E-CHANNEL FORECASTS FOR 2000 AND BEYOND
Most CEOs with a stake in physical distribution channels now realize that "e-business" is the strategic opportunity and threat of a lifetime, but few have a clear vision of what their particular channel will eventually look like or even what specific steps they should take today. Perhaps the flood of forecasts that come at each year-end (and millenium!) from the business media and technology vendors will help our e-biz vision. To pile on, here are more distribution channel specific e-forecasts.
Many of the bigger manufacturers that could have been leading channel change with e-biz initiatives arenít. Common reasons for delay have been - preoccupation with solving Y2K problems, digesting new ERP legacy systems and uncertainty about how to empower end-users without threatening traditional channel partners.
These three excuses disappear in the following e-biz scenario that has good odds for take off in 2000.
- A few manufacturers per vertical channel will re-deploy their Y2K resources into leveraging their new ERP database capabilities by sharing the data, via the web, into their channels wherever it makes sense. The objectives will be to help traditional channel partners become more agile and efficient.
- Other manufacturers will then feel compelled to jump into this "extended enterprise extranet" (EEE) game and raise the ante with increased features and information that will quickly extend all the way to empowering end-users.
- As any given channelís inventory, economics and inefficient paper flow all become transparent to the end-user, they will start to demand and get more efficient service scenarios that will cause traditional distributor business models to deconstruct. Initial evolutionary web-applications will eventually have a revolutionary impact on distribution channels.
Software entrepreneurs have already anticipated the needs to webulize the traditional channel practices touched upon in steps one and two above. Starting about three years ago a new category of software solutions appeared that was dubbed "customer relationship management" (CRM) and in the past 15 months a spin-off category has appeared called "partner relationship management" (PRM). Both categories might be considered part of the broader space of EEE.
CRM packages are password-protected extranets that allow direct buying customers to be their own inside sales person, analyst, and order-tracker. PRM packages do the same for independent channel partners, but also include features like electronic lead management, sheltered income tracking and on-the-fly, localized promotions. Because PRM packages promise a good ROI for both manufacturers and distributors, both parties should research this category with an eye for exploiting them in both an evolutionary and then a revolutionary way.
In spite of all of the hype for B2B trading exchanges and online procurement, especially in the maintenance, repair and operating (MRO) channels, serious channel e-biz canít happen for big or little guys without end-to-end, channel, e-catalog standards at the very least. How long will standards take to materialize and then transform channels? Gartner Group just weighed in (11/99) with some longer-term forecasts that seem reasonable. They think that:
- "E-biz" is currently at its' hype peak and over the next three years it will drop rapidly into a trough of disillusionment before it climbs the "slope of enlightenment" to the digital networked economyís final emergence between 2006 and 2008.
- Dot-com share prices will collapse by the end of 2001 followed instantly by investor disillusionment.
- And, from 2001 through 2003 there will be publicized failures of both brick-and-mortar companies and dot-coms.
Total e-biz reality may actually come within 2 years for some channels and maybe never for others. The two-step PC distribution channel, for example, is already closing in on e-standards, because it is currently under siege from Dell. The pre-cast, concrete block channel may, conversely, never see much impact from e-biz.
We all need to continuously work at trying to envision what our final digital networked channel will look like while we simultaneously consider near term productivity opportunities like PRM packages. Otherwise, we will not be prepared for exploiting the chain reaction of - short term efficiencies, deconstructive chaos, channel e-standards and the eventual emergence of our continuously revised digital networked channel vision.
Merrifield Consulting Group, Inc. Article # 8.12