Companies are slowly realising that using the Internet is much more than just building a Web site. In order to touch customers effectively in the electronic world, the Internet must touch every application in a business, from the customer facing applications or accounting systems right down to the crucial underlining infrastructure. Driven by the growth in e-commerce, channel companies are also realising that building an e-business is more complex than just selling and implementing products.
In fact, the importance of the infrastructure layer in an e-commerce project is only just being realised by customers and resellers alike.
Last year's online Christmas shopping period proved to organisations and customers the importance of building an integrated e-commerce platform on scalable and reliable IT architecture.
Both new e-tailers and traditional bricks-and-mortar companies, who had quickly launched online sales divisions, were plagued by inventory and ordering and fulfilment problems when underlining mission-critical systems failed to work in conjunction with front-end e-commerce systems.
Whilst it is hard to pinpoint the size of the e-commerce market in Australia, analyst IDC predicts one segment - the Australian Internet server software market - will grow from $53.93 million in 1999 to $122.71 million in 2004. The size of growth expected in this segment of the market demonstrates the potential of the total e-commerce market in Australia, which is still several years behind the US and European markets.
Despite the predicted growth in server software, Gartner Pacific research director Greta James said the hottest area in e-commerce at the moment is hardware infrastructure.
"The hardware market is growing tremendously," she said. "It's very dynamic and changing rapidly."
Like James, Gary Starr, channels manager of enterprise solutions at Nortel Networks, Australia/NZ, believes the infrastructure layer is critical to successful e-business and the hottest space for resellers.
"If a company doesn't have the right infrastructure, it won't be able to support other layers of IT," he warned.
According to James, the B2B market is primarily driving the growth in hardware with infrastructure, including networking equipment, IT systems and software, playing a crucial role in the implementation of B2B marketplaces and exchanges. James said the business to consumer market is also driving growth, but to a much smaller degree.
The integration of systems, including legacy infrastructure, e-commerce applications and traditional business applications such as enterprise resource planning and financials, is also a big part of the market.
According to Paul Marriot, business development manager for Oracle's integration product Oracle 9i, a recent survey revealed that around 60 per cent of a company's IT budget is spent on integrating applications. In recent years this has been fuelled largely by the introduction of e-commerce.
Channel research company Inform Business Development said there are plenty of opportunities for resellers in the e-commerce market, even away from traditional areas such as payment gateways, Web development and front-end systems.
According to Inform, in a total reseller population of over 4000, only 84 companies are e-commerce specialists that focus solely on providing e-commerce-related services. Whilst this figure only includes e-commerce specialists, it is likely many more resellers are involved in e-commerce in some capacity and new opportunities are always emerging.
In a survey of 300 local channel companies conducted by Inform in May, 16 per cent of respondents said e-commerce projects and maintenance contracts would create the greatest services opportunities for resellers in the future.
Industry players across the board have also emphasised the opportunities for resellers in the e-commerce space, but warned the shift in focus is not without its fair share of challenges.
Like most opportunities for the channel, resellers must find a way to add value to their customers, Ross Liston, reseller vice president for Computer Associates' company Interbiz, said.
For many, infrastructure and integration go hand in hand. Having a successful e-business is largely dependent on having a fully integrated IT architecture supported by scalable, reliable back-end infrastructure.
"As technology moves forward, just having a product is not enough," Liston warned.
In the e-commerce infrastructure space, resellers can add value through back-end integration for the provision of e-commerce transactions.
The evolution of B2B marketplaces, where separate companies integrate systems, is providing resellers with "more opportunities than ever before", Liston said. "[They] become the value in the chain."
Liston believes the biggest opportunities will lie in the SME market. In this space, customers do not have the money or technology know-how to successfully build their own e-commerce solutions.
"The reseller of the future will not be technology -based. They will be more information-based," Liston said.
"Resellers understand businesses more than the companies that build the tools, and the reseller that understands business going forward is going to be the winner."
Liston said resellers will also become the e-commerce enablers, especially for SMEs. Resellers will provide enabling technology in addition to consulting, integration and management services.
