Which strategies will be the winners in the year ahead, and who
will be left trailing behind in the race for corporate
mindshare?
After a year when the demise of the dotcoms impacted the thinking
of surviving dotcoms and brick-and-mortar companies alike, 2001 is
likely to see online strategies developing a never-seen-before
maturity.
For the most part, persuading company boards of the need to
develop a Web presence has been achieved. What has yet to be
realised is integrating that strategy with business needs and
existing channels to create a customer experience that does not end
with the customer encountering two separate entities that seem to
have little understanding of each other's role.
A product ordered on the Web should be able to be returned to
the 'real' world store presence without difficulty. Similarly, an
order made online should be accessible in the same High St
presence. Otherwise, the customer experience is going to be one of
hassle, a poor view of the company and, eventually, the customer
will shop elsewhere.
2001 will also see the shake-up of the overheated electronic
marketplace phenomenon, with marketplaces looking for new ways to
survive - there are already too many and a shake-out is inevitable.
Look for marketplaces to offer more and more e-oriented services to
drive and support liquidity, and even to begin adopting the
application service provider model to support other marketplaces -
anything to gain a new revenue stream.
Electronic procurement, however, is certain to gain corporate
mindshare, particularly in the UK following the launch of
e-procurement guidelines by BuyIT, which have government backing.
Companies such as Shell and Sainsbury's have already indicated
their faith in this area as a critical driver of their
businesses.
For the surviving dotcoms that may already have garnered
funding, 2001 will be a make or break year in the creep towards
profitability. For those companies that predicted in late 1999 that
they would be profitable in two or three years, the clock is
running out. For many, the business model may have to change.
Discounting products online to gain both eyeballs and customers may
have to drop off, in favour of gaining profitable sales from a
smaller pool of customers. The rush to spend marketing budgets to
gain those eyeballs may now be replaced by a more scientific and
rational approach, especially as there will be less money available
to play with.
Those that don't achieve this can expect to see the
brick-and-mortar companies come calling looking to buy online
expertise. Here are a selection of views on 2001's winning and
losing strategies.
Andy Williams
Head of UK business development, Citria
Winners
Over the last two years many organisations have invested in
Commerce One, Ariba and other e-procurement and exchange products.
The time taken to implement these solutions enterprise-wide means
that their full impact has yet to be seen. In 2001 expect a much
greater proportion of corporate procurement spend to migrate to
electronic media as these projects go live. Expect to see an
immediate impact in supply chains as companies lower down the value
chain are forced by their customers to move a significant
proportion of their sales activity to electronic channels. The bulk
of the automotive supply chain may move to the Covisint model set
up by General Motors, Ford and Daimler Chrysler and a substantial
proportion of supermarket procurement in Europe will take place
through exchanges, for example.
Convergence of TV, mobile telephone and Internet has been a long
time coming. While it won't arrive in the next year, it's getting
closer. In 2001 we'll see a rush of investment in convergent
technologies getting ready for the widespread availability of
broadband/3G.
Losers
The mobile telephone operators have bet their futures on 3G
licences. They need to find ways to get this investment back. We'll
see a range of hyped services being developed seeking to put yet
more functionality into the handset. These services will be
launched amidst a blaze of publicity in 2002 and many will fail -
like the dotcom boom, the revenue models won't work. The real
benefit from 3G will come from using mobile telephony in ways that
we can't yet foresee - for example, integration of 3G technology
into vehicle dashboards will open opportunities for many innovative
offerings that do make money. The winners in 2001 will be those
that spot these opportunities and position themselves for the
launch of 3G.
Phillip Mellor
Senior business analyst, Dun & Bradstreet
Winners
Data quality will dominate next year's e-business agenda.
Without global standards to allow internationally-operating
companies to aggregate trading data at both business entity and
product category level, much of the potential value of integrating
e-commerce and e-procurement systems will be lost.
Next year's winners will be those companies that can immediately
use data captured at transactional level. But before you can take
informed management decisions on, say, the discount levels you are
prepared to offer, you need to ensure the data within customer and
supplier databases is accurate.
Losers
We're now in the post-hype phase of e-business. Anyone who
doesn't plan their implementation, seeks to adopt an unproven
solution or fails to test a change in technology direction
mid-stream against a clear, robust strategy is at risk.
Equally important, it's time to look at 'soft' issues - those
business leaders who fail to take on board the need to articulate
the benefits of their e-business strategy within the organisation
may find themselves stymied by a culture mismatch.
Donald A. DePalma,
Vice president of corporate strategy, Idiom
Technologies
Winners
New thinking by pundits and investors will drive companies to
apply traditional business metrics to their online initiatives,
thus requiring firms to demonstrate return on their Internet
investment. Because the days of a guaranteed bright future for
e-commerce initiatives are over, Internet executives will be forced
to show real value, a credible path to profitability, or better
customer service delivered at lower cost - just like their
counterparts elsewhere in the business world.
