BUSINESS NEEDS DRIVING E-BUSINESS GROWTH
To Fully appreciate the implications of an e-business strategy for your organization, you must consider first the challenges facing you and your colleagues today and then think of their solutions. One of the most prevalent challenges is fostering an ongoing dialogue with your customers about what they want in future products.To place an order for the Complete Project Material, pay N5,000 to
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Using the Internet for this task is one of the best applications of the Web. Perhaps the most important aspect of using the Web outside your company is communicating with customers. The communication process makes sure the direction of all the systems in the company are contributing to meeting the needs of customers.
Studies have shown that companies using technology to stay in touch with their customers are far more effective and ultimately more profitable than others that have not used technology for handling tasks.
Much of the media coverage of the ASP model focuses on the benefits companies are obtaining from bringing collaboration and operating efficiency to client organizations. Within three years or less the ASP model will be seen as a service business instead of a product-oriented one. The combination of creating and bringing collaborative tools to market in conjunction with a service-centric model brings the delivery of ASP models to an entirely new level of professionalism and performance. For ASPs, the delivery and support for e-operations applications are becoming more of a consultative approach to working with you.
BUSINESS NEEDS DRIVING BUSINESS GROWTH
Here we will be focusing on the needs that are driving companies of all sizes to adopt the ASP model, and the implications of bringing in an ASP to handle mission-critical tasks in the e-operations area.
WHAT’S DRIVING BUSINESS-TO-BUSINESS GROWTH?
By far, the majority of ASPs today are having the greatest success in selling to companies engaged in business-to-business services, with commerce between businesses being the largest proportion of demand in ASP-enabled commerce. Clearly, all the innovation in the ASP arena is due to the early adopters in the business-to-business aspects of e-business. The continued growth of e-business globally will be primarily driven by business-to-business electronic commerce, as the graph from Forrester
The business-to-business marketplace is projected to grow exponentially in coming years.
Inevitably, when you look at a graph showing the aggressive growth of this market¬place, you have to ask what underlying factors make the forecast appear realistic and attainable by an industry. Being accurate and credible about the direction of a market is the currency that research companies trade with. Being able to show their forecasts as reliable has implications for each company’s reputation when it comes to venture capitalists and the contributory role they can play in getting business plans up and running .
The role of market research in the ASP marketplace has been, at its best, the quantification of market opportunities, risks, and growth rate. At it’s worst, the market research on the ASP marketplace has made the opportunity appear too confusing for the general investment community to get behind with financial resources and cause growth. International Data Corporation, Forrester Research, Gartner Group, and The Yankee Group all have excellent reputations with investment companies. You can get insights into the ASP marketplace from these companies via their free research offerings available on their Web sites. International Data Corporation has a free research report on the ASP marketplace that is downloadable in exchange for your contact information, for example. The other research companies also offer free market research on the ASP marketplace from time to time. Each of these research companies has a specific strength:
• IDC is strong at analyzing the overall trends driving the ASP market, with particular emphasis on case studies of mid-tier (over 1,000 employees) and larger organizations adopting the ASP model.
Gartner (www.gartner.com) is the CIO’s reference point for the ASP market arenas, and has some of the best information available on advising companies on how to ensure the highest level of security for data.
• Forrester (www.forrester.com) has a great view of the key trends affecting the strongest in terms of responsiveness and customer service.
• The Yankee Group ASP vendors and their offerings for small businesses.
In general, many research companies agree that a small business is defined as a company with between 1 and 1,000 employees.
The Yankee Group has done an excellent job of segmenting uses of Web sites by their role in the definition of e-business. The highest rates of adoption are in e-marketing, as more and more companies turn to a fundamental Web presence to maintain competitiveness in their chosen markets. There is a market dynamic of small businesses that will migrate to e-operations applications quickly, as the level of trust grows for integrating applications throughout an organization.
With the need for communicating the value proposition of products and services, and the fact that there is little downside risk to having brochures online, e-marketing is the most saturated area in e-business. This is also the area in which companies most often change their direction and select one approach over another for sending their message to their customers. For the second major application area, e-commerce, the relative level of adoption is still somewhat low because companies must trust Websites for generating revenue and for the completion of fully featured catalogs and ordering tools. Taking the concept of the Web into a fully collaborative tool and streamlining processes in effect becoming a tool for redesigning processes in a company the continuing development of e-operations services and products will drive the maturation of this marketplace.
The Yankee Group is the leading research company tracking small business adoption of the ASP model in the United States.
HOW ARE SMALL BUSINESS WEB SITES BEING USED?
