Printed
with permission from TCI
Management Consultants. A group of senior-level management
consultants, offering strategic planning and marketing services
to a wide range of public and private sector clients.
Opening
Digital Markets - Battle Plans and Business Strategies for
Internet Commerce
by Walid Mougayar
McGraw-Hill, New York,
1998
"Internet
commerce is clearly becoming an imperative for the internetworked
enterprise. It can be characterized as an evolution of international
trade. From a technology perspective, the Internet is the
catalyst for yet another new computing paradigm: Internet
computing (also referred to as network-centric computing
or internetworked computing). The marriage of the Internet
with electronic commerce represents the cutting edge in
business today.
ŠEvery
firm that wants to stay in business beyond the turn of the
century should be reevaluating its strategy and operations
[in light of the potential for Internet commerce], from
customer service to marketing to product development to
merchandising, logistics and distribution." (p.8)
Walid
Mougayar is the Canadian representative of CommerceNet,
an industry association devoted to "accelerating the
transformation of the Internet into a viable open marketplace"
(p. 102). His book is about how businesses should be thinking
about Internet commerce (which Mougayar also refers to as
electronic commerce) in order to stay competitive for the
future. A key point that he makes in this regard is that
organizations cannot simply regard the Internet as merely
another medium through which to make financial transactions.
Rather, they must see the Internet as a strategic vehicle
for the manipulation of digital data that is associated
with financial transactions, and that creates additional
value for the customer. Viewed this way, the Internet fundamentally
transforms the nature of the transaction - and puts us into
an entirely new era in supplier-consumer relationships.
Mougayar
identifies several issues as being important at this still
relatively early stage in the emergence of electronic commerce.
In the first four chapters of the book he gives a very comprehensive
overview of the current state-of-the-art (as of spring,
1998) in the field of Internet commerce. He describes in
detail the technologies, initiatives, and industry associations
and strategies that are being mounted to prepare the world
for Internet commerce. In summary, the major factors that
he identifies are:
- the convergence of technologies which is making new and
more efficient capabilities possible in the transaction
between buyer and seller
- the emergence of new intermediaries and other businesses
between providers of services and the seller: these are
new businesses, not in existence a few years ago, that are
replacing the old intermediaries - examples would include
multimedia content delivery companies such as Build-a-Card
which enable the user to create greeting cards in cyberspace
and deliver them instantly
- the
developing legal and regulatory framework, which includes
issues such as the lack of standards and consistent rules
and policies, uncertainties regarding the treatment of custom
duties and taxes across international boundaries, etc.
- the
behavioral response of consumers,,in terms of concerns about
security, privacy, fraud, hype and exaggerated promises,
and a host of other uncertainties regarding the safety of
doing business electronically
- the
behavioral response of companies, which includes issues
such as lack of awareness of what is now possible and what
will be possible in the near term, lack of an understanding
of the strategic advantages of electronic commerce, and
lack of a coordinated approach to dealing with Internet
commerce implementation
Some of these issues, such as the convergence of technologies,
are pushers and drivers, impelling us sooner rather than
later to embrace the world of electronic commerce. Some,
on the other hand, are barriers, such as the level of suspicion
and coolness towards Internet commerce that can be seen
in many consumers, which mat inhibit to some extent the
acceptance and adoption of Internet commerce.
Even though there are drivers and blockers at work at the
present time, Mougayar leaves little doubt that there is
no avoiding Internet commerce in the future, and that wise
companies will begin planning immediately for a world where
electronic commerce is routine. This brings us to the second
part of the book (chapters five through eleven) where he
presents a strategic approach for a company to become involved
in electronic commerce.
First,
he notes that it is important that a company have a complete
perception of exactly what the Internet is, and the roles
that it can play in electronic commerce. He outlines the
multidimensional nature of the Internet as having five distinct
aspects, which are:
1) a network - with proper security, the Internet can function
as a network of suppliers, customers, intermediaries, regulators
- all of the parties that potentially need to get together
to make a transaction (or develop a product or service)
2) a medium - this view of the Internet sees it as another
advertising and promotional medium, carrying messages to
the marketplace
3) a
market - this view sees the Internet as the marketplace
itself, a coming-together of hundreds of millions of potential
consumers
4) a
transaction platform - this view sees the Internet as the
vehicle through which financial transactions (and other
exchanges) are made
5) an
applications development platform - finally, this perspective
sees the Internet as a 'skunkworks', enabling products as
services to be trialed and perfected
"The Internet has five multiple identities, and each
one must be taken advantage of by developing and applying
a different strategy. It is important to understand and
accept the unique potential of each one, as a sign of Internet
organizational maturity. The synergistic effect realized
by addressing all five faces of this identity enables organizations
to take maximum advantage of electronic commerce capabilities.
Successful large organizations are addressing every one
of the five identities." (p. 83) With this multidimensional
perspective firmly in mind, Mougayar then proceeds to outline
a 10-step strategy for firms to follow in pursuing Internet
commerce (or, as he puts it, to reach 'cybermaturity').
These are:
1. conduct
necessary education
2. review current distribution and supply chain models
3. understand
what your customers and partners expect from the Internet
4. reevaluate
the nature of your products and services
5. give
a new role to your human resources department (to establish
the systems, procedures and protocols needed for electronic
commerce)
6. extend
your current systems to the outside
7. track
new competitors and market shares in the new digital marketplace
8. develop
a web-centric marketing strategy
9. participate
in the creation and development of new virtual marketplaces
and intermediaries
10.
instill a management style that understands the synergies
and the differences in dealing with electronic markets in
addition to traditional markets
Each of these steps is further detailed, with expected outcomes
at the conclusion of each specified, in Chapter 7 of the
book. Chapter 9 also discusses IT strategies to incorporate
electronic commerce into the orgnization.
Chapter 8 of the book is particularly interesting from a
marketing perspective. Entitled 'The Wired Consumer', this
chapter discusses among other things the emerging needs
that are being demonstrated by consumers, and to which electronic
commerce will have to respond. There are nine consumer needs
and demands that Mougayar identifies, which are:
1. the need for customers to be able to serve themselves
2. the need for efficient access to information and relevant
data
3. the
need for Internet commerce to facilitate bidding (possibly
using software agents representing the buyer, which are
'empowered' to make specific bids for products or services,
up to a certain amount, on their behalf)
4. the
demand for 'information appliances' which will be plugged
into the Internet (such as the PC wallet and the Web-telephone)
5. the
demand for virtual reality experiences
6. the
need for on-line customer detail and transaction history
7. the
need for universally available and accepted payment instruments
8. the
need for suppliers to be able to handle microtransactions
(that is, transactions with a value of only a few cents'
(or fraction thereof)
9. the
need for new casting capabilities (e.g. such as webcasting,
which will combine the Web and television, or pointcasting,
which will direct highly specific tailored content to an
individual)
Appendix A of the book outlines the emerging digital payment
options that are currently in use or are being developed:
digital cash, smart cards, encrypted credit cards, electronic
checks and Internet financial EDI (electronic data interchange).
All of these are vehicles for possible commercial exchange
that we will undoubtedly be seeing more of in future.
Opening Digital Markets is a very rich book, full of insights
and examples, in a very fast-moving field. Interested readers
are invited to contact the author at the address given below
(of course, you may also want to read the book itself!):
Walid
Mougayar
President and CEO
CYBERManagement
Inc.
151
Bloor Street West
Suite
470
Toronto,
Ontario
CANADA
M5S 1S4
Tel:
(416) 929-1011
Fax:
(416) 929-1522
e-mail:
walid@cyberm.com
The
above summary has been provided to you compliments of TCI
Management Consultants
