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MANAGEMENT PERSPECTIVE Subject: Dec2000 ECMgt.com:
2000 E-Commerce Recap |
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Y2K didn't wipe out modern civilization, and business went forward, continuing to invest heavily in IT and e-business infrastructure. Driven by the success (and partial frustration) of the 1999 Christmas shopping season, B2C sites are now staffing up for a vigorous Christmas 2000 shopping season, as consumers will be demanding an easier, quicker shopping experience. Web merchants discovered (surprise) that Internet shoppers are more demanding than the population at large. In Spring and Fall, the financial markets made a strong statement that valuation will be based on sustainable revenue and growth, and sound business strategy and execution. Back to real business as usual! Now for an assessment of last year's predictions in more detail: 10 - Expanded ECM Deployment: Brick-and-mortar companies deployed e-commerce systems that integrated their core business, and that often reached beyond their corporate and physical boundaries. Enterprise Application Integration (EAI) is being combined with efforts to integrate vertically in the supply chain and horizontally through ERP functions. Companies like Exterprise and Extricity are market leaders extending business process thorough network APIs and XML. Among notable B2C migration efforts, Barnes and Noble will be introducing kiosks into their stores this Christmas, which will allow customers to browse the Web as well as the shelves, and pick up the goods or have them shipped per their convenience. 09 - Executive Inability to Morph: While the majority of Global 2000 corporations have recognized that e-commerce is a reality, less than 10% of top executives have embraced "e-business" through strategic and tactical efforts. We see this as a ten-year transition, with 2005-2010 the years when executives have "evolved" or died. The largest corporations are moving toward multichannel-enabled entities that are more holistic, and integrating Internet-enabled networked business process. Today a minority of corporations are looking at their markets, considering B2B integration, and finding new opportunities in global market places. 08 - Customer-Centric Corporate Restructuring: For the Global 2000 companies that adapted and integrated the Internet into their businesses, a customer-centric view reshaped their culture and infrastructure. In the 21st century, the CRM focus means that systems which satisfy customer information needs, enable self-service, and provide intelligent delivery of services will be integrated into an enterprise with mission-critical applications. Going forward, ERP, EAI, exchanges and e-marketplaces are all being designed to maximize and leverage information to benefit service delivery and customer loyalty. 07 - Free Extends into B-to-B Space - not: ". Free dried up as a business model for B2B in 2000, and the stock market correction in May reinforced that free doesn't provide a decent business model in the B2C space either. Valuation based on transaction share, or adoption of new e-business process, does have value. Keeping "free" alive" as the year closes is Napster, where the peer-to-peer commerce model was entangled in music piracy, but peer-to-peer payment for digital goods through networked C2C based FTP might just have a chance in 2001. Free won't disappear from the landscape, but it will need to be integrated with paid business process. We predict a blend of subscription models for low cost Internet services, with easy migration to sustained revenue. 06 - Wireless Applications Exploded in 2000: Wireless Internet access exploded in user adoption in the U.S., with a projected 80 million cell phones in the United States, though Europe still remains ahead in wireless adoption. Wireless technology became more integrated into extended enterprise business operations, and in the B2C space, messaging and remote e-mail contributed to a steep rise in online usage. Palm Computing survived the scrutiny of the financial markets and continued to grow, and today over 50% of enterprise Web initiatives include some aspect of WAP (Wireless Access Protocol). Content and commerce sites now routinely publish to XML first, in order to serve the needs of HTML browsers and WML handheld devices. In three years, the number of new Internet devices will exceed the number of new computers accessing the Internet. The network appliance has appeared, and it's right in our hands. 05 - Capabilities of ASPs Expand: The year 2000 saw ASPs (Application Service Providers) grow from being test beds for outsourcing strategic and mission critical applications, and continue to increase the quantity and quality of their customers. Membership in ASP-Industry.org grew to almost 1,000. Robustness of ASP service offerings grew, and several new acronyms were coined, including MSP, SSP, and WASP, for Managed Service Provider, Storage Service provider, and Wireless Applications Service Provider. The ASP model has become pervasive within data centers, which now derive 25% of their revenue from professional services supporting ASPs. In the bigger scheme, Microsoft.NET launched as the probable infrastructure of Forrester's exT Technology, where services are universally accessed and managed by network APIs to ASPs / eBSPs. 04 - Dynamic Pricing Reaches Most Industries: The impact of dynamic pricing has only just begun to extend into vertical industries via the explosion of e-marketplaces and public and private exchanges. Gartner and IDC are estimating that 500 to 2500 exchanges in all verticals will be built in the next two to three years, and that these will facilitate almost 40% of the $3 trillion in B2B trade by 2005 ($1.4 trillion). Collaborative commerce, a new e-business innovation, creates efficient many-to-many buyer-seller interactions in e-marketplaces, where dynamically matching suppliers and buyers for provisioning of complex products and services will drive new market efficiencies. Collaborative commerce functions also allow multiple channel partners to configure unique offerings for buyers; and this information transfer in e-marketplaces will be as important as transactions. 