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Net Prophet - by Dylan Tweney

March 30, 1998

How to save millions while preparing for the revolution


This year's big advances in Internet commerce won't seem very glamorous to most people. That's because they will have more to do with streamlining and automating companies' supply chains and distribution channels than with Java-based shopping carts, one-to-one marketing, or streaming-3D-video-merchandise displays.

But make no mistake: These seemingly boring back-end efficiencies will lead to millions of dollars in savings for the companies that can successfully implement them. To the bean-counters who control your IT budget, that's glamorous indeed.

What's more, these technologies are laying the groundwork for explosive developments in online consumer sales in 1999 and beyond.

For a glimpse of the kinds of technologies that are making this happen, take a look at two companies that are focusing on what is usually called business-to-business I-commerce: Ironside Technologies, at http://www.ironside.com, which focuses on the supply side; and Ariba Technologies, at http://www.ariba.com, whose technology targets corporate purchasers.

Ariba is trying to define a new field of corporate technology. They call it operating resource management, and their product is Ariba ORMS, for Operating Resource Management System.

According to Ariba, more than a third of the average company's revenue is spent on operating resources: industrial and office supplies, capital equipment, and services. This kind of purchasing is typically done in a very inefficient fashion. If you need a new whiteboard for your office, for instance, you probably need to get the office supply catalog, find the item number for the whiteboard you want, fill out a requisition form, get approval from a manager, and give it to an assistant who then forwards it to a purchasing department or phones in the order to a supplier.

Ariba's ORMS aims to consolidate all corporate spending for operating expenses into a single application, which anyone in the company can access using a Java-capable browser. Want a whiteboard? You can use your browser to place an order through the ORMS application, which will then route it electronically to the appropriate managers for approval. Once approved, the order is automatically placed with a designated supplier. If that supplier is already using some form of I-commerce solution, such as a Web-based catalog, Ariba will plug directly into that, automatically handling payment, shipping details, and the like.

Last week, Ariba announced partnerships with Sterling Commerce, VeriFone, Federal Express, and Visa. These relationships will enable the ORMS product to achieve an even greater degree of integration with payment processing, shipping, and EDI processes. (See last week's story by InfoWorld reporter Matthew Nelson.)

Ariba's solution isn't cheap: It costs as much as $1 million to implement. But if it can help a company save even a few percentage points on a multimillion-dollar operating resources budget, Ariba should pay for itself.

On the other side of the business-to-business equation is Ironside, whose Ironworks solution enables manufacturers and distributors to set up extranets that automate their sales to other companies. If your company isn't implementing Ariba ORMS, you may still be able to streamline your operating resource purchases -- if your suppliers implement Ironside's Ironworks.

Using Ironworks, companies can build online catalogs and start taking orders from their corporate customers. The customers use a Java-compatible Web browser to access the Ironworks server, which is itself written in Java. This server, in turn, communicates with the supplier's existing back-end systems, such as order management or ERP applications, to process orders and check inventory in real time.

Ironworks has much in common with many other all-in-one I-commerce packages, with the exception that it's designed for business-to-business commerce, not consumer sales. It provides features to help corporate buyers simplify their purchases; these features include support for RFQs (requests for quotes) and account billing (rather than credit card payment processing). Ironworks also matches its high-end capabilities with its price, which starts at $25,000.

Once companies start to realize savings from automating their corporate buying and selling, that should free resources to develop Internet retail solutions. This automation will also provide a solid framework for I-commerce in general, since adding online consumer services will be a matter of extending network processes that are already in place. And all this will happen just as many consumers finally get comfortable buying things over the Internet.

That's why this year's unglamorous business-to-business I-commerce solutions are the necessary precursors to next year's consumer I-commerce explosion. Meanwhile, these "ugly ducklings" are saving the companies that use them a great deal of money.


Dylan Tweney edits InfoWorld's I-commerce section online and in print.
He welcomes your comments at dylan@infoworld.com.


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Copyright © 1999 InfoWorld Media Group Inc.

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