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July 1-15, 1999 My CT Almanac Column |
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IT BUSINESS Riding the Internet Wave Getting started on E-commerce is much more than setting up a Web site. It requires a completely new business strategy. The key challenge is to determine how to deploy an infrastructure that works with existing business systems. Atul Vijayakar
E-business in simple terms consists of E-marketing and E-commerce. E-marketing refers to using the Net to market your products or services, while E-commerce refers to commercial transactions on the Net. Various market research companies have projected that upwards of one trillion dollars of commercial transactions will be done on the Net by 2002. Intel Flips Side Intel views the Internet to be as important to its future as silicon was to its past. We are moving very quickly to take advantage of the opportunities enabled by the Internet. Our objectives are as follows:
While a lot has been written about the first two objectives, what is less well known is how effectively Intel has used the Internet to become, within the select category of manufacturing organisations, the world's largest E-commerce company. Launching a Web site is only the first step. Getting started on E-commerce is much more than establishing a Web site. It requires a completely new business strategy. The key challenges are to determine how to deploy an infrastructure that works with existing business systems. to meet the needs of a diverse, worldwide customer base, to build an E-commerce solution that scales with future business needs and of course to make profits. Intel is a classic example of how a company can re-engineer its strategy to exploit the benefits provided by electronic commerce. Intel is a manufacturing company, with 65,000 employees and approximately 40,000 involved just in manufacturing. Until about a year ago, all of our business was done in the conventional manner in which we took orders from our customers by telephone and fax. Developing a Web-based E-commerce system contained the goal was to reduce costs, increase efficiency, and build deeper ties with Intel's business partners scattered worldwide. One thing was certain, we needed to craft a solution that could work with a broad range of customers. The companies that would be using the ordering system are dispersed all over the world and range in size from $10 million a year to as much as $10 billion a year. And, many of the larger customers already used established EDI systems. With these issues in mind, we focussed on our medium-sized customers, the majority of which operate outside the US of A. One benefit: these offshore customers were less likely to be effectively serviced by our direct sales force-proving the Internet-based order handling a valuable outreach tool. To start with, Intel focussed on automating its order management system. Automated order handling and delivery also enabled us and our customers to allocate resources to less repetitive tasks. Of course, the new E-business system was designed to work within existing constraints. It had to hew standard Web technologies while remaining compatible with Intel's existing systems and enterprise resource program (ERP) applications. At the same time, the IT group built in as much flexibility and forward-looking scalability as plans would allow. We adopted strong 128-bit encryption for all transactions, a decision that required additional effort and planning since US law prohibits the export of such encryption technology. To ensure always-on service, we installed site level backups and established mirrored servers at alternate locations off-site. The customer response to the program was immediate. Intel had set a 90-day deadline for transitioning revenue to the Web, but that goal was met within just 15 days. We are currently doing business over the Internet with 550 of our OEM and distributor customers in 46 countries worldwide through thousands of personalised Web sites. By the end of 1998, Intel was transacting business over the Net at the rate of $1 billion per month. In 1999, we expect to transact more than $15b of business on the Net which would be roughly half of Intel's annual revenue. This would make us larger than Dell or Cisco as far as the value of transactions. Back in India The Internet revolution is just starting in India. With the advent of private ISPs, there is likely to be exponential growth in the usage of Internet in India. The past six months has seen a sharp increase in the number of Internet users and an improvement in the overall quality and price of the services offered. Easier access to the Internet is also triggering a boom in home computer sales. As far as Indian businesses are concerned, several studies have indicated that most large companies have either set up or are in the process of setting up Web sites. However, very few have plans to start doing E-commerce in the near future. And this trend is distrubing. The government has already taken one big step of allowing increased competition in telecom/Internet access-which will certainly lead to a significant improvement in the telecom infrastructure. The next important step is to pass the necessary cyber laws so as to ensure that there are no legal or regulatory barriers to faster and increased deployment of E-commerce. To quote Shakespeare: "There is a tide in the affairs of men (and nations) which, taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and miseries. On such a full sea are we now afloat, and we must take the current where it serves or lose our ventures." No way India should loose out on this Internet wave! The writer is director (South Asia), Intel Corp. |
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The Internet is the single biggest agent
of change today-not only in the IT industry-but in society at large. It is changing the
way we learn, play, create, communicate and work. By far, the biggest impact will be on
business. Not only does it throw up a whole host of new business opportunities-the heady
valuations of Internet start-ups are a testament to that-it also allows traditional
businesses to streamline their operations; reach newer markets; reduce costs; improve
cycle times and improve customer service levels. 
