InformationWeek

June 28, 1999

The Next Level For Emerging Enterprises

Small and midsize businesses look to gain the expertise and infrastructure they need to spur growth

By Scott Leibs

Related links:

E-Business Evolution

E-Business Or Bust

And from our sister publications:

InternetWeek E-Businesses Must Save Users Time And Money

lectronic business is a challenge for all companies, but it's particularly difficult for aggressive small and midsize businesses--emerging enterprises that are looking to stay competitive in today's fast-moving markets. These companies are struggling with problems unique to their resource-constrained, small-fish situations, such as attracting customers to their lesser-known Web sites and figuring out which side of the channel-distribution dilemma created by E-commerce they fall on. But they recognize E-business and E-commerce as being vitally important to their future.

To upgrade their efforts,many of these companies are exploring partnerships with service providers to gain the expertise and infrastructure they will need as they grow. Others, looking to solidify their foundations, are ramping up in-house talent and technologies.

In an InformationWeek Research poll conducted late last year, 25% of the emerging-enterprise respondents said electronic business would represent a majority of their revenue growth in the near future. Additionally, 93% of these respondents said E-business was somewhat or very important to their company's business strategy in the next year (see chart, below).

Franklin Covey Co., a Salt Lake City provider of time-management products and services that was formed in 1997 by the merger of Franklin Quest Co. and Covey Leadership Center, has been selling its planners and agendas on the Web for more than a year. Earlier this month, the company inaugurated its most ambitious E-business effort yet: Adding online educational courses and customized Web pages for business customers.

"A big part of our business is training in time management," says Douglas Smith, VP and general manager of Franklin Covey's electronic-solutions division. "We conduct courses all over the country, and it can be very useful for people to access the Web for a refresher course or even to experience the course over the Web without having to attend a seminar."

Franklin Covey creates custom Web sites for its biggest business clients that list only the products and services a particular company wants its employees to have access to and the negotiated prices for that customer. The sites also offer online registration for Franklin Covey's seminars.

The custom sites provide a competitive advantage, Smith says. Franklin Covey won't disclose financial goals for its E-commerce efforts, but Smith says, "This is an area of substantial growth for the company, which justifies increasing investments as we go forward."

That vision drove Franklin Covey to move away from running every facet of its E-business operations on its own, and partner with E-commerce software developer BroadVision Inc. and application service provider USinternetworking Inc. Those vendors provide an E-commerce foundation based on BroadVision's One-To-One suite of applications. USinternetworking hosts the site and provides the bandwidth, while the BroadVision applications handle most aspects of E-commerce, from credit verification to shipping, with links back to Franklin Covey's internal back-office fulfillment systems, comprising Oracle enterprise resource planning software and several homegrown applications.

About 200 of Franklin Covey's 4,500 employees work in its IT and electronic-solutions division, and about 40% of the 200 are devoted to E-commerce. Despite those resources, Smith says, the company turned to outsourcing because the monthly fee will be less than half of what Franklin Covey would have to spend to develop the same functionality in-house. Its infrastructure couldn't even support the growing volume of relatively simple E-commerce transactions, and it certainly wasn't equipped to handle the job of expanding the Web site. "We had a few outages that affected our revenue stream," Smith says. "We didn't want to keep adding applications to an unstable environment that had been cobbled together. We wanted a firm foundation in place, and by cutting over to USinternetworking we can achieve that very quickly."