When the Internet burst out of the research community in the mid-1990s, it inaugurated one of the most fruitful, creative periods in the history of the information technology industry. Businesses began exploiting this new means of communicating with the larger world. And they experienced levels of integration that enabled their employees to begin acting more quickly and collaborating more effectively. What emerged was a new model called "e-business."
If anything, the market forces that inspired the e-business phenomenon have intensified. Especially in these difficult economic times, companies are looking for new levels of efficiency. Beyond that, the marketplace is compelling them to become more competitive: to find better ways to attract and retain customers, develop better products in more innovative ways and get them to market faster, and to form and extend more productive value chains. In short, they need to take e-business integration to an entirely new, much more profound level.
Even as those market forces press upon business, the technology to achieve this next level of integration has been advancing at an incredible pace. The Internet itself has continued to evolve in reach, capability, and reliability, assimilating ever more powerful, sophisticated, and less expensive technologies, and exploiting higher bandwidth.
All the while, it has been incorporating open standards, like XML-based Web services and the Open Grid Services Architecture. These, in turn, are transforming the Internet into a distributed computing platform capable of unprecedented integration and sharing of compute resources and applications.
This confluence of market forces and technological capabilities has prepared the way for the next step in e-business: e-business on demand. IBM Chairman Sam Palmisano captured its essence last October when he defined an on demand business as "an enterprise whose business processes integrated end-to-end across the company and with key partners, suppliers and customers can respond with speed to any customer demand, market opportunity, or external threat."
Such an enterprise displays four characteristics. First, it is responsive. Information is available in such an immediate fashion that the enterprise can meet any challenge contemporaneously, as it is emerging, when a customer demand or a market opportunity is fresh and before a threat has had time to become established.
That enterprise is focused on its core competencies and the things that make it stand out from its competitors. It can be focused because, in an on demand operating environment, the business does not have to pay a lot of attention to its IT infrastructure.
Likewise, an on demand business is resilient. Its operating environment has achieved a degree of automation that permits it to be self-managing to regulate itself in an autonomic fashion, just as the human autonomic nervous system controls our basic functions without our having to think about them. The infrastructure is available day-in and day-out.
The final property of an on demand enterprise is that it is variable. It is variable in the sense that the business can strike the most favorable balance between large, upfront investments in IT assets and the variable costs associated with tapping into the IT resources of a service provider.