Similarly, Gabrielle Webster, regional channel manager for middleware provider Inprise/Borland, suggested resellers should develop specialised e-commerce expertise to use in conjunction with their knowledge of products.
Regardless of whether or not a reseller has traditionally focused on the infrastructure market or newly emerging middleware sector, if they can offer customers a service in addition to purely selling a product they will become more important to customers, she said.
Despite Oracle's philosophy that companies should avoid integration by implementing end-to-end solutions, Oracle's Marriot said integration can create many opportunities for resellers and service companies.
"The biggest pain for customers is integration . . . it's time consuming and costly," he said.
But while there are many opportunities, Marriot warns that key skills are needed by resellers to be successful in integration.
Crucial technology, database administration and messaging skills such as Java and XML are important, he said.
"Making two systems talk to each other is not difficult. It's managing performance and traffic loading which is difficult. The challenge is linking e-commerce solutions at the front end with transaction processing architecture [at the back-end]," Marriot said.
For Kon Kakanis, director of Brisbane-based reseller Sundata, e-commerce has driven growth in two key areas of his business - application integration and networking infrastructure. And despite the high level of growth already, Kakanis said there are plenty of opportunities for resellers over the next few years.
The emergence of B2B exchanges, especially amongst the SME market, will provide the greatest amount of e-commerce related opportunities going forward, he said. However, Kakanis warned that they will not capitalise on these opportunities by selling pure e-commerce services. He suggested the most effective way to engage a customer would be through traditional products and services, where e-commerce is sold as a value add.
"At the low end, most e-commerce solutions are not done as an e-commerce or e-business project. My feeling is if you walk into a customer and say lets talk about e-commerce', half would be scared off and the other half would choose a different path. Customers are not worried about whether they are doing e-commerce or not, they are looking for customer service improvements," he said.
According to Kakanis, the biggest challenge facing resellers moving into e-commerce, either from a traditional product-based role or from a services or integration role, is communicating with customers.
Many traditional resellers have moved from talking with IT managers and technical people within organisations to meeting with CIOs, CEOs and even marketing managers.
"Typically it's non-IT people who drive e-commerce projects . . . a sales guy driving an e-commerce project will see a higher risk strategy in integration than a reseller would normally expect," he said.
And by the same token, an IT executive would take bigger business risks in order to achieve the best possible end result from a technology perspective.
Kakanis said resellers are likely to need more education and consulting with customers at an executive level during an e-commerce project.
"This is not typically the role of resellers, but they are moving there," he said, adding that a reseller with technical knowledge and integration skills will not be called in for a project until some form of business consulting has taken place.
For Geoff Croshaw, manager of Senteq's solutions group, the greatest challenge for resellers today is finding and keeping skilled e-commerce staff.
"There is a shortage of good staff out in the marketplace," Croshaw said. "The reseller's role is changing from being just an infrastructure-product supply mechanism to a [total solutions provider] . . . They have a significantly larger role than the traditional reseller did. In the infrastructure space changes have been significant for resellers."
Resellers have moved from simply supplying core infrastructure to enabling capacity and IT support from an e-commerce perspective.
They are facing issues such as redundancy and the provision of scalable capacity which are crucial in running a 24x7 e-business, Croshaw said.
Anne Mossman, e-commerce manager of distribution giant Tech Pacific, said many organisations, including service providers and resellers, are confronted with back-office processing problems rather than technology issues.
Organisations have the technology in place to build B2B systems, but problems arise when different business processes are used amongst common marketplaces, she said. Resellers need to partner with a new breed of emerging service providers, known as professional service providers, who understand the way businesses operate.
Meanwhile Greg Wright, senior systems engineer at Inprise/Borland, said perhaps the biggest opportunity for resellers as e-commerce changes the way businesses operate is their role as key market advisors. As the closest connection to the end-user community resellers are valued for their market expertise.
"Companies rely on resellers to say what's hot and what's not," he said. "Given that the whole software environment is changing quite rapidly, resellers are the front line in guiding companies. With the general explosion in the market, there are more and more opportunities for them."