E-VOC – Becoming and Remaining Vendor of Choice in E-Business
Future of E-Business
When every business is an e-business, every business process will be an e-business process. Some will say this means that every application will be accessed by a browser, or that every application will be written in Java, or that every document will be formatted in XML. The degree to which any of these opinions bears fruit is debatable and entirely beside the point, because they are technology points rather than business points. The interesting questions are: What will change in how business is conducted over the next few years, and what will it take for your business to survive, and even thrive, under these conditions?
When every business is an e-business, every business process will be an e-business process. It also means that information and services from across the Internet and around your Intranet will be naturally integrated into every process of your business.
Among the most important of business processes are those that support customer relationships, from attracting customers through facilitation of transactions, through customer retention, through post-sales support. If the future of business is e-business, then an important question is how the inclusion of Internet information and services supports your efforts to become and remain your customers' vendor of choice, or "E-VOC."
There are four stages to the evolution of e-business, and each stage has its value proposition. The question is not which stage is best, but rather how should each stage should be used in your business relationships? Of course, the companion question is this: How effectively is your competition using each stage with your prospective customers?
Stages of E-Business
The evolution of e-business is the successive automation of every step of inter-business interactions, with four key stages:
- Vendor's provision of information to prospective customers
- Customer's assimilation and integration of vendor information to make a business decision
- Customer implementation of business decisions through order placement, modification, or cancellation
- Vendor processing of the customer's transaction with a fulfillment system.
We've already witnessed one important shift in the Internet as a business venue. The first Internet business applications consisted of dedicated, standalone Web servers whose sole role was to provide information about a company or its products. More recently, a new stage began in which Web servers were somehow connected to internal business systems. These connections can be used to support queries (e.g., order status) or e-commerce (e.g., accept orders). Observing this shift naturally leads to speculation about what will follow. If one shift was based on establishing communications from the Web server backward into corporate information systems, the next shift ought to involve establishing connections forward for improved information flow and process automation.
Stages of E-Business Summary
Stage 1 — Brochure-ware
This stage provides "brochure-ware" and represents the initial business use of the World Wide Web. Outdated but still widely deployed, there are still many businesses in the process of building these kinds of systems.
Stage 1 consists of a Web presence at, or beyond, the firewalls protecting your Intranet. It provides Web surfers with information about your company, products, etc. The informational content of a Stage 1 server is created specifically for this purpose and may include data extracted from existing business systems.
Click Fig. 1 To Enlarge
At this stage, the Web server provides the kind of information that was once provided by a human as part of a sales call. The prospective customer now has automated access to information about your business and products, but a human is still required to accept the order.
The key characteristic of this stage is total isolation. The application simply provides information outward one server to many browsers (and one browser to one server). No e-commerce is involved. If the Web presence entices you to do business with the company, you contact them and make your purchases through traditional means (e.g., phone, snail-mail, walking into the store). This stage is vendor-centric; the vendor has automated a business function, and many customers can access it concurrently, but each customer accesses one service at a time.
Stage 2 — E-Commerce
This stage provides "e-commerce" services through back-end integration. The Web server continues to provide information, but now, when the customer decides to place an order, the Web presence can accept the order. This is currently the mainstream business use of the Internet.
A Stage 2 Web presence supports e-commerce for browsers through content (brochure-ware) and the ability to accept orders through the browser interface. The Web presence has some ability to submit the placed orders to an order processing system. Re-intermediators are typically start-ups, so they build new order fulfillment systems integral to the Web presence. Dis-intermediators are typically existing businesses that use some means (e.g., data transfer, wrappered interfaces to ERP systems, or message brokering) to hand off the order for processing in an existing line-of-business system.
Now we've not only automated provision of information, we've also automated the vendor's business process (e.g., order placement, tracking, and so forth). However, on the customer's side, a human must gather information and integrate the information in order to decide what steps are required. The key characteristics of this stage are back-end integration and browser interface. This stage is also vendor-centric.
Stage 3 — Information Integration
This stage introduces "information integration" for the customer through programmatically available interfaces. The e-business server can be accessed through a services interface that can be accessed by another application, and the other application is concurrently accessing multiple information services. This is an emerging business use of the Internet that is quickly becoming mainstream.
