Day 1 - Forrester Forum - 2/8/99

From: <richard_at_tenagra.com>
Date: Tue, 9 Feb 1999 21:06:55 -0600 (CST)

Below is a special mailing to The Online Advertising
Discussion List about the Forrester Forum, written by
Ann Handley, editor-in-chief of The ClickZ Network. You will
receive these reports in addition to your normal Online Ads
 posts/digests.

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Forrester Forum: Day 1
Preparing for Dynamic Trade in an
Internet Economy

Ann Handley
Editor in Chief
The ClickZ Network
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When I was in journalism school a few (ahem!) years ago, one
of my favorite professors had a favorite saying: "Never use
a ten-cent word when a penny word will do." That means, for
example, that you don't use a word like "functionality" when
"how it works" explains it nicely.

So what does this have to do with the latest Forrester Forum
being held this week in Amsterdam? Well, the good
professor's words came back to me while listening to several
of the Forrester people speak to this audience, made up of
mostly Fortune 500 companies and other industry consultants.

There is no economy of words in this environment. Speakers
referred to "monolithic legacy systems" that needed to be
rectified by "technology procurement." They spoke of how
large multinational corporations must "structure a flexible
execution environment." You mean... they must turn on a dime?

After a day of this, I half expected to see Dilbert himself
next up at the podium... . Ever get the sense that there are a
few too many MBAs on stage?

To be fair, Forrester was speaking the language of the
audience. And the audience was not made up of people who can
turn on a dime. An informal audience poll demonstrated that
a mere 3 percent or so of those in attendance were
entrepreneurs or start-ups. The majority were looking for
solutions to take back to their CEOs, to convince them to
embrace the Internet in a big way as the new frontier for
business.

All of the speakers beat variations on a recurring theme:
How to move much of their business now done offline into the
online environment. For these huge multinational
corporations, that means setting up online purchasing, sales
and service divisions, all of which can be far more
streamlined on the Net.

It means setting up extranets to knit suppliers or customers
together. Or perhaps it means participating in or launching
online auctioning to trim the bloat out of purchasing.

But still, my overriding feeling was that I would have liked
to have seen the information presented a little more simply,
and the buzzwords used far more sparingly.

Forrester Founder George Colony set the stage for the
two-day event, promising attendees the answers to some
timely, big-picture issues. Namely: What is dynamic trade?
How will it impact your business? And what technology
investments must attendees make to compete?

For the most part, Forrester delivered with some big-picture
answers.

"Dynamic trade will define the rules of the Internet
economy," said Forrester Group Director Waverly Deutsch. And
just what is dynamic trade? Simply put, it's doing business
online in a customer-driven environment. Or, in
Forrester-ese, it's "leveraging technology to satisfy
current demand with customized response," Deutsch said.

In short, customers are demanding more customized products
from the companies they do business with. And they want the
goods or services that are delivered to feel more customized
to their specific needs and expressed wants. "What dynamic
trade does," said Deutsch, "is bring the customer into
play."

Fundamentally, she and others said, the impact of this new
economy will be so great that it will change everything
regarding the way traditional business has been done. It
will change (and is already changing) relationships with
customers and vendors, internal and external processes, the
very structure of organizations, and the level of technology
companies need to be part of.

So get ready to ramp up... or get out of the way. Companies
that previously had weeks to deliver on a product or service
now have days. Prices that were list prices will be far more
market-driven. Customer relationships that were standardized
are now highly customized. And the biggest strategic asset
is no longer a location... it's a customer database.

Said Deutsch, "Dynamic trade is the propeller fueling the
Internet economy."

The degree to which the new Internet economy affects your
business largely reflects how close to the epicenter your
industry is to the online revolution. For example, the
airline, telecommunications, high-tech manufacturing,
financial services and logistics industries are at "ground
zero," Deutsch said. How well companies within those
industries embrace dynamic trade will make or break their
businesses.

Other industries will feel the shock waves first, including
retail, durable goods manufacturing, health care, utilities
and media and advertising. Following that are companies
feeling subsequent ripples, such as aerospace, agriculture
and consumer packaged goods. These industries "won't be
dramatically affected by the Internet, for example, but
their supply chains will," Deutsch said.

European companies are particularly vulnerable in a dynamic
trade environment, added Cliff Condon, director of European
New Media Strategies for Forrester.

Why? Because competitive pressure increases for European
companies globally at the same time that the threat of a
recession spurs cost-cutting, and the euro is exposing price
discrepancies. No longer can European companies wear
"national blinders," he noted.

"Dynamic trade will define Europe's e-commerce winners,"
Condon said.

Companies worldwide do have successful models to follow.
Companies like Mercedes-Benz, Apple Computer and Sainsbury's
(a Peapod-style grocer based in the UK) all offer up
excellent models of how real world companies can make the
transition to doing business online.

And while Forrester also pointed out more real-world tools
and assets individual companies can leverage -- for example,
creating new roles and new responsibilities for certain
skill sets that can help accomplish these tasks -- the
Forrester speakers also noted that it takes a certain
element of courage and perseverance to steel a significant
online initiative. "You must demonstrate incredible courage
and vision," Condon said.

