However notional that 'focus' might appear on the balance sheet, owning an asset and converting this into a viable business stream can be two different matters. Whether BT assumes centre stage in electronic commerce solutions - rather than simply providing the conduit over which the electronic data passes - depends on an array of factors as diverse as the products which it has chosen to bring to market, its pricing policy and, not least, the nature and quality of its relationship with customers.
Given that BT is committed to a developing solutions around a limited number of platforms, few doubts could be expressed in the marketplace about the quality or interoperability of the electronic commerce 'products' that the company is offering. BT's pricing policy has to reflect both the increasing demand for paperless trading from across the spectrum, and the level of competition from vendors which have come into the market by way of response.
Taking electronic commerce solutions to market, however, is the major hurdle for BT. Having BT staff 'knock on the door' as the only channel to market is neither cost-effective nor even productive: a far better approach is to address customers through channels which are already in regular contact with the customer in a related area of business.
As a result of this strategic change, distinct business streams have been created; differentiated by their existing relationship with the marketplace. IT vendors who are already selling to an established customer base are perhaps the most obvious vehicle for BT, according to Mike Smith, Marketing Manager at BT. "Under this broad umbrella are LAN dealers, software distributors and systems integrators; each addressing their own segment of the total marketplace."
We have been building the support structures and incentivising that array of companies with contracts appropriate to their relationship with the customer. Some outlets will handle the sale right through to implementation and be rewarded on that basis; others will receive introductory commission, for example."
Reference to LAN dealers would suggest the BT sees an opportunity for companies whose role normally is not to add great value to a sale. In an area as 'service-orientated' as electronic commerce, should it not be a prerequisite that all channel partners should have their own 'value proposition' to bring to the table?
"Certainly they should not be in business simply to act as a channel for BT. But by implementing electronic commerce capabilities on the systems which they are already selling, they raise their potential for selling network equipment into the customer base."
It would be easy to see these indirect sales channels as a substitute for BT's own sales initiatives through its direct channel, but Smith maintains that more of a change of emphasis is involved in the interests of expediency. "The marketplace is anxious to take on board the new solutions and is growing very quickly, so there cannot be too many routes to the customer."
Taking Mike Smith literally at his word, BT's attempts at raising market penetration for its electronic commerce offerings could be a double-edged sword. Experts though the channel partners might be in meeting niche requirements, there is surely the danger that their comparative lack of knowledge of the eCommerce environment would dull the edge of a sale. This could find a customer opting for a less appropriate solution, but where the vendor has appeared more confident.
The answer, it appears, lies in the training that these channel vendors receive. BT stresses the quality of the training modules, contrasting it with distribution operations where the sum total of the induction is a manual sent by post. Imposing the discipline of training has the effect of weeding out the 'also rans': it takes a certain level of commitment to embark upon such a course.
One channel to market which needs careful monitoring by BT is the Web designer or developer. Only a handful have grown into substantial companies: most employ just a handful of staff and would probably not have the resources to represent BT in the marketplace. "The challenge is not to discard those operations but to identify those which have the flexibility to collaborate with us."
Established solution providers form the second brigade of channel vendors. These are essentially specialist companies with a detailed interest in either a horizontal capability like customer service, or in-depth knowledge of a particular vertical market segment. Being simply a 'finance' specialist would not be sufficient, it would seem: Mike Smith and his colleagues would be seeking to identify more narrowly-focused specialists able to combine their skills in insurance underwriting with a potential ability to deliver those services through electronic commerce.
A 'technology strand' is the third broad category of reseller. Companies with knowledge of a technology whose delivery could be linked to electronic commerce are providing this business stream. The options could include video conferencing services, database management and even language translation, for example.
None of these approaches to the market would be fulfilled without investment on the part of the company involved. There is, therefore a potential commercial risk; one which the early generations of PC and network resellers experienced a decade ago. Many had been recruited by national distributors who were running both a direct sales operation and indirect channel vendors. The high proportion of 'quality' leads which passed the way of the direct sales team was no co-incidence; the indirect channel effectively bearing the cost of sales without reaping the benefits.
If BT does not intend to disband its direct sales force on the eCommerce front, what is the long-term incentive for the 'independents'? Would BT pro-actively promote these third party specialists against its own sales force, for example?
Assuming that the marketers at BT have done their calculations correctly, then the rate at which new outlets are brought on stream should match the growth in demand for eCommerce services, thereby avoiding conflict between the strands. "If the independent sales channels are strong enough, and can demonstrate they are adding real value to the commerce proposition, then they should win out in the event that there were conflict."
There is another channel to market which Mike Smith hopes to foster. More subtle in its approach than the conventional indirect sales operation, it 'sells' by recommendation. Target outlets in this category would be professional associations, trade bodies and communities of interest (typically user groups) to whom prospective users of electronic commerce would refer for advice. The value of a reference to BT by one of these 'virtual partners' could be many times that of a single indirect sale if the advice is given - and taken up - several times over.
Notwithstanding the possibility that the body making the recommendation could lose its own impartiality if the advice turned out to be flawed in any significant respect, this could prove a valuable source of business for BT far into the future. The organisations involved would clearly have to weigh up whether the referral commission received in the process was worth that change in relationship with its members or affiliates. With the majority of the indirect channel network in place by the end of 1998, BT has been consolidating its solution provider programme where it works with developers whose product set complements that of the telco.
That freedom to draw in third party solutions would not be available if BT had opted to develop an idiosyncratic, proprietary set of solutions for electronic commerce. The decision to adopt the Microsoft eCommerce platform is therefore wholly logical.
That relationship with Microsoft ensures that BT stays in the 'open systems' arena and will continue to attract solutions from third parties. The viability of the approach that has been adopted by BT is therefore assured, but care will have to be taken to ensure that the company's eCommerce portfolio does not become virtually a resellers' catalogue where the range and specification of the products on offer would serve only to create confusion and increase reluctance on the part of BT customers to take electronic commerce solutions on board at all.
With sufficient safeguards in place on this front, however, the customer will be presented with a well-defined product set providing clearly defined and justified solutions. But it will take all the skills and judgement of the electronic commerce marketing team to ensure that their channel protegés remain 'on message.
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