HP hopes to rewrite the book on e-commerce

Even though the IT industry is far from lacking in buzzwords and verbal shorthand, Hewlett-Packard Co. seems bound and determined to add a few more to the collective vernacular.

At its E-services World conference held recently in Miami Beach, Fla., HP invited 500-or-so of its closest partners and customers to a two-day seminar that looked into the future directions of commerce and on-line business. And while the company promoted its own technology, including E-speak (see “HP: Internet speaking new language” CWC June 4, page 1), as an enabler of what it is calling the move toward E-services (which it dubs the next level beyond e-business and e-commerce), those weren’t the words on the tips of everybody’s tongues.

ComputerWorld Canada

confidently predicts that within the next few weeks HP users will be punctuating conversations with the descriptors “Chapter One” and “Chapter Two” and their corresponding tag lines, thanks to the exposure these concepts received in Florida.

Carleton (Carly) S. Fiorina, president and chief executive officer of Hewlett-Packard, started off the conference by providing a basic working definition of the two Chapters. Chapter One is the era of Internet computing that everybody is familiar with — the era in which businesses got wired, consumers hopped on-line, and people worked for the Web. Chapter Two, she continued, is now starting to happen: businesses are taking the Web to the next level by interconnecting every piece of hardware and every service imaginable, and the Web is starting to work for us.

Ann M. Livermore, HP president and chief executive officer, enterprise computing, then took up the Chapters theme, by promising that in a Chapter Two world, “we will be able to conduct transactions from a wide variety of devices. This is how you will get a lot of your freedom back.”

A Chapter Two world, Livermore continued, will be a place of apps-on-tap (non-core competency applications such as ERP services, being outsourced and delivered over the Web), next generation portals (where companies will join their capabilities with services offered by complementary and even competitive organizations) and dynamic brokering (where any little change in e-business transactions will cause cascading changes throughout every other related transaction).

Other speakers followed, including astronaut Buzz Aldrin and futurist and director of the MIT laboratory for computer science Michael Dertouzos, who expounded on themes familiar to attendees of the Electronic Marketplace show (see “Avoid cyberspace hype, MIT professor warns” CWC, Oct. 23, 1998, page 4), but it wasn’t until the start of the second day when the conference’s master of ceremonies Dr. Peter G. W. Keen, chair of Keen Education LLC, truly lit a fire among the attendees with his vision of a Chapter Two world.

According to Keen, financial capital and branding will be among the most important elements for a Chapter Two business. Keen explained that it costs money to set up services such as call centres or Web portals that attract customers, and since those costs are so high (roughly US$200 per customer acquisition), it is a good idea to shift some of that burden to the customers themselves – to establish self-managed customer services, and to give the customers reasons for coming back to e-commerce sites even after the initial purchases are made.

In order to accomplish this feat, Keen suggests companies must spend money in order to develop the portal’s brand — to put its name out there.

“The weakness of portals,” explained Keen, “is that companies announce that their sites will be portals, but customers determine what will be a portal. If the customers don’t come it doesn’t matter.”

Keen then compared good portals to department stores. His wife, for example, once told him she was going to Wal-Mart. That, he said, surprised him for a moment until he realized that she wasn’t actually going to shop at Wal-Mart. She was just using Wal-Mart as a reference, and she was actually going to a store at the local Wal-Mart plaza. Good portals, like department stores, should act as references, and should make money on what he called “parking fees.”

Keen cited AOL as a successful example of this. AOL doesn’t earn the bulk of its revenue from subscribers, but from partners like the medical Web site Dr. Koop, which paid AOL US$89 million for affiliation and for prominent access to its subscriber base.

In addition to having paying partners, Keen promotes the idea of service partnerships, or technology partnerships (an idea HP also promotes) which can help defray costs, and provide extra customer service, especially if a company is entering a market already dominated by a competitor. That way companies can limit dependence on venture capitalists, who demand enormous returns, and avoid draining their own cash reserves and shareholder’s profits.

Allen Dillon, director of service development, enterprise management, at Xwave Solutions in St. John’s, said the systems integration and Web development company already has a head start on the partnering aspect of the Chapter Two world, but hadn’t dealt with some of the other elements to the new business model.

“We’re getting some new ideas here,” Dillon said. “We have to step up and push a marketing and communications plan for each CIO we deal with, and make sure the plan is there for their organizations — make sure they have a budget for it.

“I’m going back to redevelop a component of our strategy. I need to help my customers decide ‘who am I going to partner with in order to get that marketing and communications plan in order.'”

Another Canadian attendee, Brain Brunner, manager of customer technology,

information technology division of Federal Express Canada Ltd. in Mississauga, Ont., also found some Chapter Two notions interesting.

“We’re coming from a Chapter One world, where we provided our customers with proprietary tools which weren’t very well integrated into Chapter Two, where we now realize that we can’t provide proprietary tools any longer. The question is how do we do that from a technology perspective?

“Dynamic brokering looks like it might be a good fit for partnering, but who would we partner with? There is lots of work to do, but nobody is really there yet. People understand what dynamic brokering is but how it works is a different story.”

FedEx also sees the value in the make-the-Web-work-for-you model. The company is working on Net Return, a process which would allow e-commerce customers, with little or no knowledge of FedEx shipping practices and no access to FedEx forms, to generate completed shipping bills. They could then more easily return unwanted or defective purchases to on-line vendors, and the vendors will have a better means of tracking and managing their returning merchandise.

HP executives including Fiorina admit that until recently the company has found the whole e-commerce world to be a bit of a stumbling block. The company is attempting to address that failing by creating new technology (E-speak), by talking about E-services and the underpinnings required to support them (scalable and bullet-proofed systems) and by gatherings such as E-services World.