"Forget the technology, it's the culture that counts." Coming from managers in IT companies selling technology, this advice on embracing electronic commerce sounds odd at first. But it makes sense: just as promoting driving sells cars, promoting business that happens to use the Internet will shift more IT equipment.
Electronic commerce, known as e-commerce, is about using the power of the Internet for all aspects of business: supply, sales, marketing and internal communications. Describing it as "the next wave of business innovation", John Leech, e-business manager at IBM Ireland, warns that getting up to speed is as much about culture as about technology.
Speaking at the launch of IBM's latest Netfinity server, Mr Leech said: "It's the culture and the approach to the market that's on the critical path, not the technology."
Wild figures for the total value of e-commerce are being thrown about like snuff at a wake, but it's unclear whether figures like hundreds of billions of dollars of online trade in 2002 reflect true online sales or just sales which included sending an email message or two. One concrete figure is the US Department of Commerce's $827 million for the value of airline tickets bought in the US via the Internet last year. This is a 300 per cent increase on the 1996 figure.
the International Data Corporation estimates more $7 billion (£5 billion) worth of goods were bought online in 1997, with 93 per cent of the revenues going to US companies. This may yet be a humble beginning: various industry analysts speak of hundreds of billions of dollars of online sales in 2002, while some predict even more. Networking giant Cisco recently predicted it alone would do $20 billion in e-commerce by 2001.
When it comes to the approach to e-commerce, Mr Leech says it is necessary to do more than just follow your competitors, and distinguishes between companies who get into e-commerce "defensively" and those who embrace it proactively. In the proactive camp he cites the example of 100year-old French bank Banque Transatlantique.
The bank adopted Internet home banking to offer services to its expatriate customers all around the world. Making the most of the new medium, the bank also offers online shopping whereby customers' accounts may be debited without having to entrust credit card details to the Internet.
IBM itself recently took to online sales of its Netfinity servers, but can hardly be called proactive in this regard. Responding to pressure from direct sales pioneer Dell Computers, IBM is selling the servers online, but only to established large accounts in the US.
The company is wary of upsetting the existing channel of distributors and re-sellers, and is only aiming to sell and ship 5 per cent of the servers without any channel involvement, selling a further 20 per cent online using the established channel for installation and service.
With 11 years of hindsight in the world's largest computer company, Mr Leech charts the development of e-commerce from a communications tool using email and Web pages to the provision of services such as checking account balances. The latest stage in this evolution allows for full online transactions, he says, but the same business cycle applies: attract customers, interact with them, transact, and look after their satisfaction.
Customer satisfaction is even more crucial in an online world, he says, because customers can move to you or from you equally easily. He recalls an example where Internet bookseller Amazon.com could not be reached one night when he attempted to purchase a book.
The following morning he had an email from them apologising for the lack of service and offering a 15 per cent discount for the following 48 hours. Alert operators had seen his attempts to contact the dead server and used the online medium to woo him back when their server was running again.
Internet marketing expert Ms Irene McGoey explains the cultural aspect of e-commerce in terms of "meeting the mind of the online buyer". Ms McGoey, author of the recently published Irish Management Briefing entitled Marketing on the Internet Winning Global Competitive Advantage, cites the example of Psion, which has partnered with Nokia, Ericsson and Motorola to form a company named Symbian, which will develop mobile messaging and Internet access. She calls this "a partnership with a vision of what the online consumer will want in three to four years' time".
Ms McGoey, formerly of the Irish Trade Board and now working for Irish-owned telecommunications software provider Euristix, cites many advantages to e-commerce, including lower costs, faster time to market, new partnerships, new products, and accessibility to new markets. On this last point, she quotes the popular mantra: "Think locally, act globally." Companies no longer need different marketing strategies for different countries (such as McDonalds in Holland selling beer, she says), but can develop a global online market from an existing local one.
Inevitably there are drawbacks. Ms McGoey's research found that security worries, lack of Internet knowledge and the complexity of technology were the principal perceived constraints to Internet usage among SMEs in Ireland.
But she feels the much-hyped security risks associated with sending credit card information over the Internet are more perceived than real, especially since people are willing to give this information out over the phone.
She thinks the biggest risk is the lack of planning for online strategy. She says companies are tempted to overstate themselves on the Web, leading to dissatisfied customers. "For example," she says, "companies may say: `We'll deliver this in 24 hours,' but not have someone collecting email. Later they offer the excuse that `we're only starting'."
Ms McGoey agrees with Mr Leech's recommendation for proactive use of the online channel, rather than defensive use, and cites the Lafferty Group as an Irish online success story. Lafferty Publications, the publishing unit of the group, successfully launched all 12 of its banking publications on the Internet, using a search engine as an additional benefit. Last year the group made a profit on Web-based transactions, she says.
During her research she found that among Irish companies, the international services and IT sectors were the keenest to embrace e-commerce opportunities, while the consumer goods and industrial sectors lagged in this area.
Eoin Licken can be reached at elicken@irish-times.ie