Company New Marketing Promoting Selling Online Reduce
Information Customers information Special Deals Products Customer Operating
The Yankee Group’s small business research shows that the majority of small
Businesses in the “United States have adopted e-marketing sites, with e-commerce being the second most-used application area.
ASP Conference to ask all the people to raise their hands who are actively shopping for an ASP solution and have come to the conference to gain insights. In the conferences I attended while writing this book, potential customers routinely were less than 10% of the audience. Fully the majority of audiences at industry events are vendors looking to understand the market dynamics in greater depth or are companies interested in selling their services to the ASP community.
touch with Ziff-Davis Events or ZDNet Events in addition very good at providing insights into the marketplace. These conferences have strong speakers on the first day so plan to have a full first day and listen closely to their comments. If you are going to be the person handling the ASP implementation in your company, you’ll find these conferences a valuable tool for getting the “straight story” of the ASP industry.
Typically the sales pitches are minimal, and there is more of a candor of what has worked and what hasn’t in the midst of industry peers for these companies. You’ll also see how the market dynamics covered in these conferences are at times almost self-fulfilling in defining this marketplace. Further, if you happen to have venture capitalists speaking about the ASP model in the context of value propositions, the clarity and frankness they bring to these events is welcome. Having a venture capitalist talk about sustained value is like getting a window open in a stuffy room1. Their frankness is refreshing.
In analyzing the forecast of ASP adoption, keep in mind that many research companies, in creating their market models and garnering the resulting revenue figures for this marketplace, make the assumptions described in the following sections.
CHALLENGE OF AWARENESS
Arguably the single biggest issue for the ASP industry’s forecasts is the need for continually developing awareness. There are many companies that offer services that are comparable to the ASP model, yet the companies do not specifically call themselves ASPs. Instead they call themselves ISPs with hosted services. The lack of awareness in this market is comparable to the first days of the Apple Macintosh, where Guy Kawasaki became the consummate evangelist and marketer. Clearly the ASP industry needs to have the focused, passionate efforts that Apple first showed in its Macintosh application software efforts. The ASP industry is in need of evangelists who can increase the awareness of potential customers. As someone who is looking at the ASP model, be sure to check in every once in a while at the sites listed in Chapter 1, “Meeting the Challenge of e-Business with Application Service Providers” to see the key messages of the ASP model and the current issues.
CHALLENGE OF INFRASTRUCTURE
In defining the relative growth of this market, many research companies are focusing on the growth of the underlying Internet infrastructure, with several (including IDC) looking at the wireless Internet access points that are increasing the distribution points of applications being hosted. This is one of several forecast assumptions, which has the highest potential of affecting ASP demand due to its capability to increase total avail¬able market size.
TENDENCY OF THE ASP ARENA TO BE VENDOR-DRIVEN TODAY
This marketplace is highly fragmented and, to a large extent, vendor driven. That explains the high concentration of companies attending these conferences and typically the low customer counts. This is a vendor-driven marketplace right now and as such, it gives customers the flexibility of defining their own solutions as the market itself is defining what it will look like. It’s a shopper’s market as customers are much sought-after and the investment community is continually stressing customer satisfaction through service-level agreements and enhanced satisfaction with delivery of services.
COLLABORATION AND E-OPERATIONS TO DOMINATE THE ASP INDUSTRY
Growth will be globally based with collaborative applications driving the majority of the demand. The migration from e-marketing to e-operations applications is going to have a pronounced effect on those firms that are only focused on the e-marketing side of the e-business equation. Many will become system integrators and will migrate their businesses “upstream” away from a purely e-marketing focus. Others will become providers or intranets, reselling e-operations applications as well.
VELOCITY OF CHANGE IN THE ASP MARKETPLACE IS FASTER THAN PREDICTED
The transition of companies from using the Web for providing information to selling products is occurring faster than many analysts projected, with e-operations—using the “Web for driving the costs of production and development down.—being the dominant trend in coming years. The focus will be on driving the costs out of products and redefining the channels of distribution through more efficient commerce. This is the factor driving the forecasts of e-operations and e-procurement as the highest-growth areas of e-business today. Driving costs out of processes and streamlining them is pervasive across all sizes of business on a global scale. The concept of e-procurement is based on streamlining supply chain purchasing electronically.
