After the Thaw: Opportunities and Issues for IT in Technology Companies

E-Commerce Channels

High-tech companies were among the pioneers in e-commerce, so it's tempting to think that they have little room for improvement. Unfortunately, that's not true. Certainly, e-commerce leaders like DellDell in both B2C and B2B or Cisco and Sun Microsystems in B2B e-commerce continue to set benchmarks for successful e-commerce Web sites, and they have been joined by others such as MicrosoftMicrosoft, Adobe and HPHP, to name a few. However, many high-tech companies still lack effective e-commerce sites. Enterprise application software vendors - with notable exceptions like OracleOracle and Microsoft - are reluctant to sell directly to customers via their Web sites. Even those companies that do use their Web sites for selling - either publicly or via private extranet sites for their partners and distributors - in many cases need to improve Web site design and navigation and customer information. The low-cost, e-commerce channel is too important for tech companies to ignore or neglect, especially as growth opportunities for IT solutions shift to the midsize and small enterprise market. Alles zu Dell auf CIO.de Alles zu HP auf CIO.de Alles zu Microsoft auf CIO.de Alles zu Oracle auf CIO.de

Software companies' avoidance of the online channel has some logic behind it, since many enterprise applications are complex systems that require varying degrees of configuration and integration to work effectively and thus have a wide range of pricing possibilities. Indeed, selling enterprise applications through dedicated salespeople and avoiding the Internet was compelling in the days when these applications were new and sold mostly to large enterprises. But as these applications mature and sales opportunities shift from Global 2000 companies to midsize and even small enterprises, software companies will need to develop an effective online sales channel. The high cost of direct sales forces won't work with these smaller accounts, so the lower-cost Internet channel will be critical to success in reaching midsize and small enterprises. That means following the lead of Oracle and Microsoft by pricing and selling software applications for small and midtier companies at the Web site.

Supply Chain Opportunities

As the high-tech sector slowly emerges from the recession and demand picks up, IT managers in high-tech companies will need to expand their focus to broad new initiatives that will support their firm's growth strategy. One area of focus should be supply chain management (SCM). SCM success stories in high-tech abound: IBMIBM claims its supply chain improvement initiatives helped Big Blue save $5.6 billion in operating costs, while HP claims to have saved $1.2 billion in inventory costs in 2002 after its merger with Compaq. Alles zu IBM auf CIO.de

Learning from the success of IBM and HP, IT executives should invest in projects that support their company's growth-oriented SCM initiatives. As they plan their 2004 IT budget, high-tech firms should earmark IT dollars for supply chain process improvement initiatives they have traditionally shunned. To begin with, they should invest in software that gives them visibility into their increasingly outsourced manufacturing activities.

As demand picks up, accelerating the launch of innovative products should be the second imperative. Surprisingly, only 47 percent high-tech manufacturers say that IT can improve product quality, and just 26 percent expect it to drive innovative market offerings.