Analyst: make e-commerce play or lose by default

Companies that don't find some way to work themselves onto the Internet soon will lose money, according to at least one industry analyst.

"If a company doesn't start to see revenue coming from the Internet in the next year or two, I guarantee you they're losing money," said Tim Sloane, an analyst with the Aberdeen Group.

Sloane told an audience at a Kasten Chase-sponsored seminar in Toronto that Internet-related business will rise by 2002 to $US88 billion in the consumer market, and $2 trillion in the business-to-business market.

He said this isn't new money, but rather revenues being diverted from other market areas. Therefore, he said, companies that don't make money online will lose it to competitors that do.

Sloane said it is not just direct selling over the Internet that counts, but also using the Internet as a business tool, such as in Web-to-host connectivity. He said Aberdeen estimates that about 70 per cent of application and business data reside on legacy systems. Moving those systems to Web-to-host products such as those offered by Kasten Chase and IBM, among others, can save a company money through consolidation, lower maintenance and new business opportunities such as linking with customers and suppliers, he said.

"Our research shows that companies are going into e-business almost exclusively to save money," Sloane said. "But companies shouldn't overly focus on [saving money]. This not only saves you money, but it prepares you for connecting to the Internet."

One of the problems with using the Internet, however, is the issue of putting sensitive data over the public network. Sloane said Kasten Chase's products use virtual private network (VPN) technology to secure data, but he added that not all competing products have the same level of security.

Sloane said that it is easy to secure one Web connection to one back end because the Web does the authentication and the back end handles the access control. But he said "it gets really nasty" when a company tries to add multiple hosts, and that's where specific security products have to be in place.

Sloane presented several tips for those embarking on Web-to-host implementations.

"Number one is to make sure all of your departments are tied together and working towards the same goal," Sloane said. He said all the groups should initially focus on the same project or else risk becoming territorial and inflexible. He said he has seen companies where various business units are at odds over project elements, each with valid reasoning but still getting nowhere.

Other bits of advice included: identify the platform for the integration point; establish a persona-based infrastructure around the network, security and implementation; and define the initial end users early on.

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