Who's hot and who's not in 2001

Which strategies will be the winners in the year ahead, and who will be left trailing behind in the race for corporate mindshare?

Which strategies will be the winners in the year ahead, and who will be left trailing behind in the race for corporate mindshare?

After a year when the demise of the dotcoms impacted the thinking of surviving dotcoms and brick-and-mortar companies alike, 2001 is likely to see online strategies developing a never-seen-before maturity.

For the most part, persuading company boards of the need to develop a Web presence has been achieved. What has yet to be realised is integrating that strategy with business needs and existing channels to create a customer experience that does not end with the customer encountering two separate entities that seem to have little understanding of each other's role.

A product ordered on the Web should be able to be returned to the 'real' world store presence without difficulty. Similarly, an order made online should be accessible in the same High St presence. Otherwise, the customer experience is going to be one of hassle, a poor view of the company and, eventually, the customer will shop elsewhere.

2001 will also see the shake-up of the overheated electronic marketplace phenomenon, with marketplaces looking for new ways to survive - there are already too many and a shake-out is inevitable. Look for marketplaces to offer more and more e-oriented services to drive and support liquidity, and even to begin adopting the application service provider model to support other marketplaces - anything to gain a new revenue stream.

Electronic procurement, however, is certain to gain corporate mindshare, particularly in the UK following the launch of e-procurement guidelines by BuyIT, which have government backing. Companies such as Shell and Sainsbury's have already indicated their faith in this area as a critical driver of their businesses.

For the surviving dotcoms that may already have garnered funding, 2001 will be a make or break year in the creep towards profitability. For those companies that predicted in late 1999 that they would be profitable in two or three years, the clock is running out. For many, the business model may have to change. Discounting products online to gain both eyeballs and customers may have to drop off, in favour of gaining profitable sales from a smaller pool of customers. The rush to spend marketing budgets to gain those eyeballs may now be replaced by a more scientific and rational approach, especially as there will be less money available to play with.

Those that don't achieve this can expect to see the brick-and-mortar companies come calling looking to buy online expertise. Here are a selection of views on 2001's winning and losing strategies.

Andy Williams

Head of UK business development, Citria

Winners

Over the last two years many organisations have invested in Commerce One, Ariba and other e-procurement and exchange products. The time taken to implement these solutions enterprise-wide means that their full impact has yet to be seen. In 2001 expect a much greater proportion of corporate procurement spend to migrate to electronic media as these projects go live. Expect to see an immediate impact in supply chains as companies lower down the value chain are forced by their customers to move a significant proportion of their sales activity to electronic channels. The bulk of the automotive supply chain may move to the Covisint model set up by General Motors, Ford and Daimler Chrysler and a substantial proportion of supermarket procurement in Europe will take place through exchanges, for example.

Convergence of TV, mobile telephone and Internet has been a long time coming. While it won't arrive in the next year, it's getting closer. In 2001 we'll see a rush of investment in convergent technologies getting ready for the widespread availability of broadband/3G.

Losers

The mobile telephone operators have bet their futures on 3G licences. They need to find ways to get this investment back. We'll see a range of hyped services being developed seeking to put yet more functionality into the handset. These services will be launched amidst a blaze of publicity in 2002 and many will fail - like the dotcom boom, the revenue models won't work. The real benefit from 3G will come from using mobile telephony in ways that we can't yet foresee - for example, integration of 3G technology into vehicle dashboards will open opportunities for many innovative offerings that do make money. The winners in 2001 will be those that spot these opportunities and position themselves for the launch of 3G.

Phillip Mellor

Senior business analyst, Dun & Bradstreet

Winners

Data quality will dominate next year's e-business agenda.

Without global standards to allow internationally-operating companies to aggregate trading data at both business entity and product category level, much of the potential value of integrating e-commerce and e-procurement systems will be lost.

Next year's winners will be those companies that can immediately use data captured at transactional level. But before you can take informed management decisions on, say, the discount levels you are prepared to offer, you need to ensure the data within customer and supplier databases is accurate.

Losers

We're now in the post-hype phase of e-business. Anyone who doesn't plan their implementation, seeks to adopt an unproven solution or fails to test a change in technology direction mid-stream against a clear, robust strategy is at risk.

Equally important, it's time to look at 'soft' issues - those business leaders who fail to take on board the need to articulate the benefits of their e-business strategy within the organisation may find themselves stymied by a culture mismatch.

Donald A. DePalma,

Vice president of corporate strategy, Idiom Technologies

Winners

New thinking by pundits and investors will drive companies to apply traditional business metrics to their online initiatives, thus requiring firms to demonstrate return on their Internet investment. Because the days of a guaranteed bright future for e-commerce initiatives are over, Internet executives will be forced to show real value, a credible path to profitability, or better customer service delivered at lower cost - just like their counterparts elsewhere in the business world.

