Talking e-business

Talking e-business

Scient is a San Francisco-based start-up systems integration company with more than 150 employees that specialises in Internet-related systems such as electronic commerce. The company was founded by Eric Greenberg, who serves as Scient's chairman and Bob Howe, who is Scient's president and CEO. Scient hopes to make its mark by successfully combining real-world business savvy with a solid technical foundation. In a conversation with Michael Vizard, the two top executives laid out the major challenges facing their customers as they incorporate the Internet into their business plansIDG: What distinguishes Scient from large consulting companies such as Andersen Consulting?

Howe: Andersen has a lot of people, but they don't have people that live in electronic business all day, every day. We have an integrated approach from consulting to architecture, through engineering and extending, which is built strictly for electronic business. That allows us to have an integrated team all the way through.

Greenberg: We call ourselves an e-business systems innovator, which involves everything from conception all the way to implementation. We're not a consulting firm because in electronic business, what people really want from us is the ability to get a site up.

Why was it necessary to leave IBM and join a start-up to accomplish that?

Howe: I became increasingly frustrated with the ability of my clients to actually compete effectively in electronic business with things that could be quickly deployed, and really make an impact for the customer. I could do it at IBM, but I had to go to a million different places. And maybe I could do it for one account, but it was very difficult to replicate.

Does that imply that it's a lot easier for start-ups to get their arms around new technologies because they don't have to deal with legacy systems?

Howe: For people who already have built physical businesses, they start with the tremendous advantage of a customer base and a brand.

But their issue is not only how they enable their legacy systems to compete, but really how they enable their business overall to compete. What we're finding is that the electronic business is the business, and the integration of it into the rest of the company's operations is critical.

The new guys, the electronic market people, have a tremendous advantage because they can get up and get going very quickly. But, they have a battle for customers. I think in some ways, they have an advantage because they don't have the legacy, but they also have to identify customers.

Everybody is talking about the need to build corporate portals, but how will having a portal site on the Web help companies compete?

Howe: If you're a particular value chain and you are targeting small business, you want to offer what entrepreneurs want.

You could offer a set of services, but the truth of the matter is that there's another set of services that entrepreneur might want - you know, accounting services, and financial advice services, and business planning and so on. So in that way, you might think of yourself as a portal. I could even rebrand my product and have it go somewhere else to be distributed.

Greenberg: Everybody's talking about portals in communities right now. But it comes back to something more fundamental. e-business is about transacting over an electronic medium in order to generate economic results - but a transaction is the consummation of a successful relationship.

The most important part about building any e-business solution is the relationship that you target and build with the user constituency.

So there's going to come a day when we're going to have communities of interest that are subsidised by people who are looking for an economic activity.

How will this technology change the existing business relationship model?

Howe: The real issue is: how many brands do you need to differentiate or distinguish yourself, when I can just push a button and see every relevant financial institution or retailer in the world. People get confused about this portal thing. What they're really trying to do is get a set of services for the customer that gets in tune with their life.

But the balance of power changes here dramatically. It moves from the people who produce goods and services to customers who are increasingly powerful because they have choice. Your ability as a car dealer to have a regional price for BMWs is pretty much gone, because I know what the national price is. I think what you will see, going forward, is an increasingly unbelievable amount of power located in the hands of the customers.

In some people's minds, portals are just online manifestations of the shopping mall. Do you see a lot of centralisation of online services coming?

Howe: It gets us back to the whole thing about portals, which are sets of aggregations. There can be market segment aggregations, then event aggregators, and then it can be similar people who aggregate around certain types of constituencies.

I think what's going to happen is going to be slightly different to the mall concept. Because at the mall, you have two anchor stores and a bunch of boutiques. Some might compete with each other, but generally, they don't. Whereas if you think about what's going to happen online, people fundamentally do a comparison across a whole series of malls.

As a result, I think that what you'll see is all those intermediaries playing a completely different role.

Intermediaries exist because myriad insurance people on the one hand, and a supply of customers on the other, find it more expensive to locate each other than simply by going through an agent. At the moment you're paying for something for that intermediary to do as a transaction.

The question is: What does that intermediary do as a new role? Maybe they go into service. I think the intermediaries will consolidate, but the ones that remain will probably be bigger and more powerful than ever before.

For a lot of companies, these types of projects are just too daunting to even consider. How do you get past the economic issues?

Howe: There are two problems with a lot of institutions. The return-on-investment hurdles are very high and the discounting periods are relatively short. The problem with that in electronic markets is that it doesn't work like any other set of investments.

You'd have never done an or an e-trade. So this is really about first mover, market share and positioning with longer-term payback horizons.

Do you worry that there's going to be a backlash if these types of investments don't start posting some profits?

Howe: The risk for all of them is that the investment community "disciplines" them by selling their stock.

They may try and force them into a traditional set of measures. That's a possibility.

Greenberg: But the thing about building businesses is that at the end of the day, it's all about people having a passion and a vision, and taking the risk - and it being right.

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