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Technical Trends: Unified management via document super highway

by Michael Stanley

It’s one thing to merge electronic and paper data, but if one looks at today’s document environment, developments are underway that will open the way to interactive systems and services that are likely to revolutionise the way we communicate.

Today’s document environment is changing in line with the spread of high-speed Internet services that have made it possible to exchange not only text data, but also image, audio, and video documents. A proliferation of mobile peripherals, such as PDAs and mobile phones, all supported by a wireless communication infrastructure, has also meant that documents can be exchanged regardless of time and location.

E-marketplaces, along with solutions like ERP, Supply Chain Management,

CRM and Sales Force Automation in their support, have also meant an increasingly large volume of documents that need managing.

In short, document management functions have changed significantly. People want links among network and image devices and applications so that they can access, update and share documents anywhere and anytime. In this environment, it must be possible to handle documents in optimal formats from any network device anywhere in the world, at any time, including documents of other systems.

Connecting all these devices and application software via some foundation is the future which aims to systematically connect various networked devices and applications to ensure document interoperability.

One can use a highway as an analogy, a mechanism that provides functions to documents could be thought of as a service station on the highway, and documents as vehicles travelling along it. The functions provided by the service station would be those required for the life cycle of any document, such as device input and output, distribution, archiving and retrieval.

Additional functions of another system would be provided by an interchange, and because the documents travelling on the highway would be defined by XML open specifications, it is easy for them to move into and out of other systems.

The design policy of this “highway” needs to consist of four essential points. This would include a common hardware architecture to enable all imaging devices to be used as a network terminal with common operations, and all imaging devices to be connected through a common interface. The next point is component software design to provide application operability as well as simple system extendibility by combining functions.

A consistent system interface that is disclosed to third parties will permit customisation of operations in accordance with the user’s type of business, as well as to ease the burden of system upgrades. Industry-standard data format and protocol will facilitate connection with other systems and enable quick and economical system development by third-party vendors.

In past architectures, print, fax and other functions were achieved by adding them on the copier board using multiple network cables. As a result, uniform management was impossible.

In contrast, the new architecture features common services running on a general-purpose operating system, and the sharing of the network and hard disk, memory and other resources at the system level. This configuration also mounts various applications like copier, scanner, printer, and facsimile on the application interface.

This new architecture provides significant advantages, for example, data input and output to and from the network can be managed in a uniform manner, and integrated data exchange with the various functions can be carried out. When developing new applications in conjunction with the application interface, new functions can be added on a software basis.

Unified hardware architecture means that the same functions, operability, and connectivity can be achieved even if actual hardware changes.

New hardware and software will start emerging that will operate on the Document Highway platform. Next-generation office solutions must take advantage of the Internet-age’s speed, interoperability and openness.

Michael Stanley is marketing manager at Gestetner SA. He can be contacted on mailto:michael.stanley@gestetner.co.za or on +27 11 723-5000

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Posted in the category: Trends

Relationship between customer and seller under threat

by Glenn Lottering

The Internet, and the globalisation phenomenon that has trailed it into the retail environment, has had a profound influence on South African businesses. The biggest change brought about by the Internet is in the area of the relationship between customer and seller.

Much has been said about the abilities of customer relationship management (CRM) applications to leverage the Internet to cement this important – although fragile – bond.

However, companies have not incurred the return on investment (ROI) they expected from CRM implementations because of their emphasis on sales force automation.

Yet, sales force automation is but one aspect of a comprehensive CRM solution.

Under-utilisation of the full benefits of CRM technology has resulted in low returns on CRM investments and subsequent disillusionment with CRM technology for many companies.

This extends to the customer experience. If companies using CRM tools are disappointed, then customers are far more disappointed at the inability of these companies to engage with them as individuals or as valued customers. The ultimate experience of many customers, in fact, is one of not being valued at all and being treated as a number.

If this is the impact a company it is making, it is in serious need of re-evaluating not the CRM tool, but the manner in which it integrates that took into its marketing strategy.

It’s a simple issue: CRM is a much broader solution than automation of customer relations. It is essentially about customer retention. Therefore sales force automation needs to be linked to the service and marketing components of the CRM implementation in order for CRM solutions to show their real value.

