It follows that perceptions of these specialised companies vary dramatically. It follows also that false perceptions of these operations remain unchallenged, largely because the observer has little or no understanding of what they do or how their role has changed to meet radically different circumstances.
EDS is a case in point. Its profile in the UK stems largely from its business managing massive IT contracts for public sector bodies like The Inland Revenue. Unless an observer has had first-hand experience of working with EDS in another market discipline, or through one of its specialised subsidiaries, the company would not immediately spring to mind in the context of electronic commerce.
There is also a question of scale: given the size of the contracts which appear to form the bulk of its revenues, EDS might not appear accommodating to any business outside the Times 500.
But the business of EDS has been evolving steadily over the years, so that solutions involving electronic commerce are playing an increasingly important role within the company's portfolio. There is evidence, too, that EDS is partnering customers which may not themselves be household names but where they match the vendor's own long-term strategy for business development. Through its existing customer base and carefully targeted new business, therefore, EDS stands to make a significant contribution to the take-up of eCommerce.
While remaining one of the pre-eminent IT outsourcing and systems integration groups in the world, EDS has found the balance of its business streams shifting to reflect the changing requirements of its diverse international customer base.
The company identifies the four main areas of operation on which its business is currently based. Systems and technology services (the outsourcing division) is inevitably one of those. Market trends in that sector would suggest that this area of EDS'business will grow steadily, if unspectacularly, through the next decade. There is a similar prognostication for the Group's management consulting arm A T Kearney.
Business process management, where EDS responsibility for the whole of a customer's business processes - not just the IT function - is an area with enormous growth potential. It starts off, however, from a low threshold within the total 'product mix'.
The same is true of electronic markets, the area of operations which includes 'electronic commerce' in its broadest sense. The dramatic growth of interest in electronic trading will stimulate this side of EDS' business which, like business process management, accounts for a relatively small share of the total revenue stream at present.
The marketing manager for electronic business in the UK, Peter Kenny, described how this subject area had developed within the company. "Until the end of 1997, there were two organisations promoting 'electronic commerce'. The classic EDI business had its own customers and was operating independently of the Internet and New Media team working on Web-based solutions. Given the high degree of overlap which that situation was starting to present, there was a strong case for integrating the two areas of the operation."
Despite the Gadarene rush towards Web-based solutions wherever electronic commerce rears its head today, 'classic' EDI will have a continuing role in many of the solutions which EDS develops for its customers.
As Mr Kenny noted, the Electronic Business group is targeted at solutions rather than particular technologies. The larger environments in which those solutions will be implemented will involve one of the standard EDI protocols (ANSI X12, EDIFACT, or whichever of the other standards is appropriate to the vertical market in question) and direct computer-to-computer exchange.
"There are clearly situations in which, for example, a manufacturer has to develop a symbiotic relationship with its suppliers and distributors. The flow of information between those parties' computers has to be constant and seamless. It would be inconceivable that a Web-based application would be introduced there. That was precisely the scenario for which EDI was introduced in the first instance, replacing the keying-in of data, duplication of effort and the potential for error."
There will be applications on the Operating Resource Management side of even the largest companies for which a Web-browser is the appropriate interface. Purchasing the array of goods and services needed to support a company's operations does not naturally lend itself to computer-to-computer transactions where the number of suppliers is large and the value of an individual transaction (specialised stationery or locally-resourced services, for example) is small.
A business could start off with a browser interface to purchasing catalogues, then migrate to a more traditional EDI application when the volume of data between itself and one or more of those suppliers increases to the point where the additional investment can be justified.
There is an important role for the Internet as a vehicle for EDI communications; the ubiquitous IP network providing a compliant environment which lends itself to many aspects of information exchange.
The Internet should be seen as one element in the total EDS armoury of solutions, providing a highly standardised channel for EDI links at one end of the scale, and the support mechanism for commerce-enabled Web applications at the other.
An example was cited of how an EDS customer in the financial services sector needed to rationalise its invoice system. Its 10,000 suppliers ranged in size from the local PTO (for whom computer-to-computer EDI was the obvious route), through an array of middle-ranking businesses, right down in scale to the 'local' services suppliers without any access to electronic technology.
