DHAHRAN, 4 May 2004 — Digital economy — Internet economy, new economy or web economy — means an economy that is based on digital technologies, including digital communication networks. In this new economy digital networking and communication infrastructure provide a global platform over which people and organizations interact, communicate, collaborate and search for information.
The new economy needs a new paradigm, but the process of transformation will take some time. Over the last few years the Internet has become a platform for the new generation of companies. The first sign of electronic business (e-business) was the exchange of information (information sharing). However, more and more types of companies have started to operate online.
The online business is rapidly shaking the foundations of traditional businesses. An increasing number of firms recognize and appreciate the opportunity offered by the Internet and have established an online presence with a sound business model behind it.
Garner Research has estimated that in the Gulf Cooperation Council (GCC) states 17 percent of Internet users shop online. The business-to-business (B2B) volume estimate for 2002 in the GCC was $4 billion and is expected to grow to $9 billion.
The following table gives an overview of the business-to-consumer (B2C) e-commerce significance and potential in each GCC state. By 2005, the trade volume is expected to double:
One of the main reasons for the increasing number of companies that digitize their operations is increased revenues and an additional customer base. Through the Internet, it is possible to invent new ways to add value to existing products and services without necessarily spending a lot of money. The Internet has added an important distribution channel to the already established businesses. This has led to a transformation or even replacement of the traditional channels, and it is much better to do it yourself within your company than to wait for a competitor who has already taken the Internet plunge to do it for you.
Today many companies are developing new models to operate competitively within a framework of the digital economy. These models are structured globally, yet they have a local focus: They aim at maximizing the risk-adjusted return from both — knowledge and technology assets.
The key message is that today’s business leaders must understand that the e-business concept encompasses the entire business model of how a company operates. In addition, they must see beyond the limits of their company, anticipate competitors from everywhere, and immediately adopt the appropriate strategies. (Comments: [email protected].)