Electronic commerce is king….but for how long?

For 15 years, businesses large and small have embraced the concept that e-commerce, primarily through the Internet, has fundamentally changed the way that goods and services are transacted.  As late as 1997, people still used the Sears catalog, the Yellow Pages, or an airline timetable to conduct business.  Not any more.

But there is a change underneath the feet of e-commerce that companies need to be preparing for, now.  Clockwork is focused on this next change, what is called digital or d-commerce, and how it can affect your prospects for growth, efficiency, and success.

My first experience with an e-commerce environment came in the transportation industry, where a web site was seen as a means of moving people from a higher cost per transaction (i.e., having to buy a ticket with an agent at the counter) to a lower cost of sale, by having them perform the same basic keystrokes through a computer.  A customer didn’t need to be trained in the duties of an agent, as the web site performed many of the same tasks behind the scenes.

Fast forward to 2012.  A travel customer wants more than the ability to book a ticket.  He or she also  wants gate information, hotel bookings, car rentals, upgrades, on-board snacks…and not from a personal computer, but a phone, or a tablet, or a device at their seat.

The simple act of commerce electronically is evolving into a much more customer-focused and customer driven process.  If companies aren’t responsive to that change, they risk losing the very customers who so effortlessly (and at very little cost to the client) migrated to the new platform.

It’s also more than just buying something.  Consumers increasingly see commerce as a fluid process, and want one means—one payment process, one refund process, one consumer interaction process—to drive their product decisions.  iTunes is one example of emerging digital commerce.  Netflix is another.

It’s still a little too much for some customers to get their hands around, however, and the industry isn’t doing its part to make it simpler.  I visited a marketing web site that attempted to define what they did in the d-commerce space.  They wrote:

 “Our proactive and practical advice targets the unique challenges created by the integration of customer-centric solutions into the technology landscape…We create immersive, loyalty-inspiring, consistent and persistent branded experiences that bridge platforms, devices, location and spontaneity.   And we do it while remaining true to project parameters including budgets, resources, timeframes and revenue projections.”

(In English, please. Our customers do not speak advertising-ese.)

“We build engaging customer experiences across multiple touchpoints that use the breadth and depth of technologies available in the commerce ecosystem.”

(Yes, much better.)

Digital commerce is about a range of islands in the consumer stream—awareness, shopping, purchase, post-purchase, repeat business, customer loyalty and ultimately retention—that expect  the same level of service in one as they get with any of the others.

Plenty of companies offer great sales experiences online and next to no post-purchase support, little or no customer loyalty, and little chance at retention.  The concept of “churn”, the marketing buzzword of the 1990’s which reflected the inevitable loss of customers to better-positioned opponents, does not apply in d-commerce.  If you do it right, you keep your customers for the long haul. Apple gets this. Dell, unfortunately, does not.

Digital commerce has significant consequences for today’s business climate, and it’s more than just building a web site.

The king is dead.  Long live the king.

Many years ago, Bank of America faced a data crisis in the growth of the check industry. By 1952, check usage in its branches doubled to over 21,000 per day, or 8 billion instruments per year.  Internal estimates pegged the growth to hit 20 billion by 1966 and the army of bookkeepers it employed to manage and record every check (with a high degree of accuracy) simply could not keep up.  The banking industry went to electronic recordkeeping, a means that changed the way American did business. It was literally a sea change, and today that same industry handles a staggering 300 million transactions every 24 hours.

Such is the sea change facing today’s business community-not in checks, but with data.

One of the most challenging cost centers in today’s tech climate is the cost of maintaining information. From ETL’s (extract, test, load) to short and long term storage, the cost of hardware, middleware, and software needed to keep up with a continuously expanding data universe is scary to many companies.

And it should be. Decisions made with 2012 in mind may be all but useless in a few short years.

In 1981, former Microsoft CEO Bill Gates was quoted as saying that “640K (memory) ought to be enough for anybody”.  Like many good quotes, Gates never said it, of course, but the decision at the time was discussed.  “I have to say that in 1981, making those decisions, I felt like I was providing enough freedom for 10 years,” Gates said in a 1989 speech.  “A move from 64k to 640k felt like something that would last a great deal of time.  Well, it didn’t – it took about only 6 years before people started to see that as a real problem.”

The technology industry has grown beyond all expectations in the shadow of a phrase every C-level executive should be familiar with—“Moore’s Law”, which states that the number of transistors on integrated circuits doubles approximately every two years. Memory grows, costs decrease, more power to the end user.  A cellular phone in 2012 has more processing power than the Apollo space capsule did a generation go.

Such rapid changes place particular stress on the capital investment of tools needed to store an ever increasing data requirement.  The client-server architecture which so many companies have relied on since the dawn of the technology age is straining to stay afloat, even as the cost of data storage has plummeted.  In 1980, he cost of storing one gigabyte of data cost $2 million.  Today, it is around four cents. The trouble, of course, is that people need a LOT of gigabytes, terabytes, and  yes, petabytes (1,000 terabytes, or approximately 1 quadrillion bytes of data) to run today’s businesses, and mere servers are a poor way of housing such enormous (and increasingly valuable) sums of data.  Years ago, we had a saying in IT for server decisions: “Today’s investment, tomorrow’s door-stop.”

Cloud computing and cloud storage are, for many clients, a means by which a firm can achieve the cost efficiency of data storage without the capital expense of investing in physical servers that will never be enough for the future. To other clients, the concept of the “cloud” is, well, cloudy.

Is it secure?  Is it safe?  What if it isn’t there anymore?  Is it economical in the short and in the long run?

These are all legitimate questions, and there isn’t always one answer.  But these are questions that must be asked by companies straining to meet the increasing needs of a customer base that not only demands access to data, they expect it.  Clockwork Technology has been “in the cloud” for a number of years now, and while we don’t run the cloud, we can provide the resources necessary to introduce you to the products and services which do.

Where would the banking industry be if it manually handled each check, each ATM transaction, each online purpose?  Where will your business be if it relies on yesterday’s technology to solve tomorrow’s challenges?