About Us | Search | FAQ | Contact Us
Customers lead the e-business charge The rise of e-commerce
Every once in a while an event occurs that is so daunting in its economic implications that it can be considered revolutionary. Such a turning point in history takes an established set of business practices and replaces it with a new commercial paradigm. Among those ground-breaking events were for instance the invention of printing, the evolution of metal currency and the telephone. Global business is in the initial stages of such a revolution now with the unprecedented rise of the Internet.
"With the Internet economy almost doubling each year, no business will go untouched" says Michael Dell, who turned a start-up into the PC industry's powerhouse. In the on-line world of the near future the internet will link every home, every business and every accessible database together in a complex weave of information exchange. Global corporations will control a world where distance is secondary and where communication and data transfer will be immediate on the spot. This will so radically transform the way business is conducted that doing transacting without the web will become unimaginable.
Consider some figures: The growth of e-commerce, both "Business-to-Business" and "Business-to-Consumer" is linked to rapid deployment of the internet itself, with more than half the world's business now linked to the web, and 75 % expected to be connected by 2003. By the end of 2000 the 40 biggest European Internet companies in Europe will have a combined market value of more than US $ 50 billion. By 2004 the e-commerce market worldwide will be worth over US $ 7 trillion in transactions and the B-to-B market will be 10 times the size of the B-to-C market. As setting up internet-connections has become more and more a standard within companies, those once-reluctant corporations now drive the technology changes, largely because they see the internet as a way to improve efficiency and add services for their clients.
The client contribution
Within the last year the capital markets have seen the evolution of trading platforms for bonds, equities and derivatives that have made the creation of a more efficient marketplace possible. Large financial service providers are offering a vast array of products ranging from plain vanilla stock and bond trading to sophisticated structures like e-swaps. Electronic Communication Networks (ECNs) put further pressure on margins. Linkups between exchanges, like the recent one between Deutsche Boerse AG and London Stock Exchange (IX) are positive for margins (less IT costs). The danger for banks is if exchanges offer access to clients directly and create dis-intermediation..
All investment houses assert their clients are the winners in this process. But are the customers really the beneficiaries yet?
1. Often present sales perspectives (the bottom line) determine if a product is promoted to production.
Within a revised value chain, client input is derived from both sides, a 'Consumer-to-Business' and a 'Business-to-Business' view and this feedback then applied towards improved products.
2. For now
technologists determine the shape and features of a product.
3. In theory it is not hard, to envision a world in which the Internet impacts every aspect of the value chain, from product development and -integration to risk management services. In practice this transformation will only happen for companies that focus on service to the individual customer - every business organisation's most valuable asset.
Primary criteria to succeed
There needs to be a balance of these two qualities. Business managers are totally dependent on technologists for their ability to create applications that work.
Technologists are equally dependent on business managers to provide them with the tools for their efforts.
Though the two sides depend on each other, their divergent goals, (i.e. creative challenge for the IT developer, and the challenge in motivating users to buy the product for the business manager), show a structural weakness in their relationship. A third quality has to balance out these tensions.
It is possible to draw out something desirable in an existing product but it is much more sensible to first decide on what customers find desirable, and then challenge the IT professionals and the business people to build and sell it. While the competitors are reacting to each other's competitive moves, the desirability-driven company is out in clean air focusing on its customer's needs.
Through constant interaction and feedback with the customer the portal is developed with desirability and usability in the first place and is strongly geared towards specific customer profiles (e.g. a corporate treasurer, fund manager, bond trader, equity research analyst).
The market for financial portals consists of multiple vendors selling similar products, none of which is designed, but all of which compete on features. Every time a company introduces a new feature, the competitors add that feature in their next version.
Being the first company to add extra features is not the same thing as being design-focused and having desirability. Features do not benefit portal users the way that primary problem-solving abilities do and adding features will not have the same beneficial effect that primary problem-solving abilities will.
What technologists develop (capability) and what business people want to market (feasibility) has to be preceded and bridged by taking into account what clients need and really want (desirability).
Fully-fledged financial portals, tailored towards different client groups are an example of how to implement and push forward this client contribution approach.
Striking changes in the way e business will be conducted between banks and their corporate clients (B-to-B) and retail customers (B-to-C) result in:
A re-shaping of the value-chain
Invariably this is already happening but surely commerce will accelerate this process. Suppliers i.e. banks can and have to respond more quickly to new demand. Failure to do so will be punished quickly.
Dresdner Kleinwort Benson is the global investment banking operation of Dresdner Bank AG and is subsidiaries. In the US, Dresdner Kleinwort Benson North America LLC is a member of the New York Stock Exchange.
|Home | About Us | Search | FAQ | Contact Us|