On Demand Business

John Patrick (an ex-IBM-er) writes:

I believe now is the time for the reincarnation of the ASP as a valid and important business model. Tens of millions of people, either at home with their cable modem or DSL or at work with a high speed wired or wireless (WiFi) connection, now have access to always on, reliable, and fast Internet connectivity. There is no need for an ASP to provide an “office” desktop from a server via the Internet – it is already on the PC. The new generation of ASP (the name will probably not reemerge) will focus on the delivery of high value applications some classical and some new. The new generation of ASPs will provide applications that can not be done on a PC. They will also be e-businesses on demand a term we will be hearing more and more about.

On demand e-businesses share important characteristics, the most basic of which is delivering value-added results to their customers — whenever their customers need it. Twenty-four by seven is jacks or better that in itself does not make an e-business an on demand e-business. Not that 24×7 is that easy to achieve; especially as an e-business scales up to a very large one. 24×7 means not just always on but also everywhere. WiFi enabled e-businesses will make their services available to all their constituencies whenever they want and wherever they are.

There are two other very important elements to being an on demand business. First and foremost is integration. An on demand e-business has integrated all of its processes so that the e-business presents one face to the customer. Buy it online and return it to the store. But at the store and return it via an online request and then ship to a centralized location. Download support materials or place a service call on line regardless of how you made the purchase. On demand e-businesses are not just click here to buy. They also enable click here to initiate a chat session or video window with a real live person. If you call an on demand e-business by phone and ask them something about the web site they dont say thats a different department. On demand e-businesses do not have the words fax this form or call Monday Friday, 9 to 5. They dont pretend to be a global business and then say to call a 1-800 number 9-5 Central Standard Time. They dont say click here or call our inside sales desk for the location of a store near you. On demand e-businesses offer a people-oriented and user-friendly integrated and comprehensive experience for all their constituencies employees on the intranet, suppliers, customers, partners, analysts, and prospective constituents.

In the months and years ahead, successful on demand e-businesses will share another attribute competitiveness. The on demand channel will need to be competitive versus any channel of any competitor. On demand e-businesses will not have achieved 24×7 by making everything redundant but rather will use autonomic computing capabilities to allow their system to achieve the effect of redundancy by virtualization of their resources and intelligent and automatic sharing of those resources. It will gain cost advantage by creating an on demand operating environment that allows them to expand capacity on the fly to meet unexpected needs of customers. Ultimately most on demand e-businesses will either become a computing utility or use one.

Semantic Weblog

Phil Wolff writes: “You should be able to define your own structure. The most common use of Microsoft Excel is making lists of things. No reason blogs can’t give similar freedom to define a new package. Build from scratch or on the shoulders of other package definitions.”

The way to do what Phil talks about is to focus on RSS publishing with blogging as an optional by-product.

Building a Buyer-Seller Relationship

HBS Working Knowledge writes about research done by HBS professor Narakesari Narayandas about how “buyers and sellers in mature industrial markets can turn single transactions into long-term beneficial relationships by a deeper understanding of the complex connection between the two.” Three questions addressed are:

1) From the suppliers viewpoint, does it pay off to be in long-term customer relationships?

2) If yes, how do you as the supplier get started?

3) If you the supplier are in an arms-length transactional relationship, how do you move it into a fuller relationship?

A few pointers:

  • Suppliers increased sales over time. If you get in with fewer customers for a long time, you get a greater share of wallet from the fewer customers (as opposed to more mass market customers), he said. Manufacturing costs went down. Even in long-term relationships, opportunism is always shown. Customers still are opportunistic, customers still look out for themselves.

  • To explain how he came to answer question twoabout starting a customer relationship from scratchNarayandas first told his audience about the classic vendor-customer standoff. The vendor wants money first; the customer sits back with arms folded and replies, Prove to me that you can do what you say….Rather than going after the entire volume, break up the needs into different parts, and try to initiate a relationship using one component, selling only this one component, he advised.

  • Winning Value Proposition

    Fortune writes about six steps to boost business – by focussing on what customers want. Simple lessons that we tend to overlook many times.