While CRM is intended to improve the bond between the seller and the customer, it is not only a selling tool. Used badly, it can be disastrous. Used properly, it really does cement that bond.

Glenn Lottering is business development manager at Oracle South Africa. He can be contacted on +27 011 266 4000

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Posted in the category: Trends

Technical Trends: Unified management via document super highway

by Michael Stanley

It’s one thing to merge electronic and paper data, but if one looks at today’s document environment, developments are underway that will open the way to interactive systems and services that are likely to revolutionise the way we communicate.

Today’s document environment is changing in line with the spread of high-speed Internet services that have made it possible to exchange not only text data, but also image, audio, and video documents. A proliferation of mobile peripherals, such as PDAs and mobile phones, all supported by a wireless communication infrastructure, has also meant that documents can be exchanged regardless of time and location.

E-marketplaces, along with solutions like ERP, Supply Chain Management,

CRM and Sales Force Automation in their support, have also meant an increasingly large volume of documents that need managing.

In short, document management functions have changed significantly. People want links among network and image devices and applications so that they can access, update and share documents anywhere and anytime. In this environment, it must be possible to handle documents in optimal formats from any network device anywhere in the world, at any time, including documents of other systems.

Connecting all these devices and application software via some foundation is the future which aims to systematically connect various networked devices and applications to ensure document interoperability.

One can use a highway as an analogy, a mechanism that provides functions to documents could be thought of as a service station on the highway, and documents as vehicles travelling along it. The functions provided by the service station would be those required for the life cycle of any document, such as device input and output, distribution, archiving and retrieval.

Additional functions of another system would be provided by an interchange, and because the documents travelling on the highway would be defined by XML open specifications, it is easy for them to move into and out of other systems.

The design policy of this “highway” needs to consist of four essential points. This would include a common hardware architecture to enable all imaging devices to be used as a network terminal with common operations, and all imaging devices to be connected through a common interface. The next point is component software design to provide application operability as well as simple system extendibility by combining functions.

A consistent system interface that is disclosed to third parties will permit customisation of operations in accordance with the user’s type of business, as well as to ease the burden of system upgrades. Industry-standard data format and protocol will facilitate connection with other systems and enable quick and economical system development by third-party vendors.

In past architectures, print, fax and other functions were achieved by adding them on the copier board using multiple network cables. As a result, uniform management was impossible.

In contrast, the new architecture features common services running on a general-purpose operating system, and the sharing of the network and hard disk, memory and other resources at the system level. This configuration also mounts various applications like copier, scanner, printer, and facsimile on the application interface.

This new architecture provides significant advantages, for example, data input and output to and from the network can be managed in a uniform manner, and integrated data exchange with the various functions can be carried out. When developing new applications in conjunction with the application interface, new functions can be added on a software basis.

Unified hardware architecture means that the same functions, operability, and connectivity can be achieved even if actual hardware changes.

New hardware and software will start emerging that will operate on the Document Highway platform. Next-generation office solutions must take advantage of the Internet-age’s speed, interoperability and openness. Michael Stanley is marketing manager at Gestetner SA. He can be contacted on mailto:michael.stanley@gestetner.co.za or on +27 11 723-5000

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Posted in the category: Trends

Online retail needs clear strategy (in South Africa)

by Arthur Goldstuck

It is in its relationship to physical retail that online retail is revealed in all its immaturity…

(Excerpted from “The Goldstuck Report: Online Retail in South Africa, 2002” – see below)

The total retail market in South Africa was worth R173-billion in 2000 and R188-billion in 2001. Given an online retail market of R84-million for 2000 and R162-million for 2001, online retail accounted for less than 0,05% of total retail sales in 2000 (0,047%) and less than 0,1% last year and (0,086%).

By contrast, the total online retail market in the United States was worth $32,6 billion in 2001, out of a total retail market worth $3,167-trillion. Online retail thus accounted for 1,0 percent of total sale. In 2000, online retail reached $27,3 billion, accounting for 0,9 percent of total sales.

Contrasting these proportions, it is clear that online retail is still at a very early stage of its market penetration, and remains deeply immature in its implementation in South Africa.