A second positive trend will be the application of
second-generation personalised marketing technology to audiences
beyond the domestic mainstream. That will mean that companies will
target under-served market cohorts, such as female investors,
ethnic buyers, or consumers in other countries with more
sophisticated one-to-one techniques.
Losers
On the negative side, many companies that built their own
e-commerce solutions will abandon them after embarrassing system
outages and outright failures. They will also find that the cost of
developing their own application servers, content managers and
commerce logic was far too expensive in both actual cash and
opportunity cost. Worse yet will be the cost of maintaining and
enhancing these purpose-built systems.
A second negative trend will be selective abandonment of
interactive agencies for building online applications. With share
prices slumped in the single digits, many agencies won't be able to
retain quality developers. Agencies haemorrhaging developers won't
be invited to bid on follow-on engagements as delays mount and
committed functions disappear from the systems they build.
Mark Baker
European product marketing manager, Onyx
Winners
As e-businesses grow and change, the integration of their
enterprise will become ever more important to them. A typical
e-business will be using customer relationship management (CRM)
data in their sales teams, call centres and marketing campaigns.
They will also be using billing and invoicing data in their
enterprise resource planning (ERP). They will also be trying to
link their demand chain to their supply chain by providing direct
integration with their suppliers and partners over the Internet.
XML-based data exchange tools will allow this to happen in a
seamless and maintainable way that will closely integrate the
entire enterprise.
With the expected arrival of high-bandwidth mobile data early in
2001 and the first delivery of general packet radio service and
then EDGE (enhanced data rates for global evolution) technologies,
the ideas of being away from the Internet will disappear. For the
business it means that any employee can have access to customer and
business data anywhere at any time.
Losers
We're not quite done hearing about 'new e-business strategies'
from companies but within those companies who have adopted the
Internet as a channel for doing business, it will start to become
'just another channel' alongside voice, fax and face-to-face
meetings. Recent research by Ovum in conjunction with Onyx, Apropos
and Microsoft showed that most organisations still can't recognise
that a customer coming to them over different channels are the same
people. This will start to change as businesses that have adopted
e-business strategies realise that they need to have a single view
of customer interactions across different types of media.
Andrew Robinson
Managing director Northern Europe, DiamondCluster
International
Winner
France Telecom and Orange's strategy of creating a truly
pan-European mobile network should enable them to leverage the full
power of mobility with their customers (both business and consumer)
as they become increasingly comfortable with mobile applications
such as micro payments, traffic avoidance, retail purchases and
such.
Loser
Letsbuyit.com's strategy will fail because it lacks a strong
proposition, it is easy to copy and eventually the strong brands,
such as eLuxury.com, that are essential to make the site attractive
will do it themselves.
Martin Howarth
e-applications sales manager, BT major business
Winners
Aggregation sites are personalised portals that pull an
individual's online activities together. For example, it might
allow them to access their bank or building society accounts,
supermarket loyalty points and online shares. This removes the need
to trawl through several sites and, more importantly, removes the
need to remember numerous passwords.
Aggregators benefit from being able to monitor behaviour
patterns and market directly to users, using interactive
'push-pull' technology. On the downside, existing content providers
risk losing ownership of the customer.
Increasingly, both large organisations and SMEs will outsource
key applications to ASPs to gain significant benefits. The
complexity and cost of software upgrades is minimised and
organisations are assured of watertight security, because the ASP's
survival depends on it. The use of ASPs removes the need for
in-house support staff, leaving the organisation free to focus on
its core business activity.
Losers
The number of dot.coms will reduce due to failure and
consolidation. Only those with a sound business model will survive.
These are not necessarily the innovators, but those that can
consistently deliver a good 'customer experience'.
Digital TV, WAP phones and PDAs are going to eclipse the PC as a
means of accessing the Internet. We can also expect a huge growth
in e-kiosks, which will be popping up everywhere - from retail
outlets and places of work, to travel and leisure locations.
Adrian Stafford-Jones
Founder and managing director of Albany Software
Winner
As an immediately achievable and cost-effective solution,
electronic document delivery (EDD) will be at the core of
successful e-business strategy. There is huge pressure on
organisations to increase profit margins and productivity levels.
At the moment 59% of companies print four out of every five
documents generated and for every £1 spent on a pre-printed
document, such as an invoice, up to £40 is spent processing it.
In automating the dispatch of financial documents such as
invoices, statements and remittance advice, companies using EDD can
realise a 90% cost saving within a year.
Loser
For the medium to large organisation, ASP will be unsuccessful.
For the last two years ASP has threatened to explode on to the
market but the reality is that large companies are too fearful of
the repercussions and dramatic consequences of a failed ASP
project. The risk involved in transferring the control of
information to a third party is too great. Large organisations are
simply too reluctant to allow valuable business data to leave the
four walls of their own company.
There are still major concerns about the security of an ASP
approach for large companies and there is little evidence to
suggest that this will change over the course of the next year.
Bandwidth, speed of delivery and efficiency are still huge question
marks surrounding the success of ASP deployment.
There is still a huge culture change that needs to take place
before businesses can begin to realise the benefits of an
application service provider model and this is unlikely to change
in the short term.