A Stage 3 e-business presence is not necessarily a Web presence. Browsers are marvelous tools for finding information and delving deeply into it, but they do require a user to look at one information source at a time. It is the user's chore to integrate and interpret multiple information sources. This integration and interpretation process is the next logical automation opportunity.
This stage requires both e-business services and e-business consumers. The services support a programmatically available interface (a software component such as a JavaBean* or ActiveX* control embedded within the consumer application) such that a consuming application can access the service as a data source. The consuming application accesses multiple information sources that may be local to the machine, on the Intranet, or across the Internet, and integrates that information. If the consuming application is on a client platform, then the purpose of this integration is probably decision support coupled with the information manipulation tools of the client. If the consuming application is on a server, then the purpose of the integration is probably associated with supply chain automation (e.g., current inventory as a function of local stock and stock obtainable from suppliers within a potential customer's order's time frame).
Now you've automated the vendor's provision of information and business process (e.g., order placement), and, for the first time, part of the customer's work (specifically, the integration of information). The appeal to the customer is obvious: by automating information integration and interpretation, we've enabled the customer to deal with a much richer set of information for better decision-making. We can now also introduce event-driven e-business, with information providers sending fresh information as it becomes available rather than waiting for consumers to check, and customers able to react immediately when conditions change. This is the appeal for the vendor: customers can be notified immediately of changes in pricing or availability with a reasonable expectation that the change will result in an order. In fact, in this stage, businesses begin to compete not only on the quality and pricing of their products and services, but also on the effectiveness of their e-business links.
The key characteristics of this stage are vendor e-business servers with information service interfaces in addition to browser interfaces, and customer e-business container applications that can access and integrate multiple concurrent information services.
Early Stage 3 involves recipient applications that are able to locate and extract relevant information from vendor-centric Web sources. Such implementations are appealing in their ability to pull information directly into an application, but they are fragile (Web page format adjustments by the vendor can break the customer's application) and passive from the vendor's perspective (the customer application must poll the information source).
Mature Stage 3 introduces event-driven e-business. It also marks a shift in responsibility for making information usable from the customer to the vendor, improving the robust nature of the connection. This is achieved through the use of a software component within the customer's container application, presumably provided as part of the vendor's e-business service, that manages the connection. Such a software component would encapsulate all of the details associated with a particular e-business link, including metadata, security, and (eventually) methods to regulate the connection (e.g., as we near a specified price range, we increase the update rate).
The use of a software component in mature Stage 3 is very important for two reasons. First, this architecture accelerates the adoptability of Stage 3, because it reduces the dependence on standards (each component managed link can use applicable standards for an overall heterogeneous implementation). Second, the use of a component with methods to regulate the connection supports the transition to Stage 4.
Stage 4 — Transaction Automation
This stage introduces "Transaction Automation" and is an emerging business use of the Internet. Stage 4 is expected to reach e-business in about 18-24 months with profound implications for business computing and how business is conducted. This stage requires both Stage 4 e-business services and Stage 4 e-business consumers. The services support a programmatically available service interface (a software component such as a JavaBean* or ActiveX* control embedded within the consuming application) such that the consuming application can access the information services as data and invoke methods of the software component that are conveyed back to the e-business service as events.
With Stage 4, we've fully extracted humans as cogs in the business machine and put them at the controls instead. Stage 1 automated vendor provision of information; Stage 2 automated vendor acceptance of orders; Stage 3 automated customer integration of information; and Stage 4 automates the making and implementing of decisions for the customer. For example, a customer application might receive an event from an internal system indicating that a stock level is low. The customer's application, continuously receiving pricing and availability alerts from prospective suppliers, determines, according to the customer's business rules, which supplier to order from and places the order automatically. This same application would then track, through vendor and shipper event notifications, the status of the order and, should things go awry, automatically adjust the order per business rules to keep things running smoothly.
The key characteristics of Stage 4 are vendor and customer e-business applications loosely connected through e-business links managed by software components at each end. These links support events in both directions to fully automate business interactions between the companies.
