This web page is from the 1990s - but don't let its "vintage" age fool you into thinking it's no longer relevent.
This page is no longer available at its original home, so I've reproduced it here.
If you think integrating online activities into offsite activities is something new, think again.

E-Commerce: The 8 Corners

or

8 Ways A Blind Wise Man Can Look At The Elephant


by John Sumser, CEO, IBN: Internet Business Network

A Computerworld magazine poll of 100 senior systems managers found that 36% have diverted resources to Internet projects as a direct result of top management reading media reports about the technology; 28% spend "more time than I should" responding to inquiries prompted by other employees exposed to media coverage of technology; and 16% feel that that "over-inflated expectations about the Internet have caused us to waste money."
(Computerworld 22 July 96 p1)

Introduction

Like the Kudzu in my Maryland yard, the more you try to bring sense to the Internet hype, the denser it seems to get. The only thing growing faster is the number of people who believe that the digital world somehow overcomes and changes the fundamentals. P.T. Barnum was intimately familiar with the breed and swore that one was born every minute.

Last year, my daughter won a prize in the Marin County science fair for her Website. She used tools that were readily available on the net (including Dave Winer's delightful Auto-Web) and drawings done in pencil by her little brother. She scanned the drawings into the computer using our office fax, loaded the files onto the Well and began her career as an HTML coder. At 13, she gets all of the work she can handle putting Websites together.

In the Computerworld poll, the frustrated systems managers were partly right. The world seems to be full of stories about the web and its potential to change the world of commerce. Many of them are written by people who assume that someone like my daughter has the credentials to deliver a strategic business product. Nothing could be further from the truth.

At the same time, there is more than a kernel of substance to the hype. Client-server technology (the foundation of the web) is bringing significant changes to the worlds in which we work, play and spend. The technology is one of many factors influencing rapid change in our definitions of community, work, countries and other key social institutions. Systems Managers are like blacksmiths in the early 20th century grappling with the consequences of the big assembly line.

In this short article, we hope to ease some of the confusion about the World Wide Web as a technology. Over-generalization is a major contributor to the swirl of conflicting and inflated claims. We will present a matrix that describes the extremes of E-Commerce with explanations and examples.

The Confusion

The bulk of the confusion surrounding the World Wide Web stems from two mistaken assumptions:

1. The idea that the Web is somehow a single marketplace, and
2. The idea that a technology is the same as an applied technology.

Imagining the World Wide Web as a single integrated marketplace is as useful as describing the global telephone system in the same way. That my Website is available through your browser is directly analogous to the fact that my telephone is available through your telephone. If you want to make any sense out of market access through the telephone, a very detailed, systematic bit of research is required. The phone system (and the Web) provide access to markets that are composed of individuals and businesses occupying specific niches.

When journalists (and net-hypesters) generalize about the potential of the Web as a single market, they obscure the obvious. Markets and industries are composed of buyers and sellers with shared interests and shared access to the marketplace. While the web provides the access, the industries remain composed of buyers and sellers. Client server technology can close the gap between the factory and the consumer, but doing so requires much additional work, on both sides of the equation, within the industries.

The telephone was first envisioned as a method for piping music into the home. More than anything else, this historical fact underlines the risk of allowing the early developers and proponents of a technology determine its future. A technology is not the same as an applied technology. Rubber vulcanization is not tires; telemarketing is not phones; computer chips are not office automation; airplanes are not airlines; and, the client-server technology is not the future of your business. Like all technologies, the Web must be tailored to your specific business needs and objectives.

In the rush to put businesses and other organizations "on the web", an astounding amount of money, passion and energy has been invested in the development of public relations nightmares that are not integrated with their core businesses and, in fact, tug the business away from its core capabilities.

Our favorite recent example involves a telephone products company whose phones and services we use throughout our enterprise. As our business has expanded, we have purchased increasing quantities of phones, phone systems and gadgets through their mail-order catalog. When they went "online", we attempted to use their online catalog.

Calling the number on their Website (which had no provision for corporate accounts), eventually landed us in the lap of a Customer Service representative who wanted to know which catalog we were ordering from. (They probably have an array of market and time dependent prices.) The Web catalog was not included in his array of pricing information. As we proceeded through the material in our order, his ability to track order numbers and prices began to suffer. We heard several widely conflicting prices and ultimately asked that he simply give us the lowest price in his array. After about an hour of frustration, we gave up and decided to use another vendor.

What went wrong? We think that the company, in its rush to get online, forgot that a catalog is a catalog. Web based activities must, in many cases, be thoroughly integrated with ongoing operations. In and of itself, the technology does not solve problems. Only when the technology is combined with thorough business planning (and process engineering), can it make a difference to the bottom line. Without these fundamentals, corporate experiments risk alienating solid customers.

The toughest question to consider when developing an application that uses any technology is also one of the simplest: What do you want to do? With the answer to this simple question, technology becomes an implementation detail of a plan to reach and serve your customers using the skills and capacities that have made your business successful.

The rest of the article is devoted to a matrix of some of the possible ways that you can think about using client server technology in your business once you have decided what you want to do.

Thinking About The Technology

Simply put, client-server technology allows you to store files on a computer (called a server) and ship them to a user (client) on request. So, the fundamental question in any client server design is: Who is the user and what do you want to deliver to her?

