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Exploring How the Year Is Shaping Up in Sell-side E-Commerce

This article profiles how exchanges are revolutionizing how the way companies serve customers, and how sell-side needs in companies are driving the development of these exchanges.
Louis Columbus is the author of more than 40 articles and a dozen books on the Internet, e-commerce, and computing topics. His latest book is Realizing e-Business with Application Service Providers (Sams, 2000, ISBN 0-67232-053-3).

The dominance of the sell-side of e-commerce is quantified in a recent survey of CIOs in the Global 2,500, which recorded their intentions for spending as they go into 2001's uncertain economic climate. Fully eight out of 10 mentioned that the ability to stay connected with their customers and build stronger relationships with them would continue as a top priority, despite economic uncertainty in certain economic sectors. What's most interesting about the resilience of the sell-side applications and platforms that are being developed are their focus on delivering measurable, value-increased levels of customer satisfaction, and ultimately a stronger ROI to the company choosing to commit to a sell-side strategy. The fact that only half of the Global 2,500 actually complete an ROI analysis of the sell-side software investments they make shows that often the anecdotal analysis is often all companies have time for, despite ROI analysis being the most important use of their time.

The capricious nature of the stock market, surprise earnings warnings throughout Q1 of 2001, the Federal Reserve's restraint in dropping interest rates, and the testing of marginal business models due to softening economic times all point to a tough year ahead. The most relevant question to ask is what the sell-side of e-business will look like throughout the year because this area of electronic commerce is already showing signs of being the enabler of exchanges and e-marketplaces for the future. Presented here are the key trends that will mark 2001—specific to the sell-side of the e-business initiative landscape.

What to Look for in 2001

What's the true trend of the market in 2001? It's clearly away from compartmentalizing and even segmenting sell-side and e-procurement between themselves. It's more about encompassing the customer with value on their sell-side and purchasing side. The unification of sell-side and e-procurement is now in full swing, and will come to full fruition by the end of the year. In planning your e-commerce direction, consider these emerging developments in the sell-side that will come to fruition during the coming year:

  • The ASP Model is becoming a distribution model over a business model. The hype over the ASP model as the panacea for potential profitability is now over, and the approach to the delivery of applications using the functionality of application provisioning is now in full swing within the Global 2,500 community. What started as an approach to drive the costs out of software delivery is now seen as a convenient and controllable approach to delivering applications internally. This trend will continue as many software companies adopt both licensing and ASP delivery models as delivery strategies.

  • Greater depth to partner technologies. As Ariba resets its own expectations about partnerships and scrambles to keep the Value Chain Management initiative alive after losing the Agile acquisition, the e-procurement company will change the role of partner technologies dramatically during the coming year. Commerce One's current focus extending past round-trip will revolutionize the approach many vendors take with regard to partner technologies. This continues to show the evolution of partner technologies to the next generation, which will drive the sell-side more than ever.

  • Customer Relationship Management: It's in the team, not in the technology. Clearly, if the economic downturn is teaching anyone anything about technology, it's that the technology itself had better be meeting needs or else it will be gone quickly. Tom Siebel's comments that 90% of the B2B companies will be gone in two years or less are really just stating the truth. Unless a technology can deliver on its promises and not overcommit to just get customers and then risk losing them, that technology will not last in the heat of competition that is very hot right now in the market. Only companies that deliver applications that do what they say they can do and more will survive.

This is what makes the role of CRM so interesting in light of the current economic climate. The potential for CRM to increase sales and lower revenues has been seriously hurt by the overcommitments of the largest vendors in this space and the lack of execution of Sales Force Automation (SFA) vendors as well. For CRM to realize its true potential in the context of a private exchange, there has to be a focus on process performance increases that center on customer satisfaction. What's daunting for companies today is that they want to make the decision to go with CRM, yet have trouble associating a specific ROI with the investment. That is understandable because there are not many good metrics around that truly illustrate customer satisfaction. The companies that are jumping into a CRM application in conjunction with their exchange strategy are finding rewards, and those center squarely on the retention of customers through enhanced and more accurate communication from all touchpoints within a corporation. The fact that people are buying from each other on exchanges is secondary to the depth of commitments that are being made via e-mail, phone, in-person visits, and conferences that were facilitated by CRM applications that were part of the exchange in the first place.

  • Partner Relationship Management becomes real. The dominance of Siebel Systems in the CRM and PRM arenas will become more integrated with order management and other industrial-strength applications than have ever been accomplished before. Companies that have focused on the more difficult aspects of warranty, market development funds handling and management, and channel management will gain significant traction during the year. Hundreds of companies also turn to PRM for the answer to their specific channel communication pain points, with the opportunity to unify a channel through aggressive developments of online sales tools being the best possible approach to handling the development and maintenance of relationships in the channel. The clear focus of companies going forward is to get greater visibility into the financial metrics in the channel, and take action to generate greater profitability and customer satisfaction than was ever possible before. That's the promise of the PRM arena in the context of exchanged-based strategies. Like any other application areas that are included in an exchange, the opportunity to share data between partners on emerging opportunities by tying databases together adds an element of responsiveness that cannot be accomplished when applications each exist on their own, in a relative vacuum from one another.

  • Analytics are made for exchanges. The promise of analytics and the increased insights they can provide has been trumpeted now for years, with only a few of the Global 2,500 making strong progress for fulfilling expectations. One of the key impediments of analytics being pervasively used is the fact that they have not necessarily contributed to the growth in customer satisfaction that all companies crave, and it is one of the driving reasons why the Global 2,00 get into e-business initiatives in the first place. What's interesting about exchanges is that the role of analytics is making companies more responsive to customers. The fact that exchanges have the potential of generating higher levels of customer responsiveness and therefore driving customer retention—the strongest metric of all for any corporation—is what will make the difference in the development and use of exchanges. The metrics of responsiveness is in the end all that matter when it comes to getting an exchange off the ground. Clearly, the new focus on metrics is driving the continued development of partnerships between the many vendors who have business analytics as their primary focus—including SPSS, SAS, Cognos, E.piphany, Brio, and others. This centrism on metrics is really making this year one that will be most recognized for its adoption of analytics as a unifying technology between sell-side and e-procurement.

  • Multiexchange models become more visible. Increasingly, the Global 2,500 are including several private exchanges into their plans for integrating international systems that are today disparate and have data that is not consistent with the rest of the organization. Dell's approach to exchanges is very successful on several fronts, thanks mainly to the scalability of its data models and metrics when it was a fraction of the size it is today. Clearly, CIO Randy Mott is doing an excellent job of unifying these systems, as he did for many years at Wal-Mart. One of the more fascinating areas of growth for Dell with a multiexchange model is in its development of Premier Pages for its customers. A Premier Page Web site is actually a comprehensive series of tools for managing all touch points back to Dell from the customer's perspective. Dell pioneered and perfected this approach to serving customers by creating a unified single face to the customer that is very much a competitive advantage for companies trying to penetrate the global accounts in which Dell already has a presence.

  • IBM Asserts itself and begins shopping. During any given week this year, there is evidence of companies with cash acquiring others who virtually have their handful of key employees, intellectual properties, and the most valuable asset of all: customers. OnDemand's acquisition of North Systems, Question Technologies' acquisition of Carbon Software, i2's acquisition of RightWorks, and the attempted acquisition of Agile by Ariba all point to a rapid consolidation with e-procurement vendors. Clearly, IBM could move to acquire Ariba and integrate applications into many different existing products; even serve the Ariba customer base through IBM Global Services.

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