Electronic Commerce Issues in Cost Accounting and Managerial Accounting
Bob Jensen at Trinity University
Issue 01: What are the cost containment issues in electronic commerce?
Issue 02: What the managerial pricing issues arising from electronic commerce?
Issue 04 What are the special considerations for the cash gap experienced by many Internet ventures?
Issue 05: What are some helpers for small electronic commerce companies?
Issue 06: What are the Harvard Business School cases and resources available in this area?
Issue 07: How can technology help to reduce fraud?
Smart Stops on the Web
ROI Issues --- http://www.trinity.edu/rjensen/roi.htm
I created a timeline of major happenings (on a timeline) leading up to the eXtensible Business Reporting Language (XBRL) and On LIne Analytical Process (OLAP) systems. Overviews of XML, VoiceXML, XLink, XHTML, XBRL, XForm, XSLT, RDF and the Semantic Web are also provided --- http://www.trinity.edu/rjensen/xmlrdf.htm
CRM
New Offering from PwC Division touts consistent CRM PwC ConsultingTM, a division of financial services organization PricewaterhouseCoopers, has released CRM ACCEL — a complete multi-channel CRM program designed to help companies reduce the cost of serving customers while increasing revenue. http://www.newmedia.com/nm-ie.asp?articleID=3144
CRM is defined at http://www.trinity.edu/rjensen/245gloss.htm
A CRM portals page is at http://www.downesmarketing.co.uk/crmlinks.html
Issue
1:
What are the cost containment issues in electronic commerce?
Motivation for Understating
Costs (e.g. stock compensation)
New Firms Short of Cash Overspend on Increasing Market Share and Underspend on Cost Management Systems Difficult to Measure the Contribution of Managerial Accounting in the Value Chain Eternal Optimism of Young Entrepeneurs Businesses must review their operations in order to contain and reduce costs. Those that do so will achieve short-term savings and will also benefit from the longer-term impact this review could have on business strategy, operations, and overall company value. More than a dozen areas for getting started are suggested in PricewaterhouseCoopers' "Growing Your Business" publication at: http://pwcglobal.com/Extweb/pwcpublications.nsf/docid/C60FA6EAD39A75A0852569ED007FA244 |
Issue
2:
What the managerial pricing issues arising from electronic commerce?
| New
distribution channels disrupt old pricing schemes (e.g., music and
movies)
Commodity pricing makes old lines less profitable (e.g., Web services that will find the cheapest sources of shipping costs plus the price of a new book) Mentality of Web users that information and other services should be free Ease of entry into virtual businesses vis-à-vis onsite businesses create vicious competition and cut-throat pricing |
From The Wall Street Journal Accounting Educators' Reviews on October 31, 2003
TITLE: Luxury Cruises At Discount Prices
REPORTER: Evan Perez
DATE: Oct 29, 2003
PAGE: D1-2
LINK: http://online.wsj.com/article_print/0,,SB106739119655964600,00.html
TOPICS: Managerial Accounting
SUMMARY: Perez reports on one segment of the ocean cruise industry and the unusual practice of discounting the rates of late in an effort to more fully utilize the capacity of the luxury cruises previously aimed exclusively at the high-end consumer.
QUESTIONS:
1.) Explain how the economy today and the build-up in capacity of recent years
in the high-end cruise business has conspired to result in the discount prices
offered by many of the luxury cruise lines. Discuss this in terms of variable
versus fixed costs and whether either or both are avoidable within a relevant
range.
2.) Compare what is happening in this business to a special order decision in which a potential customer offers to pay for a product or service at a discounted price. How is this situation similar? How does it differ?
3.) What costs would you think the luxury cruise lines could avoid when their volume is less than their capacity? Are any of your suggestions fixed costs?
Reviewed By: Judy Beckman, University of Rhode Island
Reviewed By: Benson Wier, Virginia Commonwealth University
Reviewed By: Kimberly Dunn, Florida Atlantic University
Issue
3:
What are some of the most difficult impediments to managerial accounting for
electronic business firms?
| New dot.com ventures incurred
joint costs and expenses that can be allocated only on an arbitrary and
misleading basis.
New dot.com ventures incurred expenses that accountants always stumble over (e.g., human resource costs and intangibles costs) Problems of amortizing enormous capital investments such as underground cable and satellite launches Rapidly changing technologies that can make huge investments obsolete in a matter of days, thereby raising huge problems of accounting for impairment Globalization of production and marketing systems confound accounting with foreign currencies, unstable economies, varying inflation rates, etc. Exotic and dynamic contracting (e.g., using derivative financial instruments and stock options) complicates accounting for investments, financing, and risk
|
Issue
4:
What are the special considerations for the cash gap experienced by many
Internet ventures?
It may be possible to adapt the cash gap model for inventory purchase and sale to the more complex issues of cash gaps in electronic commerce.
See Germain Boer's document entitled "Cash Gap Illustration and Description."
