Milestone or Millstone? What will E-Commerce technology bring to your business?

An analysis piece by Kevin Misselbrook, Corporate Projects Manager with E-commerce Financials software house Access Accounting Ltd, http://www.access-accounts.com

The UK populace is renowned for being early adopters of technology. Just look at the proliferation of video technology, digital photography equipment, and of course, the ubiquitous mobile phone. Who could have imagined 3 years ago that seemingly every traveller on the 17.48 from Waterloo would have their own personal phone, thus enabling them to raise the irritation levels within train carriages to an all time high!

The same exponential adoption of phone technology appears to be hitting the e-commerce market. Current surveys predict that the UK is the most prolific user of technology outside of the USA and Germany. A recent survey by the Confederation for British Industry (CBI) revealed that there had been a 50% growth in internet traded business over the past year. A pan-european survey by KPMG predicted that internet trading would account for 16% of consumer sales by the end of 2000.

So what are the advantages of adopting this new technology and what dangers await the early adopter? Many companies have invested heavily in e-commerce and web technology and yet have been unable to take full advantage of the business benefits and efficiencies that are available. When looking to adopt this technology you need to ensure that you are installing some golden efficiencies into your business rather than just buying something that glitters. To help businesses to make the correct decision there are a number of critical factors that you must consider. These will determine whether you end up with a very attractive millstone or push your business through the e-commerce milestone!

 Re-keying of data - will you really benefit from e-commerce?
It is truly incredible that many e-commerce solutions today are offered on the basis that you have to manually re-key a lot of the e-commerce related data. This is likened to having a digital phone with a carrier pigeon on the end! Avoiding the re-keying of data is critical to your company. It saves on labour, avoids the possibility of keyboard staff introducing errors, and ensures that the onus for submitting a correct order lies with the customer.
- Do not implement a solution where you have to re-key e-commerce sales orders into your accounts system. Any orders that are entered by a customer in your web shop environment should be transferred with little or no manual intervention into your Sales Order package.
- Do not invest in a solution where you have to re-key product details into your e-commerce solution. The e-commerce solution should offer the facility to extract product details from your accounts, inventory, or even your EPOS system.

 When will you benefit from this new service?
E-commerce solutions can be the subject of meticulous planning and consultancy. Custom solutions can provide the company with 10,001 options to consider. Be realistic. Be competitive. This is a dynamic market. If Britain is to get "on-line", then most companies will benefit from adopting low cost, low risk technology, that is offering an ever increasing level of sophistication. Look at your potential return on investment. If this is your company's first entry into the e-commerce environment then a flexible packaged solution may suit you better. Good packages now offer serious business solutions. Many will have the ability to enhance and add on custom elements at a later date. These types of template-driven packages can provide a full e-commerce solution that will bring real cost benefits within a few months. These packages allow you to offer an e-commerce service to your clients now, gain revenues now, and then evolve your offering as you refine your requirements

 Business to Business (B2B) or Business to Consumer (B2C)?
Invest in the correct solution for your business. Most UK companies are not in a retail environment yet most packaged solutions for e-commerce web sites are designed to meet this B2C (retail) market.
If, like most companies in the UK, you trade with other businesses, you must look at solutions for the B2B market. A B2B solution should generally offer more than just product selection and ordering. Some examples of additional functions on a B2B e-commerce solution are listed below:
1. Customer login and password
2. Notification to customer if Over Credit Limit, On Stop, On Hold
3. Ability to view their Sales Statement
4. Ability to review progress of all their Sales Orders
5. Preferential pricing for selected customers

 On-going Maintenance
Using the benefits of e-commerce web trading is an ongoing process not an event. E-commerce sites that are out of date soon lose favour with customers. You should be buying the benefit of a flexible selling tool that enables you to bring your goods to market instantaneously. When looking at proposed solutions always ask these questions:

- How long will it take to get new products onto my e-commerce web site?
- If I want to change text, graphics, or add new pages of information how complex is the process?
- Could my existing staff maintain the site? - If not what's the cost /response time?
- How much internet knowledge do I need?

