Whether you are totally dedicated to online commerce, or whether you use the Web as just another route to market, this channel is sure to become more volatile. Although there has been a dotcom backlash of late, the development of e-business continues apace.
People are becoming increasingly reliant on the Internet, without even being aware of it. E-commerce is becoming like the electricity supply; you won't notice it until it is switched off, and only then will you realise how vital it was to your business.
The challenge, then, is to keep building a solid IT infrastructure for e-business. And that's a lot harder than it sounds, because nobody really knows how the Internet will develop. It's bursting at the seams at the moment, yet no one can predict what areas will develop and which will become obsolete.
Meanwhile, there are plenty of companies whose so-called 'independently commissioned research' shows that if you don't buy their products, you will be out of business in a year.
So how do you keep an e-business afloat when you don't know where the holes are going to appear and you don't know which are going to cause the biggest damage? The obvious answer is to use an application service provider (ASP). For the purpose of this article, however, we'll assume that, like 99% of the IT buying public, you've resisted this option so far. to trust is a must
The pros and cons of application service provision have been debated at length in this magazine, and if they work as well as their publicity suggests, then upgrading any area of your infrastructure should be the work of just one phone call. There's very little evidence, however, that anyone actually trusts ASPs to deliver.
According to one supplier, ASPs can't be trusted to build their own infrastructure. "We were asked to spec a job for an ASP and, of course, we recommended load-balancing equipment," says Ian Morris, the managing director of multimedia specialist supplier Equip Technologies. "That's when we found out that some of these ASPs have only got two servers anyway. They're trying to win massive contracts, yet they haven't even got the equipment themselves," explains a horrified Morris.
A lot of end users have come to the same conclusion that, for now, the ASP market is mostly smoke and mirrors. So let's assume that most e-businesses will want to build their own infrastructure. What are the most likely areas that call for investment?
According to Mick Peacock, the general manager of interactive investor solutions (www.iiisolutions.co.uk), a company that designs, implements and executes Internet strategy for financial services companies, it is essential to keep internal control of your systems. "Establish a good technical team. A group of hands-on, experienced, full-time technicians are worth more than many hours of bought-in consultancy," says Peacock.
"Whatever infrastructure is used for e-business, it will need to be supported," warns Peacock. "Pay extra for good staff. Having a dedicated team will also mean that any technical problems can be rapidly resolved and the system reliably supported."
The key is to keep overheads to a minimum. The IT suppliers - in particular software companies - will fill their coffers persuading you to buy things you don't need. Open source software is now mature enough to help avoid the overhead of software licensing fees.
A good team will be able to build a lot on a sound, basic infrastructure. The foundations on which you build your system are the hardware, operating system, Web server, the server-side run-time environment (such as PERL or Java) and the database. From this platform, for example, you can build better security options (at a price) or ramp up the performance.
The equivalent flexibility to that offered by an ASP is available in-house if you can get the right operational and development environment in place. Not that it's as easy as it sounds. "Operational and development environments are required so that only fully tested code is moved to the operational system. It is essential that the operational system is linked to the Internet with a connection that will cater for at least double the expected load," explains Peacock.
"A secure sockets layer [SSL] connection is now a 'must-have', where credit card information or personal details are transferred over the Internet. Development tools are required to produce graphics and develop code," says Peacock.
Although software systems such as customer relationship management (CRM) and content management (CM) are often touted as essentials, they could prove expensive luxuries for a start-up or small business, warns Peacock.
Nonsense, according to Greg Coyle, the co-founder and chief executive of Sevina Technologies UK, a provider of CRM solutions. "One of the basic and most often neglected requirements for an effective e-business is CRM. Companies often spend all their budget on website design, online catalogues and infrastructure deployment, without giving any thought to how they will effectively manage relationships with their newly acquired e-business customers," says Coyle.
CRM will be indispensable one day, agrees Marc Demarest, the chief executive of DecisionPoint Applications, a data warehousing and analytical applications vendor. Although he disagrees that CRM could be described as a luxury, it doesn't yet seem to be the finished article either.
"Customer relationship management used to be called customer data warehousing; the term has changed, but the business objective has remained the same, and as yet unsolved," says Demarest. In other words, you can probably live without it.
The real threat is not marketing but service delivery, or your inability to deliver any service. If your service is poor, people won't come back to you, regardless of how great your marketing campaign is, argues Peacock.
"The three key requirements for any e-business are reliability, reliability and reliability. People will not come back if they suffer a bad experience. This is most often down to poor fulfilment, so fulfilment must be a top priority," says Peacock.
You must ensure that your infrastructure can cope with the load, and overload, and that the IT fundamentals have been addressed. For example, your company must have a fallback plan, a system for back-ups, out-of-hours support and system monitoring.
This doesn't mean, however, that bandwidth should be bought up immediately. Neither is bandwidth the challenge it once was. The European telecoms market is more competitive than ever. There are hundreds of telcos in the UK alone, many of which are busily laying down their fibre optic cabling in anticipation for the perceived bandwidth explosion. The problem is, they seem to be over-egging the pudding, because supply far exceeds demand.
Estimates show that the entire data networking traffic load created by all businesses across Europe could be catered for, several times over, by one carrier, WorldCom. The capacity of the optical networks being laid down by an ever-increasing number of carriers means that bandwidth will indeed become a commodity soon. It won't be something you need to worry about in the coming years. So don't sign any long-term agreements for communications, because the price will be more competitive in, say, six months.