Issue
5:
What are some helpers for small electronic commerce companies?
| Our most visible activities and services are:
Some links to consider:
We can't recommend enough being fully savvy about the Law. There are several great MIT courses oriented towards entrepreneurs. Be sure to consider the broader context of business and alternative investments of money. Also, check out the United States Department of Commerce for information on some of the more sensible things the government does in the realm of protecting or promoting business. Hopefully sooner rather than later the US Patent and Trademark Office will beef up their on-line information server! One of the highlights of last semester was the MIT Enterprise Forum special session on Wednesday, May 11, 1994 for the Awards Ceremony of the 1994 MIT $10,000 Entrepreneurial Competition! At the Ceremony, the David and Lindsay Morgenthaler $10,000 Grand Prize Winner was chosen from the Finalists picked from the 1994 $10K Semi-finalists All these Semi-finalists submitted full business plans proposing new ventures. We also had special guest speakers Ken Meyers, Entrepreneur, Founder and CEO of SmartFoods, and David Morgenthaler, Venture Capitalist, Founder and Managing Partner, Morgenthaler Associates. Electronic networking is our major mode of communication and collaboration outside of the weekly meetings. We are active lead users of MIT's phone and computer networks, using voice, electronic mail, and network tools for projects ranging from high-tech to K12 education, from market research and business plan development to distance learning and tutoring. For more information, please drop a note to e-club-request@mit.edu or phone 617/253-2000.
Other links:
|
Issue
6
What are the Harvard Business School cases and resources available in this area?
Harvard Business School Publishing --- http://www.hbsp.harvard.edu/
For electronic commerce publications go to the above link and search for "E-Commerce and the Internet"
Issue
7
How can technology help to reduce fraud?
Using Technology to Reduce Fraud --- http://www.smartpros.com/x35666.xml
Oct. 21, 2002 (Internet World) — These are not the best of times to be sitting in the chief executive's chair of a lot of companies. If a bear market weren't bad enough, chief executives are being put directly in the bull's eye of public and political ire over financial accounting scandals that at their worst have sucked billions of dollars out of the market, and at the least have depressed the market rebound.
That pressure will be felt far beyond just the 947 public companies whose CEOs and CFOs have been forced by the Securities and Exchange Commission to certify the truthfulness of their financial reports. And though that move by the SEC was largely a publicity stunt (you can even go to the SEC's Web site and view the sworn statements from these executives), the question arises about whether technology can play a part in providing protection for investors and company executives.
"It's quite an interesting topic," says Kraig Haberer, a former CPA at Price Waterhouse who now serves SAP AG as director of product marketing for its mySAP Financials suite. "Technology can be an enabler; however, it cannot replace good judgment." He notes that the situations that have blackened corporate images today are primarily caused, not by a lack of technology, but by bad judgement by a few key executives.
"However, I do think technology can help minimize the chance of occurrences of either outright fraud or purely overlooking something in an account," Haberer says. "To some degree, the more automated you can make your processes and your financial reporting and accounting, the better off you are because technology can be that independent third party. You have a lot of companies with multiple data feeds they are pulling from. That process of recording, processing, and reporting on that information is not automated, and you can introduce the likelihood of just pure error, nothing fraudulent. So technology can be that third party that can automate and integrate that process and minimize the opportunities for error."
The mySAP response is to give the finance department a number of automated tools for handling the complexity of financial reporting in the modem global enterprise. That can make it more difficult for an unscrupulous person somewhere in the mix to introduce unethical practices, but it still may not be enough to let the CEO relax. "You also have to empower that chief officer with the information at his desk," Haberer says. MySAP offers an executive dashboard, where you can specify the key indicators you want to track at a high level and see their performance over time. Simply by having lowerlevel executives know they're being watched may not eliminate the threat, but if you sense a problem, you will at least know what questions to ask.
To others, the problem is a security matter related to protecting the integrity of the data in the enterprise's financial systems. In August, Datum Inc. and WetStone Technologies Inc. jointly announced a new subscription service, called Time Lock for Microsoft Word that lets users embed secure and auditable digital time stamps into their work. They then have a document that can be verified for authenticity and time accuracy.
"If I was a CEO of a company and I had to sign off on the financial statements, I would want to know that my records are absolutely protected," says Steve Corie, who is in fact the CEO and president of a company, Perimeter Data Inc. Perimeter recently began selling a product that takes Datum's idea to its logical conclusion: it makes it so that any files-email, video, a series of sequential documents, voice mail, etc.-are stamped, signed, and archived in a way that makes it impossible to delete or modify. "CEOs have a fear, that if they do sign off on something, they have to rely on people down the organization," he adds.
For Comrie, the key point is that the data is viable and can be proven legally in a court of law, if necessary. He sees a future in which a brokerage house under investigation might say certain e-mails being sought by investigators have been deleted or don't exist, but their auditor steps in with the records it keeps from its collaboration with its brokerage client, and produces the digitally signed, time stamped, and sealed files. That might actually create a headache for an unscrupulous chief executive, but that headache, at least, would be well deserved.