A second positive trend will be the application of second-generation personalised marketing technology to audiences beyond the domestic mainstream. That will mean that companies will target under-served market cohorts, such as female investors, ethnic buyers, or consumers in other countries with more sophisticated one-to-one techniques.

Losers

On the negative side, many companies that built their own e-commerce solutions will abandon them after embarrassing system outages and outright failures. They will also find that the cost of developing their own application servers, content managers and commerce logic was far too expensive in both actual cash and opportunity cost. Worse yet will be the cost of maintaining and enhancing these purpose-built systems.

A second negative trend will be selective abandonment of interactive agencies for building online applications. With share prices slumped in the single digits, many agencies won't be able to retain quality developers. Agencies haemorrhaging developers won't be invited to bid on follow-on engagements as delays mount and committed functions disappear from the systems they build.

Mark Baker

European product marketing manager, Onyx

Winners

As e-businesses grow and change, the integration of their enterprise will become ever more important to them. A typical e-business will be using customer relationship management (CRM) data in their sales teams, call centres and marketing campaigns. They will also be using billing and invoicing data in their enterprise resource planning (ERP). They will also be trying to link their demand chain to their supply chain by providing direct integration with their suppliers and partners over the Internet. XML-based data exchange tools will allow this to happen in a seamless and maintainable way that will closely integrate the entire enterprise.

With the expected arrival of high-bandwidth mobile data early in 2001 and the first delivery of general packet radio service and then EDGE (enhanced data rates for global evolution) technologies, the ideas of being away from the Internet will disappear. For the business it means that any employee can have access to customer and business data anywhere at any time.

Losers

We're not quite done hearing about 'new e-business strategies' from companies but within those companies who have adopted the Internet as a channel for doing business, it will start to become 'just another channel' alongside voice, fax and face-to-face meetings. Recent research by Ovum in conjunction with Onyx, Apropos and Microsoft showed that most organisations still can't recognise that a customer coming to them over different channels are the same people. This will start to change as businesses that have adopted e-business strategies realise that they need to have a single view of customer interactions across different types of media.

Andrew Robinson

Managing director Northern Europe, DiamondCluster International

Winner

France Telecom and Orange's strategy of creating a truly pan-European mobile network should enable them to leverage the full power of mobility with their customers (both business and consumer) as they become increasingly comfortable with mobile applications such as micro payments, traffic avoidance, retail purchases and such.

Loser

Letsbuyit.com's strategy will fail because it lacks a strong proposition, it is easy to copy and eventually the strong brands, such as eLuxury.com, that are essential to make the site attractive will do it themselves.

Martin Howarth

e-applications sales manager, BT major business

Winners

Aggregation sites are personalised portals that pull an individual's online activities together. For example, it might allow them to access their bank or building society accounts, supermarket loyalty points and online shares. This removes the need to trawl through several sites and, more importantly, removes the need to remember numerous passwords.

Aggregators benefit from being able to monitor behaviour patterns and market directly to users, using interactive 'push-pull' technology. On the downside, existing content providers risk losing ownership of the customer.

Increasingly, both large organisations and SMEs will outsource key applications to ASPs to gain significant benefits. The complexity and cost of software upgrades is minimised and organisations are assured of watertight security, because the ASP's survival depends on it. The use of ASPs removes the need for in-house support staff, leaving the organisation free to focus on its core business activity.

Losers

The number of dot.coms will reduce due to failure and consolidation. Only those with a sound business model will survive. These are not necessarily the innovators, but those that can consistently deliver a good 'customer experience'.

Digital TV, WAP phones and PDAs are going to eclipse the PC as a means of accessing the Internet. We can also expect a huge growth in e-kiosks, which will be popping up everywhere - from retail outlets and places of work, to travel and leisure locations.

Adrian Stafford-Jones

Founder and managing director of Albany Software

Winner

As an immediately achievable and cost-effective solution, electronic document delivery (EDD) will be at the core of successful e-business strategy. There is huge pressure on organisations to increase profit margins and productivity levels. At the moment 59% of companies print four out of every five documents generated and for every £1 spent on a pre-printed document, such as an invoice, up to £40 is spent processing it.

In automating the dispatch of financial documents such as invoices, statements and remittance advice, companies using EDD can realise a 90% cost saving within a year.

Loser

For the medium to large organisation, ASP will be unsuccessful. For the last two years ASP has threatened to explode on to the market but the reality is that large companies are too fearful of the repercussions and dramatic consequences of a failed ASP project. The risk involved in transferring the control of information to a third party is too great. Large organisations are simply too reluctant to allow valuable business data to leave the four walls of their own company.

There are still major concerns about the security of an ASP approach for large companies and there is little evidence to suggest that this will change over the course of the next year. Bandwidth, speed of delivery and efficiency are still huge question marks surrounding the success of ASP deployment.

There is still a huge culture change that needs to take place before businesses can begin to realise the benefits of an application service provider model and this is unlikely to change in the short term.

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