Strategic implications

The early years of online retail in South Africa, from 1996 to 2001, saw annual doubling or more of total sales, or more than 100% growth every year.

This large percentage growth was premised entirely on the low base off which the market has grown. As online retailers reach the majority of their potential online customers who have a propensity to purchase online, the growth pattern will change. From the total being made up largely of one-off purchases in the early years as users began to experiment with online transactions, the numbers in the future will be made up largely of repeat purchases by regular customers.

In other words, online retailers will rely increasingly on generating additional sales from the same customers, rather than attracting new customers. This has vast implications in terms of customer retention and customer satisfaction strategy.

Without a customer satisfaction policy, online retailers will not be able to generate loyalty and attract repeat purchasing. And without a customer retention strategy, online retailers will simply lose any market share they might gain initially through the sheer strength of their online presence.

This means that, for individual retailers, sales growth will be based on a combination of their own marketing spend and their investment in customer retention. Without a clearly defined strategy directing this expenditure, however, level of investment will have little impact on level of sales growth.

The corollary to this finding is that strategies should not be based specifically on growing online market share in terms of value of purchases, as the online market represents an aggregation of widely divergent rates of success. A high proportion of online turnover represents turnover from loss-making operations.

Particularly in the light of the relatively low level of online retail sales, growth strategy should be focused on:

a) Internal strategy – i.e. growing the retailer’s own sales effectiveness, rather than focusing on what other retailers are doing;

b) Traditional strategy – i.e. growing sales in line with physical market trends and demands, rather than focusing only on online sales trends.

Arthur Goldstuck is editor of The Big Change and author of more than a dozen books on the Internet and urban legends. He runs the independent research and strategy consultancy, World Wide Worx, and led the research for “The Goldstuck Report: Online Retail in South Africa”.

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Posted in the category: Trends

Why online retail must boom

by Arthur Goldstuck

Next week sees the release of the 2002 Online Retail in South Africa report, which will reveal how South African e-tailers managed to double their online turnover from 2000 to 2001, and will probably increase it by 50% again this year.

How can this be possible, given the crash in dot.com businesses worldwide and the disfavour into which online only operators have fallen?

The reason is simple: South Africa was so far behind the world in bringing compelling online retail options to market, that when the rest of the world was caught up in the online retail race, South Africa was only just arriving at the starting line.

Out of this understanding flows almost everything else that is needed to understand the present supposed e-tailing boom.

* Firstly, there is no boom in the sense of a hugely profitable market or easy opportunities to make money. There is a boom only in the sense that proportionate growth of online sales is huge. In rand terms, those sales are in fact very small.

The total online retail market in South Africa for 2001 was double that of the year 2000. That may come as a surprise, until one looks at what was really achieved online in 2000: a mere R80-million in retail sales. The total retail market in South Africa amounted to R200-billion. Talk about a drop in the ocean!

The far higher projections we have seen for online sales in the past have included all consumer transactions generated by the Web, including car and house sales where actual payment was fulfilled offline, and shares and policies, which made up for the bulk of the numbers. These all disappear from the picture when we focus only on retail, which is loosely defined as products that are usually bought from stores.

*
Secondly, as small as the sales levels are, they are also growing off an extremely low base, so that they will grow dramatically, from a percentage point of view, for several more years. In other words, online retail will appear to boom in South Africa for the foreseeable future.
*
Thirdly, it is only in the past year that major retailers have come to understand that their online efforts must be integrated into their offline infrastructure. That includes branding and marketing; a reality that Woolworth’s, for example, learned to its own severe cost – around R40-million sunk into the near-defunct inthebag brand.

By extending marketing of physical brands and products to a company’s online presence, it is able to reap the benefits of a powerful brand in an environment where trust is still a key factor in consumers’ decision to purchase. In 2002, that is becoming the dominant approach to bricks and mortar retail, and the results are likely to reveal themselves not only in online sales, but also in return on investment.

*
Finally, online retailers are finally beginning to understand that it is usually not cheaper to sell online. You may not need physical buildings, but a busy web site with large transaction levels is often extremely expensive to maintain. As consumer activity increases, so do consumer expectations, and therefore the cost of meeting those expectations. Several retailers could have built several physical stores for the same money that went into their online presence.