We think that there are three basic dimensions to the answer:

Location,
Focus, and
Inventory.

Location

Location is the space in which the user operates. We imagine a dimension with the extremes Public (0) and Private (9). A public space is the traditional sphere of commerce (a retail store, office, or a roadside shop). A private space is a home, apartment or car. It is extremely critical to know who your intended audience is and where they will be interacting with your services. Although the mainstream media seem to suggest that web commerce is destined for the living rooms of the planet, we think it's important that you consider using the web as a supplementary tool to your existing structures.

So, if you already have an existing set of locations in which you engage customers, it may be useful to consider using the web to supplement the services you deliver in those locations. The hype would suggest otherwise. We suggest that you carefully consider the cost of developing entirely new distribution channels and integrating them with your existing operations.

Focus

Focus is a characteristic of the kind of information you deliver and the kind of relationship you wish to have with your customers. Again, imagine a dimension with Brand Information at one extreme (0) and customer information (9) at the other. Another way of describing this dimension is broadcasting (0) versus narrowcasting (9). Broadcasting or brand oriented information comes directly from the source in an unalterable form. The idea is to communicate what you have to offer. Narrowcast or customer information is fully interactive and designed to highlight the preferences and demonstrated interests of the customer.

If you follow the media closely, they appear to be saying that all businesses need to be completely interactive in their relationships with their customers. We find this notion to be staggeringly misleading. Many transactions are commodity transactions that are much better left as commodity transactions. No meaningful value can be added to them by making them interactive.

On the other hand, if customer preferences dictate your manufacturing or service delivery processes in any meaningful way, you'll want to have some room for the voice of the customer in your web implementation. Focus bears your close consideration. It's not unusual to find Web pages whose owners will swear that the focus is on the customer when they are clearly transmitting stock corporate information and have little interest in involving the customer. We think either approach is fine but are equally sure that clarity about which approach you choose is critical.

Inventory

By inventory, we mean the products or services that you deliver. This is the final dimension of our matrix with mass produced goods (0) at one extreme and custom goods and services (9) at the other.

Like the other dimensions, inventory is a continuum. In the global economy, there are as few purely mass-produced products as there are completely custom designed services. Most deliverables are some combination of "boilerplate" and integrated customer preferences. Another way of thinking about this dimension is as "degrees of freedom for the customer".

The Matrix

The three dimensions form a matrix that describes the fundamental choices facing a business trying to decide whether or not to use client server technology in its customer / supplier relations strategy. The matrix does not address the specifics of a particular industry which will certainly alter some of the fundamental decisions in the deployment of a web based E-Commerce strategy. By locating your current business along each of the dimensions, you gain a simple and clear definition of "where you are". We're certain that this is the best place to begin. Technology introduced into an organization works most effectively if it is thoroughly aligned with ongoing operations.

As a follow up to the process of defining your starting point, you may find it useful to chart your organization's ultimate position. Designing your E-Commerce strategy as a component of the larger evolution of your enterprise will help ensure that your Website (or other strategy) continues to be a lever in the forward development of your overall business strategy. Technology works most effectively when thoroughly integrated into your operating plans and development strategies.

The Corners of E-Commerce

Focus, Location and Inventory form a three dimensional space (0,0,0 to 9,9,9) as shown in the following figure. As a way of illuminating your options in E-Commerce, we'll take a quick look at each of the corners.


The 8 Corners of E Commerce Defined

Location Focus Inventory Description
0 0 0 Automate the Transaction (ATMs)
0 0 9 Empower The Clerk As Tailor
0 9 0 In Store E Catalogs
0 9 9 In Store Customization
9 0 0 Mail Order Goes to the Web
9 0 9 Mail Order Plus Tailoring
9 9 0 Targeted Broadcast Marketing
9 9 9 Anticipatory Filtering




Public=0 Brand=0 Mass=0
Private=9 Customer=9 Custom=9

A. Automate the Transaction (ATMs) (0,0,0)

B. Empower The Clerk As Tailor (0,0,9)

C. In Store E Catalogs (Virtual Inventory) (0,9,0)

D. In Store Customization (0,9,9)

E. Mail Order Goes to the Web (9,0,0)

F. Mail Order Plus Tailoring (9,0,9)

G. Targeted Broadcast Marketing (9,9,0)

H. Anticipatory Filtering (9,9,9)

Conclusions and Notes

Entering the world of E-Commerce is not a trivial matter. For the simplest experiments to be effective, they need to be well integrated with your company's culture and operations. The single largest mistake most companies make when entering this world is to forget that business fundamentals always apply. The web and other forms of E-Commerce are anything but a free lunch.

If you studied the matrix and its corners, you've noticed that we've presented the logical extremes. Many additional forms of E-Commerce are describable using our matrix. We wanted to sketch the corners so that you'd have the beginnings of a planning and strategy tool.

We think that the really exciting potential of the web and E-Commerce in general is located towards the middle of each of the dimensions. Although it may seem that important distinctions get blurred, we find the prospects of cooperative creation between customers and suppliers to be uniquely engaging. Likewise, the creation of not-quite-private spaces where people with shared interests gather to interact with suppliers offers fascinating possibilities for integrating the factory and the ultimate user.

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All material on this site is © 1995, 1996 by IBN (The Internet Business Network), Mill Valley, CA 94941
 
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