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Harvesting success from e-commerce

This article appears in the issue Nov/Dec 2000 [Volume 9, Issue 9]


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Several seeds of knowledge management, when embedded in a Web site, can help it prosper and produce great bounty. First, the knowledge of experts in the industry must be incorporated into the functionality of an e-commerce site for it to succeed. Second, accurate customer information must be drawn into the business processes for the site to function optimally. Third, the customer purchasing experience must be supported by the right kind of knowledge for the transaction to be completed. If any of those elements are overlooked, abandonment rates will be high and success rates will be low.

One of the most dynamic growth areas of e-commerce is the Web marketplace, where buyers and sellers come together to conduct transactions. The sites may have an auction format or may provide a setting in which either buyers or sellers can present their requests. Even businesses that seem unlikely candidates for e-commerce are making use of this new venue.

Expert content Take the case of CoreMarkets, developed to provide a digital trading environment for the $50 billion per year international market in ferroalloys and bulk ores. Built on well-established, personal relationships among traders and characterized more by pencils and spiral notebooks than PDAs, the market was about as far from the dot.com world as any in today's economy. Yet through a painstaking process that brought together producers, consumers, traders and software developers, CoreMarkets has created an environment that both reflects and streamlines the dynamics of traditional trading.

Incorporating the knowledge of industry experts was critical to the site's success, according to CoreMarkets' CEO Howard Feldman, who says, "Only through the input of people from this specific industry could we create the comfort, security and trust needed for our business."

For example, some traders want the option of anonymity. Also, when they seek technical support in using the site, they want to talk with people who know the industry rather than with IT staff. CoreMarkets met those requirements, and included shipping, warehousing and industry analysis as value-added services.

Through its online trading service, CoreMarkets has become a digital marketplace that serves 300 companies in more than 40 countries. But despite the e-business environment, clients are not left alone to deal with the Web site. A robust and strongly present human element augments and supports the customers. Feldman views that combination as the best of both worlds--the efficiency of the Internet along with the knowledge and expertise of industry-based staff.

Enigma has served the capital equipment aftermarket in the aircraft, telecommunications and other industries for many years by providing reference documentation and parts information. Recently Enigma launched CommerceSight, which combines spare parts ordering and inventory management with its technical content management.

"We made a bet on XML three years ago, and it has paid off," says Randy Clark, VP of marketing. Enigma's system is well-suited to e-commerce activities that rely on the effective communication of fairly elaborate technical information prior to sale. After navigating through a rich information environment, the user gets down to a part number or table that is exported into a transaction engine.

"Some marketplaces and exchanges have failed because they didn't understand the complexity of the content that surrounds e-commerce," says Clark, underlining the importance of bringing industry knowledge into the e-commerce setting. He also believes that companies are realizing that their position in the supply chain is affected by their ability to manage and control knowledge.

"Whoever owns the content has a strategic advantage," says Clark, "and this is where companies need to make good decisions about how they share it."

Collaboration capability helps integrate humans into the e-commerce process, which can be essential for more complex sale processes.

"Initially, the Web was seen as a way to remove layers from the purchasing process, simplifying it to an offer and a "Buy" button," says Arthur Fontaine, senior marketing manager at Lotus Software. "The problem is, users are signing off with their shopping carts empty or transactions incomplete, perhaps because the collaborative, interactive elements of traditional purchasing have been eliminated."

In some cases, purchasers need a higher comfort level, which can be fostered by the ability to seek further information from knowledgeable staff via messaging, forums, shared applications or whiteboards offered by Lotus' Sametime and QuickPlace products.

Xspeedium, which delivers an e-business infrastructure designed to promote rapid market growth, is in the process of integrating Lotus' collaboration products into its infrastructure. The company also uses such leading products as WebSphere from IBM (ibm.com) and SecureWay Policy Director from Tivoli Systems (tivoli.com). Positioning itself as a service company that can offer integration, connectivity and other capabilities, Xspeedium seeks to provide a quality e-business infrastructure for the many companies that do not have the internal resources to develop and maintain one themselves. Among the first entrants have been companies in the manufacturing and distribution industries.

Customer intelligence Another way that knowledge management contributes to e-commerce is through the use of customer information in the buying process. For example, a complete view of a customer's past purchasing experience should be available through the system, so that the customer is not offered a product that he or she has already purchased.

In the business-to-individual (B2I) market, Chordiant provides real-time views of the customer across multiple channels, updating the information dynamically. Its e-business software products are geared primarily toward the insurance and financial markets, and address the needs of bricks-and-mortar companies that are extending their channels from call centers to the Internet.

"Chordiant has been focused from the beginning on delivering a unified CRM infrastructure for consumer markets," says Collin Bruce, VP of marketing. In many cases, CRM products began with a single touch point such as the call center or e-mail, and extended to others.

"Chordiant allows clients to look at the customer experience horizontally, to get universal case history in real time," adds Bruce.

