Big still eats small
There's an internet saying, “On the internet, no-one knows you're
a dog”. The same idea comes through in a series of IBM commercials targeted
at small businesses thinking about getting on to the internet. This promises
that small internet businesses can compete on an even footing with giant
corporations. So where is small business in the world of e-business (internet
electronic business)?
In the real world, there is a profitable business for large corporations
selling services to small and medium businesses, now called SMEs (pronounced
“smees”). Banks and other financial institutions, telephone companies,
utilities (power, water) and other large corporations can each have hundreds
of thousands or millions of SME customers, overwhelmingly self-employed
or small employers. The working life of these petty bourgeois (to use the
technical term) is often marginal. But like workers, these small businesses,
as service consumers, can be a source of huge profits.
The path to internet profits for large corporations is still very uncertain.
Selling internet services to SMEs is almost unexplored territory, even
if just about every major bank and utility in the world is trying to make
a go of it.
The most common plan at the moment is to get SMEs to buy services such
as email, pay systems and catalogue systems from larger companies acting
as “application service providers”.
There are far more ambitious plans around, which include getting SMEs
to sell and buy products over the internet using “trading hubs” or “trading
communities” designed for this purpose. In some visions, the small businesses
would spend their entire commercial existence within these virtual marketplaces.
Most governments in advanced capitalist countries are actively encouraging
this trend, sponsoring or assisting development of these hubs. They are
also pushing their development by demanding that all companies doing business
with government get ready to do so over the internet. So if you own a small
construction business or training service, and want to bid for work within
government, you will need to have internet access and be willing to negotiate
your conditions of supply by clicking buttons on a contract negotiation
web site.
The up side of this for SMEs, constantly focused on by governments,
is that this will allow all these small businesses to bid for work over
a much larger geographical area. This view is particularly pushed by “regional
development” government bodies.
The down side, which is never mentioned, is that business tenders that
were previously too small or remote for large companies to notice can now
be dealt with by these corporations using automated processes, making even
small pieces of business potentially profitable. This would leave the great
majority of SMEs out of business. It's nothing new for small business to
be squeezed by large corporations. But using the internet to do it is a
new twist.
By Greg Harris
