Subject: Jan2001 ECMgt.com: Year 2001 E-Commerce Predictions
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January 1, 2001 *4,100 subscribers* Volume 3, Issue 1
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David Roddy
Terrie Stickel
Mark Hoffman

VerticalNet Solutions Inc.
A division of VerticalNet Inc.
301 Howard Street, Suite 1410
San Francisco, California 94105

Despite the ups and downs of the e-commerce roller - coaster, one fact is crystal clear: the new economy is being built on a foundation of software.

A variety of authors have detailed the dramatic positive economic impacts of the laws of Moore and Metcalfe. Still others point to the substantial consequences of the high-bandwidth, low-cost, ubiquitous telecommunications network. But we sometimes forget that it is software applications that enable companies to significantly change the way they do business. In a very real sense, software is the glue that links the hardware, the new economy, and the bottom line.

Many observers believe that "collaborative commerce" applications are rapidly becoming the next chapter of the software story. These techniques offer companies a wide array of opportunities for decreasing costs and increasing revenue by changing the landscape of economic relationships among companies. In short, collaborative commerce allows for complete economic cooperation among a company, its suppliers, distributors, customers, and partners. The mindset changes from one of competition or indifference to one of cooperation and partnership.

According to Don Tapscott's recent book, Digital Capital, hundreds of companies are now working to implement this new model that he refers to as "business webs". Carried to its logical outcome, the evolution to web-based collaborative commerce ultimately enables a dynamic virtual enterprise. And the benefits are real: According to eCompany Now, Office Depot attributes its online success to the relationships with its suppliers, which in 1999 alone freed up some $600 million in inventory costs for the firm. Customers benefit too. Fed Ex collaborates with its customers so that they can check the status of their shipments online.

Large and small enterprises are attracted to this model as a means to go beyond traditional supply chain models and to integrate knowledge sharing among those in the web. This allows all participants to better leverage the Internet to increase profitability. In fact, industry analyst Gartner Group believes that web-enabled collaborative commerce applications will become the one of the most important software contributions of the next decade.

One reason is that the new collaborative commerce model offers a value proposition far in excess of earlier approaches by delivering significant and tangible benefits. Analysts list a variety of factors that are expected to lead to a rapid proliferation of collaborative commerce software:

  • The explosive growth of Internet-integration technologies.
  • The rise in the outsourcing of non-core business responsibilities.
  • Coercion by strong participants in the distribution channel.
  • The globalization of trading relationships.
  • The enterprise's changing focus from departmental productivity and external transaction handling to collaborative interaction.

Technology researcher company Forrester further explains: "benefits that participants in collaborative commerce can expect include the elimination of process inefficiencies, reduction in inventories, and the optimization of production capacity."

Two years ago, analysts believed that a new 'business model' was to the key to success on the Internet. Now it is clear that effective use of the hardware and technology inventions of the last thirty years will require innovative and flexible software to help companies build their positions in the new economy. As the software revolution unfolds in the coming years, companies will become better able to truly re-engineer both internal and external transaction processes via new collaborative commerce techniques. And the gains will multiply as visible and measurable returns generate still further implementation of software-enabled e-commerce.

For further information, please visit the white paper section of www.verticalnetsolutions.com.


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