It's common for executives at multinationals chasing success in e-commerce to study US trends, extrapolate data and then sit back and wait for the money to roll in. If the wait proves to be in vain, says Giga Information Group, executives tend to look elsewhere for scapegoats, with technology a natural candidate for blame.
But while Giga concedes the technology may be immature in many respects, it insists it most definitely is not technology that's holding up the development of e-commerce. If anything, the research company says, the possibilities for e-commerce that have opened up through technology in the last two years or so underscore the non-technology limitations that are inhibiting e-commerce.
CIOs are responsible for providing first-class technology support for an organisation's e-commerce effort. And it is the level and sophistication of technology that will, to a large extent, determine the outcome of that effort. "The company that masters e-commerce is the company that will master its industry in the emerging digital economy," says Peter Fingar, guru of business and distributed objects, and author of the paper "A CEO's Guide to e-Commerce Using Intergalactic Object-Oriented Intelligent Agents".
"Such mastery is not an end game, it is a continuing and unfolding process. Agility is the byword of success - an agile business empowered by agile information systems, says Fingar. "Evaluating and partnering with the emerging e-commerce software vendors should be a top business priority. Distributed architecture, open standards, and the appropriate use of agent technology are the key criteria for selecting e-commerce vendors, platforms and frameworks."
A recent report from Delphi titled "E-active: How the Leading Edge of e-Businesses are Transforming Themselves and their Industries", notes that if e-active organisations are not solely motivated and empowered by technology, they have certainly realised the value in strategically leveraging technology. "The e-active organisation is far more likely to provide employees with technology specifically to empower them as free agents, and use data mining and other such technologies to better understand and leverage their customers' buying habits and preferences," the report says.
And it says that among those organisations that have implemented an e-business system, a common take-charge attitude prevails. Only 15 per cent outsourced the building of their e-business system. For most, the establishment of an extended value chain via an e-business implementation began at grass roots level.
Much of that grass roots work is critical to e-business success. As CIOs look to lay down the infrastructure and develop the architecture and applications that will let their organisations survive in the new e-economy there are a few key issues to bear in mind.
Keeping the wheels of e-commerce turning depends, above all else, on keeping technologies simple and open. In fact, warns Geoff Gander, general manager of electronic directory service SupplySearch, e-commerce may self-destruct unless open standards prevail. "There is no room for proprietary approaches in the Internet space," Gander says. "Take B2B e-commerce, for example. The emergence of OBI (Open Buying on the Internet) and XML (Extensible Markup Language) (see, "Tag, You're It", page 104) are testament to the fact that everyone is beginning to accept that all organisations will make differing infrastructure decisions, but all infrastructures need to have the ability to exist and communicate with ease."
XML is a way to code documents for easy transfer between applications that is widely seen as a future key enabling technology for e-commerce. Format-neutral XML is capable of providing flexible searching and data exchange that HTML-based pages just cannot deliver. But in the less than 18 months since release of the World Wide Web Consortium's (W3C) XML 1.0 specification, it has barely started to make an impact on e-commerce. That is because trading partners are still labouring to agree on what each XML-based business document will look like in order to ensure the smooth exchange of information online.
It is precisely the same challenge posed by a much earlier e-commerce technology, electronic data interchange. It took years for EDI users to hammer out the purchase orders and shipping notices that became the X12 or EDI for Administration, Commerce and Transport (EDIFact) standards used today by the transportation, manufacturing, grocery, retailing and computer industries.
Now RosettaNet is defining about 100 "Partner Interface Processes (PIP)", XML-based messages detailing ordering, returns and other practical matters of concern to the computer and electronics industries. These will be used with either the simplest of XML documents, called Document Type Definitions (DTD), or more complex XML constructs called Schema. Meanwhile, a multitude of industry groups are defining DTDs and Schema, and Microsoft has its XML Data Reduced (XDR) Schema, which may be on its way to becoming a de facto standard.
Many large corporations still insist trading partners use EDI documents for certain business transactions. The problem is that even though EDI data can now be captured through Web forms, it is still time-consuming and expensive to deploy between trading partners. That is why XML may usurp - or at least enhance - EDI's role in e-commerce.
That is certainly the case with the Australian Customs Service (ACS) and Australian Quarantine and Inspection Service (AQIS), which together use e-commerce in inspection procedures to reduce costs and increase productivity. AQIS set the ball rolling on e-commerce with EDI, in conjunction with the Australian Customs Service, in 1987. Its Single Electronic Window is designed to reduce the red tape involved with export clearance for meat and dairy products.