Some solutions will require a high level of skill to make any changes to a web site, even simple changes to text. Custom sites particularly may use several types of design tools and languages to provide the finished result. Other "packaged" solutions offer to hide the technology away from the user and enable a large amount of in-house maintenance. You must analyse and account for these ongoing service costs. These will be critical to your return on investment. If you are looking to keep investment down on your first e-commerce offering but are looking to provide a responsive up-to-date site, then the mechanism for maintaining and changing the site will be crucial.

 Communications Costs - 20,000 per year or 1000 per year?
20k option - Locally Hosted Web Site
In this environment your Web Site lives on a Server physically located within your office. This Internet Server will need to be permanently connected to the internet via a fast leased telephone line. When customers want to view your site they will be pulling pages of information from your Server within your office. This is a good solution if you are maintaining a large, busy web site with many tens of thousands of product items for sale. The location of the Server in your office makes maintenance quick and easy and you are in control of your own destiny. The costs however are high and many of them are recurring annual charges. Typically a fast leased line (2Mbit) would cost around 9k to install and about 22k per year to maintain. In addition there will be the Server hardware and software costs. Your company would also need to contract highly skilled staff to setup and maintain this technology normally providing 24 hour maintenance.

1k option - Remote Hosted Web Site
In this environment a third party "rents" you space and a traffic allowance on their Internet Server. These parties are normally ISPs (Internet Service Providers). To make changes to your web site you can dial in using a standard modem and upload new products or change the content of the site.
This solution is cost effective for sites that are publishing relatively modest product catalogues and have the advantage of normally running on high specification, state of the art, internet server technology. Maintenance of the site and transferring information back to your accounts system on terra firma is slower, but this environment would certainly suit companies expecting to handle up to 100 orders per day. Setup costs for this type of solution can be minimal with annual costs running at a few hundred pounds per year.

 Security
Contrary to the advertising agent's spin there is such a thing as "Bad Publicity". It is essential that your e-commerce web site has built-in security to protect the confidentiality of your client's data. Look for technology that offers Secure Socket Layer (SSL) technology. This ensures that confidential data is encrypted to a certificated standard. Do not settle for anything less!

 Industry Standards
Many good technologies have died a painful death because they do not conform to an emerging industry standard. Think of 8 track tape players, Betamax video, and the Wankel rotary engine to name but three! The same also applies to e-commerce solutions. The crucial element to look at within an e-commerce solution is the transport method for getting data to and from the web site. BASDA have been instrumental in pushing the world to adopt a common format for orders that could be transported from one business to another, or from a web site to a business. This emerging industry standard is BASDA's EBis XML. The vast majority of software packages will be able to read and understand orders being sent to them in this format. This in turn enables swift exchange of data without human intervention and with minimised incidence of error.

 Audit Trails
Remember that your e-commerce environment is all part of your business process. You should have the facility to audit and reconcile transactions posted onto your e-commerce web site and through to your main accounts system. Make sure that your consultant knows your business needs as well as your design requirements.

 Summary
There are many UK businesses that are heavily investing in web site technology which will never represent a good return on investment. These are suffering from the e-commerce millstone.
On the other hand there are many UK businesses that are already gaining significant advantage from offering e-commerce web site services. These have already passed the e-commerce milestone and have a new revenue stream for their business.
UK businesses cannot predict the level of trade, or kudos value, that this technology is likely to generate. In the UK we have all witnessed the dramatic change to the retail banking market and recognise the need to adopt new technology.
UK businesses must offer an e-commerce solution today to secure their own competitive position.
Investment decisions for companies are now easier. E-commerce software offerings have matured dramatically and software companies have risen to the challenge of offering low cost, highly functional packages for the small to medium size businesses. There are still pitfalls to beware of, but the levels of risk and expenditure can now be contained. This offers all UK companies the opportunity to adopt the technology and refine their knowledge, requirements, and services that they offer their customers.

Contributed by Kevin Misselbrook, Corporate Projects Manager, Access Accounting Ltd.

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