"There's no way even an administrator with access can go in and delete or manipulate data" with Perimeter's system, says Comrie. "We believe there is a vulnerability most corporations will never talk about, that at the end of the day some of this stuff will be challenged in a court of law-some will be brought forward as evidence."
The ultimate answer for corporate financial accountability is not technological, of course. If a company's executives or directors are concerned about their financials, the answer lies in the integrity of the people managing the financial records. But company leaders can invest in certain technology that can help them detect problems before they become disastrous headaches, whether the problem was man-made or a simple result of people tripping over too-complex financial regulations.
-- Zipperer, John
The MySAP Solutions homepage is at http://www.sap.com/solutions/
mySAP.com delivers a comprehensive e-business platform designed to help companies collaborate and succeed -- regardless of their industry or network environment. mySAP.com solutions include:
mySAP.com Solutions Flexible Solutions for Any E-Business Problem
mySAP.com solutions are open and flexible, supporting databases, applications, operating systems, and hardware platforms from most major vendors. They also uphold the highest quality standards and deliver unparalleled levels of performance. And they're appropriate for virtually any organization, from global enterprise to small and midsize business.What's more, SAP provides Business Maps to help you visualize, plan, and implement a coherent, integrated, and comprehensive solution.
To learn more about the mySAP.com e-business platform, check out "Solutions for the Best-Run E-Businesses" (PDF, 643 KB).
To find out how some of SAP's most successful customers are using mySAP.com to improve their businesses, check out "SAP E-Business Success Stories 2001 Edition" (PDF, 238 KB).
Want to learn more? Contact SAP for additional information.
Bob Jensen's threads on electronic commerce can be found at http://www.trinity.edu/rjensen/ecommerce.htm
Bob Jensen's threads on fraud are at http://www.trinity.edu/rjensen/fraud.htm
Smart Stops on the Web
Wow Technology Article --- A Great Article About Interacting With MS Access and Excel Files Via the Web
"Run Your Business on the Web," by Terryann Glandon, Journal of Accountancy, October 2002, pp. 49-60 --- http://www.aicpa.org/pubs/jofa/oct2002/glandon.htm
In “Do It on the Web,” JofA, Mar.01, page 43, we demonstrated how to create a basic Web site with Microsoft’s FrontPage. In this article we’ll go several steps further: To demonstrate a Web site’s flexibility, we’ll show you how to set up a site that lets customers determine whether what they want to buy is in your inventory, verify orders and change an order if need be, and convert an order’s format to Excel because some accounting data are best handled in a spreadsheet.
While this workshop focuses on enhancing customer service, with some adaptation, you can modify it for many other uses.
VIEWING ORDERS
In order to track this tutorial, you’ll need to download the Access database and the FrontPage file we created in the earlier article. You’ll find them at http://ftp.aicpa.org/public/download/GardenDelights.exe and at http://ftp.aicpa.org/public/download/ExoticFoods.mdb. Once they’re downloaded, create a folder called webs7 in the C:\My Documents\My Webs folder (assuming C:\ is your root directory). Unzip GardenDelights.exe to C:\My Documents\My Webs\webs7, and now you’re ready to begin. Add a table to ExoticFoods.mdb by opening the database and double-clicking on Create table in Design view . . .Continued at http://www.aicpa.org/pubs/jofa/oct2002/glandon.htm
Bob Jensen's threads on accounting information systems can be found at http://www.trinity.edu/rjensen/acct5342/index.htm
"Smart Stops on the Web," Journal of Accountancy, October 2002, Page 23 --- http://www.aicpa.org/pubs/jofa/oct2002/news_web.htm
THE INTERNET
SMART STOPS ON THE WEB
E-BUSINESS SITES Articles, Archives and Links
www.business2.com
The online version of Business 2.0 offers CPAs timely reading material on e-businesses and dot-com companies as well as lighter fare such as the article, “The 101 Dumbest Moments in Business.” The site links to archived issues of the magazine and to other business, e-business, finance and management Web sites.Express Yourself
www.iconocast.com
For CPAs interested in tracking trends in marketing and technology, this site offers a gratis weekly newsletter and the Iconocast Forum—a community of discussion threads on topics including the Internet market, interactive marketing and segmentation. Other sections of interest are the Search Engine Optimization Guide and archived Iconocast Web pages back to 1998.Net News
news.com.com
Brought to you by CNET, this site offers tech-savvy professionals news and information on technology issues, as well as market quotes and product reviews. The e-business tab on the home page links to current articles on Web-based companies and on general information technology topics such as dot-com stock options and values.Insights From Inside
www-3.ibm.com/e-business
For CPAs who dabble in technology consulting, the e-business page of IBM’s Web site focuses on software implementation strategies. Users also can find case studies—including IBM’s solution to Chase Manhattan Bank’s data warehousing problem—and a list of resources with links to timely articles such as “Government Finance—Compliance and Customer Service.”The Business of E-Business
www.ebcenter.org