According to John Christian, manager, electronic documentation and registration system, both agencies have stayed with the global UN EDIFact standard. "That gives us a global standard which is very rigorous," Christian says "But it is an expensive process, developing standards that way, and that's why we're looking at this XML. It doesn't mean you throw out your EDIFact stuff - XML is just an easier way of doing things."
BHP Steel Group uses the Internet to give its entire customer base access to electronic trading, and aims to be the world's best resources organisation by linking resources and technologies to benefit customers worldwide. Electronic trading manager Tony Hart says the company is carefully watching moves to extend XML to develop a steel markup language (SML).
Catching the Virgins
In the meantime, since most of BHP's smaller customers or potential customers have limited exposure to the Internet, the organisation is concentrating on finding ways to encourage them to embrace the technology.
"The developments we've done to date have been focused on transactional-type documents," Hart says. "We've built in the capability of a system to download files into basic Excel or plain text files which the common user is very familiar with. That makes them want to embrace the system relatively quickly and we're finding that people are embracing it with a passion. It's a way to overcome the fact that lots of people don't have the infrastructure or facilities yet, by presenting things to them that are very intuitive, so they're not frightened."
Hart says increasing numbers of what he likes to characterise as BHP Steel's "Internet virgins" are not only embracing the system but also making some "fantastic suggestions", which in turn help to ensure the system is accepted readily and with a degree of passion.
Pilkington Glass e-commerce manager Garry Millar is trying to help small, privately-owned business customers get connected by offering them a membership kit. This welcomes them to Pilkington Online, explains the site's goals and benefits, and offers a range of facilities to help them get connected. "It says to them if you would like to upgrade or replace your computers, we have done a deal with Gateway Computers. If you don't have an ISP, we have done a deal with Connect.com, who would be able to provide an appropriate level of Internet access. If you need training for staff, you can go to AUSe.Net, established by the commonwealth and state governments, which would be more than happy to guide you to the right place," Millar says.
Meanwhile, John Robinson, group development manager for Industrial Galvanizers, is concentrating on increasing Web performance as he strives to keep customers loyal. "Our customers have got expectations of performance where if we don't meet their expectations they're quite entitled to go somewhere else," he says.
Robinson says the speed of data transmission and the reliability of some ISPs remain significant issues. "You've got to take those things into consideration, particularly with Web site design, because people don't want to wait around for ages for information to download," he says.
"E-commerce is a complex mixture of applications, strategies, technology and management issues that when combined provide the environment for consumers and business to create relationships and conduct business over the Internet," SupplySearch's Gander says. "The technology is developing fast, particularly in relationship to the technical architectures that are now beginning to underpin Web applications."
The dream of developing the perfect e-business hinges, above all else, on a robust IT infrastructure that will allow an organisation to:
* Interface with customers and partners
* Adapt quickly to changing customer service needs * Introduce innovative services quickly * Deliver tailored services to groups of customers and individual clients * Meet shrinking time-to-market requirementsIn reality, most organisations today want to use the Internet (and intranets) for far more than just selling products and services, says Curt Hall, editor of the Data Management Strategies and Intelligent Software Strategies newsletters. "They want to use it to tie together and automate the operations that drive their various lines of business. And it is here that they are struggling, because this usage requires building an IT infrastructure that can efficiently integrate multiple, interconnected business processes, different platforms, and different applications."
Not only must this infrastructure provide support for electronically marketing and selling products and services via the Internet, Hall says, it must also electronically link a company's business processes within and across the organisation, as well as with those of its suppliers and partners. But many companies find that, once built, their IT architecture fails to provide the flexibility that will allow them to change applications fast enough to meet their business needs. The problem, while not new, is magnified by the rise of Internet use and increasing competition.
"Some people refer to this decreasing window of opportunity to respond to changing market conditions as 'Internet time'," Hall writes. "In fact, it's no secret that many companies are reporting that it takes them three to six months to design and build an application that has to be changed again only three months later."
At AQIS, Christian knows just what Hall means, although the agency has so far managed to extend the life of various iterations to somewhat more than three months a time. Indeed, the process of developing the EXDoc system has been a story of reiterations to run on new architectures.
EXDoc began its life on a Hitachi Data System mainframe running VM - virtual machine - architecture. Code cutting cost slightly less than $1 million and the system cost around $650,000 a year to run. In 1996, after IBM withdrew support for VM, AQIS adopted a Unix-based client/server architecture. "I think to do that switchover cost us well over a million dollars - probably a million and a half; but it was always going to be done on the basis that operating costs were going to be cheaper," Christian says.
