In my last post I wrote about how transactional eCommerce was about to be replaced by value based eCommerce. Whilst the inherent message was about one of change and one of dealing with the disruption, the potential for Value based eCommerce to define the corporate landscape is significant. And that means your future and my future will be subject to change.
So here are the 10 reasons, in no particular order, why I think value based eCommerce could change your future. If you want to know how to cope with what all that this might mean, then you are going to have to wait until next week’s post! But read this one anyway, as it will you give you a hint to the direction I am taking with this.
1. Value based eCommerce will change corporations cost models. It will no longer be margin per transaction or by product as the products themselves become increasingly commoditised. In its place we will see multiple revenue streams as solutions are embedded in customers workflows as modules or components. Payment may be on a per seat, per use or more contentiously, perceived value basis over a given time frame. This is a fundamentally different way of charging for services, and will drive major reviews of infrastructure, processes efficiency, inter-connectivity costs and cost bases.
2. Web enabled architecture becomes a green Fee. Companies with burdensome legacy systems that are complex to integrate and costly to maintain will suffer as more nimble, flexible web architecture enabled companies outpace the leviathans of old. New companies, new ways of integrating, and increasing use of SAAS, SOA, and modular software will reduce investment cost, increase a companies ability to innovate and meet the increasing need for Open systems. These changes will threaten not just the Old companies’ IT departments, but the very companies themselves
3. ROI Models and Investment Criteria will change. The length of time that investments can deliver a return will shorten, there will be less requirement for physical assets, and increasing reliance on service-based investments. This will change much f the investment criteria, capital requirements of business and allow more flexible, cash rich business to outperform their more traditional rivals.
4. Without value based eCommerce, Customer Loyalty will be almost impossible. Much is made of the value of customer loyalty, and the opportunities it provides to cross-sell and up-sell. However the increasing expectations of customer is that is is Free, Open (for integration or use as they determine) and that they reserve the right to take the best deal on a case by case basis. One way around that is to undermine the commodity pricing that this is leading to, and allow customer to use the tools, products or services within their own domain, allow loyalty to be more self-selective and more value based, as the relationship will be more long-term. This is much the model Google has adopted with many of its products (the map API for example).
5. Business become more specialised/modular. As the companies evolve, so there is an opportunity to become more specialized. They can streamline around their core differentiators – probably talent, innovation, and content, and enable it through technology. They may choose to outsource to other specialists key functions (Finance, Fulfillment, logistics, technology etc very much dependent upon the type of business and focus on the main areas that makes them different. This will largely be based around talent – the intellectual capital we each bring to the game is after all one f the primary reasons companies employ us; the solutions – how technology has been used to provide value propositions to customers, particularly in terms of innovation to make open integration and adoption by customers more prevalent – and Content – that might be product, data, rich media. All companies in the value-connected worlds will need some form of content to attract and retain repeat visits. This obviously has implications for different roles in different companies.
6. Talent becomes increasingly critical. Finding talent that can help drive the transformation – a transformation that for many business will feel like changing the wings of an aircraft in flight – will be itself be a significant challenge. Recruiting individuals with the skills required to operate effectively in a value based eCommerce environment, where much of the decision making is pushed to the edges of the business, and power/control no longer resides in verticals but exists often equally across the eco-system, including the customer. Individuals with the creativity, flexibility and resilience to work in this sort of environment will be the stars of tomorrow.
7. Innovation become a key differentiator of long term sustainability. There is nothing new or radical in this idea. This maxim holds true of today’s eCommerce environment. In the value-based eCommerce world though it becomes critically important. Organizations that have Innovation as a key value, that have invested in the right collaborative environment, that have made innovation part of their DNA, they will be the ones to succeed. This is not as easy as it sounds. Giving individuals the freedom say for 1 day a week to do whatever they want to in exploring new ideas for many will be an uncomfortable step to far. But some of the most innovative companies today – and I hate to keep citing Google as an example – do just that. They already have a degree of engagement and trust that it a direct result of their culture, that foster innovation.
8. Islands of Certainty. Moore’s law means that processing power will grow exponentially at the same time as storage becomes so cheap as to be an incidental cost. this means that in the future we will have no reason not to store data – of whatever type and however banal. What will change is as this sea of unstructured and increasingly complex (to put into a logical taxonomy) data grows, so we will see a need to find the island of certainty – those pockets of information that are contextually relevant at the point of need, rather than the current model where we assume the sea is fixed (client/server architecture for example) and you manage uncertainty. Value based eCommerce turns this on its head. You have to manage the uncertainty and create moments of calm that drive real value for the customer. This require a fundamentally different approach to how we see content and data. Now the customer has individual discretion at every point of the decision curve. and for an organization that means planning for and coping with uncertainty.
9. We’re all individuals. I’m not! At the risk of plagiarizing Monty Python, transactional eCommerce is all about the convergence of best practice implementation to squeeze every piece of efficiency or cost saving out of a transaction. This leads to convergence of the user experience as companies increasingly turn to similar or the same software to drive their eCommerce platforms. In the value based economy this will be broken wide open again. Granted, there will still be a need for complex eCommerce software to support this, but it will take a far more cartridge or modular approach, where different cartridges can be deployed rapidly, cheaply and, critically, flexibly. It becomes much more what you do with those cartridges, than what the cartridge itself does. We will move back into a world where individualism – both in terms of the customer experience and the value proposition – become increasingly important again.
10. Virtual companies. If even some or all of the other ideas in this list come to pass none is perhaps as radical or contentious as virtual companies. Why, the argument goes, if my systems are open, flexible and easily connected; if my technology is predominately hosted; if my customers are able to create their own solution out of the building blocks that I create, and my talent is located where it chooses to love, but connected seamlessly through technology, would I need a traditional company? In the short term there are obviously compliance and legal reasons for this, but the point here is that the ability for companies to come together briefly and then separate will allow a whole new approach to solutions, service and virtual companies. Think of it no longer as a merger or JV but more of a temporary co-existence. This means that companies will keep themselves deliberately nimble, looking to flex talent, resources and other functions on a project by project basis. Now if that doesn’t have an impact on your future, I don’t know what else will!
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