Over the last 18 months, the online world underwent some dramatic
transformations.
February 2000
The dotcom market looked healthy 18
months ago. A Computer Weekly/Kew Associates IT expenditure survey
indicated strong growth in Internet-related spending and the SSP/
Computer Weekly quarterly IT recruitment study highlighted the
increase in demand for staff with e-commerce and Internet skills.
IT executives thinking of joining dotcoms were warned that they
should do so within six months and were given advice on "how to
avoid duff dotcoms", such as find out how they are funded,
interrogate the business model and look at the management team and
its experience. Safeway's IT director appeared to take note,
jumping ship to join an Internet start-up.
In a Computer Weekly/Harvey Nash Big Question, 82% of the IT
managers questioned believed that a skills drought would hold up
e-commerce projects.
Also in that month, car maker Ford announced savings of more than
$10m (£7m) in its first use of Auto-Xchange, its Internet supply
chain network. And looking ahead, the opinion writers predicted
that Internet-based e-marketplaces would be the next big thing in
e-commerce.
March 2000
March was a busy month for UK retailers
looking to flex their e-strategies. Selfridges unveiled plans to
roll out an Internet-based e-procurement system. Waitrose became
the first British retailer to go live with a mobile phone ordering
service. And Sainsbury's announced that it expected to make savings
"in the multi-millions" after implementing a warehouse and
distribution software system.
The month also brought news that Barclays bank was to re-engineer
its IT systems to take maximum advantage of e-commerce. Computer
Weekly concluded that Barclays finally had a grasp of what the
Internet means for financial services.
On a more cautious note, readers were warned about the dangers of
the "frothy" world of online trading exchanges.
April 2000
Worrying signs that UK companies had been
exposed to increased security risks in their rush to secure an
online presence was provided by the Department of Trade &
Industry-commissioned Information Security Breaches Survey 2000. A
disturbing 60% of the companies surveyed admitted suffering a
security breach in the previous two years and only 14% had a
security policy in place.
Evidence that the dotcom rot was gathering pace was provided in the
disastrous flotation of Lastminute.com. And in the month that
European electronics firm Philips announced the roll-out of an
e-procurement system, Computer Weekly embarked on an in-depth look
into "the latest e-business buzzword" to discover the truth behind
the e-procurement hype.
Elsewhere, research by Internet consultancy E-Insight predicted
that UK retailers' e-commerce initiatives would lose them £100m
over the year, driven by investment in complex technology
platforms, inefficient order fulfilment methods, unfocused
marketing spend and reduced gross margins.
May 2000
The arrival of the Love Bug put security high
on the agenda and Computer Weekly reported that commentators were
blaming "a lack of diversity among corporate IT systems".
Online fashion retailer Boo.com became the biggest European dotcom
failure to date when its investors finally lost patience and denied
it further funding.
Hotel chain Thistle launched its wireless application protocol
(Wap) reservation service just as the Wap backlash was starting to
kick in. Summing up the shortcomings of the Wap medium, Computer
Weekly's e-business editor declared, "Never in the history of
technology conflict can so much have been promised to so many and
so little been delivered."
Although the Computer Weekly/SSP skills and salary survey found
that the shortage of Internet-related skills was deepening, analyst
Gartner warned IT managers of the dangers of investing in
e-marketplaces, predicting that the majority would be out of
business within a few years. According to Gartner, there were too
many around and there was only enough space for three vertical
portals in each industry.
June 2000
The alarming news that only 3% of British
firms had a formal e-commerce strategy came in a survey by NOP
Research. And research from consultancy Shelley Taylor Associates
suggested that firms in the UK and US were failing to entice
customers online by offering hard-to-navigate Web sites.
Internet bank Egg was listed on the London Stock Exchange by parent
company Prudential this month. This was followed by the launch of
Abbey National's online bank offering Cahoot went down like a lead
balloon - like the site itself, which was out of action for two
days.
Waterstones looked to cash in on the popularity of online
bookselling by introducing Internet kiosks in its stores. And in a
bid to address a common problem of online retailing, both
supermarket chain Iceland and Internet start-up Dropzone 1
announced plans to use high-street outlets as collection points for
goods ordered over the Internet.
