E-comm tools promise dollars

Cutting costs forms a far more common justification for investing in Internet infrastructure than generating extra revenues, but not always. Financial services company BPay and industrial tools company Collins Industrial Distributors have cash-generating Web projects.

When BPay was launched as an electronic bill payment service in 1997, its total revenues flowed from phone banking.

Now 60 per cent of the six million payments it handles monthly are Internet-based. Obviously BPay's Internet channel is delivering revenue to the bottom line. Less obvious is precisely what that figure is.

The company doesn't publish its revenue figures so general manager Linda Hemstrom can't provide an Internet-specific breakdown. The most she'll reveal is that BPay is cash-flow positive.

On a simplistic level, the Internet-inspired gain could be taken as 60 per cent of BPay's total revenues. However that begs the question whether BPay's monthly settlements would have reached six million so quickly without the Internet channel.

Whatever the size of its Internet-generated revenues, BPay has been sufficiently impressed by them to step up its Internet activity.

It has just launched BPay View, an Internet-only service that gives Internet banking customers a one-stop summary of all the bills they owe on the same Web site where they can pay them. "Our expectation is that this will generate revenue," Hemstrom says.

It selected Sun Microsystems server hardware and iPlanet's BillerXpert Internet software to support BPay View after an "extensive" search.

It spent 18 months researching business models and technology offerings before settling on Sun and iPlanet. Robustness and scalability were the key factors in its choice, Hemstrom says.

Scalability was particularly important because BPay is owned by six banks, including the big four, and its potential customer set is an aggregation of each of theirs.

The accent on robust, scalable systems is fuelled by BPay's startling growth rate. In the past eight months, the number of billers accepting its system as a payment method has nearly doubled to 7000. Financial institutions able to use it have grown to 160 from 130. The number of registered Internet banking customers in Australia has shot to four million from 2.5 million over the same period.

Organisations taking advantage of the Web to set up online procurement sites linked to their current inventory and financial systems are motivated mainly by the prospect of cost savings.

That applies particularly to the buy side of the equation, says Peter Sendy, senior sales consultant with Strategic E-commerce Ltd (SEL), an Adelaide company specialising in e-procurement software for both buyers and sellers.

Some customers setting up sales sites with Strategic's Straightsell solution, on the other hand, are able to point to revenue gains, he says.

One is Collins Industrial Distributors, an industrial tool distributor picking up new accounts from local councils throughout South Australia, thanks to its online catalogue.

"It is business that otherwise wouldn't have come our way," says company MD Ian Collins.

There are 26 councils getting trained in Open Buying on the Internet (OBI) catalogues such as the one from SEL that Collins has installed.

With help from SEL, Collins has spent at least $25,000 over the past year setting up a catalogue compliant with the OBI standard. So far only a few thousand dollars in new revenue has been generated, but the sky ahead looks very blue.

Each of the 26 SA councils being trained for OBI-based catalogues could potentially spend $70,000 a year online, Ian Collins says.

"Really, only two councils have started scratching the surface but I see the potential."

Especially because the online project is 18 months ahead of any other industrial tool supplier with OBI capabilities, he says.

Collins has outsourced the entire project to SEL but will be hiring staff to maintain its catalogue, which now has 48,000 products listed, with a goal of 200,000.

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