Canberra 2000 RMAA
presentation
e-Business - Recordkeeping's biggest challenge since forever
by Michael Steemson
Electronic business, or e-business as it has come to be known, is the biggest challenge to record keepers since “IT” ceased merely to spell “it”. What makes me say this? Look around at whom else was talking about e-business during the month I wrote this paper for presentation at a seminar in Canberra, Australia's capital city.
In Hannover, Germany, the conference at the world’s biggest IT trade fair, CeBIT 2000, heard more than 30 papers with titles including Email Support - a Logical Consequence for Successful e-Commerce, The Potential of Mobile e-Commerce and Hardening your Network for e-Commerce.
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In London, days later, the European Centre for Pharmaceutical Information’s second annual Electronic Records forum in Whitehall was opened by Colin Sandercock of the American Intellectual Property Law Association with a paper Maximising the future potential of electronic records in your global patent strategy. Mr Sandercock is a partner in the Washington, D.C., law firm Foley & Lardner with technical expertise in biotechnologies, pharmaceutical chemistry, organic and inorganic chemistry, and chemical and biochemical engineering.
A day later, at the Grand Hotel in Amsterdam, Holland, the tenth European Business Information Conference opened with keynote speeches by M. Michel Albert, of the Council for Monetary Policy at the Bank of France, on The Future of Business in Europe and Mr Peter Job, chief executive of Reuters plc, on The Media Business in the World of e-Commerce and the 21st Century.
Neither of these big money men is what might be called a usual speaker at information management conferences. Michel Albert has a law doctorate and joined the bank in 1994 after leaving the presidency of the big Assurances Generales de France insurance group. Peter Job was a journalist who served as a correspondent in Latin America, Africa, Asia and the Middle East for 15 years until taking over Reuters’ huge Press and financial business in Asia and subsequently the World.
In the same month, a big Osaka consultancy held a seminar on the “latest e-commerce trends from the consumer perspective” in the suburb of Nishi-ku. It’s a difficult subject to get excited about in Japan because the Government Posts and Telecommunications Ministry demands very high prices for Internet connections. Nonetheless, the Osaka YMCA Hall venue was crammed with polite businessmen eager to hear “examples of the latest e-commerce and solution services in the United States”.
At almost the same time, in Wellington, New Zealand, the head of Australia’s PIMS consultancy, Len Asprey, was holding his Australasian road show “Information Management Strategies and Technologies for Government” which he introduced with the words: “The key to successful e-commerce … is setting in place strategies …”
And at the Olympia exhibition centre in London, Libtech 2000 conference goers were attending a symposium with the catchy name “E-wizard”, part of the three-day Internet Librarian International event E-resources: Beyond State of the Art. They sure think up some fancy titles these conference organisers, don’t they?
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The U.S. organisation that has come to be known as the Net Tax
Commission was meeting in Washington to find a compromise in the report it had
to give to Congress on an Internet sales tax.
The group, properly called the Advisory Commission on Electronic Commerce, was equally divided between the anti-taxers, lead by, in the blue
corner, Virginia State Governor James Gilmore and the pro-taxers under the baton of Utah’s Governor Mike Leavitt, in the red corner. Washington watchers said the outcome was too
close to call but shortest odds were on a stalemate.
Next, the Australian National Office for the Information Economy (NOIE) and the Department of Foreign Affairs and Trade sponsored a presentation on the Federal Government’s new E-commerce: Beyond 2000 report issued in April, the first of its kind in the world to analyse the economic impacts of e-business on its whole country. The report was just a pilot draft, a first cut at the subject, but it forecast gains from e-business across Australia, especially in the Australian Capital Territory (ACT).
Then, AIC Worldwide was in Wellington again with a three-day EDM conference with a highlight speech by world-renowned US consultant Charles Dollar giving a paper E-commerce: Taking the Long View.
Three weeks later, Richard Alston, the Australian Federal Minister for Communication, Information Technology and the Arts, opened the Now 2000 telecommunications and information conference in Darling Harbour, Sydney. Keynote speeches included Early Stage Investment in Telecommunications, Internet and e-Commerce Businesses, E-banking in the New Millennium and The e-Commerce Battle in the Travel and Transport Industry.
American information professionals were still getting to grips with the e-factor, too. The U.S. information management AIIM 2000 conference called The Technologies driving e-Commerce” opened in New York with a panel discussion What is the “E” in e-Commerce? And so it went on throughout the year.
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We’re in good company. We are seeing the birth of a new equation. If Albert Einstein had discovered it, he would have written it:
E equals IM squared, see!
That busy little “e” is growing into another dollar monster … bigger than e-mail, bigger than imaging, bigger than sliced bread. Its impact on record keeping is huge and getting bigger. Suffice to say, whatever the size of a particular information management programme today, when e-commerce hits, you can double that and double it again.
But, what is all the fuss about? Let me show you. The statistics being thrown up by Internet watchers are astonishing, and getting wilder and wilder. Before I start though, I warn you I won’t be saying much about “millions”. The sums of money will be in billions, even trillions, of dollars, mostly American dollars. The trouble with amounts of money that big is that they become almost meaningless. What is needed now is new terminology, the fiscal equivalent to the astronomers’ use of “light years” to make sense of the unimaginable distances in space.
The best I can offer is to tell you that, in round figures, Australia’s gross domestic product, that’s the value of everything Australians produce in one year, is around $500 billion. That’s roughly equivalent to $US300 billion. And it’s six times the gross national product of New Zealand. I shall be using about figures as big as this, sometime even bigger. They are figures that have gripped the financial world and created unprecedented business activity.
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Governments'
e-Business fever
Even government’s are catching the fever. US Vice President Al Gore says that when he first went to the White House in January 1993 there were only 50 servers on the World Wide Web, but now global electronic commerce is expected soon to grow to more than $300 billion annually.
