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MANAGEMENT PERSPECTIVE Subject: June2001 ECMgt.com:
Better, Faster and Maybe Cheaper |
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| Better, Faster and Maybe Cheaper Management Perspective by Mitchell Levy, Author, E-Volve-or-Die.com With continued learning and experimentation, companies will build better products and services by utilizing the multiple capabilities of their companies and their partners. Price may still be a determinant in customers buying decisions, but value received is becoming more important than price alone. New ways to conduct business enabled by technology will lead to many new opportunities for companies, with improved choices for customers and more efficient payment mechanisms for the exchange of value between parties. Better, faster, and maybe cheaper, has been the story of the Internet and Web-based commerce for over five years. Technology brings the ability to apply strategy to networked economies, and offers businesses and consumers alike the ability to choose from a wider selection of often custom built products and services. Today, the Global 2000 have created an entirely new infrastructure of software, applications, and e-business rules that has reshaped the world's economy in less than a decade. Today, companies in all vertical industries are spending a significant portion of their revenues, (often over ten percent of corporate resources) on e-business initiatives. Vertical markets including pharmaceuticals, telecommunications, and education have been completely redefined by the inter-section of computation, communications, and process. In this article we will focus on key trends created by these innovations, including new partner strategies, the rise of collaborative commerce, focusing on value provided for consumers rather than on price, and the rise of e-process. But these initiatives are not always done cheaply or successfully. Over 20% of the R&D and technology budgets of Global 2000 firms are invested in Information Technology, and Internet budgets and initiatives often exceed $100 million per year. Customer Relations Management (CRM) and Partnership Relationship Management (PRM) tools have been widely adopted over the past decade, as companies sought a more intimate relationship with their customers in order to intelligently predict and satisfy their needs. The advent of the Internet has fostered the means to allow partners to have visibility of each other, the enterprise, and the combined views of customers that enterprises desired just a few short years ago. Collaborative commerce, the extended ecosystem of enterprise, partners, and customers, was born as marketplaces promised free interchange of information, customer visibility, and combined inventories of enterprise participants. However, the lack of liquidity forced an early retreat from the promise of "global intelligence". Collaborative commerce was reborn in ePRM, addressing the business problem of channel conflict. OEM vendors Sun, Oracle, HP, IBM, and Compaq have leveraged channels for much of their sales, yet issues of lead and opportunity management have always been a struggle for these firms. Business consumers have likewise had difficulty in piecing together complex solutions, where services, hardware, and applications are configured, priced, and delivered by channels. Value has now become more important than price, especially for financial services, such as banking, equities, and insurance. Today, managing cash and investments, providing flexible benefits and pensions for employees, and integrating information from multiple sources provide new and custom offerings that are better and faster, but certainly not cheaper. Personalization drives customer retention through fostering intimacy of contact, messaging, and flexibility - customers can "order off the menu". Pharmaceutical firms, now called Big Pharma", have grown by incorporation of biotechnology into the long, expensive, and failure-prone process required to bring new drugs to market profitably. Today, 350 pharmaceutical firms are leveraging network and computational technology to harness the knowledge of the human genome to discover new approaches to disease, cutting the time to market by years. Pharma now include networks of labs and physicians, and data moving rapidly among peers involved in collaborative modeling, discovery, and testing of new drugs. Yet cost has not been a driver, because time to market with greater chance of success yields profit. Semiconductor firms use e-business applications to organize workflow between sales and engineering groups in complex sales cases, such as the design of complicated custom devices that are designed into systems that will be sold in millions of units of finished products. Managing these complex activities without e-business applications is time-consuming and human-intensive, and firms often lose sales to competitors because of resource management problems, rather than technology issues. New ways of doing business have been boosted by the ability of industries to merge products, and services, and ultimately value, through multi-channel delivery. The ability of telecommunications giants to provide - through a single wire - integrated voice over data, network (LAN) fax, and Internet connectivity services, as well as outsourced storage, network, and business services, has reshaped the design and delivery of business information. Players in this field have targeted financial services, health care, and manufacturing sectors, where maintaining IT and business management services can be particularly challenging. Observation of key players in the telecommunications industry, including giants like Qwest, AT&T, Level 3, and Verizon, has shown that better and faster isn't always cheaper, and many participants have jumped too hastily and made poor investments. Education, not seen as a vertical market eagerly to engage in e-business, is about to become a trillion-dollar industry through the combined efforts of networks, distance learning strategies, and the webification of education content from higher education (colleges and universities) to corporate retraining and life-long learning. Many of the Global 2000 now invest 5% of annual salaries on training, and with travel and work schedules a constant challenge, distance learning becomes a viable, (if not preferred) choice. It is better and faster, but delivery is not necessarily cheaper. Currently, investment is remaining fairly constant, but yielding more efficient and effective results, and more profits for firms providing health, business applications, language and management training. Surprisingly, pioneers in convergence of electronic, print, and integrated office services, including Ricoh, Canon, and Kodak, struggled to bring strategy into market alignment with where technology was driving their companies and industry. Yes, technology, networks, and integrating applications and services made office business processes faster, and probably better, but in the short term, product and market confusion appear to be ruling the day. The rebirth, or convergence, of networked office automation, is still a "work in progress", but is progressing. As the new century spins into its second full year, and the Web complete its first decade, evolution of technology, strategy, and market is in full swing. While industries like Pharma, semiconductors, financial services, telecommunications, office automation, and education have found new ways of collaborative design and delivery of services, other firms are still as Geoffrey Moore so aptly put it, "in the Tornado". Evolution in e-business, as in nature, is a long process. URLs: Pharma:
Semiconductors:
Partner Relationship Management:
Office automation:
Telecommunications:
I
hope you enjoy this eZine. Mitchell
Levy
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