PricewaterhouseCoopers and the University of Navarra’s IESE Business School in Barcelona have joined forces to form the E-Business Center Web site. Technology consultants can keep abreast of the latest IT industry news with articles, case studies, expert commentary, news items and research.Worth a Second Look
techupdate.zdnet.com
This site, previously featured in this column as www.zdnet.com/enterprise/e-business (see JofA, Jun.01, page 21), deserves another visit as it is continually refreshed with current news in the Tech Update Today section. Visitors can find resources such as the E-business Update with articles and commentaries on B2B, customer-relationship-management software and global Internet topics. Other areas of the site offer free newsletter subscriptions via e-mail and free software downloads.“Accountability, Integrity, Reliability”
www.gao.gov
The GAO home page offers the profession a lengthy list of downloadable resources including the report, “FDIC Information Security: Improvements Made But Weaknesses Remain,” and publications on accounting and financial management. Visitors to the site can access FraudNET to “facilitate reporting of allegations of fraud, waste, abuse, or mismanagement of federal funds.”Tips to Run a Smoother Office
www.shrm.org
Small business owners and HR consultants will want to visit the Society for Human Resource Management (SHRM) home page to get its HR tip of the day as well as the latest industry news. Users can click on the nonmembers section to read articles such as “Office Romance: HR’s Role” and “Ten Tips for Managing Telecommuters.” Also, CPAs can access any article in the e-version of HR Magazine not labeled “Members Only” for free.Knowledge Is Power
www.savewealth.com
Estate planners and PFP and tax specialists can find news stories on estate and retirement planning as well as suggestions for reducing taxes here. Articles such as “Retirement Plans With Pass-Through Annuities” and “Avoiding the Perils of Probate” offer guidance on building and preserving wealth. The travel section gives advice on trip planning as well as a link to the State Department’s Web page on travel safety outside of the United States (www.travel.state.gov/travel_warnings.html).Free E-Tips
www.dummiesdaily.com
Register here and receive free tips via e-mail on topics including health, lifestyle, money, recreation, technology and travel. Each section includes how-to articles for just about anything—from backing up your pocket PC files to downloading online music. Also, for each topic, the Dummies Express feature offers quick fixes and timely advice.Not Just for Mathematicians
www.actuary.org
The American Academy of Actuaries site offers peer-reviewed documents, such as comment letters and issue briefs, as well as news and task force findings on banking and financial services, professionalism and Social Security, for example. Users also can view the online versions of Contingencies magazine and the “Actuarial Update” newsletter.
Bob Jensen's threads on e-Commerce and e-Business are at http://www.trinity.edu/rjensen/ecommerce.htm
From the Free Wall Street Journal Educators' Reviews for November 1,
2001
Subscribers to the electronic version of the WSJ may obtain these highly useful
reviews by contacting wsjeducatorsreviews@dowjones.com
TITLE: Special Report: E-Commerce: Data, Data Everywhere...
REPORTER: Kevin J. Delaney
DATE: Oct 29, 2001 PAGE: R8,10
LINK: http://interactive.wsj.com/archive/retrieve.cgi?id=SB1004296279799214760.djm
TOPICS: Managerial Accounting, Accounting Information Systems
SUMMARY: In this article in the special e-commerce section, Delaney interviews Bernard Liautaud who helps firms utilize the data they accumulate with today's technology. He accomplishes this by providing software that allows his clients to access, analyze and share the information already captured in databases in their information systems. He maintains this gives the manager an opportunity to focus on specific issues "that can get lost in the aggregate data."
QUESTIONS:
1.) " ...but, says Bernard Liautaud, companies still don't know how to use it," according to the sub-headline of this article by Delaney. Find an example of ineffective technology use in the related article about Alan Greenspan's remarks to Congress last week.
2.) What does Liautaud mean by the term the "Age of the Analytics?" How does he describe the evolution of databases and their uses?
3.) If management accounting presents relevant information to decision-makers, how would Business Objects (his company) help? What happens to information that is presented "in the aggregate?"
4.) In management accounting, relevant information can be provided to decision-makers for both routine and non-routine purposes. Give four examples of information needed for routine purposes. Give four examples of information needed for non-routine purposes. The sort of service provided by Liautaud would be more useful for which of these two purposes? Why?
5.) Find a specific example in the article in which a company was not using some available information, producing results that were not in the company's best interest.
Reviewed By: Judy Beckman, University of Rhode Island
Reviewed By: Benson Wier, Virginia Commonwealth University
Reviewed By: Kimberly Dunn, Florida Atlantic University
TITLE: Special Report: E-Commerce: Data, Data Everywhere...
REPORTER: Kevin J. Delaney
DATE: Oct 29, 2001 PAGE: R8,10
LINK: http://interactive.wsj.com/archive/retrieve.cgi?id=SB1004296279799214760.djm
TOPICS: Managerial Accounting, Accounting Information Systems
PARIS -- Bernard Liautaud is in the business of helping companies decipher huge masses of data to try to find ways to improve their bottom lines.