Richard Alston estimates that the value of global Internet commerce will be somewhere between 1.3 and 3.3 per cent of the World’s gross domestic product by 2001, up to three times the size of Australia's G.D.P.
A New Zealand Ministry of Commerce report calls e-commerce “The Freezer-ship of the 21st Century”, an allusion to the economic leap forward the Australasian nations made with that advent in the latter half of the 19th century.
The figures coming out of the United States seem to support that belief. The University of Texas does a great deal of study on information management. In 1999, its researchers found a nearly 70 percent increase in e-business between the first quarters of 1998 and 1999. In the United States alone, over $500 billion flowed into the economy, providing employment for two and a quarter million Americans, the Texan analysts calculated.
The survey figures are backed-up in the world Press. London’s daily business newspaper, the Financial Times, reported late in 1999 that the biggest bucks are being made in business-to-business, or B2B, e-commerce. It quoted international study group Forrester Research forecasting B2B e-commerce in the U.S. would amount to $250 billion this year, jumping to $1.4 trillion by 2003.
The paper quoted another big U.S. Internet watcher, Jupiter Communications, as saying that, by contrast, consumer e-commerce will reach only $41 billion by 2002.
The boom is not confined to the States. Forrester Research also forecasts that Northern Europe will challenge the U.S. lead with $1.6 trillion worth of business by 2004.
Other surveys have indicated huge savings as well as gross incomes. The U.S. Giga Information Group says that on-line technology cut $15 billion from corporate cost structures in the States in 1998. It estimates that the annual savings will reach $600 billion by 2002.
Early in 2000, the international newspaper USA Today reported that companies believe the Internet cuts B2B purchasing costs by 10 to 20 percent.
No, the figures don’t all agree, but the huge numbers of noughts explains why, early in 2000, the U.S. Congress agreed to spend almost $7 billion to maintain the nation’s dominant role in technology over the next five years. The Washington Post said that $95 million of that sum was earmarked for university maths and science faculties.
With figures like that to chew on, the commercial world is, understandably, showing enormous interest and is realising that getting into e-business means getting into electronic record keeping.
Global company re-grouping
Companies all across the developed world have been re-grouping, re-equipping and re-assessing their positions in their industry. Investment has been phenomenal but not always wise.
Hopefully, most of the activity has been driven by finer instincts than those of the business tycoon Alex, the London newspaper cartoon character. At a board meeting, he listens smugly at his new IT whiz-kid trainee Robin’s portentous predictions.
(I used to work with a bloke like Robin. A real smart-aah…! He was usually right. Hated him!)
Robin is saying: “The Internet is a powerful new medium which is increasingly opening up business to international competition.”
The cartoon actually highlights one of the problems that many companies are having to come to terms with. Robin continues:
“As a major UK manufacturing company, you are directly threatened by this. Frankly you could be out of business in six months. Urgent action is called for. As in most areas of business, your U.S. competitors are two or three years ahead of us on this!”
Alex patronises the young upstart’s confidence, and hastily grabs the board’s attention. “Thank you, Robin. I couldn’t agree more.”
And he comes up with the right idea for his directors. He tells the board: “So I think you could justify an immediate increase in directors’ remuneration”. A smirking director agrees: “Ah, yes. Got to pay ourselves competitive salaries to stop us being poached by those U.S. companies.”
Alex’s precocious colleague was right about one thing: the U.S. certainly leads in the virtual market, by at least a couple or years, perhaps more.
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And the face of American e-commerce is undoubtedly Amazon.com’s founder, owner and driver, Jeffrey Preston Bezos, Time magazine’s 1999 Man of the Year, or Person of the Year as that august journal describes its award nowadays.
Time calls Bezos the “eye on the future” and pictures the balding, grinning 35-year-old multi-multi-millionaire with an image of the traditional lower-case “e” superimposed on his eyeball. His story, and the company’s, is an amazing one. Even its Nasdaq stock exchange code, “AMZN”, is like a car registration plate comment on its amazing performance.
Bezos founded the company in May 1994, just six years ago, and now employs 2,100, from his Seattle, Washington State, headquarters. The company’s market stock price has risen an unbelievable 1,100 percent in the last year to an astronomical book value of $US27 billion, yes, $27 BILLION.
That’s more than $AU40 billion or something like a month’s worth of Australia’s G.D.P. Jeff Bezos is paid a minuscule $80,000 annual salary as chief executive, but he’s not complaining. He owns 40 per cent of the company stock, worth some $10 billion.
If those figures aren’t astonishing enough, the Amazon.com façade is built on an annual income of $610 million and a net loss of nearly $350 million last year. In its six years, Amazon.com has never made a profit.
Spend five minutes surfing the Web and you’ll see why not. The company’s advertising and partnerships are everywhere. Its little yellow “click here” boxes appear all over the system. Company partnerships abound, extending as far as to the London auctioneers Sotheby’s. This staid, old Bond Street firm has joined Amazon.com in a new venture to outbid on-line auction sales rival eBay.com, another mega-million dollar enterprise begun on a whim in 1995 by a San Franciscan geek.
Amazon.com doesn’t sell just books anymore, either. In the month before Christmas, Amazon was the most visited site on the Web as millions also sought CDs. TVs, stereos, software, home improvements and toys. And, for recipients with the present that was just not what they wanted, there was Amazon’s new zShop, an on-line flea market where anyone can sell anything. I could go on about Amazon all day. It and its founder are phenomena.
