Honeymoon's end

2001 needs to be a year of e-business consolidation. This means realising that it is not a corporate cure-all. Danny Bradbury...

2001 needs to be a year of e-business consolidation. This means realising that it is not a corporate cure-all. Danny Bradbury documents some common e-failings

People do not generally mention IT and marriage in the same breath, but there are a lot of similarities. In any marriage, the honeymoon period is soon offset by cold, hard reality as the partners realise each other's faults. Industry trends in the IT sector are the same, and e-business is a good example.

As with any new industry phenomenon, e-business has gone through its honeymoon phase, and the problems are emerging already. Here are ten gripes that could break up a happy match.

Logistics

On the first day of Christmas, Amazon brought to meÉ nothing. Well, actually, it delivered about 70% of my Christmas orders. Given that it had assured me that all products ordered before a certain date would arrive, this is far from acceptable, and led to tears before bedtime for some of my loved ones. Unfortunately, managing inventory and order delivery is one of the biggest e-commerce downfalls. One example came during the early days of e-commerce in 1997, when your correspondent ordered a case of red wine from a well-known online retailer. The case arrived but three of the 12 bottles were missing, meaning that I had to call the company to make enquiries. As soon as I picked up the telephone, the company's margin started to disappear. Eventually, someone brought the wine to my house in a plastic bag in the back of his car. Successful e-commerce? I think not.

Interoperability

While the lower levels of the communications stack have been taken care of (IP is now universally accepted), the same cannot be said for the application communication layer. In the business-to-business e-commerce world, companies are still thrashing out standards for exchanging data. Many people have looked to XML as a panacea for the interoperability problem, but XML is only a meta-language. It cannot be used on its own, but must instead be used to write data exchange language specific to particular markets. It is these languages that are causing the problems, as consortia of companies try to persuade others in their chosen markets to support them.

Insular activities

One potential problem for e-business operations is the lack of communication between different areas of the business. If the marketing department is charged with producing an e-business solution, it must talk to sales, IT and logistics, not to mention customer service, if it is to work properly. The worse thing that can happen is a lack of communication between these departments, leading to misunderstood goals, tasks that do not get assigned or completed, and ultimately a mismanaged project with little accountability and a poor finished product. A project manager must co-ordinate all of these departments to be sure that everyone gets what they want.

High burn rates

The problem with many young Internet firms is that they spend money like water on branding, marketing and so on, and do not keep track of how much they are spending. Before they know it, they end up calling in the receivers, having blown literally millions of dollars in venture capital funding. No wonder investors are taking a dim view.

Bad revenue models

Spending loads of money is easier to do if you earn the loot. But many Internet revenue models are questionable. Lots of Internet companies have relied on advertising to make their cash, and are starting to realise that this model is not as profitable as they thought. This problem is becoming evident in the supplier community. Streaming multi-media firm Real Networks recently adjusted its earnings estimates, for example, citing "trends in Internet-related spending" as a key factor. With companies such as Symantec offering programs that automatically block banner ads, anyone relying on advertising revenue should be worried.

Bad capacity planning

On the technical side, companies often fall foul of the capacity planning issue. Try as they might, many e-business companies do not seem to be able to produce systems that cope with spikes in site visits and customer activity, and in some cases, this is a clear example of what happens when the IT department and the marketing department do not speak to each other. For example, in 1999, Toys R Us suffered from site outages, when its online customers found themselves unable to access the Web site. The company had run a huge marketing campaign in print publications, and had engaged in joint promotions with online services, but its infrastructure could not cope with the extra demand.

Poor customer service

If you're selling stuff online, what's your return policy? How easy is it for customers to get through to a real-life support person? Issues such as these have a huge bearing on customer loyalty. One mistake that many online companies are making is to substitute personalisation technologies for genuine customer service. Simply presenting a customer with personalised product offerings when they log on to a site is not enough - they must be able to get specific queries answered quickly and easily.

Technical glitches

There's nothing more irritating than a site that leaves you hanging with technical problems. You will sometimes see this with sites boasting jazzy Javascript-based Web interfaces that have not been tested on all browsers, where they return scripting errors that stop you from carrying out a task. But other technical problems can be more insidious. This journalist needed to re-partition his hard drive over the New Year's holiday, and paid $70 (£45) online to download a program from a popular software supplier in this area. Unfortunately, the Zip file downloaded proved corrupt in spite of several attempts at the 40Mbytes transfer. And then there was the original Tesco online shopping service, which told you that your postcode was in the catchment area for delivery, but then would not let you download the software to access the service.

Bad security

Many companies have suffered from security setbacks, including CDUniverse, which managed to let a hacker post 300,000 customer credit card details online. Egghead, the huge US electronic retailer, has also failed to keep customer credit card details secure. The company was hacked in late December. None of this makes customers feel any safer, in spite of the zero liability guarantees that credit card suppliers are providing.

Lack of service level agreements

Resilience service level agreements are fairly common, but one thing that e-commerce companies have not been asking for when speaking to hosting companies is performance guarantees to ensure that their e-commerce applications respond quickly enough for customers. This will become an increasing concern as the industry matures.

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