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E-Commerce - It's Always New! | ||
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By Leo Schlinkert CEO Communicator Inc The institutional securities industry has, for the most part, been years and several iterations ahead of other domestic industries in the development of B2B e-commerce markets and services. This lead time has given e-commerce professionals in the institutional securities industry the luxury to formulate proven solutions in e-commerce. The lessons learned in the institutional securities industry can now be applied in vertical industries - in insurance, money management, professional services, specialty publishing, health care, chemicals, energy - which have been seeking, with mixed results, the correct formula to achieve efficiency from e-commerce while maintaining control of their core business interests. We found that business needs must take precedence over technology issues in B2B initiatives. Secondly, large or important purchases bring an immense amount of information that is more important than the price. The right online marketplace allows information to be used to increase customer collaboration with suppliers to continuously improve business practices. Finally, to ensure the success of your B2B initiative, choose a technology partner that has implementation experience. In 1995, the core team for Communicator Inc. created an electronic distribution platform to provide the latest inventory, prices and research electronically to dealers' core customers. In recent years, institutional investors have been bombarded with proprietary websites from broker-dealers in addition to third-party research providers. Navigating the increasingly numerous and disparate web sites was consuming an inordinate amount of time. Customers needed a commingled site for this information and dealers were seeking a way to extend their brand names and commingle their proprietary content and services without compromising their existing web platforms. Thus was born the idea of "Bond.Hub," which we launched in December 1999 for Goldman, Morgan Stanley Dean Witter and Salomon Smith Barney. "Bond.Hub" was the first industry portal to bring together all of the participating dealers' key information while maintaining control of the dealers' content, branding and customer relationships. "Bond.Hub" was an instant success - registering more than 3,000 users in the first two months. It has since been expanded to include JP Morgan, Lehman Brothers and Merrill Lynch and upwards of 10,000 institutional customers of these firms have registered as users. This fall, we are launching a second portal covering new issue bond information and pricing for these six Wall Street Firms called "Syndicate.Hub." This business model has succeeded because it offers value to both sides, it aggregates the right information to the buyer and it protects the seller's brand, content and customer relationship. Without the right business model, quality technology will not catch fire in the marketplace. Chicago Board Brokerage tried to bring online a total restructuring of the trading process, as opposed to greatly improving the existing process with technology. Participants found it to be too little too late. Conversely, a good business model can carry even basic technology to success. The Chicago Board of Trade's Project A was Project a trading system launched in the early 1990s to automate after-hours trading. There was such a demand for electronic trading of futures contracts that it began to build volume almost immediately. The system was so successful that the CBOT expanded it to include trading during regular trading hours. For large B2B transactions, on-line exchanges are likely to be ineffective. "For online exchanges to work . buyers and sellers need to be fragmented with thousands of small orders interacting simultaneously, according to Prof. Eric K. Clemons of the Wharton School of Economics. "In industries such as auto parts, where there are a limited number of buyers and sellers, an exchange-based market is not the best alternative. "If the order flow is likely to be concentrated in a small number of buyers or a small number of sellers, or if delivery must be carefully coordinated and scheduled between buyer and seller, then an exchange is likely to be less effective," Prof. Clemons told The New York Times. At Communicator Inc. we believe the lessons learned in the last 15 years from the institutional securities industry should be applied to the burgeoning online industrial markets. To apply these hard learned lessons, B2B e-commerce initiatives should follow these best principles: Business objectives override technology. A July 24 Gartner Group commentary stated, "Enterprise portals should directly support the initiatives of the business and secondarily support the IT initiatives of the enterprise." Focus on top customers first: While it may be possible to find new customers overseas or lower the cost of office supplies, there are huge opportunities to better serve your core customers. Control and extend your Content, Brand & Customer Relationship. Do not let third parties or new entrants position themselves between you and your customers and commoditize your content, brand and customer relationship. Implementation is the hard part. It is easy to announce a new initiative but only a small percentage of all announcements are successfully implemented and functioning. High-level B2B customers demand results, they do not care about announcements; go with proven experience. Iterate: Pilot first; add layers of functionality and customers. Build a pilot, test it out and iterate to move from access to usage to customer interaction and finally to collaboration with your customers. Be prepared to commingle information with competitors and complementary suppliers. Your top customers will demand aggregation of information and if you do not satisfy that demand a third party aggregator will. The volume and richness of information supporting sales, marketing and service functions is exploding. The Internet provides a huge opportunity to increase the efficiency of these processes by aggregating the right information to the right professional at the right time. Although the focus in the marketplace today is on exchanges, Communicator Inc. is finding that improving the business practices before and after the negotiation of price is more valuable. To ensure the success of your B2B initiative, rely on a solid, proven business model and a technology partner that has implementation experience. Leo Schlinkert is President and CEO of Communicator Inc., a business-to-business electronic commerce company founded in 1999 to create industry Hubs that allow business customers faster, better, and easier access to information and products. as printed in ISP Weekly - December 12, 2000 |
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