July 2000
July was a big month for the banking sector,
both the Alliance & Leicester and Barclays launched
far-reaching e-strategies. Barclays aimed to double its profits in
three years through increased outsourcing and investing in customer
relationship management. The Halifax, on the other hand, was forced
to postpone the launch of its Internet banking service, Intelligent
Finance, just days before it was due to go live owing to
performance fears.
Computer Weekly examined the launch of the largest e-marketplace
for the oil, gas and petrochemical industry. Answering a reader's
question in our Strategy Clinic, David Taylor of Certus urged
readers to "dip a toe in the water" of e-marketplaces while a more
cautious Roger Marshall of Elite described e-marketplaces as
"attractive but risky".
September 2000
As the Government demonstrated its
support for e-commerce by announcing a £1bn effort to put Whitehall
online, financial services group HSBC announced its
multimillion-pound online investment. The deal with e-commerce
software supplier ATG was aimed at creating personalised Web pages
for about 500,000 of its online customers worldwide.
Computing Services & Software Association director-general John
Higgins told Computer Weekly, "Companies have to get to grips with
e-business in order to survive." But a report by Andersen
Consulting suggested that governments in Europe were failing to
create a suitable environment in which e-commerce could
flourish.
October 2000
News emerged that supermarket chain Tesco
had re-engineered the IT infrastructure behind its online shopping
service to keep pace with orders and help it cope with the
anticipated Christmas rush. Tesco was later ranked the best online
supermarket by e-commerce consultancy Gomez.
In a shake-up of its e-strategy, online airline EasyJet announced
plans to scale down its call centre operation and sell almost 100%
of its airline tickets online by the end of the year. And US retail
chain Wal-Mart, which owns Asda, began a multimillion-pound project
to improve its supply chain.
For its part, Computer Weekly was advising readers on the
importance of personalisation in e-commerce Web sites and the
dangers of treating customers like a mass audience.
November 2000
As e-minister Patricia Hewitt was forging
e-business links in India, Computer Weekly was gearing up for its
E-Business Month. Readers were given a summary of B2B e-commerce,
which predicted that B2B would transform the value chain in many
industries, transaction volumes could be huge and efficiency
volumes would force companies to co-operate.
"E-marketplaces set to crash", declared another article based on
findings from analyst Gartner. And news that many UK manufacturers
still lacked a coherent e-business strategy came in a report by
Benchmark Research, which found that 42% of the 700 senior UK
executives canvassed did not have an e-strategy.
December 2000
"Get sold on e-procurement" was one
message appearing in Computer Weekly, but another article was
asking whether the e-exchange show-down was on the way and
predicting that the exchange model would come to be dominated by
the large multinationals. Meanwhile, commentators were reminding
companies that "selling on the Net is not just about the bells and
whistles of flashy technology. For a company to survive, it must
have a brand it can sell and deliver."
Research carried out by Vanson Bourne showed that Marks &
Spencer, Littlewoods and Iceland were the top three rated e-tailers
in terms of usability, according to 250 online shopping virgins.
But bad news for e-tailers came in the Big Question, with 55% of IT
managers saying they had no intention of doing their Christmas
shopping online.
February 2001
As the IT industry was reacting to
confirmation of the appointment of Andrew Pinder as e-envoy,
worrying research from ICM showed that only half of the UK's top
1,000 companies had put in place the necessary management structure
to further their e-business strategies.
In the retail sector, analyst Datamonitor announced that Tesco.com
had become the world's largest online grocer. Department store John
Lewis made a bid to bolster its online business by acquiring the UK
arm of US-based office supplies e-tailer buy.com. And SupplyON, a
marketplace for component suppliers in the automotive industry,
began trading.
Whilst Gartner was predicting that e-business would force companies
into partnering, the European Commission promised a "root and
branch" reform of customs regulation to meet the demands of
e-business. The commission proposed a streamlined system for
dealing with "known legitimate businesses" to free up officers to
deal with more suspect firms. It also advocated more co-operation
between national forces along with more training and funding to
increase IT knowledge amongst customs forces.
