Mexican Co. Uses Extranet to Keep, Win Clients

FORT LAUDERDALE, FLA. (03/20/2000) - When steel processor and distributor Ryerson de México SA de CV was looking for a way to differentiate itself in a commodity market last year, it turned to its IT department.

The company plays in a highly competitive market customizing steel for manufacturers of heavy equipment, such as makers of industrial air conditioning systems, as well as selling to steel distributors. Top executives knew that its IT infrastructure had to be one of the most, if not the most, modern among its competitors.

After all, Ryerson de México, a joint venture between U.S. steel processor and distributor Ryerson Tull Inc. and Mexican steel maker Altos Hornos de México SA de CV, was founded in Sept. 1994, and thus based its IT architecture on up-to-date systems. Unlike many older companies, it doesn't have a legacy IT architecture to hold back its implementations of new systems.

The 11-person IT department huddled and came up with the idea of building an extranet on top of the company's business application suite R/3 from SAP AG.

The project started in August of last year, went into its beta testing phase in December and began operating on March 1st.

The extranet lets Ryerson's clients place and track orders, check inventory and even generate reports detailing their dealings with Ryerson, for example, what and how much they have purchased from the company in any period of time.

"This is an extranet for our most important clients, so that we can provide them with a better service and increase and improve our communication with them," said Rafael Pérez, the company's IT manager.

Having clients interact with the company via the Internet carries the risk of a loss of personalized service, which is why Ryerson designed the system so that it helps improve the company's human interactions with its clients. For example, Ryerson salespeople receive e-mail alerts whenever one of their clients submits an online request or places an order.

Ultimately, Ryerson hopes to use its extranet not only to keep the clients it has, but also to gain an edge when competing for new clients. The new system is also expected to increase the company's efficiency, accuracy and speed as well.

"Its something that sets us apart from our competition," Pérez said, adding that, as far as he knows, Ryerson is the only company in its market in México with this type of extranet.

"I've shown it to some of our clients, and the response has been very enthusiastic," he said.

The ability to check inventory is attractive in particular for clients that have been guaranteed a stock level by Ryerson.

The private company has about 500 employees. Because it has a relatively small IT department, Ryerson enlisted the help of Hewlett-Packard Co. to help with the design, development and implementation of the extranet.

"We're a company that specializes in steel, not in IT, and our IT department is small. We could have done this in-house, but it would have meant interrupting other projects," Pérez said, adding that Ryerson had outsourced to HP before, and the experience had been a positive one.

"Outsourcing these types of one-time projects makes a lot of sense," he added.

The creation of the extranet was done very quickly because the company's IT infrastructure is based on newer systems.

"The development of this system was simple, thanks to the platform we have, and because we don't have old systems that are difficult to change," he said.

The extranet runs on HP 9000 servers, Oracle Corp.'s Oracle8 database, SAP's R/3 suite and a network based on Cisco Systems Inc.'s routers, Pérez said.

"The upper management believes firmly in technology, and they have tried to let us have the best (IT systems)," he said.

Furthermore, the extranet's access is controlled through the use of security tools to make sure that only those clients chosen by Ryerson can use it.

The demand in Latin America for these types of Internet-based projects, which HP calls E-Services, is enormous, said Airton Gimenes, the general manager of HP's commercial and enterprise business division for Latin America.

"The E-Services market is exploding in Latin America," he said.

Although major barriers still exist to business-to-consumer e-commerce in Latin America, the business-to-business sector is much more mature.

"The PC penetration is still low in the home, but high in businesses. The biggest e-commerce sector is business-to-business," Gimenes said.

A recent International Data Corp. (IDC) survey of 500 companies in Brazil, México and Argentina found that 25 percent of respondents are already making business-to-business purchases over the Internet, and that most of those not currently doing it plan to in the near future. [See "IDC: 2000 to Be Year of E-Commerce in LatAm" March 14.] IDC predicts that e-commerce spending -- both business-to-consumer and business-to-business -- will reach US$8.3 billion by 2003 in the region.

And Ryerson aims to make sure its customers can do business with it via the Internet.

"The competition is very strong. That's why we need to differentiate ourselves with a value-add, because steel is a commodity these days," Pérez said.

Ryerson de México is based in Monterrey, the capital of the Nuevo Léon state, and can be reached at http://www.ryerson.com.mx/. Ryerson Tull is in Chicago and reachable at http://www.ryersontull.com/. HP, in Palo Alto, California, is at http://www.hp.com/.

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