The company he co-founded in 1990, Business Objects SA, which has dual headquarters in San Jose, Calif., and Paris, makes software that allows managers to access, analyze and share the information that is churned out by a business's applications that, for instance, manage its sales, billing, human-resources and customer records and is all stored in databases. That type of program -- known generically as "business intelligence" software -- allows managers to slice and dice a company's data to allow them to focus on specific issues that can get lost in the noise of the aggregate data. For instance, they can home in on why a product is selling poorly in a particular region, or define a narrow group of customers who might be targets for a specific marketing campaign.
Wall Street Journal reporter Kevin J. Delaney spoke to Mr. Liautaud, who is president and chief executive officer of Business Objects, about how companies can best manage their online and offline information given today's technology.
WSJ: Where are businesses at in terms of their use of data?
MR. LIAUTAUD: We're at the beginning of a new period which I call "the Age of Analytics." Basically, in the 1980s, companies put in place a basic database infrastructure. Then in the '90s they decided to automate their business processes. They decided we need to put in place manufacturing software or a sales-force-automation system.
They have updated these processes, but they're not at a stage yet where they're able to use in an efficient manner all of the information that is collected by these processes.
Now is really the time where they will put in place processes across the organization to use that information to enable people to make better business decisions, to have more visibility on their business, to understand their customers better. But I would say in general we're at the very beginning. And most companies today still operate very much in the dark without the use of that information.
WSJ: What does business-intelligence software do?
MR. LIAUTAUD: Business intelligence is a set of software solutions that enable people to access the data in a very easy way and to analyze that data and to share it with others.
Data is very complicated, so the first thing is to present the data in a way that is meaningful for business users through the use of business terminology. Once that is done, the users are able to, by themselves, without going through the company's information-technology department, interact with that data.
So if I want to understand what are the sales of this particular product in this particular geography in the past six months, I can ask that question almost in my natural language and I will get the result.
WSJ: What's a good example of how a company is doing that?
MR. LIAUTAUD: Business intelligence is used in all departments of the company. Companies want to understand who are the most profitable customers, for instance, or to understand what are the products that are the most successful.
One example we have is there's a company called Arjo Wiggins Appleton, which is a paper company. They were using a rule of thumb that they should always push the heavyweight paper to the customers because they assumed that was the most profitable for them. Looking at all of the data, they realized the most profitable products weren't heavyweight papers, they were the midweight papers. So that's an example of a better business decision just based on simple analysis of data.
WSJ: At the onset of the recent technology-sector downturn, tech companies like Cisco Systems that used business-intelligence software were blindsided just like the others that didn't. How do you explain that?
MR. LIAUTAUD: What we're seeing here is that very well-run companies and companies that are very well automated, e-business savvy and have a very good understanding of their data can be surprised. The reason is -- and we're now touching a very interesting trend -- is that businesses operate in a very much more complicated way than before, where they don't operate by themselves, they operate with a sophisticated network of partners, suppliers and customers.
What happened in the Cisco example is they had excess inventory. But I believe one other reason is while they have good visibility on their own systems, they did not yet have good visibility for all their partners, suppliers and customers.
One thing we have put in place, which we think is a critical element of business intelligence, is the sharing of information among partners. If you look at how this works today, companies have data, essentially their own data, but in order to operate they need data from others. The data coming from the other partners is not well integrated. What we've enabled companies to do in the past two years is this concept of business intelligence extranets, or a B.I. network, where a company can now make available data to its business partners.
I no longer need to send a customer or supplier bits of data, I can let the supplier come into my database and look into it. I think the visibility throughout the extended enterprise is going to be key because probably the top thing on the minds of CEOs right now is not getting surprised.
WSJ: To what extent can business-intelligence software be used to handle online data today?
MR. LIAUTAUD: If you look at business-to-consumer e-commerce, the nirvana of business intelligence for online consumer information is how do you link demographics and expressed preferences and observed behaviors and transactional data. That's extremely hard to do because the information is logged in different systems and because of the massive amounts of information.
WSJ: Is it a question of computing power or information complexity?
MR. LIAUTAUD: It is the question of extracting from all of this data the relevant things. Because you have a lot of data that is useless. And in order to collect that information, you have to have a system that's very fast, so you can collect data and not slow down the system.
We're at the very beginning, and the return on that investment is not proven yet. So do you want to buy loads of machines and analyze all of the clickstream data [from customer activity on your Web site] if you can't really transform that into action? The key to all of this is not just analyzing the data, it's transforming that data into a knowledge that you transform into an action that will in the end generate a profit. That's the hard part.
WSJ: There is a lot of data being created on the Web that could be useful for companies for a variety of reasons. But can they trust it, given that the source is not always certain, it's often not clear whether the information is up to date, it's hard to know just how accurate it is?
MR. LIAUTAUD: The Web has several elements. You have the private relationship that exists on the Web, say between two companies [such as when a manufacturer makes updated information about its production schedule available to its suppliers over the Web]. Then you have the public part of the Web, where you have information that is available to everyone.
