To shamelessly borrow from one of the classics of literature, for information technology it is both the best of times and the worst of times.
First the bad news: Investment by corporations in capital equipment and software is declining. Indeed, in the fourth quarter of 2000, it dropped at a 4.7 percent rate — thats after years of double-digit quarterly increases.
The good news, however, is that some 77 percent of information technology and business executives say that, despite slowed overall spending, they plan to increase investments in Internet-related technology by 40 percent on average, Gartner Group says. The consulting and research firm also expects that e-business will grow from 12.7 percent of IT spending in 2000 to 15.5 percent this year, and could be as high as 50 percent by 2004.
Why? Because by now even the most hesitant chief executives have been convinced they can do everything from customer service to supply chain management to employee relations cheaper over the Net.
The questions now are: Whats currently out there in e-commerce-platform land that can help businesses do business better and cheaper and, ultimately, where are business-to-business (B2B) and business-to-consumer (B2C) IT heading? To answer the first question, whats out there is a breathtaking array of solutions.
In the B2B space, collaborative commerce continues to be the buzz. “businesses are going to start to look for efficiency answers here,” says Tim Weis, senior consultant at TeleChoice in Dallas.
Community-of-interest networks, for example, might connect a regional hospital with clinics and suppliers with just a point and a click. An individual physician, for instance, could launch a single application and log a weeks worth of patient visits directly into a hospitals billing system. “A virtual private network has been extended from the hospital to the doctor. The doctor doesnt need a password; he or she simply launches the application. Its totally secure,” Weis says.
Burlington, Mass.-based Enigmas 3C platform now includes a collaborative commerce component. Enigma develops so-called sell-side exchanges, working primarily with large equipment manufacturers such as GE Aircraft Engines to build, among other things, collaborative online parts and corporate information libraries.
“Its a way to share best practices, identify logical communities and then for those communities to collaborate,” says Randy Clark, Enigmas vice president of marketing. In this iteration, collaborative commerce might allow an aircraft engine mechanic in Chicago to communicate online with an aircraft engine mechanic in Dublin, Ireland, who is working on the same kind of engine with the same kind of problem, and use the identical service manual — down to the virtual sticky notes and annotations left by previous users.
“Theres a huge amount of savings in all this,” Clark says. “It really comes from reducing downtime. Any time the planes not in the air, the airline is not making revenue. There is a huge premium on how to do what we do faster.”
In the nonprofit sector, Cambridge, Mass.-based ArsDigita, whose for-profit clients include giants such as America Online, Oracle and Siemens, recently deployed its open source e-commerce software in a collaborative commerce site for The World Bank Group. The goal of the World Banks Global Development Gateway at Developmentgateway.org is to help developing countries save money, time and human lives.
IBM also wants to be a strong player in the space. It has about 200 researchers worldwide working on collaborative commerce technologies.
In B2C, customer service and traffic management tools have gained substantial sophistication. Customer service alone is expected to be a $14 billion market by 2002, according to Westminster, Colo.-based Finali.
Finali, a customer service call center, merged in October with NetSage, a developer of “socially intelligent” online customer service agents that look and behave like human beings and can answer 50 percent to 80 percent of a customers service-oriented questions. Finali CEO Bob Bergin estimates that the virtual agents can handle most customer service inquiries for about 25 cents each, compared with $3 to $9 for each offline contact.
Online agents get smarter as customers ask questions because answers are updated weekly, depending on what customers are asking. Agents also move through the site cross-selling and selling up, and appear in order processing follow-up e-mail messages.
Web site traffic management tools are also evolving rapidly. Circadence has developed technology that is able to prioritize traffic to a site. It monitors how long a potential customer is waiting for a page to load. If the wait drags beyond a predetermined length of time, the technology serves up some cached content, perhaps a clickable coupon for discounts when the real page loads. The software also is able to find the quickest route to a particular server, thus reducing a companys demands for additional infrastructure investments.
Sunnyvale, Calif.-based Resonate recently announced a new service-level management platform called the Resonate Commander Solutions. Its touted as a new kind of service-level management tool that allows not only site traffic monitoring and reporting, but real-time control of scheduling and load balancing.