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Rise of the dot.coms
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There are thousands upon thousands of other smaller companies plugging every conceivable item. Adornis.com offers high-value jewellery, Petstore.com pampers pets, Redherring.com and Half.com, shopping malls Buy.com and Shopnow.com. In direct opposition to Amazon’s book sales are the big U.S. booksellers BarnesandNoble.com, Varsitybooks.com, and the British site, Waterstones.com. Greenlight, Autoweb, Autobytel, CarsDirect and CarPrices.com were leaders in last year’s $400 million on-line car sales market in the U.S.
One of the most glamorous recent public launches is Playboy.com. In January, 2000, it launched a stock market offering worth $50 million. The move was greeted with coy media headlines like “Playboy goes for more exposure”.
So-called adult-orientated web sites are big business, yet so far few have done much to capitalise on investor’s enthusiasms. Adult sites accounted for three quarters of the $2 billion paid to subscription and pay-on-view web pages, according to Playboy.com’s stockmarket launch statement.
The magazine’s website was opened in 1994. It carries those raunchy Playmate pictures, of course, articles and cartoons, and it conducts auctions of Playboy branded merchandise and sells admission to Playboy events.
Last year it made a thumping seven million dollar loss on an income of almost the same amount, so it’s probably destined for great things. Certainly analysts think it has a chance. “Playboy knows the adult world”, one told a Washington news agency.
There are plenty of detractors, itching to pull the whole virtual structure down. Mildest comment comes from a Forrester Research analyst who told Time magazine’s Amazon.com story writers: “No one’s sure where all this is going. Initiatives like zShops and Auctions are distracting to the brand. They need a tab on the home page that says, ‘other crap’.”
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Market stock in these new “e-tailers”, as they’ve become known, has been falling in price. Once upon a time, investors could not get enough of Internet retail stocks. New online stores that mimicked Amazon.com were appearing every day. But then, e-tailing became something of a dirty word among even the most enthusiastic Internet investors.
Some commentators gloomily insists that only Amazon and eBay stocks were worth holding, that at least 75 percent of the companies going public would not exist in five years and even B2B’s promise will falter. We shall see. There’s no doubt that a lot of money is being made, and a lot is going to be lost.
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Time Warner-AOL
mega-marriage
But big commerce is gearing up to meet the opportunities. Massive mergers and re-engineering is the talk of many top-dollar boardrooms. The stars in these directors’ eyes are the B2B margins promised by e-business.
Witness the alliance signed early this year between America OnLine, the world’s biggest Internet service provider, and entertainment giant Time Warner. Once the deal is completed, supposedly towards the end of 2000, it will create a company with a stock value of $350 billion. Remember those “light year” comparisons I made just now? $350 billion equals one year’s production by Commonwealth of Australia Ltd., and everything that Kiwi Corp will make from now to beyond the middle of this new decade.
America Online chief executive Steve Case gave the answer to the “why?” of the deal: “We will draw on one another’s strengths, combining AOL’s superior distribution capacity and Internet expertise with Time Warner’s programming and cable network assets.” In other words, one giant step towards combining PCs and television sets. .
Time Warner boss Gerald M. Levin brings a hefty dowry to this mega-marriage of ‘Net and media. His group employs almost 70,000 and owns Hollywood film-maker Warner Brothers, Tv services CNN, HBO, and Cartoon Network, the Warner Music group, Bugs Bunny, the Atlanta Braves baseballers and international publications like Time magazine, Fortune, People and Entertainment Weekly.
AOL has only 12,000 employees and owns a number of Internet services, including Compuserve and Netscape, but there’s no doubt who will be on top in this marriage. Gerry Levin will be the new corporation’s chief executive, but Steve will be chairman. Why? Because AOL has been the aggressive swain in this arranged union and, while Time Warner’s stock market value is just under $100 billion, AOL’s is more than $160 billion.
And you don’t need rocket science to work out how the companies will operate and communicate with one another - electronically. Count the e-records!
Those final figures, by the way, illustrate how Internet rapture has gripped the stock markets. In 1999, Time Warner produced profits in excess of $500 million. AOL, on the other hand, lost almost $100 million. Time Warner has debts in the region of $17 billion but it’s around five times bigger than AOL in assets, revenue generation and payroll. Despite this, U.S. investors put AOL’s value at more than one and a-half times the media group’s. Is that crazy, or what?
Microsoft gets
moving
The Time Warner-AOL betrothal pretty much overshadowed other astonishing news, only four days later, from mighty Microsoft, the corporation that, if it had statehood, would rate as the 32nd richest country in the world just behind South Africa and ahead of Hong Kong.
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Its January 14, 2000, news was that founder William H. Gates III, the richest man in the world, was handing over his company chief executive role to his oldest friend, MS President Steve Ballmer. The announcement came shortly after reports that the U.S. Justice Department was seeking to divide the Microsoft monopoly into three separate companies. Knee-jerk reaction from MS watchers was: “Bill doesn't have the heart to preside over the break-up of his own company." But they hadn’t been watching closely enough.
The clues: Three months before, Microsoft had announced it had expanded its mobile telecommunications partnership with British Telecom, the go-getting conglomerate that grew from the privatised telecommunications arm of the UK’s GPO. And, just a week before Bill Gates’ shock hand over, MS had revealed an alliance with Barnes and Nobel, called the eBook Initiative, that aims to move readers to digital books. It was an answer to the Amazon.com stranglehold. It will allow users to download print and audio books into their home computers. MS was further toughening its communications and its product portfolios.
The final clue to the MS strategy came in the company’s January 14 announcement. Megabyte Bill was leaving to spend more time with his computer. He would remain company Chairman and create the new position of Chief Software Architect. It made sense. Young Bill was always the geek of the company, happier with bytes than bucks.
Bill’s back to the workbench
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He knows the company has had difficulties with its Windows 2000. Jokers recount a conversation he’d allegedly had at a millionaire mardi gras in Colorado with William Clay Ford Jnr, the 41-year-old Chairman of the Ford Motor Company. That’s the company that is to IC (internal combustion) what Microsoft is to IT.
