Doing Business on the Internet

It's all part of the ultimate drive toward information, communication and transactions on demand

by John Makulowich

Any systems integrator worth its salt these days is busily scouring the Internet for business leads, partners and staff, from government solicitations and teaming arrangements to personnel identified through classified ads. It's a clear sign of the changing landscape in which commerce is conducted with the growth of online services and the Internet, especially the World Wide Web.

From the use of computers and communications equipment for business-to-business transactions all the way to buying and selling crafts and professional services or making checking account deposits over a public or a private network, electronic commerce is on the upswing. It covers the private sector as well as the public. It's all part of the ultimate drive toward information, communication and transactions on demand.

The numbers are part of the reason for the frenzy in e-commerce. In the United States, according to a recent report by Alex. Brown, Baltimore, consumers make 82 billion transactions each year. Of these, 35 billion are with cash, 33 billion with checks and 12 billion with credit cards. Businesses also write 30 billion checks per year. Thus, the report concludes, "There is an enormous opportunity to displace the 68[sic] billion cash and check transactions made by consumers and businesses with electronic credit or debit transactions. The opportunity is not limited to the United States market."

Oracle

Paul Litvak, executive director of Electronic Commerce for Oracle Government, makes the corporate commitment quite clear: "We strongly believe that electronic commerce is the business model of the future."

One company reading the metrics on the wall is Oracle Corp., Redwood Shores, Calif. Paul Litvak, executive director of Electronic Commerce for Oracle Government, makes the corporate commitment quite clear. "We strongly believe that electronic commerce is the business model of the future."

Oracle recently announced its electronic commerce solution for business-to-business and business-to-consumer transactions. It includes electronic cash, marketing and promotional tracking, catalog shopping and delivery of secure transactions and payment options. With Project Apollo, a merchant server, a small business can start a retail Web presence. The Oracle Payment Server offers a range of electronic payment methods. Oracle Security Server, the company's authentication software, helps recognize and protect consumer identity and information as well as authorize payments. Add a few strategic relationships with key firms such as Cyber-Cash in Reston, Va., Hewlett-Packard Co. in Palo Alto, Calif., Quark Inc. in Denver and VeriFone Inc. in Redwood City, Calif., and presto, you have a comprehensive solution to Web commerce.

Does Oracle have a grand plan? No question. "Build a network computing business infrastructure grounded in our Network Computing Architecture - an open-systems, standard-based operating environment for the networked economy," says Litvak.

Multiple Players

Of course, Oracle is not flying solo with its vision or its mission. Others committed to electronic commerce are the virtual household names of the Internet pioneers alongside the Internet newbies, the Big Board's billion-dollar firms and Nasdaq's newcomers. For example, Netscape Communications Corp., Mountain View, Calif., offers Netscape Payment Kit. This contains Netscape LivePayment server software for online credit card processing, Netscape Enterprise Server software for building intranets and Web sites and Netscape LiveWire Pro, a visual development environment to create an online commerce solution.

Started in October 1995 and targeted to both consumers and insurance agents, InsWeb was the brainchild of Hussein A. Enan, who had more than 30 years experience in the insurance industry.

Open Market Inc., Cambridge, Mass., just announced a licensing agreement with AT&T, Basking Ridge, N.J., for its Internet commerce software, OM-Transact, to be used in AT&T's new SecureBuy Service. With the program, businesses have order management, online customer service, security, buyer authentication, record-keeping, flexible purchasing and payments and secure transaction processing, including sales tax and shipping charges. Add AT&T's Web Marketing Solution, which integrates access, hosting, advertising and customer service, and you are on your way to putting almost any business on the Web.

Even Internet service providers are getting into the act. PSInet Inc., Herndon, Va., along with CyberCash and Mercantec Inc., Lisle, Ill., introduced PSIWeb eCommerce, an electronic commerce solution tied into PSIWeb, a hosting service of PSInet Publishing Corp. With the product, companies can develop, integrate and manage virtual storefronts. CyberCash just introduced CyberCoin, a payment service for small cash transactions between $0.25 and $10. The company plans an electronic check service by year-end.

And never far off is the ubiquitous presence of the industry giant, Microsoft Corp., Redmond, Wash. It offers Merchant Server 1.0, part of the BackOffice family. This software allows companies to build Internet stores from templates, generate custom Web pages on the fly, develop targeted sales promotions based on real-time information and process orders. It also supports VeriFone Internet-based payment processing and other third-party payment systems for secure credit card transactions.

Niche Players, for now

Alongside the dominant industry players are a host of new boutiques with a dazzling array of imaginative initiatives based on hard-earned field experience and bright programmers tinkering with Java, JavaScript, ActiveX and C. Among them are InsWeb, San Mateo, Calif.; RoweCom, Cambridge, Mass.; Elcom Systems, Westwood, Mass.; and Employease, Williamstown, Mass. - all addressing problems with new solutions in areas that could become significant markets in the years ahead.

InsWeb

(http://www.insweb.com/)

Insurance information over the Web is the focus of InsWeb, whose site sports the tagline, "The Internet Gateway to the Insurance Industry." It's a grand vision for an industry that generates $1.5 trillion in premiums. Started in October 1995 and targeted to both consumers and agents, InsWeb was the brainchild of Hussein A. Enan, who had more than 30 years experience in the insurance industry. At the site, consumers can purchase insurance policies or find information about insurance companies. Agents can gather news and information on the industry, connect to insurance company home pages, reference materials and collect data on financial service providers who work with the insurance industry.

