March 6, 2000

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Seeking The Deeper Path To E-Success
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The synergies between traditional companies and their dot-com subsidiaries often generate more customer-centric business initiatives. TMP Worldwide Inc., the New York ad agency that publishes the Yellow Pages, acquired and then merged online recruitment pioneers Monster Board and Online Career Center into Monster.com five years ago. TMP and Monster.com want to leverage the strengths of both businesses to create a new business providing moving and relocation services.

TMP, through its Yellow Pages business, has developed relationships with moving companies and relocation services, while Monster.com maintains a database of 6 million job seekers, many of whom may need to relocate when they accept a new job. By establishing a relocation service on Monster.com, the two companies would link two of their main constituencies.

"We can leverage the traffic of Monster.com and the client relationships with TMP Worldwide," says Monster. com CEO Jeff Taylor. "It's a powerful combination no one else can do."

Partnering with a dot-com business is a model more than one-third of the surveyed executives cite as an effective way their companies transform their businesses. Consider this pairing of a brick-and-mortar company and a dot-com partner. Kozmo.com Inc., which bills itself as an on-demand Internet-to-door delivery service, last month agreed to pay specialty coffee retailer Starbucks Coffee Co. of Seattle $150 million over five years to locate drop boxes for the return of videos and other items in Starbucks stores. Kozmo. com lets customers order items such as videos, CDs, and specialty foods at its Web site and then delivers them within an hour.

Kozmo.com, which operates in New York, Boston, Washington, San Francisco, and Seattle and plans to expand to 30 more cities by year's end, sees the Starbucks deal as an efficient way to market its products to the 10 million people who visit Starbucks stores each week. About 90% of Starbucks customers use the Internet. CEO Joseph Park, who co-founded Kozmo.com in 1997, says the fit between his company and Starbucks is a natural one. "Like a good cup of coffee, Kozmo. com has become an integral part of our subscribers' daily lives," he says. "The Starbucks partnership is further realization of our commitment to quickly expand our service and product in ways that satisfy customers' needs. It also is a realization of our business-to-consumer and business-to-business Web strategy."

For its part, the partnership will let Starbucks attract more customers to its stores as Kozmo.com subscribers return items to the drop boxes. The deal also will fatten Starbucks' coffers as the company expects the relationship to add 1 cent per share to its fiscal year 2000 earnings and 5 cents per share by the end of the next fiscal year.

Whether an E-business unit remains inside or outside a company's walls, adopting an Internet solution to eliminate paperwork and other manual processes is one of the more successful E-business efforts. Nearly six of 10 executives say their companies are instituting E-business processes to replace analog or conventional procedures.

Snap-on Inc., a $1.8 billion maker of tools and industrial equipment in Kenosha, Wis., created an extranet sales- and account-management solution linked to its Baan enterprise resource planning system to let industrial customers order from the company's catalog of 17,000 products. The sales system, based on OnLink Technology Inc.'s Rainmaker Sales software, encourages cross-selling; for instance, it can recommend that a buyer of Snap-on's diagnostic equipment purchase premium ratchets and wrenches. CIO Al Biland says the extranet sales system has increased incremental orders by as much as 40%. "It's sort of like printing money as we look at the orders coming in," he says.

Using E-business solutions to help make the customer experience simpler and more effective is a key concern for business and IT executives. Legal information publisher West Group Inc. in Eagan, Minn., gives customers access via the Net to its SAP R/3 system to let them subscribe to information services and manage their accounts. "We want to get out of being the middleman," says VP of technology Steve Buege.

Customer-oriented initiatives also scored high on the E-Success survey--utilizing E-business applications to improve customer satisfaction (78%), solicit customer feedback (71%), learn more about customers (68%), and conduct customer research (63%).

Courier service Federal Express in Memphis, Tenn., changed its approach based on customer feedback, allowing access to its famed tracking system through its customers' Web sites rather than through its own. "People don't really want to look at our Web page when they want to track a shipment--they want to look at their own systems and their own capabilities from an internal standpoint," says Rob Carter, FedEx's chief technology officer. "They just want the FedEx information and capabilities to be there."

The early faith of E-business innovators is bearing out through hard-won experience. Meanwhile, the rest of the business world is quickly embracing the Internet religion.

To obtain the Redefining Business 2000: E-Success study, pay a visit to informationweek.com/reports

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Illustration by Bryan Leister

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