The Future of E-Commerce Technology

In the virtual world of e-commerce, price pressures created by near-ubiquitous product comparison sites actually favor the smaller enterprises that dare to compete head-to-head with big business on the Web. "Due to their far lower cost structures," notes AMR Research analyst Louis Columbus, "SMBs can now compete with firms that are far larger."

Having emerged from the latest economic downturn knowing where their core strengths lie, SMBs now are looking for ways to level the Internet playing field even further. To best capitalize on their strengths, though, e-businesses will need to acquire online capabilities that parallel what companies like Oracle and SAP traditionally have delivered to their big-business clients.

"The future of e-commerce is about delivering quantifiable value," Columbus told NewsFactor. "The days of promises are gone, and the days of results have arrived."

Leveling the Playing Field

"The Internet was supposed to level out the playing field five years ago, but companies buried so much of their operating capital in Web development that it never happened," said iCode vice president Steven Toole. Since then, the cost of the enabling technologies has come down to the point where an SMB can operate a virtual storefront -- or what Toole likes to call an "online pure play" -- at a much lower cost and with much higher margins than an actual brick-and-mortar storefront.

Virginia-based iCode's current playing-field leveler is an enterprise (news - web sites) resource planning (ERP) platform called "Everest" that over 3,000 customers already use in 40 countries around the world, according to the company.

"Everest covers the 1-to-100-employee range that has largely been ignored by the major enterprise-software players," Toole said. "It offers the kinds of things that you learn about in business school but never get to apply," such as just-in-time inventory, drop shipping, profitability analysis by category, and the ability to calculate the lifetime value of a customer.

"One main difference that we're going to see, going forward, is a shift from thinking of e-commerce as just one among many components to the technology becoming the driving force behind all of a company's business transactions," said Toole. "Because it costs less to process transactions over the Internet, there's where companies will be able to gain cost-lowering efficiencies as profit margins continue to shrink."

The best way to do this, advises Toole, is to "automate as much of the business processes as possible while eliminating redundancies -- all the way down to the customer placing their order on line."

Broadening of the Market

Future e-commerce efforts will be refocused "into analytics, marketing and sales, funds management through channels, and the performance of channel partners relative to goals," predicts Columbus.

In particular, the AMR Research analyst is looking for next-generation software to include sales-pipeline tracking analytics that can handle the order-to-cash process from quote to fulfillment efficiently.

"Customers are going to want to know how real are the opportunities in their pipelines and whether they have the ability to manage them for greater, more accurate control over their sales costs," Columbus said.

SMBs are expected to embrace CRM technologies at a quick pace over the next 24 to 36 months, added Columbus, mainly as a result of the work Microsoft (Nasdaq: MSFT - news) is doing to create awareness around new CRM-related products, as well as Siebel's focus on its new OnDemand initiative. "The net effect will be a broadening of the market," Columbus believes.

Offering Embedded Analytics

Siebel Systems and IBM are about to launch an enterprise-class CRM application that SMB operators can manage right over the Web.

"To deliver a seamless experience from the customer's perspective, we've used the familiar Web paradigms of My Amazon and My Yahoo, which means that customers won't need I.T. support or training to install and support it," Siebel Systems director of product marketing Rich Reiner told NewsFactor.

Before the end of this year, the two companies will join in marketing their new CRM OnDemand service at a price of US$70 per user per month. Featuring embedded analytical capabilities, the new platform delivers real-time reports and includes a hosted data warehouse that enables historical trend analyses and multidimensional queries.

On-Premise and Hosted CRM

"The functionality offered by hosted delivery models was traditionally basic CRM for smaller companies only," said Reiner. "Smaller companies and divisions of larger companies can access advanced CRM-like embedded analytics right now -- and vertical functionality in the future -- without any up-front investment in hardware or software."

The platform's 100-percent hosted delivery model also will feature a migration path in support of on-premise operations.

"If a company has a high-volume call center equipped with customized processes, then on-premise may be better, while Siebel CRM OnDemand hosted may be better for a company's reps in remote sales offices," said Reiner. "We also enable companies to have hybrid deployments that use both on-premise and hosted together. Customers no longer have to choose between both."

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