The story goes that during their chat, Bill teased Mr Ford, saying: “If automotive technology had kept pace with computer technology over the past few decades, I would now be driving a V-32 instead of a V-8, with a top speed of 10,000 miles per hour and you could be making an economy car weighing 30 pounds that does a thousand miles to the gallon. And, they both would have a sticker price of less than $50.”
William Jnr. thought back through the line of Ford potentates, back to his great grandfather, the indomitable Henry the First, and growled: “Yup, guess you’re right. But, would you really want to drive a car that crashes twice a day?”
It’s just a silly joke, but seriously, after the January 14 release, the MS news came thick and fast. On January 21, the Wall Street Journal broke the story of a Microsoft-Intel programme to train half a million teachers in 20 countries to use MS Office 2000 and Encarta in the classroom. Microsoft’s contribution: Over $300 million in software and support. The theory: Teach the kids to use them, you’ll sell more.
Days later, the New York Times reported a $50 million Microsoft investment in a new venture with inter-active media companies Intertainment and Liquid Audio. The deal gives Microsoft more TV sets-appeal for cable and broadband TV providers – another step in PC-TV convergence.
Then, Microsoft announced yet another deal, this time with mobile telecoms corporation, Qualcomm to develop smart phones and wireless, palm-sized PCs. And, Bill Gates went public.
At the Consumer Electronics Show in Las Vegas, he launched his new “Pocket PC”, a palm-sized wireless telecom unit, and he talked-up Microsoft’s new WebTv platform. In a speech to the show conference, he spoke of a transformation in consumer electronics incorporating more computing elements in what he called “the post-TV era”. He told delegates: “Devices like the phone or TV, or the way we get out music, have stayed the same for a long time.”
And, guess what these new desirables e-widgets will download? You’ve got it: books, entertainment, e-mail, personal, managed information, travel arrangements. That’s e-business. That’s what Microsoft is making a bid for, the e-commerce bucks. And Bill’s got his knowledgeable nose back on the grindstone to get the company up there.
Okay, enough about the American’s. What’s happening in the rest of the world? I can tell you something about Australia, Britain, Japan and, of course, New Zealand. I’ll leave the Kiwis to the end because we’re not very good at e-commerce in Godzone!
The Aussie scene
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A year ago, e-business didn’t look too good in Australia, either. Back in December 1999, Mr Alston was trying to make encouraging noises. In his Strategic Framework for the Information Economy report, he said:
“It is important to note that electronic commerce offers the same benefits and opportunities for businesses around the world. There is a real danger that if Australian firms hesitate they will fail to maximise their opportunities to participate in the expansion of local and global online markets. So far, many Australian businesses have been cautious about embracing electronic commerce.”
But since then, the Australian Federal Government has published “electronic transactions” legislation which provides a regulatory framework for electronic business and in April 2000, issued its report, E-commerce Beyond 2000, forecasting that electronic business could add 2.7 percent to GDP within seven years, a very modest figure when compared with America where productivity is said to be soaring by five percent each quarter because of on-line efficiencies.
The report was only a first look at the subject. It described itself as a pilot study into the economic impacts of electronic commerce. It heralded a larger report by the country’s National Office for the Information Economy and a group of industry sponsors. It was another Australian first: the world’s first analysis of the effects of e-commerce on a whole nation.
Despite its modest basis, the pilot report pointed Australian businessmen in the e-business direction, saying:
“It is already clear that e-commerce will bring significant changes to business, consumers, government and the economy. Companies are changing the way that they undertake their business. New industries are emerging and old ones are getting a new lease of life. Others may not fit in this new environment and may decline.”
Its forecast of modest GDP growth was accompanied by the calculation that e-business would enhance consumption - it called this a “better indicator of material well being” - by about $AU10 billion within the next decade.
In addition, the report saw what it called “real wages” rising 3.5 per cent and aggregate employment simultaneously rising by half a per cent.
It reported that the most reliable data available pointed to rapid growth in the use of Internet-based e-commerce in Australia from the 1997 level of $AU61 million to $1.3 billion in 2001.
But it also warned: “Projections that e-commerce could reach a billion dollars or even many billions of dollars in turnover should be placed in perspective with the fact that economic activity in Australia involves final expenditure of over $550 billion and total transactions would be many times greater.”
It identified likely early gains for a number of industries, including IT, communications, pharmaceuticals, education, banking and finance, and entertainment. Information managers in those sectors, take note!
It saw benefits to Australia from overseas markets, greater efficiency in marketing practice, the freeing of labour and capital for other tasks and added value for e-business customers. It forecasted that Australians would become richer because the economy would get more out of what it calls “the capital and labour endowment”.
E-commerce beyond 2000 detailed e-commerce benefits State by State, forecasting the least value for Western Australia, largely because of the State’s heavy mining economy that, it said, would find little use for e-commerce. It gave top ranking to ACT because of its low reliance on traditional exports. The report it is available on line at the NOIE at www.noie.gov.au/ecom/HOME/Policy/Economic_Impacts_Study/economic_impacts_study.html
Senator Alston published the report on February 10 with another encouraging comment for Australian businessmen: “This ground-breaking research once again confirms the magnitude of opportunities that e-commerce is likely to bring to all Australians and illustrates how far-reaching the effects will be.”
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Business takes the hint
I don’t think that there’s any doubt that Australian businessmen have taken the hint and are reading the NOIE report, too. Some of them are already well down the e-business fast lane on the Information Highway. The Australian business publication BRW , in a special 2000 edition, called them “e-ventures”, another good e-word. I like it!
BRW wrote: “Tired of upstart e-commerce companies snapping at their heels, banks, retailers, airlines and manufacturers are developing and implementing e-commerce strategies that will dictate the pace of the Australian economy over the next decade.”
