper-

based system - e.g. sending faxes to people rather

than emails. We infer that adopters need to learn

how to extend their core applications such as

customer relationship management, with their

business partners. Recognize the role and impacts of

collaboration, in the implementation of B2B e-

commerce solutions. Strategic alliances still deliver

results such as leading B2B e-commerce solution

providers, Commerce One and Microsoft were

reported to form a strategic alliance to address

technical barriers to adoption.

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