Lloyds TSB Group, a financial services company, announced recently that it will use Chordiant to integrate CRM activities for its 16 million customers (see KMWorld, October 2000).

CRM is also broadening its view of customers by integrating external information. Drawing in information to augment can help prioritize selling efforts or smooth the path to a final purchase through a better understanding of the customer's situation. CRM software providerSiebel and.OneSource Information Services, an information content provider, recently announced the development of a link to OneSource's external content from within Siebel's CRM software via an API.

"This is a natural fit for external data," says David Curle, director and lead analyst for Outsell (www.outsellinc.com), a research and analysis firm in the information content arena. "CRM benefits from the availability of data beyond the internal sources. Its value cuts across many verticals to include any industry that has purchasing and customer management functions."

Positive purchasing experience Finally, e-commerce will not be accepted unless the user experience is satisfactory--meaning fast, easy and secure. Knowledge management can contribute on all those fronts. ActionPoint wanted to help its customers move paper-based applications to the Web. Many of its customers sell complex insurance and financial products that do not lend themselves to e-commerce. After extensive discussions with and feedback from its customers, the company developed ActionPoint Dialog Server, which offers a number of key enhancements to the prevailing Web purchasing experience.

To speed up performance, Dialog Server executes business logic locally in the user's browser (via DHTML with embedded Javascript) to minimize server round trips and provide what the company calls "brains in the browser." As the purchaser moves through the transaction, errors are picked up and explained locally, rather than at the end of the session. Any information already available about the purchaser is provided on screen for verification, reducing the number of keystrokes required of the user. Finally, the information that the user supplies is dynamically incorporated into the process. Rather than struggling through a process of "skip to question 15 if you answered 'No' to question 6," the user sees only questions that are relevant.

Says ActionPoint's President and CEO Kimra Hawley, "We really wanted to move beyond the concept of a static form template, and interact with the user in real time, so we provided intelligent Q&A sessions instead."

"A great deal of knowledge underlies these systems," says Shane Hughes, president of Pyxis Consulting. Pyxis provides technology-enabled business services for the financial services industry and uses ActionPoint's Dialog Server for XML applications. Applications that Pyxis develops typically incorporate needs analysis tools, risk assessment and calculators that help determine coverage requirements. Those elements embody the expertise of knowledgeable brokers.

Hughes points out that no single software tool can meet all of a system's goals. "We typically are integrating three to five solutions from vendors to create the overall application," he says.

Another way of improving response time is provided by EpicRealm, which developed PriorityRealm to enhance Web site performance. PriorityRealm creates a proxy of the site on the fly and copies the contents, as needed, to a server near the user. It can monitor Web site traffic and balance loads, but also can implement business rules that prioritize activities.

"We can give priority to users who are waiting for credit card approval, for example," says Keith Lowery, EpicRealm's CTO. Information about customers can also be integrated into the business rules, to convey VIP status that offers enhanced service to certain customers. The layer of security provided by a proxy, which resides outside the origin server's firewall, is an additional benefit.

Ideally, an e-commerce site should be so easy to use that any would-be purchaser can complete a transaction unassisted. In reality, many purchasers will need guidance at some point. Therefore, successful e-commerce sites must anticipate and present the information needed for a customer to overcome any hurdles. Usability testing can reduce the number and impact of those hurdles, but that phase of site implementation tends to be neglected.

Web site designers often rely too much on the visual aspects of the site and do not recognize the importance of usability," says Christopher Calisi, CEO of eHelp. Among the development tools offered by eHelp is DynaHelp, which provides a means of continuously improving usability by monitoring help system usage on transaction-based Web sites. DynaHelp is a help system tool, but it also provides real-time analysis of help system usage. One component of DynaHelp tracks the problems that visitors encounter and how they are resolved, and another predicts help system usage based on prior patterns. The product ships with a dozen predefined reports that help a company know which screen objects are hard for users to understand. Through the integration of information from those various components, DynaHelp creates a feedback loop that can be used to make a site more functional.

Security is a significant concern for e-customers, and will become increasingly critical as more users engage in online banking and high-value purchase transactions.

"Knowledge management has a large role in security," says George Holland, chief knowledge and technology officer at Xspeedium. The most effective security systems provide a comprehensive view of activity on the site and link that information to policy guidelines that help to detect or even anticipate compromises (seeKMWorld, October 2000.

Knowledge management will eventually be embedded throughout the e-commerce infrastructure, according to Holland. He envisions a time when an intelligent agent will be able to detect and report on a chemical that could be used as a less expensive substitute for one used in a manufacturing process, for example. More tools can now be integrated into online business processes.

"Creating a knowledge-enabled infrastructure protects a company's intellectual capital and therefore its future," says Holland.

Judith Lamont is a research analyst with Zentek Corp. (Alexandria, VA), e-mail jlamont@sprintmail.com.


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