TOP-TIER COMPANIES DRIVING ACCEPTANCE OF THE ASP CONCEPT
Credibility of the ASP model is being enhanced by the efforts of AT&T, HP, IBM Oracle, Microsoft, SAP, Sun, and even hardware companies including Micron Compaq, and Dell with their hosting initiatives. The accumulated effect of these Companies getting behind the ASP model will be seen during the coming years as customer trust is exemplified through high adoption rates of tools that bring together organizations in efforts to drop their costs. “When the adoption rates by ASP product area are tallied years from now, the relative effects of Sun, with their Star Office in the personal ASP market arena, for example, will be illustrated by measure of market share. Market share estimates are just becoming available for personal productivity and other areas of the ASP model.
GLOBAL REACH OF THE ASP MODEL NOW APPARENT
Increasingly, business models are being focused on international opportunities, requiring 24/7 availability and fault tolerance. Creating a catalog in multiple languages, for example, is easier for a small business to outsource than to take internal resources to complete. The dual needs of being up 24/7 and being localized for the needs of a given country or region of the world are market factors driving the demand of the ASP model on a global level.
INCREASING IMPORTANCE OF QUANTIFYING EXPECTATIONS THROUGH THE DEFINITION
of Service Level Agreements (SLAs)
Quantification of ASP performance is already a major contributor to the growth of the ASP model because it is creating more trust through the quantification of performance levels. The Service Level Agreements (SLAs) now being introduced into the ASP arena are also taking the mystery and open promises out of the sales equation. The SLA will actually be one of the stronger tools for getting the ASP model accepted by companies hesitant to sign up due to lack of assurances in the past. This quantification of performance will translate into a higher level of trust than would have been possible before, thereby creating increased demand for e-operations tools that are used for driving down costs and increasing efficiency in organizations.
Looking at Needs as Market Drivers
The market research companies tracking the ASP industry are looking at the mix of both the larger technology issues intersecting and influencing the purchasing decisions of organizations. The key needs driving this market are explored in this section. These are the customer trends that ASPs are responding to with their product and service designs. In the end, an ASP is actually a service business and the needs described in the following sections are the “pain points” they are focused on solving.
SHORTAGE OF TRAINED STAFF AND PROFESSIONALS
Not being able to find the right information systems person at the right time in organizations has become an almost universal need that is targeted by many ASPs. Being able to extend the breadth of what existing IT staffs handle is possible using the ASP model as an outsourced resource. The ASP model is being built to allow existing IT staffs to manage it with a minimum amount of interruption to existing priorities. Being able to offload the development and maintenance tasks is one of the key benefits of the ASP model when it comes to the shortage of workers today. Consider that there are 10 IT jobs for every 3.3 workers available and you can see the need for having an ASP model that can compensate for the shortage of trained IT staffs and professionals.
DISTANCE DELAYS IN CONDUCTING BUSINESS
It’s interesting to see that the early adopters of the ASP model defined in detail in the next chapter are primarily choosing ASP-based solutions due to the wide geographic coverage their companies have. With many companies having locations throughout a region or at international locations, having an ASP provide access to members of an organization anytime is a compelling solution.
Companies that have distribution channels are in effect dealing with distance delays in formation delivery as well.The ASP model is used successfully in many companies that rely on distributors to cut down on the time delay of getting information into the hands of salespeople in the distribution channel.
With the distance delays comes the fact that over time documents tend to be inaccurate because inevitably there are multiple versions of documents created. Putting documents up on a server to make them accessible to everyone on the intranet site provides an instantaneous competitive advantage for many companies.
Coordinating communications across a wide distance is one of the essential needs in organizations of all sizes that the ASP model is adept at meeting. This need has pushed the scalability of the ASP model to new levels of responsiveness.
TIME SAVINGS IN THE SERVICES SECTOR
With the velocity of transactions in many industries accelerating, especially in the PC industry, the need has arisen for real-time pricing, availability quotes, and order status reporting within seconds of the query.
Automated banking on payment gateways also requires the ability to complete transactions in seconds. The ability to design order status and customer query systems online for instant access is one of the benefits of the ftSP model. Several countries are experimenting with kiosks, which will have high-banking and public transportation speed connections to the status information.
COST SAVINGS IN MANUFACTURING INDUSTRIES
The essence of an e-business strategy is the potential it provides for driving costs out of a business and streamlining a business model. When e-business strategies were introduced in several industries, the benefits were readily apparent. The rapidly changing scope of the PC industry’s channels of distribution is a testament to the power of the Internet to change entire supply chains. Streamlining commerce is quantified through the costs savings achieved. For example, the capability’ to order parts and even subcontract for assemblies to be produced outside your plants saves you the time of managing both the production of these items and the continual reconfirmation of orders.
