Guest column: E-commerce: Chapter 2

In the first chapter of the e-commerce storybook, the technology largely drove business models. Now the business models are driving technology. Post-2000, this will transform the part of IT organisations that has been least affected by the internet -- business application development.

Chapter 1 of e-commerce exploited three technology enablers: the Web browser, hypertext and Internet Protocol networks. C++ and Java were the base for front-end applications, with application program interfaces (API) linking to back-end databases and processing systems. This gave us the standard storefront and shopping approach to online business. Customers log on to a site, where they interact with a growing range of services.

Very quickly, it became apparent that the keys to all aspects of internet business are customisation, personalisation and relationship-building. Prices dropped as customers surfed, and online players began to give away freebies to help build the relationship: e-mail, internet access, research, news articles and even PCs.

In this context, building repeat business and relationships set the stage for Chapter 2: the move to maximum personalisation. This movement began with "cookies" and continued with giving viewers the ability to customise Web sites. Personalisation became the basis of the portal player strategy: build a relationship brand so customers park at your site to explore the Web, the way shoppers park at Wal-Mart and then shop the rest of the mall.

The Web storefront surf/shop approach is now moving to a Net market/dynamic agent strategy. The service provider generates offers, scanning the Web to put together deals. Pricing changes from the stated price to the right price for you. There is on-the-fly communication among sites about inventories, status, prices, catalogues and specials. It's like having a personal broker working on your behalf, who contacts you with "Boy, do I have a deal just for you!"

This business model turns the Web into a market of tightly linked supply chains. Chapter 2 Web strategies include industry portals that bring together all the players needed to configure and price unique, dynamic offers to customers; consumer portals that are the trusted single contact point for just about anything; and vertical portals, infomediaries and other variants of no-site-is-an-island online business.

So behind the customised front ends to their online business services, Dell's and Schwab's sites interact directly with many others, using software tools, catalogues, APIs and links to legacy systems and databases. Amazon's acquisitions are as likely to be a software company providing software for customisation and dynamic offers to customers as they are to be companies that add to Amazon's range of goods.

This business model needs a new generation of technology. The market is responding very fast. In just a few months, the moves to apps-on-tap and software-on-demand have created the likely next software industry: application software providers. Java has enabled a mass of front-end customisation tools, while Jini (basically Java for hardware devices by connecting through IP) makes the most dynamic and interactive of personal tools -- digital cell phones -- part of the IP/Java world.

Such innovations as Hewlett-Packard's Chai, a new Java-based development language, illustrate the shift towards what HP calls "e-speak" applications talking to other applications and brokering services. This style of interactive, dynamic agent is clearly the emerging norm for software targeted at customer relationships.

Most of this new technology leaves me feeling like a goldfish floating in a bowl of alphabet soup. I wash up against acronyms as alien to me as most of standard IT is to business people. What's very clear to me, though, is that the relationship imperatives and customisation that underlie Chapter 2 business models are driving all this new technology. In turn, this new technology is the basic toolkit that IT organisations must use to develop business applications once they get through Y2K and all those lengthy ERP implementations. The pace and force of these business-model demands are already so strong that they will push the demand for electronic-services technologies even faster.

IT will have to respond. Now, does anyone have a Chai or Jini manual?

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