Once this cost of doing business online is fully understood, not to mention its effect felt on the bottom line. The weaker operators and those with little strategic understanding of online retail will fall by the wayside. The stronger will not only survive, but they will prosper – as long as they stick to the principle of integrated sales and marketing strategy.

The bottom line is that the boom will continue, but it must be understood for what it is, and not as a justification for throwing money down the drain.

* “The Goldstuck Report: Online Retail in South Africa” will be officially released in a presentation at the Brainstorm Conference at Computer Faire in Midrand on Friday, May 24. A summary will appear in The Big Change.

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Posted in the category: Trends

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Posted in the category: Insight

Playing Monopoly

by Arthur Goldstuck

A few days from now, on May 7, Telkom’s monopoly on fixed telephone services in South Africa comes to an end. No, really…

The fact that Telkom will still appear to be the sole fixed telephone network will merely be an illusion, brought on by our blind lack of faith in the structures of government.

On May 8, Telkom will be able to say, seemingly truthfully, that it is not up to them to ensure the end of their monopoly. It is up to the state structures responsible for processing the applications for the Second National Operator (SNO) licence. As far as Telkom is concerned, its monopoly ends on May 7.

This means we move from a legal monopoly to a de facto monopoly. Which means that, in terms of competitive practises, Telkom is entitled to continue behaving like a monopoly.

Why does this sound like an attack on Telkom when it has no responsibility for the situation? Probably because, when you look behind these monopoly games, Telkom bears the entire responsibility for the situation.

Over the five years of its exclusive ownership of fixed telephony in this country, Telkom has fought every conceivable attempt to introduce competitive practises in any industry related to telecommunications. From denial of service to court action, it has been the bullyboy of local telecommunications. Indeed, it has done its international investor consortium, Thintana, who themselves enjoy a legacy of monopolistic practises, proud.

When the Department of Communications on July 27 last year announced the regulatory structure that would govern the issuing of new licenses, it proposed two new national operators, and laid out a framework for a more customer-oriented telecommunications industry. While the public welcomed the news, Telkom fought tooth and nail against the provisions for added competition. Moreover, it’s international investors, SBC (holding 19%) and Telkom Malaysia (12%), held the South African government to ransom, with SBC even threatening to divest from Telkom. On August 15, the government capitulated.

This once again threw the licensing process into disarray. The long-term consequence? The government has to walk on eggshells to keep foreigners happy with the way South Africans are provided with communications services.

It therefore became inevitable that May 7 would arrive with little immediate prospect of a new operator being licenses, let alone operating.

Little wonder that Telkom declared some time ago that it would not exercise the right to extend its monopoly by a year. It knew that, de facto, it would get that extension anyway.

The bitter irony is that, in the first place, Telkom earned that right by sleight of hand. It was required to meet certain quotas in terms of providing universal access to previously disadvantaged communities. it beat those quotas handsomely, providing connections in the remotest of areas and the poorest of communities.

And there’s the rub. The regulations required Telkom only to install the lines – and not to ensure that they remained installed. Due to the high costs of telephone connections, let alone the cost of local calls, a disastrously high proportion of Telkom’s beneficiaries eventually lose their lines. Between 30% and 60% of new connections are not maintained.

In other words, Telkom’s claims of meeting its quotas were a farce. They met the letter of the regulations, but certainly not the intent.

Rather than having a right to another year, they should have been severely penalised.

In this light, their “generosity” in forgoing their extra year of exclusivity was just another exercise in playing monopoly.

The recent revelation by Financial Mail (March 29) that Thintana has expressed deep unhappiness over SA’s regulatory environment merely adds salt to our consumer wounds. Thintana is now lobbying government to scrap draft regulations that will allow customers to choose a new operator as their preferred long-distance and international carrier while using Telkom for other services.

In other words, even as they were set to see the life of their exclusivity prolonged, they were still playing monopoly with our economy.

* Arthur Goldstuck is editor of The Big Change and author of more than a dozen books on the Internet and urban legends. He runs the independent research and strategy consultancy, World Wide Worx.

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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