The potential for cost savings by collaborative information sharing through selling and supply chains is significant. Increasingly, e-business will be known as the cost savings achieved through the streamlining of commerce electronically; the e-marketing aspects of unidirectional communication will become commonplace in the coming years. The real benefit of an e-business strategy will be in driving costs out of processes and enabling more efficient communication throughout organizations.
VELOCITY OF TRANSACTIONS DRIVE INVENTORY TURNS
Every growing company needs the ability to drive more transactions through its Web site and ultimately through its organization. Handling these transactions, fulfilling customer orders, and also tracking the customers’ purchasing statistics is a big challenge. Companies as diverse as EDS and SAP are taking on this challenge with industrial strength tools for handling customer information management, sometimes called CPJV1 or customer resource management. Smaller companies that have built strong applications on diverse platforms are assuming the challenge as well.
The ASP model is acting today as a unifying thread across the largest solutions in this market and the smallest applications because customers’ data is needed on a 24/7 basis.This is sometimes called an “always on” data strategy.
The essence of the e-business strategy you are creating is how you can increase the speed and responsiveness of a given transaction. Using an ASP’s solution for driving increased responsiveness to your customer through more efficient processing gives you a strong building block to customer retention and eventual loyalty.
ROI OF AN INVESTMENT IN ASPS
The financial returns of investing in the ASP model must be quantified. Metrics are being generated in the industry today to look at the total cost of ownership and the role of service level agreements in generating returns on the investment in an ASP.
Taken together, the investment in an ASP to give your company the capability to compete effectively along these three dimensions becomes measurable after the customer base has adopted the e-business strategy you’re offering. Over time many companies track their ROI per sales program and track cost reductions typically by the increased number of trans-actions completed and revenue achieved.
Convenience, time savings, personalized shopping experiences, learning, career development, and finding jobs are just some of the reasons consumers are adopting the Internet, and in a sense, creating their own e-business strategies. Many companies are using the Internet for communicating who they are and their strengths, with many using online banking and travel sites for handling business and vacation travel.
Although the consumer sites, including Amazon.com and others, are generating the majority of media coverage today, business-to-business electronic commerce will far outpace consumer-based e-commerce in the coming years. B2B commerce will ultimately surpass B2C commerce, due to the fact that what gets measured gets better, and B2C commerce is not as amendable to an ROI as B2B commerce is. Consortiums of companies can drive adoption of new technologies faster and with greater force than can consumers.
Eventually, the ASP model will be used throughout the consumer community as well. Yahoo! and its utilities, including a calendar, is just the first phase of what IDC is calling personal productivity ASPs.
The implications of this class of ASP are provided in this section. Personal productivity applications are specifically built to replace desktop applications. For example, Microsoft Office Online is a suite of applications that are enabled over the Internet for lease by Microsoft through a series of specially selected Vars. The entire Star Office initiative is also the same class of ASP-delivered application suite.
TRUST AND THE INTERNET EXPERIENCE
Commerce strategy compared applications making up the commerce to arena are differentiating themselves based on the ability to quantify performance trust. The ability to drive fear out of transactions when a person is skittish about ordering via credit card over the Internet becomes a cultural issue instead of a purely technological one. Just as companies are doing today, the early adopters in the consumer arena are also experimenting with the benefits of being online. The capability to use the Web to secure leisure time is one of the biggest motivations for the early adopters in the consumer arena. As the size and scope of jobs are changing as the economy itself changes, everyone wants greater control over their time.
As better authentication pro¬grams are developed and as generations embrace e-commerce more than before, the issue of shopping online will become cultural instead of purely a new adopter trait.
ASPs and Delivering a Personalized Shopping Experience
Delivering a personalized shopping experience to both B2B and B2C customers is a competitive advantage you can obtain through the expertise of an ASP. The precedent set by companies such as Amazon.com, American Airlines, Expedia, and others has created the expectation that personalization will be a requirement for Web sites from this point forward.
Planning for personalization is a potential differentiator that makes the shopping and use of any Web site more memorable than those sites not offering this feature.
Security of Data at Hosting Centers
Having a secure, trusted server for your information is crucial for the long-range growth of your e-business. As you compare ASPs and their offerings, be sure to drill into the hosting locations and their fault-tolerant features, including their capability to have your data online 24/7 with no interruption of service. Companies such as Exodus Communications have fault tolerance and enhanced security features typically found in the best of hosting centers. Taking on the e-operations aspect of your e-business strategy at times may require you to put your data on a secured server at a remote location. Actually visiting the hosting site is always a good idea and a useful test to see how committed an ASP is to being responsive to you as a customer.