03 - Privacy Concerns Increased, as did "Security": Privacy concerns continued in the U.S., but more in the area of capturing, and sometimes selling, personal transaction data to third party marketing firms. Even TRUSTegot caught violating its own privacy agreement. Enhancing security, Congress passed legislation enabling digital certificates and signatures, bring one step closer the era where non-repudiation, security and encryption are enabled across the Internet with reasonably open and federally certified standards. Tacitly, our real concerns have shifted to topics like securing websites from network attack, authentication of users and merchants, and adoption of secure encrypted transaction contracts. As we go to press, Microsoft is unraveling hacker invasion of its internal networks, leaving us all a little nervous. 02 - M&A Activity Escalates, but financial markets demand solid revenue: What a year! The financial markets brutalized the B2C space in May, venture funding has become leaner and more difficult to obtain, and now the B2B space is also affected. Private, public, traditional and newly created corporate venture capital funds now look much harder at mergers and acquisitions. Many large B2C portals saw resignations at the highest level, including Web MD (Healtheon). The B2C space saw a wave of layoffs that typically approached 25% staff, with some firms closing. We see this as a reality check, not a correction. Natural selection applies to business models, sound strategy and execution included. The rapid ride that many B2C firms experienced in late 1999 and early 2000 is over. Nasdaq is responding by slashing capitalization in firms that do not have sound strategy and probability of revenues. 01 - B-to-B Growth Continues its Dramatic Pace: B-to-B growth continued its dramatic 1999 pace, leading to more liquidity in the B-to-B exchanges and inter-organizational virtual enterprises. Part of this growth stemmed from the B-to-B practitioners borrowing successful techniques already proven in the B-to-C marketplace. Research from ActivMedia projects that for firms that do business both on and offline, by the end of 2000, 25% of their revenue will come from the Web. This number will rise to 34% in 2001 and 50% by 2002. eMarketer reported that B2B revenues will represent 77% of total e-commerce in 2000. B2B websites will generate $134 billion in revenue by 2001. The average B2B website will generate $445,000 in revenue in 2000 -- a number which will increase to $2.3 million by 2002. Our bonus prediction for 2000 remains an elusive agenda item in online consumer commerce. Electronic wallet acceptance and SET still remain more promise than reality. Not surprisingly, wireless commerce will probably be the driver for secure and authenticated payments using "wireless digital cash". Better luck in 2001. Summary: Our management trends and predictions for 2000 revolved around executive strategy and adoption of a net-centric enterprise, expanded e-commerce deployment, and customer-centric restructuring. Closely related technology trends included investment in ASP technologies and outsourcing, wireless applications, and privacy concerns. We predicted an escalation of M&A activity, and dramatic B2B growth. Our predictions, both strategic and tactical, were widely recognized, and we are not surprised by the mid year scrutiny of overvalued stocks and firms without sound strategy and vision. This theme continues in 2001, as "the more things change, the more they stay the same". Business basics will apply to discarding old fashioned and antiquated paradigms, as companies race to stake claim for customers and eProcess share (transactions share) as the networked economy continued to expand. The Internet-enabled world will see migration of business process to all layers of the infrastructure, from smarter browsers to intelligent phones and appliances. But the customer rules, not the technology, and CRM becomes a requirement. Customers and partners will seek new value, both in products and services and the relationship they form in the value Web. Price won't always be the detriment, as best-fit solutions deployed faster and more efficiently &emdash; choreographed through e-marketplaces and collaborative commerce &emdash; shape the form and selection of new business models. Continued transformation of supply chains, logistics, and disintermediation will reshape the architecture of the coming extended enterprise, all deployed in the value Web of e-business. New standards and rules will attempt to keep order as legislation struggles to merge 20th century law with 21st century commerce. An evolving infrastructure and new tools will help collaboration and integration of processes, now emerging as foci in ASPs and BSPs in data centers, the peering points of e-business. We predict that marketing will continue to grapple with issues of online and offline branding, effective messaging, and CRM in an Internet-enabled world. Our final trend summarizes all of it, "New dimensions for growth and evolution", as we, today's pioneers and leaders, make decisions about our business strategy, adoption of technology at an ever increasing pace, and creating a global e-marketplace with no geographic boundaries. Stay tuned and participate in our columns, surveys, and fora, armed with lessons learned as we e-volve and meet the challenges of the first year of the 21st century. Let me leave you with a few of my favorite quotes this month: *** I think that the most significant aspect of 2000 is the fall of overrated dot-com stocks. It takes more than a dot-com after the name to reach success in business. It takes more than venture capital, more than corporate credentials, or image. It takes: (drum roll, please) Actual Performance.(Judy Wogoman, Publisher, NetNuggetz Newsletter) *** In my opinion, the most significant sea change in the last year has been the public realization that with eBusiness the velocity is much faster, and though many of the rules are different, it is at its core, still Business. (Jim Siegl, former news editor for ECMgt.com, Sr. Technology Analyst at Amherst) *** I believe that the market for internet start-ups has become more difficult in the year 2000 in the sense that it's more competitive and investors are reluctant to support (especially B2C models) in the retail sector. (Patrick Stark) *** For me, the most significant "event" of the year was that e-business is transforming more and more into business, it really gets a part to satisfy the corporate mission.(Rolf Scherrer, CREDIT SUISSE PRIVAT BANKING, Product Management Virtual Banking, Zurich) I hope you enjoy this eZine. See you in cyberspace, Mitchell Levy Executive
Producer, ECMgt.com <http://ECMgt.com>
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