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September 27, 1999

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Tech Companies Want Everything On The Web

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IBM has a similar scenario on the purchasing side. First, the company requires its electronic data interchange partners to put all billing and other purchasing information on the Web. Then, through various links to a number of databases that provide information on industry components and prices, IBM does the calculations and has the knowledge and the ability to demand the lowest prices. "As a result, we have every purchasing agent for every supplier working for us," Ward says.

Even with the amount of money it spends over the Web, IBM is expecting to save $240 million this year through these electronic-procurement applications it has set up.

Cisco is another example of a company for which E-commerce has become a mainstay. Some estimates put Cisco's E-commerce revenue at $20 million a day. The San Jose, Calif., network equipment maker began operating its E-commerce systems two years ago and now does 80% of its business on the Web.

"Since we went live with our E-commerce system, the business that comes over the Internet went from 2% to 80% of our $12 billion revenue," says Peter Solvik, CIO at Cisco. "It's grown about 300%."

Much of the company's Web business to date has been from about 30 large customers that have direct access to Cisco's networks through a server at the customer site, Solvik says. But Cisco is looking to expand that with a new multitier distribution channel that's accessible via the Web. Under this scenario, if a reseller wants a Cisco product, it can go to a Web site and choose the product, Solvik says. The reseller then uses Extensible Markup Language, an E-commerce application development language, to go to various distributors, who present offers. From there, the reseller can select whichever distributor it wants to use.

Solvik, who says the new application went live this past summer, adds that much of Cisco's use of the Web is to help improve its operations. "Our largest focus right now is on our own employees," he says. "We're trying to offer less travel for training and focus on using the Internet to deliver distance learning and just-in-time learning."

Employee Options
To train employees in the use of new products or in new areas of expertise, for example, most courses require them to travel out of town for a week at a time. But Cisco has a program in place to let employees take training courses when and where they want to. If, for example, an employee wanted to take a course Cisco offered, that person would make a request over the company intranet, and the corresponding training module for that course would be transmitted overnight-when network traffic would be least affected. Completing the cycle, information on which employees take and complete specific courses is automatically fed into the human-resources database. This allows Cisco to keep track of which employees have particular skills.

"It's a whole closed-loop system for our skills database," he says. With just-in-time electronic learning, employees can take courses a few hours at a time, when they need them. Not only does this help reduce travel costs for the company, it improves employee retention. That's a critical need considering today's IT skills shortage.

Although keeping employees happy is important, keeping customers happy is another top concern-one that is well-served by Cisco's online efforts. Cisco is providing about 80% of its customer service over the Internet. Solvik says customer connections are provided through a private extranet to ensure security. The company is also working to offer more direct connections for its customers, although nothing is ready to be tested. "We're moving toward linking customer networks directly to ours to work with customers proactively," Solvik says.

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