Then AQIS changed the architecture from 16 to 32 bits and built in the capacity to extend the system to all non-meat commodities. "That process has cost us probably four times the original development cost to go onto the mainframe."
Christian says e-commerce is so costly no organisation can afford to make too many mistakes. "You can't afford to build something that doesn't work, so your business analysis is critical," he says. "And you're redeveloping about every three years."
But today's e-business infrastructures need to do much more than just provide flexibility. A recent report from Forrester Research, "Measuring Web Success", found site success cannot by measured by hits and page views. Instead, the company says, organisations need an intelligent infrastructure to track visitors and their activities. Forrester says e-leaders will use metrics to fuel personalisation and create a single, cross-channel view of the customer.
"Today's shallow measurement practices fail to provide the insight needed to steer online efforts," the report says. "To accurately quantify success, sites must deploy a visitor-centric measurement model. To support this new model, companies need an intelligence infrastructure that ties significant online events to unique visitors. Leaders will extend this infrastructure to other channels to create a unified customer view and drive personalisation."
Look Ma, No Wires
There's an even more potent force driving personalisation, notes Pure Commerce CEO Daniel Lavecky, and that's wireless technology in the form of Wireless Application Protocol (WAP). WAP is a set of standards to allow wireless devices like intelligent mobile telephones or portable digital assistants (PDAs) with a wireless modem to operate on the Internet.
"A mobile phone is a personal device, whereas a desktop computer is a device that's used by many people in the office or many people in a home," Lavecky says. "A WAP-enabled phone, which is a mobile phone with an Internet browser in the LED crystal screen, is a brilliant example of personalisation on a mass scale." Lavecky points out that WAP technology, while providing significant benefits for consumers, puts pressure on business to wrestle with ethical issues such as privacy and who should store the data.
But WAP will have a much wider effect than that, as independent consultant and author Tom Worthington, the director of TomW Communications, notes. Worthington says designers of Web pages are in for a big shock as they come to realise that the hot new browser will have less of everything. "The latest, hot new computers will have less processing capacity; less memory; smaller, lower resolution screens and poorer input devices. Chunky looking old text Web pages will be back in fashion," he says.
Worthington says WAP was developed to address a number of limitations with portable devices: limited bandwidth, small screens, small or no keyboard, and limited processing capacity and memory "WAP provides a set of Internet-like protocols and document formats to overcome the limitations of portable devices," he says. "These limitations are similar to those for access to Web pages by disabled users, those with slow links, with older equipment and those using languages other than English."
Worthington says IT professionals will need to design for limited graphic screens to meet the new demands. "There is a large body of experience in the design of character-based user interfaces for computer applications," he says. "This work will not be familiar to Web designers, but it will be to IT professionals. That experience can be applied to WAP design."
They also must separate content from format to meet the new demands. "One of the skills of the IT profession is data analysis. This provides techniques for discovering the underlying structure of information, which is hidden beneath its surface e-appearance. This structure can then be separated from the representation of the data. Different representations, such as text and graphics, can then be applied to the same data. This allows different interfaces to be applied to the same information for conventional Web and WAP applications," Worthington says.
Keeping the Bad Guys Out
Few Australian companies have appropriate formal policies and strategies in place for e-commerce security, according to Deloitte Touche Tohmatsu and the Information Systems Audit and Control Association (ISACA). And company auditors and computer security managers who are actually involved in setting up e-commerce and security systems within organisations are considerably less confident than many executives about security issues.
Based on a six-month study of the status of e-commerce security, which tapped into 150 e-commerce strategists and 25,000 members of ISACA in 46 countries, the report found only 20 per cent of organisations in the Asia-Pacific have formal security strategies and policies, compared to 35 per cent globally. Dean Kingsley, a partner in Deloitte's Enterprise Risk Services group and president of the Sydney Chapter of ISACA, says other key findings from the survey include:n Most executives with e-commerce strategy responsibilities view an appropriate investment in robust security as key to the success of e-commerce initiatives.n The number one perceived e-commerce security risk by all those surveyed was unauthorised access ("hacking").n Many organisations identified as a concern a lack of globally accepted standards and guidelines for e-commerce.n The main security measures in place included virus scanning (90 per cent), firewalls (85 per cent), intrusion detection (60 per cent), SSL encryption (55 per cent) and password authentication (75 per cent).n Many organisations commissioned regular external assessments of their e-commerce security, such as "penetration testing" studies to simulate a hacker attack.