Executives who believe e-commerce is just IT hype can be found at almost every level of corporate Australia, but the sceptics are thinning. Blue chip Australian companies are moving onto hyperspace marketing and head hunting for necessary management skills, the magazine said.
Earlier this year, the President of the Australian Institute of Company Directors, Dick Warburton, told manufacturers at the World Economic Forum in Switzerland that they could cut their costs by 30 percent with e-business.
Australian banks are getting on line with customers. An Australian financial researcher estimates that at the beginning of the year, Westpac had 150,000 on line customers and Commonwealth Bank had 140,000.
Westpac’s Chief Executive David Morgan was converted to e-business at an IBM summer camp for chief executives in the United States in November, 1999. After the e-business revelation, he said, bluntly: “If I could start again with a blank sheet of paper, we would not have 950 branches and a proprietary IT system.” He hopes to be able to equal the U.S. bank Wells Fargo’s 30 percent of customers on line by 2002.
The prospects for savings are huge for banks. Over the counter transactions cost them an average $1 each. On-line, the cost to them is just one cent. That’s e-business. You can see why David Morgan was running trials with Telstra on mobile telephone protocols to allow customer account access and transactions.
It shows why the Government’s Beyond 2000 e-commerce report includes in its list of outcomes: “It is expected that greater use of e-commerce for banking purposes will reduce the demand for teller staff.” It’s the red, reverse side of the e-commerce coin. Speaking for myself, if I was a Westpac teller right now, I’d be inquiring about re-training.
But their misfortune equals opportunities for information managers whose job it will be to look after all those automatically-created records.
Qantas goes a-hunting
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Australia’s international airline has taken off with e-business. It has set up a 50-strong team to put e-commerce across the corporation and headhunted an e-commerce partner from a big Sydney consultancy to run it.
Qantas deputy CEO Geoff Dixon says: “E-commerce is the main item on the agenda here at the moment. It’s a terrific opportunity for Qantas.”
He highlights three areas for its early introduction: corporate accounts, frequent flier customers, all of whom already have Internet access, he says, and the company’s annual $1.4 billion procurements, a big savings area if B2B promises stack up. Then will come corporate travel and e-ticketing on international services to join its already big e-system for domestic tickets.
Coles Myers superstore chief executive Dennis Eck is wild about e-business, but analysts are concerned that his enthusiasm may not be shared across the company. In 1999, Coles bought leading computer retail and Internet services company, Harris Technology, and up-graded its web site, launching the Coles Online home shopping scheme.
The company also picked up a 10 percent holding in online wine e-tailers Winepros and it provides online sales support for the Australian Football League and the Sydney Olympics websites. But the company has no big-name alliances, like the U.S. superstore Wal-Mart deal with America Online, and it has more than 150,000 employees lead by senior executives most of which came up through the conventional retailing ranks – a solid wall of company culture for Mr Eck to breach.
Australian wines and appliance manufacturer Southcorp has met the same baulk. Corporation boss Graham Kraehe, another e-business backer, met heavy scepticism when he proposed online services but he’s breaking through to the doubters. He believes the company can save an annual 200 million dollars with e-commerce, saying: “Through e-commerce, we can streamline the entire logistic chain. It’s very much a business to business opportunity.”
Southcorp owns world-known wine labels Penfold, Lindemans, Seppelt and Wynns. Faced by the competition from online wine sellers like Wineplant, Liquorlink and Winepros, Southcorp has launched Artesian.com-AU, a joint venture with Lion Nathan and United Distillers, for wholesaling to the hospitality industry and, still on the drawing board, a plan to sell direct to the public, a dangerous move as it risks raising the ire of the company’s established, powerful retailing customers.
That friction between existing and old customers is a big headache for wholesale companies. They know the syndrome as “channel conflict” and it’s giving senior executives sleepless nights all over the switched on world.
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Car sales are an ideal avenue for online business. Analysts at Pricewaterhouse Cooper have predicted that one in three Australian new car dealers will be out of business by mid-decade as e-commerce crashes in on the industry. It’s a problem for Holden Ltd, concerned to keep its dealer network happy but being pushed by Detroit parent General Motors to get to grips with e-business.
Boss of eGM, the online arm of the huge corporation, has said: “We are going to transform General Motors from a traditional organisation to an e-commerce model and we have to do this at Internet speed or risk missing the boat.” General Motors has online Ford and Toyota breathing down its neck, not to mention Autobytel.com, Cars.com and the rest.
Holden’s nervousness about selling online does not extend to its own B2B deals with its component suppliers. It plans to make a grab for those 10, 20 or 30 percent savings, or whatever they are, within 12 months with online bidding for its custom by tyre, wheel and transmission makers. That’s e-business! Can car sales be far behind?
Australia is chipping into the vast online gambling business, too. First up was the Northern Territory’s Lasseters Casino which opened a web site at its Alice Springs facility. The company has spent $10 million on the site but it will be in profit by the end of 2000, chief executive Peter Bridge calculates. Turnover for the first six months’ operation exceeded £13 million, all bar five percent of the cash coming from oversees.
Best estimate of the world-wide market is a turnover of $US10 billion in the next year, with Australia flagged to grab every third dollar. Two hundred companies with 700 sites vie for the gamblers’ coin around the world, but many operate with little or no player protection. The U.S. forbids online gambling, so no one can operate an e-casino there. Result: Anonymous gamblers dial oversees for their thrills. Increasingly they are dialling Australia.
By the end of 2000, at least three more web dens will be online, Tattersall’s in ACT, the Federal group in Tasmania, and Gocorp in Queensland. That’s e-business with all the aces, Aussie style.