Customer Relationship Management
The evolution of e-business has implications for attracting customers, conducting transactions with them, and delighting them with post-sales support. With an understanding of the four stages of e-business evolution, the key questions become: How should each stage be used for your customer relationships, and how effectively is your competition using each stage in their relationships with your mutual customers?
The future of e-business is the natural inclusion of information and services from across the Internet in every process of your business. Business processes are owned and conducted by various information constituencies within your business. These constituencies include:
- Corporate, which expects and demands that core, line-of-business systems be maintained with strict discipline and restricted access
- Business units, which expect and demand flexible environments that support their competitive position in the marketplace through, among other things, service offerings desirable to their prospective customers
- Business users, who require access to the tools and information required to perform their jobs
- E-business customers, suppliers, and partners that need access to e-Business services that make it faster, better, and cheaper to do business with you than with your competition.
A long standing challenge for information professionals is the simultaneous satisfaction of the conflicting needs of each of these constituencies, especially with the introduction of the latest constituency, the e-business partner.
The set of business systems considered to be line-of-business solutions is somewhat industry dependent, but some or all order fulfillment applications are usually part of that core. This usually creates a tension among the information constituencies of a company as choices are made about how to support access to such systems for e-business partners without risking the integrity of core systems. In fact, Intel's Balanced Computing Model, a truly distributed applications architecture that builds multiple applications with bounded contexts and interaction interfaces, was developed by the Intel IT organization to embrace and manage the heterogeneity of modern information systems.
The natural application of such a model is the establishment of tiers of applications supporting the information constituencies of a business. There are business processes that are managed by individual business users. There, the challenge is integrating information and services into their business processes and empowering the user to handle the resulting amalgamated environment. The keys are to use tools and applications familiar to the user and integrate e-business information and services into these applications.
There are business processes managed by business units that currently have humans as cogs in the machine because the browser model doesn't support delegating customer decisions to the machine. Humans are very expensive processors. Natural integration of information and services into business applications through customer-centric computing takes those humans out of the loop and, instead, gives them tools to manage the processes through business rules.
Attracting Customers
Stage 1 e-business systems, by publishing electronic brochures, are an important e-business tool. Customers can use their browsers to peruse information about companies and their products and make decisions about prospective suppliers. In fact, the browser is an excellent tool for jumping from one information source to the next and delving deeply into an information source for ever greater detail.
However, once a customer has selected a potential supplier for regularly ordered parts, the challenges change. Each time an order is to be placed, the customer must access and review each potential supplier's Web site to determine current pricing and availability. Typically, this information is cut and pasted from the Web sites into a user productivity tool like a spreadsheet for comparison, with references made to internal decision support systems regarding the status if each business relationship (e.g., discount agreements, timeliness and quality track records, compatibility of the parts with your customer's preferences and other part orders). All of this activity is facilitated by browsers, but it is still laborious for the customer.
Stage 3 e-business automates the collection and integration of information from within and beyond corporate boundaries. If the particular purchasing process is managed by an individual, then the individual's PC would support a familiar productivity application (e.g., spreadsheet) whose cells contain functions that access information sources for the user. One user's client application would establish and maintain multiple concurrent connections to multiple providers. For example, for each prospective supplier, a row might display the supplier's pricing and availability, and output from an internal rules engine regarding your business' track record with this company. Each connection either polls the sources or responds to updates from the sources and directly populates the appropriate cell. The result is an environment that quickly presents the user with the information required to make an informed decision, and the number of candidates that a user can effectively consider is now a function of the client's capacity rather than the user's patience.
Another customer role affected by this environment are the sales people the business employs to attract their customers. For example, while responding to a customer's verbal or electronic query regarding pricing and availability, your business will want to include stock currently in house as well as stock that is in transit to you, being manufactured by you, and/or acquirable within the time window set by the customer's query. This creates a fluid inventory function that uses Stage 3 connections to include live information in your business process, and the number of potential stock sources you can consider in order to win your customer's business is a function of your fluid inventory server's capacity to integrate e-business information.
