Picking successful companies in the Net age is a challenge because the speed of the Net economy means one part of the year's winners - both suppliers and users - could become losers six months later.
And given the wide variety of debate over which technologies will succeed - will ASP succeed or fail, for example, depends on who you ask - no choice has a guarantee of success.
Some things are clear from the evidence of 2000, however. The most successful user companies who embrace the Internet, are now more likely to be the traditional bricks and mortar companies, who have become "clicks and mortar" than pure play Internet "dotcoms". The funding worries that have plagued "dotcoms" have left many struggling more for survival, not bidding for leadership.
On the supply side, those companies that "lead" in 2001, will be those who, like in 2000, came to be identified with the next "wave" of the Internet. Originally it was supply chain management, which spawned companies such as i2 and Manugistics, then customer relationship management, which led to success for Siebel Systems. For much of 2000, it was electronic marketplaces and e-procurement, which produced dividends for at first Commerce One and Oracle, then Ariba.
The big losers during 2000, as the dotcom turnaround hit hard, were many of the digital consultancies. By the end of the year, one-time Wall St darlings such as MarchFirst and Scient were laying off staff, and trying to re-invent themselves to either offer their expertise to bricks and mortar companies, or, like everyone else, trying to become "ASP" specialists. And if the ASP world fails to take off as predicted, then look for 2001's leaders to either come from an explosion in "broadband" services, or from the directory services world.
So, who will be 2001's winners?
The broadband industry is expected to grow revenues by an average compound annual growth rate of 44% over the next five years, with cable and DSL services capturing 81% of revenue in 2005. Success will not come cheaply, however. In the US, SBC is spending $6 billion to make DSL available to 80% of its customer base by 2002, with 60% of them qualifying for 1.5Mbps guaranteed service. According to Forrester, Time Warner expects to pass 21 million homes with two-way cable by year-end 2000. So, companies with a fortŽ in Web infrastructure are those with a chance of success. US successes here could include bandwidth provider Yipes Communications and Net caching specialist CacheFlow.
In the electronic marketplaces world, the time taken for vertical hubs to gain traction will see the development of private hubs, led by companies such as Volkswagen, following a series of different paths to success. With many marketplaces/exchanges considering offering more 'e-services' to service the liquidity they hope to drive through their site, any companies offering products in this space are possible winners. Those tipped for success, include Seattle-based Vitessa, which offers an e-commerce network for Web sites, Los Angeles-based Adexa, which provides collaborative commerce software and services and Exterprise of Austin, Texas, which provides a software platform for business to business marketplaces.
In the key area of software to manage Internet content, there is little to say the key companies of 2000 won't be equally influential in 2001. That, according to Forrester which has recently produced a series of rankings, means a key role for companies such as Open Market, Broadvision, Documentum and Vignette. Those that are going to be successful in 2001 are going to be those whose software is easy to use and offer strong workflow and version control, as well as excel both at repository and user management. But even these four leaders can expect competition from document management vendors and commerce "crossovers".
When it comes to picking an e-commerce platform, Art Technology Group, Intershop and Blue Martini are sharing top billing, largely, according to Forrester, because of their standard application servers and tailorability. Other potential players who could enhance their reputation next year include Groundswell and Expedior, and BEA Systems.
Customer Relationship Management
In areas such as customer relationship management, currently dominated by Siebel Systems and Oracle, new contenders with a shot at success include E.piphany and Knosys, while among companies building Internet-based applications, San Francisco-based Buzzsaw.com, and Australian software company, HarvestRoad, are also being tipped for success.
Application service provider
The ASP market is likely to be the most competitive. There are companies who have embraced the digital consulting world, who are also offering ASP services, as well as some electronic marketplaces who will offer hosting solutions for other exchanges.
Names to keep an eye on in this space - with plenty of others ready to offer their services as ASPs too - include Interliant, CoVia Technologies, Jamcracker, and Broadreach Consulting.
It is a similar story in security. The last year saw the rapid rise of companies such as Baltimore Technologies, which went from being a niche Irish software company to becoming a significant publicly quoted security specialist. The need to offer digital signature services in future is certain to see a new wave of companies claim to offer new solutions, in areas such as bimoetrics, and encryption. There is also a crying need for companies to demystify the whole "trust" services area. Those with a chance of enhancing their reputation include US companies Arcot Systems, Authentica and BioNetrix Systems, while in the UK, Trustis has set out its stall to explain in simple terms to users how they can best use digital certificate technology.
For many of these companies, a critical factor in their success will be forging a relationship with the big consulting companies. Those that have benefited from such relationships include Kana Communications, and WebMethods, whose integration tool has been recommended by Andersen Consulting, and KPMG, plus a host of smaller consultancies. Meanwhile, the consultancies themselves have still to prove they can deliver Web strategies at speed, and not in 200 page reports to users that will take years to implement. One recent innovation has seen Andersen get together with Microsoft to set up Avanade, a consultancy devoted to building e-commerce solutions based on Windows 2000.
When it comes to choosing user organisations who have a good chance of succeeding online, it is tempting to suggest that those companies who have wholeheartedly embraced the Web in their core business, are those with the best chance of success. That implies giants such as General Electric, which has created a culture whereby every employee is encouraged to digitise their own job. Even the retirement in 2001 on GE's legendary chief Jack Welch, is unlikely to see the sprawling company dilute its focus on e-business. The same is likely to go for companies such as Cisco and Dell, Wal-Mart, Time Warner and Bertelsmann.In the UK, Legal & General and Tesco have proved to be in the UK's vanguard of e-business pioneers, with companies such as Kingfisher Group, Sainsbury's, and Unilever also active. Both Sainsbury's and Shell have already expressed strong interest in making the most of e-procurement, while a whole string of companies have made moves towards joining electronic marketplaces, though these have yet to deliver.
There is little encouragement yet for UK online banks in dominating European competition. While Cahoot, Egg, and Intelligent Finance from Halifax have all suffered poor publicity over security problems, other European banks have been stretching their advantage. According to Forrester, Credit Suisse and UBS are the leaders in Europe's online retail banking, with the French Banque Directe and BNP Paribas running a close third and fourth. Barclays is in joint sixth place, alongside Advance Bank, Commerzbank and Deutsche Bank, but behind Finland's Merita Bank.
Among electronic marketplaces generally, the winners will not necessarily be the largest, but those that are most agile and who form partnerships with their communities. Independent smaller marketplaces must show leadership if they are to prosper against the financial might and resources of captive- or consortia-based marketplaces like Covisint. These smaller Net markets such as eSteel, ChemConnect and works.com can extend their influence outward to partners and suppliers, by adding services such as financing and logistics to stay ahead of the competition. By optimising "interenterprise production", e-steel, in the US, could allow Ford and Caterpillar to coordinate similar steel orders through Bethlehem Steel mills, reducing changeover costs and increasing mill use.
Similarly, as Forrester has suggested, Covisint and similar large consortia in sectors such as retail, will have to find communal leadership strategies, as well as technology and business practice changes. If not, these firms will behave less like eBusinesses but more like "groggy, lumbering old world firms. DaimlerChrysler and GM, Forrester adds, will struggle to agree on production forecast formats, never mind a common process for sharing and refining that information with suppliers.
This was first published in January 2001