Setting up shop online isn't something that should be taken lightly - unless you use a hosted third-party service, that is.
The market for hosted e-commerce services that require little or no in-house IT knowledge is growing rapidly as small and medium-sized companies (SMEs) become aware both of the potential of e-commerce, and the disparity between the necessary skill and their own resources. A number of new players have entered the game, and many more are waiting in the wings.
One such company is the E-trading Company, a service chaired by former BT UK managing director Sir Michael Bett. The service promises companies the chance to become online suppliers by utilising its own back-end infrastructure. Launching in September, it will offer companies the chance to operate their own Web site and domain name to maintain their own branding, while passing sales management and credit card processing to the back end.
CEO Chris Carroll argues that the service will particularly address companies with turnovers of more than £20m. "Our observation was that as far as medium-sized firms are concerned, they have all the problems of the big companies without the resources," he argues.
Carroll also believes that many companies of this size are unsure of the ultimate commercial benefits of implementing an e-commerce solution, and thus are unwilling to invest huge amounts of money in it.
The company will offer both business-to-consumer and business-to-business services, explains Carroll. He adds that he is forming relationships with Web site design companies to offer that service too, along with logistics companies - delivery fulfilment firms who will be able to get the product from its clients' warehouses to their customers' sites.
Obviously concerned about the increasingly crowded hosted e-commerce services market, E-Trading has pre-announced its service, but is only just putting out invitations to tender for technology suppliers. Issues such as capacity planning - vital to any online operation - and integration with its clients' back-end systems for issues such as accounting and order processing have yet to be decided. Given Carroll's admission that most of his senior staff come from a marketing background, it remains to be seen whether E-Trading can tackle these issues in the two-month timeframe it has allotted itself.
Another company that is just investigating the possibility of providing hosted services is Rubicon Software, an 11-year-old firm that has just finished developing an intranet system for ICI Paints.
Rubicon which has also been piloting an e-commerce element to the site, is hoping to roll out its e-commerce service, based on its DFinity object-based middle-tier e-business software, as a hosted service. "We are promoting to marketing departments who can use the bells and whistles out-of-the-box, but IT departments can integrate it if they don't want to outsource to us directly," says Alistair Hancock, technical director for the company. He adds that Rubicon is negotiating deals with hosting companies.
Other players in the market include freecom.net, a company which is particularly interesting because of its acquisition of accounting companies Pegasus and Systems Union in recent months. Freecom.net which listed on the Alternative Investment Market in December, provides SME-branded e-commerce services based on the Intershop Merchant Server. Prices start at £250 per month, rising to £750 per month and upwards, depending on the number of products that will be included in the store.
Significantly, the company decided to cut down the functionality in its hosted product last year, limiting it to work only with clients using packaged software.
Meanwhile, Netbenefit offers a similar click-and-build service, having integrated with online payment firm Worldpay to offer back-end credit card processing services. The company says that although services are offered on a template basis, it is possible for SMEs to customise their service if they have sufficient Web programming skills.
The move isn't restricted merely to consultancies or hosting companies either. Sage, the accountancy software firm that has grabbed a large proportion of the SME market, launched two services in mid-May designed to target hosted e-commerce applications. Webtrader is designed to enable companies to set up shops online. The second service, Webcatalogue, is designed for companies that want to enhance their online shops with Web-based functionality.
"What our customers are looking for is an interactive storefront for their customers to place orders on the Net," says Mark Gratreaux, deputy managing director for Sage. "Under the covers we use APIs written in Java to provide back-end integration."
The integration aspect of its product is important, and provides a much-needed advantage in this busy market space. Because Gratreaux's customer base is already using Sage's accountancy software, direct integration between the online e-commerce service and the financial software package is a no-brainer.
Businesses wanting to take the hosted e-commerce route need to ask themselves how customisable their package needs to be. Carroll doesn't rule out customisation, for example, but argues that customers must walk before they can run. Ultimately, firms must find a healthy balance between fast, easy start-up, and the ability to add functionality as their confidence grows. This may mean eventually adding some Web programming skill to your in-house resource, no matter how expensive it is.
Ironside links users to B2B trading hubs
Ironside Technologies, a US-based business-to-business software company, has launched the latest version of its product, Ironworks 5. The program effectively allowing customers to hook into the vertical and horizontal online B2B-focused trading hubs that have sprung up in the past year or so. New features in this version include capital ordering, enabling buyers to execute an order within a static HTML catalog, and support for the Punchout feature within Ariba's network.
Product manager Ted Tritchew says many firms don't like joining online marketplaces because they lose their branding when they export their catalogues into the procurement systems. Ariba Punchout lets the buyer into the client site at the click of a button. "You get the look and feel of the supply-side, but under the covers, data gets sent back to Ariba's system," he says
This was first published in June 2000