Bits of Brits on
line
I won’t dwell long on the British e-business. There isn’t much. In fact, there are some horror stories like the 1999 survey of 200 leading U.K. websites accessed to see how fast the companies responded to e-mailed queries.
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The survey result: Of the only 74 sites that actually responded, 50 replied by Royal Mail with a 26p stamp on the top right hand corner. Some even came by the 5 pence cheaper three-day delivery second-class post. That’s snail-business.
In fairness, I should tell you that, in addition to the British suspicion over what it sees as an over-hyped damned Yankee plot, Internet usage in Britain is appallingly expensive. British Prime Minister, Tony Blair, got involved in the row over charges early in 2000 when he publicly praised two independent Internet service providers, the Dutch-based NTL and America’s Altavista, for promising free Internet access for Brit-surfers.
Faced with this Prime Ministerial scolding, and a popular campaign in The Times newspaper, the monopolising British Telecom gave in a week later. It dropped its up-to-$90-a-month charges to a still-high package of subscriptions ranging from $15 a month for off-peak only use, to $50 for unlimited use. And, surfers still have to pay standard phone-call charges on top of the fees.
But there are some happier stories. Great Universal Stores, the UK's biggest mail order company, appointed an e-commerce guru to its board of directors to beef up its virtual selling activities. The new boy was Michael de Kare-Silver, author of a best selling book "e-shock" which sold nearly 15,000 copies after being runner up in a business book of the year award.
Off-course bookmakers have moved into online punting in a big way. The U.K’s biggest betting shop chain, Ladbrokes, launched two Web sites aiming to grab a quarter of Britain’s online betting and a large slice of the international market. Bet.co.uk, is focused on Soccer games, and Ladbrokes.com, operating from the company’s Gibraltar base, will offer tax-free sports betting in a variety of languages and currencies.
Ladbrokes is part of the British-owned Hilton leisure and hotel group. In 1999, Hilton announced a number of joint ventures and deals as part of a $250 million investment in betting through the Internet, interactive television and mobile telephones.
Now it’s
E-lizabeth!
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Even Queen Elizabeth is getting the e-biz touch. She was to abandon 600 years of tradition and sign the first major parliamentary Bill of the 21st century by computer. The British Department of Trade and Industry proposed that she should for once abandon her fountain pen and her distinctive, elegant Elizabeth R moniker, and give her Royal Assent by electronic signature.
Appropriately, the legislation was the Electronic Communications Bill, which became law in May and gave such signatures on legal documents the same standing as those on paper. Acts of Parliament have been signed by, or borne the wax seal of the monarch at least since the 15th century, and their yellow vellum sheets line many shelves in the House of Lords record office.
But, the British will only go so far with these new fangled things, won’t they. Even though Her Majesty signed the Act on screen, she would still sign a paper version with her pen to keep up the unbroken filing record in the Lords Library.
There’s better news on the fashion front, too. British haute couture is taking to the Internet with virtual catwalks for online models, if I may use the phrase. After Matthew Williamson, the British fashion designer, displayed his much anticipated autumn collection on the Internet, corporate buyers from Bloomingdales and Macy's in New York were able to go direct from the webcast to the online "look-book" to purchase designs.
The presentation end of the fashion business - rather than the design and manufacture of clothes and accessories - is a global industry estimated to be worth some $40 billion. John Horner, managing director of the Models1 agency in Britain, says the creation of an online marketplace for booking models, stylists, photographers and designers will open up the often cosy networks of the fashion world.
"It is like the Big Bang in the City, where the broker used to have lunch with his chum," says Mr Horner. "What is going to emerge is a lot more online interactivity . . . It will gradually destroy many of the old relationships."
Mr Horner’s excitable words expose something of himself but also, interestingly, demonstrate what a novelty the idea of e-commerce still is in the Old Country. “What is going to emerge is a lot more online interactivity…”
Tony Blair’s government was busy getting all the legislative ducks in a row, but British commercial awareness of e-commerce opportunities still lagged far behind most of the developed world.
The Financial Times reported that one in 10 businesses sells online, with one in four buying, but it doesn’t say where it got those figures from and frankly I suspect them. I can find little evidence in support. Perhaps they include credit card transactions, or something like that.
The paper also said that fewer than one in five people had Internet access compared with the US where the figure is one in two. If that includes access at work then that’s probably about right.
Even the new e-terminology is unfamiliar in Britain. At about the same time, a feature in The Times of London about the Internet charges referred to “an expansion in electronic trade - or e-commerce”.
Early in 2000, the London daily Independent newspaper carried a story “Learning e-commerce is the business” with an excitable warm-up intro:
“Electronic commerce is one of the hottest topics in business circles today. It is expected to have a huge impact on business, consumers and government and revolutionise the way in which we live and work.”
How true, how true!
What was all The Independent drama about? The University of Plymouth's School of Computing plans for a postgraduate programme in e-commerce. There were dramatic quotes from the course designer, Dr Peter Jagodzinski, about “intense industry focus”, “integrating separate technologies” and “strategic business positioning”.
The feature also identified what it called an “e-commerce programming” course run by a company called People Energy in Llangollen, North Wales, a one-month residential teach-in actually for wannabe Web programmers from the big urban areas of northern Britain.
That’s great, but … Plymouth? Llangollen? Where were the courses in London, or at the big, technical universities in the major cities like Glasgow, Manchester or Birmingham?
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The London-based group Aslib, a name derived from its early days as the Association of Libraries and Information Bureaux, themed its first Year 2000 edition of the journal Managing Information to “e-Business and e-Commerce”. Its main feature was an interview with a Harrogate, North Yorkshire, consultant Colin Ives.
