By Keith Newman

The ongoing global dervish dance of lay-offs, cut backs, take-overs and shrinking profits in the tech marketplace are forcing Kiwi businesses to step back and review what constitutes stable business reality. 

Many companies who've been whirling along the e-business, e-commerce pathway to the tune of 'gotta be in to win' hype, now have had their fingers on the pause button while the dust and emotional upheaval settles in the aftermath of the dotbomb fallout. 

Part of the reason many e-commerce pioneers or tire kickers have failed is a lack of a sound business strategy and an inability to handle the pressure behind the front lines.

In the ideal world you key in on-line information once and set in motion an electronic chain of events that generates the correct instructions for suppliers and distributors and customers, the goods being delivered and the shelves and warehouse are replenished accordingly.

But it's not as easy as it sounds. While many suppliers may have a fancy web site, behind the scenes orders are often processed by printing emails, sending faxes or re-keying data.

An increasing number of larger organisations require suppliers to become an electronic link in their automated supply chain. With so much proprietary technology around you run the risk of being stranded in e-commerce Babel if you can't share the same document types.

If your business is going to be opened up as part of a wider trading community then the bottlenecks, islands of information, incompatible code and missing links need to be sorted out otherwise you'll become a weak in the supply chain.

Even if you have moved beyond people placing paper in pigeon holes and have the plumbing and document translation right that's still no guarantee of success. You still need to have the right products, marketing, management and customer response systems in place.

An increasingly e-literate breed of executives is realising the need to take the reins of technology, rather than being held to ransom by it. IT strategies and purchasing decisions are moving from the backroom to the boardroom with a view to integrating fragmented organisational structures and presenting a united face for e-commerce.

The incentive to get it right is a confident expectation, that once the right internal systems and external relationships are in place, e-business is the gold at the end of the rainbow. Research firm IDC says revenues earned by businesses selling to businesses (B2B) - currently about $2.36 billion - are expected to grow to over $16 billion by 2004, while business-to-customer (B2C) transactions will grow from $966 million currently to just under $5 billion.

For the moment the big sites using e-procurement and e-distribution systems, including IBM, Foodstuffs, government departments and others that dominate in their market sector, are driving B2B revenues.

However IDC reckons e-marketplaces will soon begin to meet the needs of small to medium enterprises that can't afford the risk, the time or the capital outlay to make a big splash. From next year it believes we'll see major growth in neutral third party business portals selling products and services on-line based only on a transaction fee.

Early examples include Southfresh, representing the fishing industry and soon to branch out into the plant nursery market, Lingus, which handles sales for the timber industry and Supplyzone, now selling everything from electronics to chocolates and wine. In the rural sector the dairy industry's new umbrella company GlobalCo has Fencepost and RD1 providing information services for farmers and now selling PCs and other products.

More generic sites, which can pull in international traffic for a broader range of products and services are expected to emerge rapidly. IDC predicts e-marketplace revenues will rival the entire B2B segment by 2003, lifting to $5 billion by 2004 and soaring by 2005 to around $21 billion, outgrowing both e-procurement and e-distribution revenues.

In the meantime the challenge for all organisations is to sift through the lessons of the dotbomb debacle, get a bead on what both partners and competitors are doing, and ensure internal systems, departments and processes are in order and talking seamlessly.

Business is still business -clicks and mortar are complementary. The principles of success at street level; reputation, quality, pricing, and service, are the same in cyberspace. There are no shortcuts to building trust and loyalty. In fact there's less tolerance on the web for experimentation, srcew ups (sic), bad design or slow service.

Once we find the right business models, successful companies will form tight electronic clusters with their supply chains and become reluctant to do business with those unable to order, invoice and settle on-line.

Properly integrated into a business strategy, the e-word cuts out the paper chain, reduces queues and bureaucracy and results in efficiency, instant access to information and increased profitability. With solid strategies and strong marketing even our cottage industries should be able to perform like well-organised corporates as they take 'Made in New Zealand' to the wired world.