EDS has accepted a managed services contract with that customer. It identifies those suppliers whose operations justify the EDI link and implements appropriate solutions. Then there is the larger tier of suppliers generating substantial traffic yet which were not using EDI elsewhere in their operations. These companies extract data from the financial applications on their PC networks, where an EDI translator formats the data required and passes this over to the customer for processing.
Web browsers play a valuable role for the next 'layer' of suppliers who have minimal exposure to formal IT systems. Electronic forms supporting extensive validation capture the data required and funnel this through to the invoicing system over the Internet.
"Only the very smallest operations escape that net. As part of the service, EDS has undertaken to capture that remaining data from the paper-based invoices received and convert it to an acceptable format. "
The significance of that customer's electronic business environment is that it is one of the first projects completed by the integrated Electronic Business team at EDS; where diverse skill sets are drawn into a comprehensive solution. In effect, the 'traditional' EDI group has migrated towards use of the Internet, while the Internet and New Media group is migrating its own customers as appropriate towards an EDI environment. As Peter Kenny observed, "People are working together for the benefit of the customer. Our belief is that the customer's primary objective is to solve its business problem in the most cost-effective way. "
With a few notable exceptions, the units which form 'Electronic Business' have not been active in promoting their services to new customers, seeing their activities primarily as adding value to relationships with existing customers. In the context of a company whose largest customer for both professional services and electronic business is General Motors, that has no doubt proved to be a viable strategy.
That situation seems set to change. The US arm of EDS has been increasingly active over the past year selling electronic business services as a 'bounded' solution in the open market. While Europe is only now following suit, there would be enormous potential within that region for electronic business.
That pursuit of new business is conditioned, however, by the EDS ethos which has been responsible for taking the company to its present size. Matthew Wall, the manager of Electronic Business services at EDS in the UK, defined that culture: "We look at that quality of the customer and its position in the marketplace. We have a history of relationships with customers lasting ten to fifteen years, so we must be satisfied that the company in question has the potential to sustain such a relationship."
That strategy accounts for the predominance in the EDS portfolio of Blue Chip customers whose activities are clearly in the business-to-business (B2B) domain. The company has not been working extensively with those companies in the lucrative business-to-consumer (B2C) market, however, so EDS has had to identify opportunities to raise its profile in that segment.
In the US, the company Chaos to Order (C2O) is a 400-strong EDS subsidiary which has developed a business providing consultancy, integration and design for commerce-enabled Web-sites, and hence for the B2C marketplace. C2O has completed extensive research into the retail marketing environment, so that it can identify when the time would be right for a business in a given sector to go down the Web route.
Within Europe, the same approach has been used to advantage, EDS having targeted customers that meet the 'timeliness' profile yet which would otherwise appear to lie outside the list of leading 500 companies and major government institutions.
The example of English shirtmaker Charles Tyrwhitt illustrates how EDS sees it role in the B2C area of the market. The company has been operating since 1986 in a sober marketplace where a supplier's longevity tends to be measured in half-centuries rather than mere years.
Its retail premises, at Jermyn Street, in London's fashionable St James's, speaks volumes for the company's standing and reputation. Matthew Wall took up the story from the EDS perspective. "Charles Tyrwhitt is growing rapidly, has a go-getter management team and a customer profile which will keep the company in business far into the future. Its predominantly male, ABC1 customer base has exactly the right profile for the kind of business we are keen to work with."
How EDS approaches this emergent market sector is worth closer examination. The company would argue that its differs from the mass of Web-site developers in a number of important respects. EDS could hardly be compared, for example, with the clusters of enthusiasts turning out Web material like intellectual spaghetti from a room above a sweet shop. At a superficial level, that claim might appear justified: the Charles Tyrwhitt site is distinctive yet thoroughly professional.
EDS claims also that it draws upon its extensive experience in virtually every market sector over the years to develop a powerful Web-based trading environment. Whether for this reason or that the concept of shirts being ordered over the Internet is still so unusual, the site has proved to be viable faster than was expected. A significant proportion of the company's turnover (into double digit percentages) is now being generated over the Web and this is a trend that seems set to continue.
Though Charles Tyrwhitt has maintained a physical presence in its most important export markets, the Web site has opened up new opportunities for reaching the customer base. Being able to take orders and respond to frequently-asked-questions 24 hours a day are two obvious advantages. But as there is no corresponding requirement to have staff on duty round the clock, the cost of generating additional business in this way is small.
