E-business 2002

I didn't do a lot of mall shopping this holiday season, but I heard there were lots of bargains to be had. The mall isn't the only place where merchants are slashing prices to keep the cash flowing. Lots of "sales" are going on in the e-business world now, and smart companies are taking advantage of these markdowns.

Here are some tips to get the most for your e-business dollars in 2002.

Exploit low advertising costs. Advertising spending is down, so prices have fallen. In some markets, the cost of a full-page ad has dropped by as much as 70 percent. As far as what you'll advertise, consider advertising for staff instead of using headhunters; advertise your b-to-c Web site in the national press; advertise your b-to-b Web site in the trade press; run a campaign on the radio or even television promoting special deals available only through your Web site.

Start using basic ASPs. The cost of deploying an ASP system is likely to be at least 20 percent lower than implementing packaged software, and 30 percent to 50 percent quicker. Companies new to ASPs should start with lower-risk administrative processes, such as travel expense management or time recording, where the business process is simple and standard, vendors have experience, and changing vendors is relatively painless.

Move to a package or a hosted service. During the past three years, many e-business application functions, including e-tail catalogs and information portals, have become available as packages, and these packages have matured rapidly. Consider shifting early (1997 through 1999) customized e-business applications to packages or hosted services. These applications have served their purpose. The task now is to improve the business model, and packaged and hosted solutions will likely offer a better way forward. For example, by moving to a packaged solution, a large online bookstore reduced the number of technical staff employed on site maintenance and ongoing development by 85 percent.

Pay less for better e-business services. Although vendors will insist their rates are holding up, expect time and materials rates for e-business development labor to be at least 15 percent lower at the start of 2002 than they were at the start of 2001. Certain skills, such as integration services and the implementation of certain packages, will remain in short supply, and rates will stay high in a few locations. Negotiate hard with your suppliers. Put work out to tender instead of automatically using the same vendor again.

Extend b-to-b to all business partners. Many enterprises started their b-to-b initiatives in 2000, and connected with a few close partners during 2001. The success of these initial experiments has proved the value of electronic trading, but the real ROI comes when you can trade electronically with all your major business partners.

During 2002, companies must not lose momentum in their e-business programs. Instead, leverage the downturn, and get more from the market for less.

Barb Gomolski is a research director at Gartner, a Stamford, Conn.-based research firm. Send her e-mail at BarbaraGomolski@earthlink.net.

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