According to Carolyn Grossman, vice president of corporate communications, "The original intent was to do something for the insurance industry to benefit the industry. The long-range objective was to provide benefits to consumers by making the distribution channel more efficient."

At the outset, little concern was given to the payback period. Grossman admits that recently the figure was set at five years as the time when the founders expected to generate revenue worthy of the investment. There are almost 60 people involved with the company, nearly half of whom work on Web development. The rest are in sales, divided neatly into life and health, and property and casualty.

She says that half of the $1.5 trillion in premiums, or $800 billion, could reasonably be transacted on the Internet "at some point in the future." In order to build a Web site that could handle an $800 billion industry, enormous work went into systems design, especially in security, privacy and legacy interfaces.

"At this point, we probably have $3 million invested in the site itself," says Grossman. "We have a very sophisticated, secure system, one of the best on the Internet, we think. We have yet to promote the site to consumers, but we plan to start in the first quarter of 1997. We were waiting to develop critical mass for people to see when they come to the site. Based on our marketing research, it comes down to presenting comparison shopping for auto insurance."

RoweCom

(http://www.rowe.com/)

For Richard Rowe, president and CEO of RoweCom, the problem was clear: 42,000 magazines and journals from thousands of sellers offered to information professionals, what amounted to a dizzying array of choices and a monster to monitor.

His solution? WebSubscribe, a simple "point and click" subscription ordering and tracking system done securely over the Internet. A companion product, Knowledge Acquisition Reporter, combines orders in a reporting service that tracks and analyzes the organization's total acquisition expenses. Among the programs' features are renewal

reminders via e-mail and the option to renew with an approved e-mail order, missing issues claimed over the Internet and links to specific journal and publisher titles and tables of contents.

"This was a classic intermediation issue, many sellers and many buyers and a triple entry system of buyer, intermediate, publisher," says Rowe. "It called for, not disintermediation, but what I term automediation, a computer program with high value-added and rule-based purchasing that offered users a way to save money, save time and avoid costly errors and duplication."

Elcom Systems

(http://www.elcom.com/)

David Wolf, president of Elcom International Inc., believes that customers are ready and anxious to participate in e-commence at the business-to-business level.

With a product built on the Java programming language, Elcom Systems Inc., a wholly owned subsidiary of Elcom International Inc., focuses its efforts on business-to-business marketing with what it calls "full circle electronic commerce." Formed in 1992 to develop and market multimedia, interactive electronic commerce systems, the company serves customers in PC products distribution, oil drilling equipment supply and food products distribution.

Says David Wolf, president, "The problem we were trying to solve was to provide sellers with better ways to present, merchandise and market their products and to achieve cost reductions. One example would be an office products company serving a customer by allowing that customer to order directly online. Enter our transaction server system linking the client/server and legacy systems. A classic example of a component-driven technology and a seller-oriented solution."

Wolf believes that customers are ready and anxious to participate in e-commence at the business-to-business level. What's holding them back is the lack of imagination at the supplier level. "We have the tools and technology; the suppliers are the bottleneck," says Wolf. Another impediment is the current transition that large organizations are passing through from legacy systems to client/servers. To do e-commerce, he feels a stable technical environment is a prerequisite.

Employease

(http://www.employease.com/)

John J. Nail is CEO of Employease Inc., which offers an online human resource and employee benefits administration service with its Benefits Management Network, a program that automates benefits to help relieve employers of the burden of costly paperwork.

One bureaucratic nightmare few companies are willing to address is the challenge accepted by Employease Inc. This firm offers an online human resource and employee benefits administration service with its Benefits Management Network, a program that automates benefits to help relieve employers of the burden of costly paperwork.

Like the other e-commerce entrepreneurs, John J. Nail, CEO, brings deep field experience of 20 years in employee benefit sales and management to the task of solving the human resources administration problem. For him, the issue is in-sourcing or co-sourcing, a term used by Electronic Data Systems Corp. It has the same meaning as Rowe's automediation.

"The point is to automate the employer management side, the back office work for the administrator," says Nail. "The problem we addressed was that there was no common data platform and the issues, like benefits, are very regionalized and localized."

Interestingly, the Benefits Management Network is a proof-of-concept for JavaScript, with the program comprised of more than 40,000 lines of JavaScript and 4,000 lines of Java code.

Resources:

World's Guide to Electronic Commerce http://e-comm.iworld.com/

Office of the Deputy Under Secretary Of Defense (Acquisition Reform). Introduction to Department of Defense Electronic Commerce: A Handbook for Business. Version 2. [Undated] http://www.acq.osd.mil/ec/

Oracle Electronic Commerce
http://www.oracle.com/ecommerce/

U.S. Business Advisor http://www.business.gov/

U.S. Congress, Office of Technology Assessment, Electronic Enterprises: Looking to the Future, OTA-TCT-600 (Washington, D.C.: U.S. Government Printing Office, May 1994). http://www.ota.nap.edu/pdf/

©1996, Washington Technology. All rights reserved.