Surf's Up -- Way Up

Dec. 21, 2004

In case you hadn't noticed, a whole new wave of business computing -- propelled largely by the upheaval of the Internet and electronic commerce -- is suddenly upon us. And for those who aren't prepared, this one could turn out to be a tsunami. If you recall the early years of business computing, the key players were banks and other large companies that had the bucks to harness computers to automate repetitive tasks such as check processing, payroll, and accounting. Except for those who worked with these systems at the office, though, most people had little or no contact with computers. I mean, as a kid, all I remember was the bagful of IBM punch-card confetti Dad brought home for us kids to throw at the football game. (As you can imagine, this stuff was pretty ugly to get out of your hair when you got home.) In a second era of computing, companies found ways to improve their business processes with the help of various kinds of software -- for planning, production scheduling, human resources, order management, etc. More sophisticated accounting systems made it possible for many large companies to eliminate rafts of people who once labored over adding machines and calculators, checking and tallying invoices from vendors. These systems generally yielded efficiencies through faster routing and processing of documents and work orders. Today, business is starting to find ways to use e-commerce and the Web to grow the business. Many companies of all sizes now find they suddenly can reach out to tap new mother lodes of potential customers, offer new services, and expand sales to existing customers using the Internet. A couple of stellar examples -- albeit of service, not manufacturing companies -- are Standard & Poor's, a division of the McGraw-Hill Cos., and United Parcel Service of America Inc. S&P wanted to tap a new market -- consumers -- with its investment information services, which traditionally had served larger institutional clients. The company now offers, via a Web site for individual investors, a variety of information and data, including mutual-fund evaluations. UPS realized early on that delivering packages was only one aspect of its business. An equally valuable part of its service was letting its customers -- and their customers -- know exactly where a shipment was and when it would arrive. Five years ago the company decided to get in on the ground floor of the move toward improving supply chains, and it now has an almost $1 billion business in connecting the materials flows and associated data and information for many companies. Manufacturers are getting in the act, too. Cisco Systems Inc., Dell Computer Corp., and Weirton Steel Corp. all are out there making sales on the Web that might otherwise have gone to their competitors. Dell racked up an estimated $2 billion in Web sales in the last year. Boise Cascade markets its office products to small businesses over the Web. One of the most interesting examples of a manufacturer using IT to grow the business is Weirton Steel, which organized a joint effort with other steelmakers called MetalExchange ( Working with LTV Steel Co. Inc. and Steel Dynamics Inc., the Web-based trading post for the metals industry is open to any metals manufacturer that wants to join. Weirton, which has invested an estimated $5 million in the venture, expects MetalExchange sales to reach $500 million within a year. In another innovative arrangement, W.W. Grainger Inc. is teaming with SAP AG to offer its maintenance, repair, and operations (MRO) supplies to SAP R/3 users via Grainger's Web site. The deal opens up a whole new avenue of sales for Grainger, which hopes to attract sales from SAP's 15,000-customer base. Grainger also is forming a unit to work with systems integrator Perot Systems Corp. to bundle MRO products from Grainger and others for sale via the Web to small businesses. It's safe to say that for most industries -- service or manufacturing -- if there aren't already businesses taking advantage of the Web to boost sales, there will be soon. And chances are, if your firm isn't one of them, then you probably won't have to ask at whom the e-commerce tsunami rolls. It rolls at thee.

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