InformationWeek
Defining The Business Value Of Technology
December 13, 1999
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The Leaders Of E-Business
Innovative users of Internet tools take charge of The New Economy
By Bob Violino
What characterizes E-Business 100 companies? They are aggressive in linking customers, suppliers, business partners, and employees via the Internet, using Web sites to handle sales transactions and provide customer service; intranets and enterprise data portals to link employees and give them more access to data; and extranets to improve information flow to and from business partners.
For many of these 100 companies, E-business has become pervasive. Nearly 60% say it's present throughout the entire company, while only 3% say E-business is limited to a specific department, according to an online qualifying survey for the E-Business 100 conducted by InformationWeek Research.
On average, the companies derive about half their annual revenue from E-business transactions, although that figure may be skewed somewhat by the fact that one-quarter of the companies get all of their revenue from E-business. Surprisingly, companies don't rank revenue growth or increased profits very high among their goals for launching E-business ventures. At the top of the list are improving customer satisfaction--mentioned by 94% of the survey respondents--and improving customer service.
"E-business is not only about customer acquisition; it's also about customer retention, and that's where customer satisfaction is important," says Bruce Mowery, VP of marketing and business development at online pharmacy More.com Inc. in San Francisco.
A key to keeping customers satisfied, E-business executives say, is to make the online trading experience as personalized as possible. This is true whether the customer is someone looking to buy toothpaste or a procurement manager searching for the best deal on thousands of PCs.
Formerly GreenTree Nutrition Inc., More.com--No. 38 on the E-Business 100-- has designed its online store to appeal to individual shoppers. The Web site uses "shopping filters" that let customers select whether they want to see products for women, men, seniors, or general use. It also offers a short list of popular product categories that lets customers quickly select products they're most likely to want based on past purchases.
On an even more personal level, the company lets customers create their own vitamins based on factors such as age, medical condition, and nutritional needs. Users fill out a detailed questionnaire on the Web site, and the information is routed to vitamin maker Acumin Corp., which More.com acquired in November 1998. Acumin manufactures the vitamins and ships them to the customers.
More.com is also using a synchronized browser capability from Acuity Corp. that lets its customer-service agents take over a customer's browser and guide the customer to particular pages on the store Web site or to information on specific brands. The agents can view the contents of a customer's shopping cart and help fill out order forms.
Another example of the more aggressive use of personalization comes from 11th-ranked Nortel Networks Corp., a provider of communications and networking equipment. Nortel's extranet lets business partners and customers be directed to account representatives from personalized extranet pages they can create. Similarly, Insight Enterprises Inc. (No. 9), Intel (No. 18), Marsh Inc. (No. 100) and other E-businesses offer personalized Web sites to their customers or business partners.
Also increasingly common are customer self-service applications on Web sites. More than two-thirds of the E-Business 100 companies provide self-service applications for order or service tracking. IPrint.com, which provides online customized printing services to consumers, small businesses, and home-office workers, lets customers design and order printed merchandise, including business cards, invitations, and T-shirts.
One of the strongest trends in E-business is the continuing growth of extranets. A majority of the companies in the E-Business 100 operate electronic supply chains, and on average these companies include nearly 60% of their customers and 55% of their suppliers in their extranets. Companies say they get multiple benefits from these networks, including reduced inventory costs by shortening the time it takes customers to order and receive products. They also provide customers and suppliers with information about products and buying trends from data warehouses and other systems.
Owens & Minor Inc., a Richmond, Va., distributor of medical and surgical supplies, launched an extranet in April to give customers and suppliers access to a 120-Gbyte data warehouse that stores detailed information on product ordering, shipping, billing, inventory, and usage. The data warehouse helps customers, including hospital systems and health-care networks, better manage their purchases. It helps suppliers analyze product-purchasing patterns to better forecast demand for their products. "The extranet is allowing all of us to operate more efficiently and drive costs down," says Don Stoller, director of information management at Owens & Minor, ranked No. 61. "We're sitting in the middle of the supply chain, and this is letting us share information on both sides." Stoller credits the extranet with helping Owens & Minor land at least four major contracts with hospital systems, including a recently signed $2 billion, eight-year deal. "The extranet wasn't the only reason they signed with us, but it clearly differentiated us from our competitors," Stoller says. Owens & Minor has 40 customers and five key suppliers on the network and expects to quickly add more companies.
PHH Vehicle Management Services, a Hunt Valley, Md., subsidiary of Avis Rent A Car Inc. that manages fleets of vehicles for business clients and was ranked No. 71, also uses an extranet to provide detailed information to its customers. The extranet is linked to the company's 1-terabyte data warehouse, which includes information such as vehicle maintenance history, fuel consumption rates, and drivers' records. Users such as company fleet managers can create their own customized reports or download data from the warehouse.