Right now there is a lot to be done in the private part because that information is a lot more trusted. [Businesses can exchange greater quantities of data with their suppliers and customers in order to increase their efficiency. And if you're working with such industrial partners or clients, you have some confidence that the information you're pulling off their Web sites is accurate.] If I engage in a relationship with a supplier or customer, I know the information we exchange is qualified and certified.
On the public side of the Web, there's no mechanism to know the quality of the data. So I believe that over time we will see the development of data quality labels on different sites that will apply to publicly available information.
But right now the data is not very often used in a company's business processes. It's more an added piece of information.
Issue
7:
What are the top eCommerce companies doing right?
"The Annual Interactive 500," by John McCormick ---
http://www.interactiveweek.com/article/0,3658,s%253D617%2526a%253D17766,00.asp
The Interactive 500 is more than a list of which companies generated the most hard dollars from their web operations in the past year. It's also Interactive Week's annual checkup on the state of e-commerce. And this year, surprisingly, the health of the online economy appears to be a lot better than most people think.
Yes, some 330 Internet companies ceased operations in the first half of the year. And some of the dot-goners — such as Quokka Sports and Streamline.com — had prime positions on the two previous Interactive 500 listings. Other former Interactive 500 companies, such as DLJdirect, have been merged out of existence. And whole Internet groupings — such as the independent e-marketplace sector that made such a strong showing on last year's Interactive 500 — are being battered.
So where's the good news? The aggregate revenue of this year's Interactive 500 is a downright jaw-dropping $378.38 billion — more than double last year's total of $183.56 billion. Many of the dot-coms on the list are profitable, and traditional businesses continue to be a dominating presence on Interactive Week's annual ranking of e-commerce powerhouses.
Indeed, just about every metric shows e-commerce is growing, becoming more profitable and, for many traditional companies, a sharp competitive edge. Properly mastered, that edge can cut new paths to online opportunity.
This year's Interactive 500 special report tells those hard-won e-commerce success stories. From manufacturing to energy to technology to wholesaling and retailing, they show that the companies that have discovered the keys to implementing Internet technologies and strategies are, more often than not, market leaders.
Take, for example, Office Depot, the leading office products' company: It's No. 30 on this year's list, and is considered by many e-tail experts to be the company to watch in the space. For its most recent quarter, ended Sept. 29, the company's overall sales were relatively flat at $2.8 billion. But its worldwide e-commerce sales grew 60 percent, to $402.0 million, while its profits surged 25 percent, from $50.6 million to $62.5 million.
"We had decided as a company from day one that the Web was going to be totally integrated into our systems and our company. We viewed it as a strategic initiative," says Monica Luechtefeld, Office Depot's executive vice president of e-commerce. "We viewed it as a critical business function."
Office Depot isn't the only business using its Internet operations as a protective skin against recessionary pressures. Some of the nation's most admired companies — General Electric, IBM, Intel and others — say the Web is critical to their success and that they'll continue to push hard on new Internet initiatives.
Lessons Learned
Most of the top companies on this year's Interactive 500 have learned how to integrate their supply chains, back-end databases, customer service operations and procurement systems with their Web operations to get a jump on the competition. They figured out how to get people to visit their Web sites and even buy something once they're there. These companies also have developed more mature mechanisms for determining whether they're getting payback from Internet expenditures.
Their efforts are paying off. Two reports last month showed that business-to-business and business-to-consumer e-commerce activity is healthy and strong. Despite the current economic difficulties, GartnerG2, a research arm of Gartner, is predicting happy holidays for e-tailers. The research house estimates that worldwide online holiday shopping sales will hit $25.3 billion — a 39 percent increase over last year. On the B2B side, IDC expects the worldwide value of business goods and services purchased online to skyrocket from $282 billion in 2000 to $4.3 trillion by 2005 — an incredible 73 percent compound annual growth rate.
No wonder corporations are dedicating more of their precious IT dollars to e-business initiatives. In a research note published Sept. 13, John Gantz, IDC's chief research officer, said there was a growing backlog of e-business-related projects, and that Internet-related spending would grow from 15 percent of overall corporate technology spending last year to 37.5 percent in 2005. That compares with overall IT spending, which, depending on the source, is expected to grow a scant 2 percent to 5 percent this year.
"The reality of the situation is that any new technology development is based on Internet technology," says Rick Villars, vice president of e-commerce strategies at IDC.
Continued at http://www.interactiveweek.com/article/0,3658,s%253D617%2526a%253D17766,00.asp
"New e-Accounting Advisor Network Debuts," SmartPros, September 29, 2003 --- http://www.smartpros.com/x40720.xml
Insynq Inc., a provider of Internet-delivered online accounting solutions and services, has launched an online advisor network to assist the accounting professional by supporting back-office processing requirements on a highly cost-efficient basis.
