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Realizing e-Business with Application Service Providers

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E-commerce expert Louis Columbus talks about how the application service provider model is being used by major companies to leverage their e-business strategies -- and how you can apply this model to your business, regardless of size.

E-commerce expert Louis Columbus talks about how the application service provider model is being used by major companies to leverage their e-business strategies—and how you can apply this model to your business, regardless of size.

Being able to harness change and make it work to strengthen a company's products and services is one of the biggest challenges in business today. The Internet and its widespread adoption as a distribution and communications channel is now bringing change to many industries, from how computers get sold to the approaches being used by universities for delivering their product: knowledge. What ties all these industries together is the ability that both intranets and Internets provide for getting more done in less time. The speed of transactions, based on both sales and communication, is at a rate faster than ever.

How are companies adapting to the quickening pace of business brought on by technological innovation? Many are leveraging both internal intranets and the Internet with applications that would have otherwise been built as standalone applications. Increasingly, companies able to grow quickly, building interactive and reciprocal relationships with their customers, are using the tools of technology to accomplish their goals. Harnessing internal intranets and the global Internet is now possible for any business in any industry.

HP, IBM, and Oracle and many other software companies are now building an entirely new class of software, which is delivered over the Internet and typically leased on a month-to-month basis. The applications include accounting, ERP, and database management tools, and taken together comprise the emerging e-business class of software. This entirely new class of products is being delivered using the application service provider (ASP) model. Industry leaders endorsing this model include Larry Ellison, founder and CEO of Oracle, and Steve Ballmer, co-founder and senior vice president of Microsoft. The world's largest software companies are aiming at the pinnacle of global business, the Fortune 1,000, as their target market for ASP offerings. Typical price tags for ASP integration, very often delivered with the assistance of a value-added reseller or VAR, can typically fall in the hundreds of thousands of dollars range.

If you're running a small business and want to get on the Internet or even set up a corporate-wide Intranet, what, then, are your options? With the evolution of these world-class software companies from e-commerce to e-business, what's the difference? Change brings more questions than it answers. The fact is that small business is the driving force behind one of the most sustained and strongest economic expansions in the nation's history. With small businesses being one of the highest growth areas of the economy right now, there are thousands of companies literally launching overnight to assist you in the development and launch of your e-business strategies. One of the most useful approaches to looking at e-business is to see how other aspects of the Internet relate to it.

The term e-business refers to the application of Internet technology to streamline all aspects of business processes. It is comprised of e-marketing, e-commerce, and e-operations. Building an online presence, showcasing a company, and providing detailed information is e-marketing. The majority of small businesses on the Internet today are actively doing e-marketing. The next level is e-commerce, which involves selling products and services online, conducting payment, handling transaction details, and supporting automated customer inquiries. The third aspect of e-business is e-operations, which is the streamlining of business processes and steps to enhance business efficiencies between functional departments of a company. This also includes streamlining the supply chain between your company and key suppliers. Taken together, e-business = e-marketing + e-commerce + e-operations. The Yankee Group, one of the leading research providers tracking small business adoption of the Internet, has completed surveys of very small businesses (2–19 employees), small businesses (20–99 employees), and medium-size businesses (100–499 employees) to find out how they are using their Web sites. The results are shown in the following figure.

Figure 1

The Yankee Group actively tracks small business Internet market dynamics.

Today there are Web site developers who can provide the e-marketing aspects of a small business and who even can get a catalog of products up and running. As a business grows, there is the ever-greater need for streamlining business processes. Clearly, small businesses need a technology partner who can go the distance, from providing e-marketing tools through e-commerce support, all the way to implementing e-operations throughout an organization. Having the software for enabling small business in each of these areas is just one part of the solution. The other is having a person able to walk with you through the customization of software tools to you needs, without requiring a large investment up front.

In summary, the Internet is here to stay, and e-business holds the promise of making your business more efficient than it has ever been before. Yet to get to the performance and profitability goals that you have set for yourself, you need to find a technology partner who has products that span the spectrum of e-marketing, e-commerce, and e-operations. Having local accountability and knowledge of your business is crucial as well. Taken together, these criteria can take your business to new levels of sales performance, profitability, and internal efficiency from automated processes.

About the Author

Louis Columbus has more than seventeen years of product management, sales, and market analysis & planning experience, and has been actively involved with electronic commerce for the past six years. He actively manages marketing communications, public relations, technical writing, and training functions as the Director of Marketing for Linksys, an organization that focuses on launching state-of-the-art networking products for the SOHO, small business and enterprise-level markets. Louis was previously a senior manager at Gateway Business, where he lead business-to-business electronic commerce initiatives—including the definition of stealth sites, competitive analysis, and coordinating product introductions, in addition to managing content used on gateway.com. While at Gateway, he also managed the E-5000 Series of workstations. Louis has spoken at many industry conferences about the ASP model and the market dynamics of electronic commerce. He currently teaches electronic commerce and the fundamentals of networking operating systems at California State University, Fullerton, and he has also taught at the University of California, Irvine. Writing on topics for technical professionals, Louis is a contributing editor for Desktop Engineering Magazine. He has published twelve books on a variety of operating system, hardware, and electronic commerce topics. Louis double-majored in marketing and information systems design at the University of Arizona, and he has an M.B.A. from Pepperdine University.

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