In both cases, the supplier is motivated to get the most current possible info-rmation to customers. These environments will start as polling environments in which customer applications will access potential suppliers periodically or whenever information is needed. That means your latest discount or increase in stock will not be known by your customer until they take the time to look, and it also means that the first supplier that provides an event-driven capability will have an advantage over the rest. This supplier will use event-driven, or "push messaging," capabilities to make sure prospective customers know immediately whether some event (e.g., order cancellation, opportunity to buy at a discount, etc.) has given this supplier an opportunity to offer inventory at a discount for a limited time. Once this has occurred, suppliers will compete to get the most up-to-date information possible to prospective customers.
Conducting Transactions
Stage 4 automates transactions. Once the customer has automated the integration of information from multiple sources, the next logical step is to automate the execution of these better informed decisions. Automating these transactions will have significant impact on how transactions are conducted.
Again, some business transactions are executed by individuals and others by organizations. Individuals conduct transactions now by making decisions and managing transactions through humans that are ultimately propagated to automation systems. For example, a good purchasing agent will make multiple calls to make sure that, for example, five purchases occur involving compatible parts, acceptable prices, and adequate delivery schedules. A travel agent will manually work iterations of hotel rooms, airline seats, and rental cars to find a combination acceptable to a customer. Their information sources are automated and productivity thereby enhanced, but the number of combinations potentially considered is bounded by the patience of the agent.
Automated client transactions open a world of possibilities. A travel agent can iteratively consider thousands of potential combinations to find that five-day interval somewhere in a given month whose net cost doesn't exceed the customer's pricing guidelines. The purchasing agent can make dozens or even hundreds of individual micro-transactions that ultimately satisfy a set of requirements, thereby taking advantage of pricing and availability fluctuations.
Automated server transactions can support long transactions, required for the reservations example above. As the purchasing agent iteratively considers potential combinations, potential suppliers must concurrently manage countless tentative holds against their current and potential inventory. The number of concurrent deals a business can participate in is a function of their server's capacity, and that capacity is the memory "addressability" of their servers.
One clear requirement, however, is a balanced computing model that supports loosely coupled inter-business distributed transactions. Only such an environment can safely manage transactions from a client, and only such an environment can extend distributed transaction semantics across multiple businesses.
Customer Retention
Once orders have been placed, the customer relationship shifts to retention. Retention has multiple modes: order retention (avoid customer order cancellations due to perceived opportunities to get better pricing or availability); post-order processing (keeping the customer informed regarding order status with options if there are any changes); and repeat business (ensuring the customer is satisfied enough to be a vendor-of-choice for subsequent orders).
Order retention is a challenging problem. If the customer is continuing to conduct long transactions searching for potentially better net deals, the only recourse is countering order cancellations with "electronic dickering" or ensuring that the potential cost savings is offset through post-sales support or net cost reduction through rich post-sales information services.
Post-order processing is keeping the customer informed of any changes in the order status. This could include subsequent price drops (see order retention), status updates as orders near completion, and problem management (keeping the customer informed if the order will be late and providing service options).
One could envision a customer's delight in applications supported by post-sales information services. For example, a big ticket item could be accompanied by an application that changes as order status updates are received. If the order is a car, then parts of the car might switch from wire frame to solid as they are completed. If the order is place settings for a wedding registry, the betrothed might see items fill in as they are purchased.
Getting There
When every business is an e-business, and every business process is an e-business process, then tools intended to support Web access to traditional applications will be inadequate.
As of this writing, a number of leading ISVs are about to announce products, tools, and services intended to support the adoption of customer-centric solutions. None is complete, and applicable standards are not matured to the point that interoperability can be ensured. Leading edge businesses seeking to implement these solutions will need to apply them selectively. On the other hand, these companies will reap the competitive benefits associated with improved customer relationships.
Make sure that the ISVs and SIs your business considers have the skills and tools required to support your business' adoption of customer-centric models; make sure your users are equipped with adequate client processing capacity to support Balanced Computing client applications, and make certain your server roadmaps include a smooth transition to 64-bit microprocessors in volume.