"Europe is currently served with copious bandwidth in the majority of areas, with only a few regions suffering from patchy coverage," says Mike Atherton, the managing director of Infornet UK, a company that manages bandwidth for clients. "Bandwidth is no longer the issue for Europe - people and services are becoming a determining factor in the equation for global networking."
One of the best things about lagging behind the US in e-commerce is that it makes future trends easier to predict. Service is undoubtedly important, but the evidence is that CRM systems just aren't the most potent tools for delivering this. In the US, e-businesses are far more likely to use an interactive tool, such as a text chat system. This allows experienced customer service people to have online chats with clients while they are visiting a website.
One of the biggest problems e-commerce sites have today is that shoppers too easily abandon sites because they can't get the information they need, as quickly as they'd like it. "Forrester Research reported that only 1% of shoppers buy anything online and it is this lack of 'stickiness' that has been perceived as the problem," says Matthew Vallance, the managing director of Customer Asset, a company that specialises in service.
"In the US, around 50% of websites have text chat facilities, and this will be a big feature of e-commerce in the UK next year," he says. If you really insist on getting customer relationship systems developed, they should be outsourced to the new breed of specialist, he says. The greatest expertise in CRM and statistical analysis is in India, says Vallance, and the good news is that this can be cheaply outsourced because bandwidth is so cheap.
Vallance's company has a CRM centre in Bangalore, which client customers access via his company's fibre optic network. "They think they're talking to someone locally, but really it's someone in India. It makes no difference anyway, except that the Indians give better customer service," says Vallance.
A sticky wicket
Streaming media is another proposed contributor to site stickiness. According to research conducted by twofourtv, a company that offers streaming media solutions, this can increase site traffic by 28%, site stickiness by 80% and online sales by over a third.
"Over two-thirds of US companies using streaming media features on their sites are booming as a result. It is clear that the UK needs to catch up in this area," says the chief operating officer of twofourtv, Mark Hawkins.
Of course, the ASP market might suddenly mature, and all technical and staff eventualities might be covered by it. However, what's more likely to happen is that many of the new ASPs will go out of business and release a pool of talent on to the market, allowing you to build a stronger infrastructure with in-house expertise.
Britnet's MD: challenges ahead for e-businesses in the UK
When asked his opinion on what challenges lie ahead for electronic businesses in the UK, Graham Higginson, the managing director of Britnet - a company that offers business-to-consumer e-commerce services - says that making WAP into a business tool will be among the biggest challenges for many e-businesses.
"Ironing out many of the little design 'niggles' that have made people sceptical of WAP is a huge challenge," says Higginson. "For example, [users want] convergence tools giving larger screens, better keypads or other improved input methods, such as touch screen and voice recognition," he says.
Bandwidth must, and will, increase significantly to coincide with the introduction of 3G mobiles, he predicts. "We are already seeing bandwidth of up to 28.8K, and this is likely to rise to around 2Mb, which will bring its functionality into line with the high expectations prematurely raised at its initial launch," he says.
The market is ready for a mobile Internet explosion and it is starting to gain momentum now. Ovum analysts predict that the mobile Internet market will grow rapidly after 2002 and that there will be 543 million mobile users by 2005.
"I anticipate that most of these will be WAP mobile phone users, simply because the mobile phone is so portable and familiar to users," says Higginson. As soon as more powerful devices, greater bandwidth capability and higher quality, up-to-the-minute content are made available, Web access through the mobile phone will be a logical progression for users.
Firesend: Customer relationship management is the secret of success
For Bill Simpson, the chief executive of Firesend - a newly launched business-to-business venture - the biggest challenge for e-businesses in the UK will be retaining customers.
Firesend is an independent online delivery service that aims to give better choice and value for the more infrequent users of express delivery services. The company presents low-volume users with a choice of competitive services and prices from the UK's largest parcel carriers on one website.
In Simpson's opinion, customer retention will be the key to Firesend's success. "One of the greatest technology challenges today is designing an online service that is simple, customer-friendly and visually appealing," explains Simpson.
"If the site is complex, the customer will be gone in a click. Fancy gimmicks can look good, but if the customer has to wait for them to download you've almost certainly lost the sale. We spent a long time focusing on simplicity over anything else," says Simpson.
Obviously, bandwidth relates to this. At the end of the day, if the site falls over customers don't visit twice. It's not just about the initial attraction, however. Customer retention is key to future success. "We are focusing on systems and technology that offer customers the ultimate in service. So every time they log in they are immediately recognised," he says.
"Customers are able to track any parcel they send through our service, wherever it is, in real-time. We can also use information from this monitoring process to begin to tailor our services to match our customers' every buying need," says Simpson.
"Launching the system was only the first station on a long journey. To stay ahead we need to develop the site on an ongoing basis to ensure that customers like what they see, get what they want, and keep coming back for more."
Security: a must-have technology, but at what cost?
SSL transactions can take up to 90% of the processing resources of a Web server, which is a massive burden. This can be taken away from the server by modules that process transactions locally, such as the nCipher hardware security modules.
Technical requirements: a checklist for preparation
The Top 10 technical requirements for an e-business infrastructure