To help facilitate the growth of extranets and E-business transactions, nine of the E-Business 100 companies support the standards of the Open Buying on the Internet Consortium. The consortium, formed in 1996 by a group of companies to create vendor-neutral, interoperable, and secure standards for conducting business-to-business E-commerce, hopes to reduce the costs of E-business transactions and processing errors and make it easier to do business on the Web.
The latest version of the standard, released in August, includes a common set of business requirements, supporting architecture, and technical specifications.
Growing in tandem with extranets are intranets, the internal Web networks that let companies efficiently share information with their employees and give them access to useful business tools. Nearly 70% of the E-Business 100 companies operate intranets. Companies have been using these networks to provide information such as human-resources benefits updates, job postings, product-development news, and training programs while reducing paperwork in the process.
But E-Business 100 companies are increasingly using intranets for more transactional and interactive processes and to give employees information that can help them generate business or improve service to customers. "When intranets were first developed, they usually involved just putting up information," says Ellen Minton, director of Internet technology support at FleetBoston Financial Corp. in Boston. "That's valuable, but the magnitude of value increases dramatically when you start to add interactive services."
FleetBoston, formed by the merger of BankBoston and Fleet Financial Group in October, uses its intranet to let employees download software, reset passwords, and access financial data and research services that they need to do their jobs. Employees can also post information on the network as soon as they relocate to new offices or change phone numbers, making it easier for others to find them. FleetBoston, ranked No. 68, provides intranet access to extensive reports by Robertson Stephens, its research and investment banking subsidiary, so consultants in its global capital markets division can rapidly provide information to clients.
Others in the E-Business 100 are finding useful applications for their intranets. No. 31 Charles Schwab & Co.'s intranet, called Schweb, provides broad access to databases, and a browser-neutral platform lets any employee publish content that can be shared throughout the company. Computer reseller Insight, which calls its intranet its most important tool, uses the network to conduct twice-weekly employee opinion polls on a variety of topics.
Some E-Business 100 companies are pure Internet plays. They were created to provide online auctions, Web communities, or collaboration portals in which buyers and sellers come together to make transactions. These business-to-business trading communities are springing up in many industries.
One of the fastest-growing online auctioneers is Enermetrix.com, a clearinghouse for retail natural gas and electricity contracts that ranked 87th. Enermetrix offers a Web site that combines online auctions with relational database technology to match buyers and suppliers of retail energy. Similarly, No. 80 Altra Energy Technologies Inc. runs an Internet marketplace where energy buyers and sellers meet to trade natural gas, electricity, crude oil, and natural gas liquids.
USBid Inc., No. 28, operates a site that links buyers and sellers of electronics equipment in auctions, letting manufacturers sell an estimated $21.1 billion in excess electronics inventory annually. It plans to apply its online-auction model to other industries.
Companies employ various IP technologies to build their commercial Web sites, intranets, and extranets. The most common, according to the survey, are application servers, encryption software, legacy integration tools, links with Internet service providers, messaging software, and personalization tools.
More than half of the E-Business 100 companies report they have already achieved a positive return on their investments in E-business ventures. All of those companies that track E-business payback say they expect to reach positive returns in no more than three years.
While building their E-business operations, these companies had to overcome some significant challenges. The most common, mentioned by half, was tying their legacy IT systems to Web systems. Right behind that was changing their cultures to be more E-business savvy, finding people experienced in Internet technologies, and building an awareness of their brands in the E-marketplace.
No doubt there will be more challenges to come in the fast-changing E-business economy. With new competitors constantly emerging, next year's E-Business 100 might include some companies that don't even exist yet.
Return to the "E-Business 100 homepage"
ot too long ago, just having a home page meant a company was Internet-savvy. But the rise of commercial Web sites, intranets, and extranets as critical business tools is creating a new E-business economy. The leaders in this new economy include companies that were early to recognize the Web's potential and other, newer ventures that exist because of the Internet. InformationWeek endeavors to find the most innovative practitioners of electronic business with this first E-Business 100 ranking. Companies in the list range from old blue chippers such as IBM and Procter & Gamble Co. to newer powerhouses such as Intel and Home Depot Inc. to companies that didn't even exist a year ago, such as online auto dealer DriveOff.com Inc. and Web application service provider Portera Systems Inc.
Marsh Inc., the parent company of risk and insurance services firm J&H Marsh & McLennan, provides a self-service application on its enterprise Web portal that lets customers' insurance administrators automatically renew certificates of insurance, print the certificates, and run ad hoc reports.
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