    Step 1: Figure out the needs of your most profitable customers
    Step 2: Get creative
    Step 3: Test and verify your hypotheses
    Step 4: Tell customers how great your value propositions are
    Step 5: Apply the best value propositions on a large scale
    Step 6: Begin anew

    SAP’s Strength

    Fortune writes about SAP and how it has grown to be in a strong position in the business applications business with nearly 20,000 customers. Here’s a brief on how SAP turned things around:

    First SAP paid $574 million for a 20% stake in Commerce One, a California startup that wrote software for Internet-based B2B marketplaces. Then it spent $400 million for Top Tier, an Israeli software company that had developed a portal compatible with SAP business applications. With Top Tier came its precocious CEO, Shai Agassi, 34, who has become Plattner’s heir apparent as SAP’s tech visionary.

    Bolstered by its acquisitions, SAP has developed Net-based applications that have moved it from the back office to the front. To compete with Siebel, which pioneered customer-relationship-management software, SAP began selling its own CRM products in 2000. It moved into supply-chain software, competing with i2. One by one, SAP took on startups, which were writing software that used Net standards to bring new computer and communications power to corporate tasks. As customers increasingly demanded one-stop shopping, SAP gained market share. “Two years ago SAP’s product wasn’t there,” says Mohammed Moawalla, a software analyst at Goldman Sachs in London. “Now they’ve got it.”

    Agassi is pushing SAP further on the technology front. He has insisted that SAP make its applications compatible with the underlying web-services software produced by Microsoft, IBM, and others. He has also mapped out new products called xApps, meant to combine bits of software from a human-resources application, say, with those from a financial application. Such a package could, for instance, make it easier to plan how many people to lay off in an acquisitionsomething Ellison might find handy should he succeed in buying PeopleSoft. “Because of the Internet, we can do things we never could do before,” says Agassi. “Before we spanned a sliver of the enterprise. Now I can span the entire enterprise.”

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    TECH TALK: The PubSubWeb: Information Marketplace

    One of the applications of the PubSubWeb will be in enabling the creation of vertical information marketplaces. Let us take one example of how these marketplaces can make a potentially huge difference by seeing how an information marketplace for small and medium enterprises (SMEs) would work.

    One of the biggest challenges that SMEs face is growth. The larger enterprises can easily locate business partners given their resources. They can also be located by other enterprises small or large seeking to do business with them. What is very hard to do is for SMEs to locate other SMEs to do business with. This is where everything from classifieds to yellow page listings to search engine listings to spam is used.

    SMEs do not have enough money to spend on marketing (or decide not to). Either way, the smaller marketing spend limits the awareness of the SMEs solutions in the marketplace. This results in lesser business, which in turn results in keeping the SME small. This is the marketing trap. Most SMEs are stuck in this and find it difficult to get out of this.

    A big business can be reached by an SME (the knowledge is available of the big buyers) while a big business also has the resources and network to locate SMEs relevant for its business, though this is much harder. On the other hand, it is quite hard for SMEs to sell to other SMEs. The two have no way of connecting with each other. Technology has done very little to change the way SMEs trade with each other, especially in a local marketplace.

    I speak from experience. I run a small messaging company (Netcore Solutions) which has about 200+ customers. It has taken us over 4 years to build this customer base. Over 90% of our customers are SMEs. We could easily handle many times our existing customer base if only we could find them! Finding these SMEs is tough we do direct marketing and work with channel partners, but they too are other SMEs we work with and we all end up facing the same problem. Whether it is a marketing failure or an information gap, most SMEs like us end up staying small.

    Why need a separate page from the website? Because it is hard to update most websites! Even after nearly a decade of the Internet, the design elements which make up the website and permissions required make it difficult for an SME to update its website on its own. This is where an SME Information Marketplace based on the publish-subscribe ideas can make a difference.

    Imagine if every SME can publish an RSS stream (via a weblog) about who they are, their products and services, the new developments at their organisation, their take on industry events, and what they are interested in purchasing. In addition, each of the SMEs should also set up subscriptions based on what they are looking to buy or sell (by keyword or category) or by a company they would like to track.

    So, SMEs do what they would anyways do in search of new business opportunities. By making it easier for them to both publish information and subscribe to relevant information, the PubSubWeb works as a connector, an information market maker. The product in this marketplace is information; the currency is attention.

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