The e-Accounting Advisor Provider Network (http://eaccounting.cpa-asp.com) has created a new cost-effective resource for practices of all sizes to use to expand their practice, or to provide the opportunity of higher gross margins, Insynq announced. Through the use of business process outsourcers -- such as call centers, payroll and HR processing services -- professional practices are able to improve client services, expand their practices, and improve practice profitability.
"These accountants have gained a comprehensive solution that combines our online accounting technology services with business process outsourcing models," said Insynq president John Gorst. "e-Accounting is one of the few providers in the industry with a service model that encompasses online accounting applications, data management, document management and workflow tools."
Insynq will co-sponsor a series of seminars in the top 25 U.S. markets over the next four months for CPAs, accountants and bookkeepers that explain the online accounting model. These seminars will detail the outsourced accounting opportunity, and demonstrate the benefits of using business process outsourcers in support of practice initiatives.
Liberis offers an innovative concept, one which is quite unique in Europe:
Available in 2 languages, Liberis is a whole site devoted to "Business to Business" information, with a detailed database of companies whose customers are other companies. Liberis is a "Business to Business" meeting place - a place to build new contacts and forge new deals.
Liberis is your answer to the difficulties of finding specialized and detailed information on the Web. These days, it's becoming all but impossible to find in-depth information using the traditional search engines: 2 or 3 lines and a few keywords are by no means sufficient for quickly locating a company specialized in a certain field. But at Liberis, all registered companies are displayed with a complete description of their activities, products, and services, a list of the brands they distribute, and a selection of their customers...
So don't wait a moment longer! Surf to our site today at: http://www.liberis.com
Knowledge Management (KM)
Knowledge Management Magazine - http://www.cpanet.com/up/s0111.asp?ID=0254
Measurement for KM - http://www.cpanet.com/up/s0111.asp?ID=0255
Knowledge Management World - http://www.cpanet.com/up/s0111.asp?ID=0256
What is Knowledge? - http://www.cpanet.com/up/s0111.asp?ID=0257
KM News - http://www.cpanet.com/up/s0111.asp?ID=0258
Total Knowledge Management - http://www.cpanet.com/up/s0111.asp?ID=0259
Knowledge in a Global Economy - http://www.cpanet.com/up/s0111.asp?ID=0260
Business Model Innovation - http://www.cpanet.com/up/s0111.asp?ID=0261
News from New Media on December 13, 2001
THIS WEEK'S NEWS
* BUSINESS Future of Marketing for 2002: New Priorities, Part I The flash and excess that were the mark of marketing in the 1990s are officially gone for good. Today, customer knowledge and calculable returns rule. The following issues will be essential to marketing success in the coming year: Multi-Channel Synchronization Today, most businesses operate across many channels, from retail stores and catalogs, to call centers and the Web. http://www.newmedia.com/default.asp?articleID=3265
We Came, We Saw, We Did a Little E-Shopping In fact, 25 percent of us are finished buying gifts; report finds last two weeks of November were the biggest so far this year for online shopping. http://www.newmedia.com/default.asp?articleID=3261
Untapped Webizens: Seeking Out the Gay and Lesbian Market Nowhere has the Web's potential to galvanize had a stronger impact than in the gay and lesbian community, yet little has been done to reach this market online. http://www.newmedia.com/default.asp?articleID=3257
Toys Continue to Top E-Commerce Lists If the data from the Nielsen//NetRatings Holiday eCommerce Index is any indication, there should be a lot of packages arriving at a lot of homes that will make a lot of children very happy this holiday season. http://www.newmedia.com/default.asp?articleID=3254
Travel Joins the Holiday Shopping Spree Online shoppers outspent their post-Thanksgiving e-commerce purchases during the week ending Dec. 2. http://www.newmedia.com/default.asp?articleID=3251
DESIGN Making Advertisers and Users Happier: A Case Study Making advertisers and users happier: Has Lycos achieved the impossible? http://www.newmedia.com/default.asp?articleID=3263
How Web Designers Sell Themselves Are you one of those Web designers who design quite well, but don't have time to work on your own site? Savvy Web surfers looking for designers expect a great deal from a site offering Web development/design. http://www.newmedia.com/default.asp?articleID=3262
Is Your Web Site Qualified to Sell? Does your site pass the one page only indicator? Take this test to find out. http://www.newmedia.com/default.asp?articleID=3256
Eight Things to Consider When Choosing a CMS If you are a Web site owner you'll probably be keen to do the job of keeping your Web site up-to-date yourself. We've been producing content management systems for our clients for couple of years now, but the main problem has been that these systems often cost more than the original Web site. http://www.newmedia.com/default.asp?articleID=3253
Accommodating Visually Impaired Shoppers Online retailing behemoth Amazon.com is making it easier for the visually impaired to shop on the Internet by launching an alternative version of its Web site designed for customers who use screen access software. http://www.newmedia.com/default.asp?articleID=3249