Title Most Likely To Be Seen In Dilbert

CFEE - A newly created "dynamic trade" position of a Central
Flexible Execution Executive. Nice beat... . really tough to
dance to.


And the Winner Is...

Auctioning is clearly a model that's a winner in the new
economy. Tim Jackson, the founder of the online auction
company QXL http://www.qxl.com gave this European audience
-- the overwhelming majority of whom have never bid in an
online auction -- a brief walking tour of the auction
process and pointed up its clear advantages in a
market-driven environment.

While online auctions haven't taken root in Europe to the
same degree that they have in America, Jackson is convinced
it's only a matter of time. Americans may be demonstrably
more price-sensitive and aggressive, he said, and embraced
the auction model more fully. "But the desire is still
there... " for Europeans, he believes; they are simply more
embarrassed by such overtures.

What's most critical for any online business these days,
however, is visibility, Jackson said.

"There's a saying in the retail business that what's
critical is location, location, location... ," Jackson said.
"That is as true online as offline. If you don't have
marketing and distribution channels, if you don't have
people walking by all the time, then you won't be able to
run a successful business."

Nibley's Nuggets

Andrew Nibley, big cheese of Reuters New Media, gave an
inspired talk about his company's highly successful efforts
to bring an old media company online.

Tuned to the worlds of print and broadcast, Reuters
nevertheless launched an online syndication and packaged
content adjunct, serving as an inspiration to those
multinationals in the room struggling with just how to bring
their own brands online.

Nilbey served up nuggets from famous historical figures to
make his point that the web very much represents a new
frontier. For example, Alexander Graham Bell once said, "The
telephone will be used primarily to broadcast symphonies to
remote locations." And HM Warner (of Warner Bros.) said,
"Who the hell wants to hear actors talk?"

Most tellingly, it was Bill Gates himself who once said,
"The Internet is a fad. It's not really relevant to our core
business."

The true value of a technology is not always obvious, Nibley
said, adding, "These people all shifted their thinking to
become highly successful in their industries."


Forrester Facts

What's a Forrester show without some fun factoids? To wit:

* 5 percent of sales worldwide (totaling about $3.2 billion)
  are expected to take place online by 2003.
* 50 percent of the online audience is female.
* There is a new web user coming online every 2 seconds.
* 51 percent of those who own both a TV and computer would
  relinquish their TV before giving up their computers.
* If stranded on a desert island, two-thirds would prefer an
  Internet connection over a telephone or television.
* By 2002, there will be 69 million Internet-abled computers
  in Europe, up from 13.3 million in 1997.
* Foreign visitors make up 30 percent of the traffic to
  US-based web sites.
* 80 percent of European-based corporate sites are
  multi-lingual.
* 50 percent of new car purchases were researched on the
  Internet last year.

Outtakes

"Playing with the nozzle on the content allows you to offer
different things to different sites." - Andrew Nibley,
Reuters New Media Inc.

"What are you doing in your business to raise the bar on
customer service? Because that's what it will take to
compete in an Internet economy." - Waverly Deutsch,
Forrester

"You can build a brand very very quickly online on the
Internet." - Andrew Nibley

"In America, many Internet users are not paying for their
telephone calls. In Europe, many people are paying for the
time they spend on a web site. If you make them go on for
six or seven pages before they get where they want, you are
going to make them very angry." - Tim Jackson, QXL

"For large, mature companies -- like Reuters... the Internet
represents more opportunity to rationalize costs than to
make new revenue." - Andrew Nibley

"If you have ever been to a commerce site, you know that
it's rather like being a visiting head of state. The shelves
are full of beautiful products... but you are the only person
in the store. [The store] looks rather dead." - Tim Jackson,
speaking of the advantages of real-time auction sites

"One of the problems with success is that it stifles
creativity. Very few very large companies can make
innovative moves." - Bobby Cameron, Forrester

"I first wrote about Amazon.com in 1995, in the days when
you could call the office in Seattle and ask to speak to
Jeff." - Tim Jackson, who spent many years as a journalist
covering Internet entrepreneurs before he became one

"I'm proof positive that old media executives can make the
transition into the web environment." - Andrew Nibley

"Europeans will be better served in the long run by bringing
a more competitive stance to business." - Glen Meakem,
co-founder, FreeMarkets Online

"More than 90 percent of corporate executives will look to
the Net for their primary source of information within six
years." - Andrew Nibley

"[The key] is to not go back and convince your CEOs [to
embrace the Internet], but to actually go back and quit your
job." - Tim Jackson, encouraging more Europeans to seize the
tremendous opportunity on the Internet

"Less is worth more... if it's the right less." - Andrew
Nibley, speaking of targeted content delivery to Net users

"Europe has been described as a curator culture... which is
insulting, but probably true. The key is to stop being
curators and be innovators." - Tim Jackson

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Received on Wed Feb 10 1999 - 07:56:12 CST