Inside Intel.com's E-Commerce StrategyPublished: December 10, 1999 in Knowledge@Wharton
Everyone has heard of Amazon.com and CDNow. But contrary to popular belief, e-commerce isn't just about consumers buying books and music online. Companies use the Internet extensively for routine functions such as purchasing supplies, marketing products to resellers and communicating design specs to manufacturers. In fact, business-to-business (B2B) electronic commerce is the closet success story of the Internet. Forrester Research, a consulting firm in Boston, predicts that firms will conduct more than $3.2 trillion in business-to-business e-commerce by 2003. Some of the most adept players in this space today have taken this forecast to heart. Known for its ubiquitous processors, tech giant Intel has quietly been turning itself into a B2B e-commerce heavyweight.
How did Intel take the lead in the B2B race? Suzy Balter, manager of customer marketing and team manager of Intel's e-commerce site development efforts, illuminated the process at a recent talk titled "Building the E-Corporation at Intel." Speaking at Wharton's e-commerce lecture series on Nov. 9, Balter affirmed that Intel absolutely embraced the Internet. While its old mission was to be "the pre-eminent building-block supplier to the PC economy," she said, Intel's new raison d'être was clearly to be "the pre-eminent building-block supplier to the Internet economy."
Intel's business, explains Balter, can be broken down into four categories: client platforms, server platforms, networking, and solutions and services. Client platforms are familiar; everyone uses them to connect to the Net. Server platforms are at the other end; they feed out all the information. In the last three to four years, Intel has expanded its networking operations, the back-end technologies that enable the network on which the Internet runs. Finally, Intel is also making inroads into the business solutions field, offering startups new products such as e-commerce back-end systems and online services.
Two years ago, the company decided to do something about the growing importance of e-commerce in the B2B environment. Balter put together a global, 50-person team of people from various departments to take on the challenge of giving Intel a big e-commerce presence.
Through research, the team found that Intel's customers cared most about reducing costs and inventory and improving information flow and order placement. Intel's answer was to build a simple, customized e-commerce website with standardized functions.
Balter described the project as exhausting, but fun. The initial phase, she says, was to automate existing business processes. Not every company had the same needs; extensive workflow analysis and country-specific profiling was essential before such automation would become efficient. Only then could there be any productivity gains.
The process was made as transparent as possible, Balter says, to force change. "We gave customers direct access to prices and other stuff that wasn't at all ready to be shown to them. We were posting speaker notes and internal presentations on the web. It forced us to do things better because it exposed our failings to the customer."
The e-business initiative was jointly developed by employees from sales and marketing, planning and logistics, and information technology. "They wisely put marketing at the head. Of course, I'm partial!" joked Balter. Still, the choice had its merits: The marketing department was closest to the customers' needs and was the expert in customer interaction. The timeline was tight -- the initial push for the team's charter was around July 1997 and deployment began in April 1998.
Today, Intel's e-business site is customized for its customers -- and even for specific employees within those firms who are viewing the site. Why? Different customers have different needs, and not everyone is privileged to see confidential information. "Depending upon who's looking at the site and what kind of authorization she has," Balter said, "the dynamic toolbars on the site will change." Thus, order managers and design engineers will each see a set of menu options tailored to their needs. There is even file transfer capability, so that customers can exchange confidential data with Intel.
The fact that the e-business site is functionally designed is no accident; there are no graphics or moving objects for a good reason. "The site is intended for customers around the world," said Balter. "Not everyone has a fast connection. It's a secure site, and the encryption degrades connectivity. So customers told us to strip out the graphics, put as much as possible on the front page, and minimize the number of clicks required." What worked, she notes, was to simplify, standardize, maintain flexibility and remain market driven. "Don't let IT or logistics build what's easiest for the company," Balter warned. "Build what your customers need."
If success is measured in revenues, Intel's business-to-business endeavor certainly seems to make the cut: Its e-commerce operations have generated $1 billion a month for the past year. Customer satisfaction has averaged above 90%. By next year, Intel projects that all of its business will be occurring either on the Internet or through EDI; by 2001, 80% of the business should be on the Internet. "We're now seeing some 'no-touch' orders," Balter says. "No one at Intel has to adjust them, and customers can interact with us better."
The challenges for Balter and her colleagues in the near future are to keep improving web-based decision support systems and confidential content delivery; to understand the return on investment from the project; and to enable customers to better automate their own processes. With any luck, Intel's B2B initiative will keep the company comfortably in front of the competitionat least for the time being.