Adoption Rates of Key Applications
Look through the applications an ASP offers to see which are heavily adopted and which aren’t; also, investigating the relative success or failure of the application is essential. You must have this honest and frank information to make the right decision on an ASP. Because there isn’t a Consumer Reports on ASPs yet, you can first check with the success stories on an ASP’s site to see how other companies are using the applications.
You can also check in with the ASP Industry Consortium (www.aspindust ry.org) to see whether the ASP you are considering using is involved with any committees and also whether it has won any industry awards. The ASPire Awards (from the front page of the site www.asp.industry.org) from the ASP Industry Consortium recognizes excellence in application delivery to meet customer needs. The awards are a good place to start looking at solutions.
How Christopher Radko Drives a Successful e-Business Strategy
The challenge for many companies whose products are highly seasonal is to generate sales throughout the remainder of the year. Christopher Radko’s approach to building a Web site with the tools from its chosen ASP, ZLand.com, shows how one company in the holiday ornaments business has taken on this challenge using the tools of e-commerce.
Focusing on the critical Christmas selling season, Christopher Radko turned to an ASP to quickly enable all aspects of the Radko electronic commerce goals for 1999. Hundreds of ornaments can now be previewed, priced, and ordered via www. christopherradko.com. The site also provides a listing of key distributors and shops, including their Web sites.
Combining Craftsmanship and Sound Business Practices
The impetus for Christopher Radko’s company occurred in 1983 when the family Christmas tree, laden with thousands of antique glass ornaments from Europe, tipped over. Vowing to replace the thousands of broken ornaments, Radko made it is his quest to find true glass ornaments that would equal the quality of the ones broken. After designing several himself and having them produced by local craftsmen, he soon found friends interested in purchasing them. In addition, Radko had the opportunity to travel to Europe, where he found many antique pieces that reflected the same craftsmanship found in the family heirlooms he was so intent on replacing. Yet before he could deliver them to his home, friends asked if they could buy one or several of them.
What began as an effort to replace family heirlooms grew to become a business with 4,000 total designs to its credit, over 700 of them featured in the 1999 Christopher Radko catalog. To produce these ornaments, the company has more than 1,500 people working in cottage factories in Poland, Germany, Italy, and the Czech Republic. Instead of going door-to-door to sell his products, Radko today has 3,000 accounts, including the venerable retail giants Bloomingdale s, Neiman Marcus, and Marshall Fields. One of Radko’s many accomplishments is the recruitment of Walt Disney and other key customers as OEM partners. Christopher Radko now creates customized figurines for Walt Disney, F.A.O. Schwartz, Starbucks, Marie Osmond, DC Comics, and several of the world’s leading department stores.
Complementing all these efforts is the firm’s latest communications and commerce vehicle, its Web site, developed in conjunction with ZLand.com. Unlike the traditional retailing media for seasonal items such as ornaments, the Web serves Christopher Radko and its customers 365 days a year.
The ASP’s approach to catalog building made it possible for Christopher Radko’s 1999 catalog to get online quickly, in time for the 1999 holiday selling season. On the Website there are hundreds of ornaments that can be previewed, priced, and ordered online. The site also provides a listing of key distributors and shops actively selling ornaments, and includes listings of their Web sites as well.
The ASP-enabled catalog architecture provides Christopher Radko with the flexibility to add key marketing messages and images of these ornaments. Examples of the custom work Christopher Radko has done may be found among the Disney Catalog ornaments, including Winnie the Pooh, for the 1999 Disney Christmas Catalog. An example of the craftsmanship that Christopher Radko brings to its ornaments is apparent to online shoppers in the details in this ornament.
Todays online customer can even listen to the Radko Holiday Song online, in addition to checking order status and finding ornaments that are appropriate for each sea¬son. Christopher Radko s ASP-designed Web site is making a seasonal product line accessible to customers all year long, while sustaining the business with ornament products that cross the highly seasonal barriers experienced in the early stages of the company’s life.
The adoption of the ASP model is driven by the need for businesses to work more efficiently together, driving costs down and the level of collaboration up. This chapter has profiled chose driving needs in detail and provided a glimpse at how market research companies are looking toward the intersecting of large, more macro-like trends to impact and be impacted by customer behavior in the ASP adoption arena. The role of the early adopter is making an indelible imprint in the market today. To understand why the ASP marketplace is growing the way it is, it’s important to view the early adopter organizations and see how their influence is shaping this industry.
GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183
Then text the name of the Project topic, email address and your names to 08060565721.