B2B: How to Build a Profitable E Commerce Strategy

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9780738205229: B2B: How to Build a Profitable E Commerce Strategy
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B2B presents the first definitive blueprint for creating a profitable business-to-business e-commerce strategy. Showcasing successful initiatives designed by industry leaders such as Cisco Systems and Dell Computer, as well as lesser-known trailblazers such as VerticalNet and eCredit.com, Michael Cunningham clearly identifies the key issues in assessing opportunities, building technological and organizational capabilities, and designing a successful business-to-business strategy using the full power of the Internet.

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An interview with Michael Cunningham, author of B2B: How to Build a Profitable E-commerce Strategy

Q.B2B is obviously a popular buzzword in the business press right now, but what exactly does it mean to businesses trying to make in-roads into e-commerce?

A.The general (stock market) reaction happening today is likely to blow over as more organizations understand what B2B will mean to them. This is not a “buzzword” phenomenon, or a fad, but a way of doing business. As more companies realize this, they will look at it as the vehicle and the process instead of a destination.

In other words, businesses will use B2B as a method of improving many of their business systems, communications, distribution, support, sales, and development. B2B is a very multi-faceted noun, it has been around for a long time, just without the Internet and the tools to change where and how business-to-business transactions and processes occur.

Q.What is your background and tell us about your expertise in the B2B sector?

A.My core capabilities and skills come from design and development application of software systems to solving business problems. I have spent more than 10 years at the executive level running software companies. In 1994 I founded a consulting firm focused on linking business goals, work processes and technology needs in a common framework, based on a gap in the market between the strategy consulting firms and the technology ones. This turned out to be prophetic for the operation, as luck would have it, the first assignments were intranet focused, and we decided to focus on the B2B and B2E segments of the market. As many of our projects were oriented to the improvement of channels, distribution and technology operations, we started to operate in what became known as the B2B space formally in 1998. Now with more than 200 engagements behind us, we now have a huge advantage in the market, having brought early stage companies from idea to IPO and more recently, redirecting the B2B! strategies of the traditional brick and mortar firms.

Q.Does the industry a company competes in make a difference in how B2B will enhance their business?

A.No, all businesses need B2B systems and technologies, it’s more a question of how fast they will adopt or adapt them to stay competitive. However, it is true that certain industries have adopted them more quickly. For example high tech and financial services have already a huge rate of adoption, because their processes and supply chains were ready for many of the distribution improvements.

Even the later adopters such as construction, food and utilities are starting to come to the B2B party. One thing is for certain: the first movers will have a considerable advantage.

Q: What benefits can a company expect if they adopt a B2B strategy? How can it help them become more profitable with B2B?

A.Organizations that have successfully embraced B2B are placing themselves in a position of flexibility for their future. Many organizations can expect to reduce their cost of sales, expand their market position, reduce support costs, cut transaction costs, eliminate unwanted processes and improve shareholder value. As B2B is an enterprise activity many improvements are based more on the appetite for change and the ability of the organization to change the way they are operating quickly.

A culture of change and flexibility is critical for rapid success in B2B situations. This is why many organizations have set up separate operations unencumbered by old world business rules, policies and timeframes.

Organizations become more profitable with B2B by using it as a means to change or improve existing business processes and activities. By reducing the number of steps, the cost associated with them, the amount of time and the intensity of transactions will produce results that allow business to do more for less. It will be the way that companies can scale the cost of acquiring and maintaining new clients, and servicing them more effectively.

Q.How can your book help realize those benefits?

A.The book provides a framework for the major elements that impact the development and implementation of B2B e-commerce. By taking what has worked in the very short first chapter of B2B history, we are able to learn from the methods and practices of others. In addition, the book provides a comprehensive guide to the technology and development strategies that currently are the key elements to making B2B work. This ranges from internal systems to sophisticated customer relationship management tools. More importantly, when and where best to use them.

Q.You say that the business potential represented by B2B is unprecedented. What makes this opportunity so historically unique? And, is this opportunity being diminished at all by the recent dot.com fallout?

A.B2B is different because it provides an integrated vehicle for change. Dependent on how much an organization wants to change, they can build a strategy accordingly. The unique combination of new low cost communications channels (the Internet), remotely accessible applications (ASPs and Virtual Private Networks), and new business models (Exchanges, Infomediaries) have allowed a combination of lower cost access to new markets and provided the ability for firms to offer products to service new work processes at will. Businesses are figuring out how to take advantage of this on a daily basis.

B2B will increase regardless of the .com fall out. (As a way of business all operations will adopt it in some form over time.) The .coms who have focused on B2B without a solid business model are going to become casualties. This “clean up” was probably overdue in the market. In the short term it will affect the values of others, but in the long run the B2B market will emerge stronger, players with the sustainable business models rising to the top.

Q.You say that anyone who owns, operates or participates in any business will be affected by B2B within two years. Do you think people will be skeptical of that claim, given the history of hype surrounding online shopping, and internet business?

A.Organizations have to look at B2B as just another normal way of doing business over time. One we cannot do without. Just as no one would start a business without computers and software or the internet today, the competitive edge is using technology and business practices to good effect. Why would anyone want to keep themselves out of the market, not want to communicate with the clients, reduce their costs of sales or support?

Not everyone is going to be an early adopter, I accept that. However, I would not like to be the last one to adopt technology or enter the market as a laggard.

About the Author:

Michael J. Cunningham is founder and CEO of the Massachusetts-based Harvard Computing Group, an international business-and-technology consulting firm geared to creating innovative strategies and to developing powerful Web-enabled solutions. He speaks and consults to clients and industry groups internationally and regularly writes articles on Web business and e-commerce for publications such as E-Business Advisor. He lives in Harvard, Massachusetts.

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