In adopting the Internet as a vehicle for its retail trade, Charles Tyrwhitt has been able to explore new methods of promotion. Using electronic mail, the company can send out 'fliers' to its existing customers, with news of special offers and new lines. The fact that each Email can be 'tailored' to reflect the known preferences of each recipient means that the shirtmaker can address a market of one rather than a single homogeneous body of customers.
To what extent is Charles Tyrwhitt typical of the companies that EDS is now trying to bring into its electronic business fold? Structured as a commercial partnership between the solutions vendor and its client, the deal involves a degree of risk for EDS; marginally more than it would have done had the specialist tailor been a company turning over half a billion pounds every year. Matthew Wall again: "There are always variables in any relationship, but we understand the risks involved and can control our exposure."
While the appropriate industry directory may suggest to the contrary, there are relatively few specialist makers of shirts in the world. It would follow that the Electronic Business team at EDS would have to find richer seams to tap if it were to continue along this route.
Other vertical market sectors have been identified, therefore, and are being pursued. Entertainment has been targeted as one of the areas for focus, for example, alongside the more traditional financial domains of insurance broking and underwriting. The company is not proscriptive, however, in its choice of markets and would clearly consider each business opportunity on its merits. That point notwithstanding, there is little to suggest, that EDS will find itself supporting the smaller members of the business community as a matter of course. The company is geared to supprting large institutions with large projects, and this type of business seems destined to account for much of the company's revenue for the foreseeable future.
Computer screen shots of commerce-enabled Web sites are probably the nearest that EDS comes to the Victorian sepia tints of grocers and grainy newsreels of post-war industry. Dynamic where photography is static (even 35 mm film footage is a mere snapshot in time), they reflect the way that businesses are reacting to new trading circumstances, and meeting demand on a global basis. EDS has certainly reacted to that opportunity in its own way: the creation of the Electronic Business unit is infinitely more than a cosmetic change for the benefit of the camera.
Stimulating solutions
EDS maintains that electronic commerce involves rather more than simply replacing paper documents
There are very few subjects - in any walk of life - about which there is one view; one way of doing things. In an area as complex as electronic trading, it is remarkable that there are just two 'camps' on the way that eCommerce should be implemented. Involving the smallest cultural change, the replacement of paper documents with their electronic counterparts often appears the easier route for organisations heading down the paperless path for the first time. EDS belongs to the second school; one where the trading process is re-examined, and electronic trading is implemented only where there is a real opportunity for improvement.
Trading Process Re-engineering (TPR), as this assessment and rationalisation is usually described, is in many ways a complement to Business Process Re-engineering (BPR). BPR tends to be introspective; examining how internal processes can be improved, while TPR takes a broader view of an operation's relations with its own suppliers and customers.
Undertaking a TPR review allows an organisation to stand back and examine the business environment in which it is operating. Even a cursory examination identifies several factors:
Globalisation of business. Many manufacturers are looking not only to sell globally but also to source at that level. These companies require up-to-date information from organisations anywhere in the world. Competition is increasing. Beyond the obvious arena of price, the level of service and quality are important determinants. Product life cycles are decreasing. The best example is in the automobile industry where the life cycles are reducing, along with the time that a manufacturer allows for a new model to be brought to market. The extended enterprise. Manufacturers once in confrontation with suppliers are now working in partnership with them. They co-operate on removing costs rather than moving them to-and-fro between the stages.All of these factors stimulate a need for electronic business in one form or another. If applied effectively, there are potentially four main benefits: .
Enhance customer services Reduce costs Improve management information and control Facilitate trading and business process re-engineering
It may not be obvious that management information in electronic form is a significant benefit. Printed material can never be as current as data in real-time from a current trading process. Access to live information would allow a clothing manufacturer, for example, to monitor sales on the shop floor and immediately produce replacement stock. The total level of inventory is reduced as a result, so that cash flow improves dramatically.
Electronic trading helps monitor more effectively the linkages between the different members of the trading 'eco-system'. In the real world, trade always involves more than the two parties undertaking a particular transaction at a point in time. There are 'ripples' set up in both directions from that transaction; upstream in terms of the raw materials and resources required by the vendor, and downstream in whatever way the purchaser passes on value in finished goods or services. Electronic commerce provides the knowledge and understanding for critical processes to be refined and the eco-system managed for the benefit of all those involved.
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