Strangely, what Mr Ives and the Managing Information writer talked about was not who’s who or who’s doing what in e-biz. What Aslib readers were apparently eager to know was how to do it. The article’s intro reads:
“So, just when many of us were heartily sated with hearing about knowledge management (irrespective of whether it’s a good or bad thing), we’ve now got a new set of terms to play with: e-business and e-commerce. What do these terms mean? Are they synonymous? Are they going to effect the world of libraries and information?”
Are they ever!
The feature explores the differences between the two terms. E-business is, it says, the “collection of
technologies today that support the delivery of business objectives”, and
e-commerce is the “financial transactions between organisations and people”,
the “sexy end” which the Press concentrates on.
Good definitions!
The journal reproduces Mr Ives’ “four stages of e-business evolution” and then sets out its own eight-point action checklist to “make sure you are ready to position your information service at the forefront of the e-business revolution as it hits your organisation.” These are:
1. Be clear about the differences between e-commerce and e-business.
2. Carry out an informal audit of where your organisation is with regard to both e-commerce and e-business.
3. Carry out the same task on your information service.
4. Identify the broad steps required to prepare your organisation for e-commerce and e-business.
5. Carry out the same task on your information service.
6. Separate what can be done anyway from what would be a purely e-business matter.
7. Keep informed on what your clients are doing in e-commerce and e-business.
8. Give staff guidance and information on developments in the information management processes to ensure they see it in its “pivotal role”
It’s all useful stuff, I suppose, straight out of any records management guidebook, apart from the first item that is somewhat unnecessary. By Mr Ives’ definition, e-commerce is part of e-business. I can’t see that knowing the difference is of first-place importance.
The United Nations’ agency
The United Nations runs what it calls the Electronic Trading Opportunity System, or ETO, from its Trade Point Development centre. Since its beginnings in 1993, the ETO has distributed over two billion trade leads to companies all over the world. Currently, some eight million companies from 173 countries use it.
A British analyst, Jonathon Cutting, has calculated from ETO statistics that less than one percent of these companies are British. In a book he recently co-authored on B2B resources world wide, he says that British and European companies are lagging behind the U.S. and the Far East. In a recent interview, he said: “British companies are not only behind the USA, Korea, China and India but within Europe, even Turkey and Italy make more use of trade sites like the ETO and the vast number of trade leads now being posted on the World Wide Web.”
But it’s not all bad news for Britain, now firmly part of Europe. Californian web watcher Michael Erbschloe, research head at Computer Economics, a high-profile company consultancy amongst Fortune 500 businesses, says: "Over the next three years, the worldwide e-commerce market will open up in North America, Europe, and Asia Pacific and grow to about 93 percent of the worldwide total."
Which augurs well for Australasia, too.
On the bottom left hand side of the Asia Pacific region, Australia and New Zealand are ideally placed to grab a bigger slice of the e-business as China, Japan and other nations in the region’s top left hand side come on-line. This is so, not just because of our geographical location but because we are thinking “Asia” as well as “North America”.
Asia getting online - slowly
E-business has been slow to start in the Orient because of its various governments’ paranoia over telecommunication and the freedom it gives their citizens. Authorities in Japan and China have actively discouraged Internet activity, by decree in China, by price in Japan.
The Japanese are particularly cross with the way their government has hobbled Internet use with high access fees and bureaucratic red tape. In 1999, to answer much noisy criticism, the Tokyo government reported that use of the ‘Net had doubled in the previous financial year.
The Japanese Post and Telecommunications Ministry reported that the country had 17 million users, a rise of almost 50 percent, year on year. Another startling revelation in the Government white paper was a claim that e-commerce in Japan totalled almost 1.5 billion U.S. dollars during the year, double the amount the year before.
The report followed a report in Japan's leading business daily paper, the Nihon Keizai, that unnamed government sources were saying Nippon Telegraph and Telephone would be "urged" to introduce flat-rate pricing for Net access within the next couple of years. The plan was that ‘Net users would pay almost $100 a month for Internet connection and access, a huge figure but still lower than they pay now.
Businessmen were sceptical about both the usage figures and the pricing reports. The online news service C-Net quoted the boss of one Internet service provider as saying: “I don't see how that's possible. It sounds like the government is making these numbers up."
What makes the data even more suspect is the fact that in 1998, three out of the nation’s top five PC makers reported big drops in the number of machines shipped. Japan's biggest PC manufacturer, NEC, for example, acknowledged a massive 14 percent decline.
Despite all this, Japanese businesses seem to be moving into on-line retailing at least with some gusto. In January, 2000, one of the big Tokyo corporation, Nikkei, began publishing a monthly ranking of Japanese e-tailing sites, calling the service BestShop. It divides e-tail sites into top ten overall winners, plus the best ten in various categories.
In an early listing, the Top Ten e-tailers sold outdoor camping and sports gear, fishing kit, bespoke curtains, discount travel, crystal and glassware, lingerie, ham and sausages, model-making stuff, coffee and … hanko, those little personal stamps carved with the characters of the user’s name needed for opening bank accounts or signing official documents.
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Japanese businessmen are on an e-biz learning curve, too. Consultancies and training companies are offering e-business courses and Internet services and equipment rentals. One of the bigger Tokyo agencies, Internet Initiative Japan Inc., launched one, called “iBPS”, in the contemporarily approved way that these things go, with a lowercase initial “i” - Internet Business Processing Service. The new service boasted of providing “need-oriented easy-order systems integration services”. I expect they understand what that means in Tokyo.
China coming on
song
Entrepreneurial Hong Kongers are casting their eyes across the new Territories into the ancient Republic and its teeming millions for e-biz opportunities. It’s a hard row to hoe, but to people like Peter Yip, chief executive of Chinadotcom Corporation, it’s an irresistible challenge.