March 2001
A report by consultancy KPMG and the
Confederation of British Industry showed that e-commerce in the UK
had shrugged off the dotcom crash of last year and was entering a
new phase, driven by the traditional companies. Computer Weekly
reported how success in the Internet was down to branding, with
bricks-and-mortar companies leading the "brand backlash".
Royal Bank of Scotland announced it was to introduce an online
auction system for its suppliers to cut costs and streamline its
supply chain. Boots' e-business chief was warning of the importance
of top-level buy-in for e-initiatives to be successful. And Tesco
revealed it was testing "virtual" shop assistants in some stores to
provide customers with extra product information.
April 2001
The Computer Weekly/Kew Associates report
showed that UK e-business spending continued to soar in 2001. And a
specially commissioned report for CW360.com by analyst firm Canalys
said that, although B2C commerce was growing at a fast rate in the
US and in Europe, the lack of investor capital meant few B2C
companies would survive. The report also claimed it was now too
late to start up a dotcom.
We reported how the majority of organisations had seen no increase
in revenues as a result of investing in e-business technology and
exploring the view that although e-procurement was more hype than
help there were still benefits to be had. The following issue
contained an article claiming that nearly two-thirds of
organisations using e-procurement had achieved no cost savings,
based on research from Forrester.
May 2001
The first government survey of UK online
businesses showed that online business transactions reached £57bn
in 2000, while research from IDC revealed how personality clashes
between IT directors and e-business leaders were threatening to
derail corporate e-strategy.
Also in the news, online banks Egg and Virgin Money stalled
e-commerce initiatives, shelving their roll-out of account
aggregation services amid fears they could contravene data
protection laws.
Computer Weekly reported how companies that use Internet technology
to empower their workforce were the real high performers and
companies were urged to invest in e-training to ensure the success
of their e-commerce projects. We also highlighted the importance of
e-fulfilment, looked at how e-supply chain savings were more than
just dotcom hype and reported how insurance companies were lagging
behind in the adoption of e-procurement due to a lack of awareness,
security fears and integration challenges.
June 2001
As Douglas Alexander was promoted to the role
of e-commerce minister following the election, new research from
Forrester suggested Europe was in the midst of an e-commerce boom.
And Computer Weekly readers voted the Internet the defining moment
in the history of IT
In the retail sector, Tesco announced it was implementing a global
sourcing system, based on a new IT infrastructure, in a bid to
increase its non-food business by 30% to £3bn a year by 2003.
The company claimed the system would automatically make purchase
orders based on the best deals, provide more visibility of final
costs and save time as information would not have to be re-keyed in
each country. Safeway announced it was shelving the warehouse-based
business model of its online shopping operation, GroceryWorks in
favour of the store picking model of Tesco.com.
In the financial sector, international investment bank ABN Amro
developed an e-procurement package for its customers while
insurance company Royal & Sunalliance announced it had spent
£20m on e-commerce and customer-facing systems. Barclays said it
intended to run £500m of its spending through a new e-procurement
system.
Computer Weekly, meanwhile, warned that a complex maze of politics,
standards and regulation was impeding e-business security while a
survey by IBM's Tivoli Systems claimed that more than a half of
financial institutions in the UK still did not know how to enforce
e-business security.
July 2001
Security was back in the news as 19-year-old
Welsh hacker Raphael Gray was sentenced to three years' probation.
Computer Weekly provided advice on how to become a successful
e-entrepreneur. "Do your homework before you seek funds", the
article urged, outlining the importance of a strong management
team, carving out a "starter" niche and making sure the revenue
model stacks up.
In a mixed month for the e-tail sector, US online grocer Webvan
closed its virtual doors after two years and filed for Chapter 11
bankruptcy protection whilst Ocado, which plans to launch a
London-wide Internet-only grocery deliver business later this year,
announced it had secured a further £46m of funding. And Tesco.com
reached an agreement with Microsoft to allow people without
computers to shop online using Microsoft Pocket PC devices and
smart phones. The company said it expected the service to generate
£1.2bn of revenue in Europe within two years.
Case Studies
Automotive e-marketplace Covisint lacks driving
force
Rather than set up their own automotive procurement
marketplaces, General Motors and Ford combined their efforts with
DaimlerChrysler to offer a single marketplace, Covisint. But the
lack of a cohesive, joint e-strategy has seriously hampered their
efforts.
