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December 7, 1998

Tools For Growth In E-Commerce

The future is bright for business-to-business electronic commerce. InformationWeek Labs and Doculabs examine what approaches--and what tools--will help your company make the most of doing business on the Web.

First in a two-part series

By Jeetu Patel, Mark Schenecker, and Gautam Desai of Doculabs, and Jason Levitt of InformationWeek Labs

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lectronic commerce is gaining momentum like a runaway truck heading down a mountain pass. The most eye-popping prediction we've seen lately comes from Forrester Research Inc., which projects as much as $3.2 trillion in worldwide sales over the Internet by 2003.

Whether or not you agree with such estimates, there's no doubt that Web-based E-commerce has arrived. The World Wide Web provides a whole new sales channel for companies that have traditionally relied on their sales personnel for direct and indirect sales. Other companies are springing up for which the Web is the only sales channel. Some companies are even assigning sales quotas to their CIOs, making technology groups responsible for using IS to generate revenue. Web-based E-commerce gives companies global reach, and it's far less expensive than alternatives such as electronic data interchange. Web-based commerce can also streamline processing, facilitate branding, and lead to greater customer satisfaction.

As more companies jump on the Web-comcommerce bandwagon, E-commerce products and systems are justifiably being viewed not as technology infrastructure, but as a central part of a company's sales and marketing operations. But are today's E-commerce products ready for use as cornerstone technologies on which companies can bet their most critical commerce applications?

With this question in mind, Doculabs and InformationWeek Labs compared a number of technologies for Web-based commerce--specifically for business-to-business commerce applications. We found that, despite all the hype, the E-commerce technology market is still relatively immature. There are some good products available, but keep in mind that their deployment can require a lot of application development, integration, deployment, and maintenance. They are extremely complex undertakings.

In this article, the first of two parts, we take a look at how today's products are addressing the needs of complex business-to-business E-commerce applications. (For this evaluation, we looked at products in the toolkit and packaged application categories. Next week, we'll take a closer look at each of the individual products' capabilities, strengths, limitations, and ideal deployment.)

A wide range of products is available to handle different classes of applications. The challenge for businesses is to understand the philosophies, approaches, and target applications of a given product, and to match those factors with their own application needs and environment. In the end, you may find a product that offers a perfect fit for your application--and plenty of others that may fall short of your needs.

Using E-Commerce For Business
At a high level, there are two major types of E-commerce applications: business-to-consumer and business-to-business. Initial interest in E-commerce was in the business-to-consumer sector. There are numerous examples of high-profile business-to-consumer Web-commerce applications, including Amazon.com, CDnow, and 1-800 Flowers, and countless other mail-order businesses.

But most experts agree that the real impact of Web-based commerce will be in the business-to-business sector. For this study, we focused on products that provide solutions for business-to-business commerce over the World Wide Web.

Business-to-business E-commerce is nothing new. EDI has been around for years--but it's expensive and is beyond the scope of all but the largest companies. With the Web, E-commerce is now viable for companies of any size, not just corporate powerhouses with deep pockets and vast resources. The Web opens new opportunities for companies to engage in commerce with their suppliers, customers, and business partners.

However, there are different classes of E-commerce applications within the business-to-business sector. The primary classes are: sell-side, which focuses on selling goods or services to customers; buy-side, which focuses on helping companies make procurements; and marketplace, in which an aggregator brings together multiple buyers and sellers, providing a community for commerce among the participants.

Each application type has different requirements. Consequently, many vendors of E-commerce software and hardware offer products specifically aimed at these application types. Vendors that want to attack multiple application types face the challenge of providing multiple products (which can be a maintenance headache) or incorporating comprehensive functionality into a single product (which can become unwieldy).

Solutions For Selling
The primary purpose of sell-side applications is revenue generation. Sell-side applications follow the classic E-commerce model: enabling an organization to sell products or services to multiple buyers, usually outside the organization. For example, companies such as Cisco Systems and Dell Computer let business customers place orders over the Web.

Sell-side applications require several important capabilities. For example, if you're an auto-parts manufacturer that sells parts to a large automaker, you'll want your E-commerce application to integrate with your inventory system and your production scheduling systems. If you're an online publisher selling content over the Web, you'll need special features to ensure successful delivery of the product.