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**JOB SECURITY -- CAREER GROWTH -- CHALLENGING POSITIONS** The internet.com Careers Channel is the leading online Information Technology (IT) job board. Whether you need to start your new job today, are searching for your dream job, or are just wondering what your skills are worth, you'll find the tools you need to land your next great job. Don't wait any longer! http://www.internet.com/sections/careers.html
* TECHNOLOGY Internet Influencing All Aspects of Healthcare The Internet has provided efficient ways for doctors to treat and communicate with their patients, but it's also provided a platform for pharmaceutical companies and other organizations to reach doctors, a study by The Boston Consulting Group and Harris Interactive found. http://www.newmedia.com/default.asp?articleID=3264
Enterprises Continue to Drive Wireless Applications Nearly half (46.1 percent) of development managers at large corporations plan to develop applications for wireless devices in the coming year, according to Evans Data Corp . That's more than plan on developing B2B e-commerce applications and even security. http://www.newmedia.com/default.asp?articleID=3260
ISPs Barely Passing Customer Service Tests A survey of more than 14,000 Internet users by the National Regulatory Research Institute and BIGresearch found that almost half (47 percent) of the respondents have complained to their ISP about the quality of service. http://www.newmedia.com/default.asp?articleID=3258
Email Can Do That? Email Can Do That? All the technology @d:TECH has to offer is being channeled into your inbox. http://www.newmedia.com/default.asp?articleID=3252
Advanced Ad-Serving Features, Part 2: Third-Party Ad Servers Advanced features of third-party ad servers that meet the needs of advertisers & agencies. http://www.newmedia.com/default.asp?articleID=3250
MORE NEWMEDIA NEWS (From the internet.com Network)
Sun To Find Competition in New Intel Rack Units Setting themselves as the "Company Of Choice," the popular chipmaker is betting increased flexibility is what carriers, OEMs are looking for in a rack unit. http://www.internetnews.com/dev-news/article/0,,10_939031,00.html
Judge, Creditors Approve @Home Extension Creditors at the nearly-defunct broadband ISP agreed to keep its operations open until February 2002, saving millions of high-speed customers from shutdown. http://www.internetnews.com/isp-news/article/0,,8_938361,00.html
President to Name Tech Advisory Group A panel of technology marquee names, including AOL Time Warner's Steve Case, could play an influential role in helping to shape the administration and the government's technology policy. http://www.atnewyork.com/news/article/0,1471,8471_938721,00.html
TOP HEADLINES FROM INTERNETNEWS.COM
Yahoo! To Snatch HotJobs Out of the Clutches Of Monster.com http://siliconvalley.internet.com/news/article/0,2198,3531_939331,00.html
For Online Retailers, It's Showtime http://www.internetnews.com/ec-news/article/0,,4_939511,00.html
Ciena Posts Net Loss, Warns of More Losses http://www.internetnews.com/fina-news/article/0,,5_939451,00.html
CONTACT US!
Questions? Comments? Please e-mail them to NewMedia Managing Editor Laura Rush (lrush@internet.com). Please do not send unsubscribe requests to this address--instructions for that appear at the very bottom of this newsletter. You can also subscribe/unsubscribe directly from our Web site, at http://www.newmedia.com
From Information Week on December 17, 2001
2001 Winners And Losers
Let's cut to the chase (and you can read all their profiles online), who were this year's winners and losers? Here's our take:
Losers: Sun Microsystems, network service providers (E.spire, NorthPoint and WinStar, among others), networking providers (Cisco, Lucent, Nortel), Compaq, pure-play supply chain firms (Manugistics, i2), Nike, Enron, Bluelight.com and content-only Web sites.
Winners: SAP, PeopleSoft, Microsoft .Net, IBM, Fidelity, EDS, Toysrus.com, TechData, Priceline.com, eBay.
Let the arguments begin. Read the whole package online: http://update.internetweek.com/cgi-bin4/flo?y=eFSz0Bdl6n0V30BD3J0Au
Plus, how did our 2000 predictions fare? http://update.internetweek.com/cgi-bin4/flo?y=eFSz0Bdl6n0V30BD3K0Av
I found this interesting from Syllabus News on February 28, 2003:
Web-Based B2B Textbook Supplier Sales Skyrocket
The Thomson Corp. said sales of college textbooks through its business-to-business Web site, Service Plus, has grown from $10 million to more than $104 million in three years, an increase of almost 1,000 percent. The service provides U.S. college bookstores with round-the-clock online account management tools, title research capabilities and a powerful ordering function. The Web site is designed to handle basic customer inquiries, such as pricing and availability, freeing customer service representatives to handle more complex customer requests. Live chat with a customer service representative is also available. Approximately 36 percent of stores' pricing and availability inquiries were answered through the site in 2002. During the busiest ordering period in 2002 more than 10,500 online order-status inquiries were received.
Bob Jensen's threads on electronic commerce can be found at http://www.trinity.edu/rjensen/ecommerce.htm
Bob Jensen's eCommerce threads are at http://www.trinity.edu/rjensen/ecommerce.htm
Bob Jensen's homepage is at http://www.trinity.edu/rjensen/