"Until now, comprehensive global data on the role security is playing in the growth of e-commerce has been unavailable. This report shows that security is, and will remain, a major issue for companies moving into e-commerce," Kingsley says.
- S Bushell
Be Prepared to Spend, Spend, Spend
You're unlikely to achieve a market leadership position online unless you're prepared to invest heavily in new technology, says greengrocer.com.au managing director Doug Carlson. Greengrocer.com.au does just that and will continue to do so because the rate of technological change is staggering, Carlson says. "It's an ongoing thing. We're spending about $750,000 a year on our Web site technology, back-end systems - the lot."
Australia's first Internet-based fruit and vegetable retailer recently quadrupled its existing large investment in high-performance servers as it tries to keep pace with its expanding range of product offerings and rapidly increasing customer base. The company has more than 25,000 customers in Sydney and Melbourne and grew by 41 per cent in January alone.
"When you live in a high-growth environment, you think differently. We have just moved into our sixth premises in two years, this time a 3500-square-metre distribution centre in Sydney, and we recently purchased three new Dell PowerEdge servers to supplement our existing PowerEdge server," Carlson says.
Before choosing the right technologies for your Web presence, he says, you need a clear idea of the purposes it will be put to. "You can't take an off-the-shelf Web site or system. You might sell cars from one Web site and jewellery from another Web site; they're going to be completely different Web sites, just as a jewellery store has a different store layout to a store selling automobiles.
"Every different product has certain advantages and certain disadvantages to going online, and one of the keys skills is identifying the advantages and disadvantages your product would gain or lose if it went online. You have to address that, and you can't unless you have clear picture of what you want to achieve online," Carlson says.
- S Bushell
Following the Money
It's no use legacy organisations trying to tackle the Internet as if it were just another delivery channel, says ANZ Bank's head of technology, e-commerce and payments, David Boyles. The ANZ's bid for survival in the Internet era has started with the re-engineering of its entire back room to look and act like a Web back room - a process which has been under way almost since Boyles started with the bank two years ago.
He says it is all part of the bank's essential progression from a bricks and mortar operation to a clicks and mortar operation. And it is also positioning the bank to react fast to changing market realities. "We have dramatically reduced the amount of time it takes to develop new products and services and get them into the market," Boyles says. "You've got to be fast, you've got to be efficient; more and more you are dependent upon technology platforms being flexible and scalable and having a rapid turnaround time and so on.
"If you want to be successful, you definitely have to have 7x24 availability, and it actually requires that your internal technology and your Internet technology be one and the same - they're not different technologies as we move into the future," Boyles says.
"Web-ifying" the back room started with moves to simplify the infrastructure, to heighten availability and to standardise systems. When Boyles joined the bank it had between 13 and 15 different data communications protocols running in Australia and New Zealand alone, including its own proprietary communications protocol. It had just about every brand of mid-range computer and all the operating systems associated with that. Australia and New Zealand weren't even on the same banking system and there were six different banking systems running outside Australia and New Zealand.
Now New Zealand, a subsidiary in Perth and 15 of the largest countries internationally are running the same banking system. Most key locations are now using IP for data communications and by August every last location in the world will be on a single IP network.
"IP is going to allow us to offer more products and services more quickly to our customers, and we found that internationally. When we rolled out IP internationally, within a few months we were able to offer a consistent, expanded major product set across all the major countries very, very quickly," Boyles says. "There's a lot of cost efficiencies around this; and, of course, IP is what is used on the Internet and again you have to have internal technology matching the Internet technology. You're accomplishing a lot of things by simplifying and standardising and rationalising to an IP network."
Web-ifying has also involved standardising the desktop. From a plethora of assorted machines, now most employees have made the conversion to a standard operating environment - currently Windows NT and Office 97, but soon to be Windows 2000 and Office 2000.
The groundwork largely done, ANZ can concentrate on enhancing its ability to do customer relationship management in real time, and to achieve straight-through processing. "It also will allow us, no matter which channel you contact us through, to have the same look and touch and feel from an ANZ brand point of view," Boyles says.
"So it allows you to quickly standardise your channels. That also means that as soon as you come up with a new product or service it quickly rolls across all channels immediately, instead of having to be reconfigured or re-engineered because it is different for each of these channels.
"But you can't get there without doing all the other stuff first," he says.
- S Bushell