Using the analogy of a subway traffic control center, Resonate says its platform can determine if a train is heading down a track that has a piece missing, then find the missing piece and repair it instantly. “Its one step beyond rerouting the train,” says Karen Styres, vice president of marketing at Resonate. It all comes down to productivity. “All business today is e-business. IT spending in the enterprise is going to be on things that will give productivity savings.”
Outsourcing, long a cost-control tool in the brick-and-mortar world, CONtinues to gain devotees in the virtual world. “The appeal is the ability to move quickly,” TeleChoices Weis says. Large companies can outsource to save time and money; small companies can outsource to save money.
One e-commerce platform outsourcer is Scottsdale, Ariz.-based Vcommerce. The company provides its software a la carte for everything from customer service to drop-ship networks to product catalogs and databases to transaction management. Depending on where a companys core competencies lie, it can outsource the weaker portions of its e-commerce efforts.
For dot-coms currently, the issue of scalability is paramount. The growth and shrinking of an organization is really painful, says Vcommerce Chairman Dan Kennedy. “On the flip side, however, traditional brick-and-mortar companies are looking for core competencies on the front end. Over the last couple of years, lots of organizations have had failures in that space. They come to us and say, How do we build this online storefront? “
And then theres mobile commerce (m-commerce).
“If you mean wireless, I think thats the future,” says Sam Kapreilian, a partner at PricewaterhouseCoopers. “But its not ready for prime time in the United States unless youre talking about regular phone calls. Its about like the Internet in 1988. Everybody thought something was coming then, but they didnt know what it would be.”
Nortel Networks thinks it knows what it will be, in one area at least. In January, it launched what it calls a wireless field service and logistics solution. The software allows field service personnel, such as the now infamous cable guys, to dial in to the corporate Web site using a Wireless Application Protocol-enabled mobile phone and check requests and orders dispatched from the companys customer service center.
Nortels software also gives mobile work forces access to up-to-date inventory data and shortens customer response time. The idea is to optimize a companys call center operations, says Steve Paolini, the companys director of wireless Internet architecture. “You offload those call center agents from mundane and routine tasks, and leave them to answer the tough questions,” he says.
Building M-Commerce Apps
Pleasanton, Calif.-based Mobileum already provides a platform upon which many m-commerce applications can be built and managed. “These applications can be B2C or B2E [business-to-employee] — employees that want a wireless time and expense management system, for example — or B2B. We have one customer thats using our platform to build a B2B exchange for container shipping,” says Mitch Bishop, Mobileums marketing chief. The companys newest version, which it targets to developers, is called SmartHomepage. “In this country, when you buy an Internet-enabled phone, the home page is controlled by the carrier. There is no way to provision your own home page. Weve come up with a way to do that,” Bishop says.
IBM has given the newest version of its WebSphere Commerce Suite m-commerce features. In what may be one of the best marketing ideas ever, Dutch beer maker Heineken is using Big Blues wireless feature to allow mobile phone users in Europe to find the nearest pub that sells the companys brew.
“They had 800,000 hits in the first month,” says Sandy Carter, vice president of marketing for IBMs e-commerce arm.
WebSpheres latest incarnation has also gone global. Culture to culture, people shop differently, Carter says. “Web page designs vary, and if you present a product in consumers own languages, they are more likely to buy. In Europe, only 30 percent of the people who browse buy. We are figuring out how to turn those browsers into buyers.”
But even though the array of e-commerce product out there is impressive, business will keep demanding better performance, most observers warn.
And rapid progress toward greater performance may be e-commerce platform providers biggest conundrum over the next year. “The expectations by users are that the capabilities of all these solutions will continue to improve,” says Circadence CEO Mike Moniz. “Bandwidth, speed and content all are expected to be better.”
But what Moniz calls the “macroeconomic environment” is not currently supporting that development. Translation: The recent and rapid decline of tech and telecom stocks has deprived them of the market caps they need to get further research and development funding. “Lots of different companies that were providing these opportunities are out of favor right now. The capital markets want to see growth, but they dont want to fund what customers are demanding,” Moniz says.