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Enterprising Mr Yip thinks ahead. He was clever enough to get the ticker code “China” on the Nasdaq equity market stock listing. Nasdaq? It stands for National Association of Securities Dealers Automated Quotation, the world’s hottest share market. In 1999, it traded stocks worth over $15 trillion, close to double the previous year’s work. I digress … Chinadotcom, the pan-Asian Internet investment and development group.
Mr Yip made a $50 million business alliance with one of Japan’s oldest Internet groups, Trans Cosmos, a company founded as computer systems integrators in 1966, and a leading force in the Japanese Internet sector with fingers in many telecommunications and multimedia technology pies at home and in the United States.
Peter Yip was excited about the new alliance. The news release about it quoted his flowery declaration: “We are both operating companies with an investment focus -- making investments in the incubation and development of new Internet businesses. Chinadotcom has applied this focus and its 1,000 employees to developing such businesses in Greater China and Asia, while Trans Cosmos' 4,000 strong team has adopted a similar approach in Japan."
Sounds like another 50 million dollar marriage made in virtual
heaven. But it is the type of deal
that’s happening all over the East, creating alliances with China that will
bring the new technologies to that mystical continent and with it e-business of
a scale set to turn the sort of sums I’ve been quoting this morning into petty
cash.
“How can we compete!”
And so, finally, I turn back south again to my new homeland, New Zealand. There are currently three point eight million people in Aotearoa in a country roughly the size of Great Britain.
All right, and 45 million sheep! Or is that 70 million, I can never remember.
Like our cousins across the Tasman, we were a bit slow picking up on e-biz. Difference is that we in New Zealand are still dragging our heals. Just after the Australian Federal Government published its Electronic Transactions Bill, The New Zealand branch of the international business management consultants Ernst and Young carried out a study of e-commerce in New Zealand. What it discovered dismayed me, and many like me, who thought we’d be quite good at that sort of thing. Mind you, we thought we were good at Rugby, once, didn’t we.
Well, what Ernst and Young discovered was that less than half the 100 or so chief executives who responded to the survey had committed as much as $NZ50 thousand to e-business initiatives. Worse still, 40 percent of the bosses admitted their companies had no e-business functions on the Web.
Another survey question found that less than seven percent of the respondents saw themselves as “innovators”, despite the fact that New Zealand could be considered the most networked country in the world. At the time, New Zealand had around 5,000 Internet connected PCs per 100,000 inhabitants, compared with just over 4,000 in Australia, 3,500 in Silicon Valley and 2,000 in Britain.
New Zealand always has been a nation of primary production. The concept of added value rarely appears anywhere. We’re happy just growing our sheep, apples, pine trees or dairy cows and shipping the products out with the minimum of processing.
So, it was little surprise when, at the end of an Ernst & Young presentation in Wellington about the survey, the very first question came from a blue-suited businessman, presumably a reasonably successful one or he wouldn’t have been invited to the seminar. The suit asked: “How can we compete?” It was as much a statement as a question and he left unspoken the usual corollary to that pathetic comment: “ … we’re only a small country!”
The survey found some things to be happy about. For instance, more than half the respondents intended getting into e-biz. It would be having a moderate to significant impact on their business by about mid-2000, they said. It was a fond hope and very encouraging but I see little evidence of it from here, 12 months or so down the track.
The New Zealand Government is moving urgently into electronic Government, an initiative that will introduce more and more Kiwis to the glories of the Internet e-business. Public interest in the Government’s plans is picking up.
Witness the meeting of the Wellington chapter of ARMA at which the Deputy State Service Commissioner, Ross Tanner, outlined the e-government scheme and gave an insight to Government thinking on information management and the knowledge economy. Normally the chapter gets between 20 and 30 attending its monthly lunch events. This one attracted 70 plus. We had to arrange a new venue to accommodate the crowd.
Ross Tanner spoke of a range of new e-products being considered by the group of agency Chief Executives, a management programme and major policies such as legislation up-dating, and deliverables which included a secure electronic environment for Government agency intercommunication and a government electronic procurement programme. He said: “It’s all about moving Government from the industrial age to the information age”, a rather neat way of expressing it, I thought.
Another large number attended the chapter’s annual general meeting seminar at which Ministry of Social Policy managers set out the Government’s Data Management Policies and Standards which will form the basis for e-government. The project was explained succinctly by Project Manager Wayne Pincott from the Social Policy Ministry’s Information Systems Co-ordinating Unit. He told the seminar:
“The (project) will enable government departments to better work together, so that the public can deal with one technically ‘joined-up’ organisation, instead of a number of fragmented agencies. In addition, government ministers will have better quality and more complete information available to address the complex problems that face the nation. Common standards and a shared IT infrastructure will lower government costs and reduce the likelihood of agencies taking on projects that are beyond their capabilities.”
Like I said, there’s hope, hope that soon we’ll all be up there with the Amazon.com boss, Jeff Bezos, when he says: “One Click Shopping is a major innovation. We have made some progress there already. I tell people--and I believe it firmly--that we are at the Kitty Hawk stage of electronic commerce. We know 2 percent today of what we will know ten years from now.”
What is clear is that, very soon, the “e” will drop out of “e-commerce” as more trading is done on-line than off. Just as “e-commerce” will lose its prefix so, too, will it cease to be necessary to differentiate between e-mail and the post, or electronic record keeping from any other.
All records will be e-records. If all the other reasons - efficiency, productivity, tracking, cost savings, legal requirements, accountability, social responsibilities, knowledge retention and so on - did not exist to make us do it, the burgeoning “e” is reason enough to kick-start us into electronics records management, and the sooner the better.
See also Michael Steemson's review of the March 2000 Canberra conference of the ACT branch of the Records Management Associatio of Australia: Face it: e-Biz is here to stay and it's making records!.
To go to the Caldeson Consultancy Home Page, click HERE.
 Michael Steemson |
Michael Steemson,
The Caldeson Consultancy.