The exchange has been beset with problems since its creation - not
least because no one is using it. Covisint has also suffered from
lack of leadership and only appointed a chief executive in April.
In a case of too many chiefs and not enough indians, the exchange
has struggled to find its way and this lack of direction has
resulted in an absence of awareness in the automotive industry. A
recent survey of 60 component and engineering groups by Cap Gemini
Ernst & Young found that only 27% had heard of Covisint.
Owing to its huge size and timely launch, Covisint still holds the
dominant position in the sector but it could be in danger of losing
this due its poor e-strategy. Although it has signed up Renault,
Nissan and Peugeot, other manufacturers such as Volkswagen have set
up their own exchanges and more could follow suit unless Covisint
cleans up its act.
First in the checkout with Tesco.com
Tesco.com
continues to lead the field with a business model that takes
advantage of an existing brand and infrastructure. Building on a
bricks-and-mortar business meant that Tesco.com could leverage its
brand name and buying power and use existing channels to advertise
the site. This helped keep customer acquisition costs low. Adopting
a "store picking" model for selecting goods out of existing shops,
instead of setting up a separate warehouse system, also proved
instrumental to its success.
Adaptability is a key element of Tesco.com's e-strategy. Last year,
the company re-engineered its infrastructure to accommodate the
increasing number of customers using the service, which was putting
a strain on its Web servers.
This redesign, which increased its order processing capacity and
speeded customer access times, helped it cope with the huge rise in
customers using the service last Christmas. And Tesco recently
announced plans to implement a global sourcing system.
Kingfisher restacks its online shelves
Kingfisher
announced it was founding a dedicated e-division last June. The
retail group, which includes B&Q, Woolworths and Superdrug, set
up the e-business operation to exist alongside its DIY, electrical,
general merchandise and ventures divisions.
The group wanted e-Kingfisher to act as an "e-commerce accelerator"
for its brands. It has a central role in the group's "3e" strategy
to exploit brand advantage, extend its brands into new
business-to-consumer and business-to-business markets and explore
marketplaces for future investments and opportunities.
Put simply, e-Kingfisher is seen as a vehicle to increase the
group's market share and to aid profitability, taking advantage of
economies of scale in e-sourcing and fulfilment to help grow its
online sales from £40m to £1.5bn in five years.
At the end of last year the group announced that its UK online
retail Web sites were the second most popular British online retail
sites.
Charles Schwab's online gains
Online trading portal
Charles Schwab Europe (CSE) became the first recipient of the
Computer Weekly E-business Excellence Gold Award in November 2000.
While online trading was already established in the US, the UK
market was relatively non-existent prior until CSE's entry in 1998.
Timed fortuitously with the scramble for technology shares, CSE
celebrated its millionth online trade within two years of its
launch.
Sue Griffin, CSE's director of electronic channels, says that
breaking into the UK market involved research into local Web use
and financial legislation. The infrastructure was acquired when CSE
bought Sharelink, which had already established a telephone
brokering service.
As well as offering trading functionality, the site also contained
complementary services such as reports from the Financial Times.
Another innovation gave active users the option of carrying a
customised pager to receive real-time updates on stock
performances.
Amazon.com's next Web chapter
Despite losing money hand
over fist since its inception in 1995, Amazon.com, the father of
the global e-tailers, has refused to go away. Although it has yet
to reach a profit, its survival is due to a clear e-strategy.
The success of Amazon is based on a no-frills Web site which is
easy to use. The one frill is its patented "1-Click" online
purchase technology that enables customers to enter payment details
just once for all sales transactions.
Amazon's longevity has helped it build a reputation for speed of
delivery and reliability. And the e-tailer has pursued a policy of
expansion, proving to be one of the few online retailers capable of
hammering home its first-mover advantage. Over the last 18 months,
it has grown its customer base and market share and now claims to
have more than 29 million customers in 160 countries.
The e-tailer's strong market presence has led other companies, such
as bookseller Borders, to sign strategic partnerships with Amazon
rather than lock horns with it.