By now, everyone knows about the dot-com bubble. It burst. As a result, a lot of people lost a lot of money. This is old news. However, there is something to be said for reflection. While looking back at the e-business/dot- com experience is kind of like looking back at an airplane crash, there are some interesting lessons to be learned from the dot-com disaster. These include:
- There is still a real e-business opportunity out there. Admittedly, the dot-com/e-business opportunity looks nothing like what the venture capitalists and wild-eyed MBAs predicted. In truth, some corporations are just now starting to make e-business bear fruit. E-business has become another sales channel. It is another way to reach the consumer, and it entails its own unique opportunities. Where else, for example, can you find out what the consumer is thinking before buying?
- The e-businesses that succeeded are those in which the dot-com was fit into the corporate business plan. The dot-coms that did not succeed were those in which the business plan was built around the revenue to be generated by the dot-com (for the most part). However, when it comes to mainstream corporate business, the successes came where the e-business activities were an extension of an already successful business model.
In line with #2, the e-businesses that succeeded were those that tied the e-business technical infrastructure to the corporate infrastructure. In every case where the e-business infrastructure was built as a separate satellite technology infrastructure that stood alone and had no relationship to the corporate technology infrastructure, there was failure. In order to be successful, there had to be a tie-in between the e-business technology infrastructure and the corporate infrastructure.
- In almost every case, where there was a tie in between the corporate infrastructure and the e-business infrastructure, the tie-in was at the data warehouse level. Corporations found that the data warehouse acted as a "universal joint" between e-business and corporate systems.
- Clickstream data is very interesting data. However, in order to be useful, clickstream data must be handled quite differently than other data. The main problem with clickstream data is that it is at too low a level of granularity. This means that there is too much clickstream data. In order for clickstream data to be useful, it must be carefully selected and organized. Otherwise, it just sits in the corner and gathers dust.
These constitute the lessons learned from a technology standpoint. There were some other interesting lessons along the way as well. These include:
Just because people can buy something on the Internet does not mean that they will buy or even want to buy it on the Internet. The other day, I was in front of a pet shop. In the window were the cutest puppies. Several were doing some puppy roughhousing, being adorable as only puppies can be. I bet the puppies that sit in that window find homes every day. People buy puppies based on emotion. They don't buy puppies because of pictures or descriptions on the Internet. However, there once was a day that people thought that you could sell anything on the Internet. That simply isn't true. Where emotions are involved, there is another entirely different buying mechanism in place. The thought that anything could be sold on the Internet was the foundation of many a failed Internet business plan.
- Brick and mortars are not a bad thing. There once was a day when the term "brick and mortar" was used derisively. It was thought that people who were of the "brick-and-mortar" persuasion just did not get it. They were old, out-of-date fixtures just waiting to be replaced. Well, who won the war? Brick and mortars won, of course and the war wasn't even very close. The MBAs who "got it" are now driving cabs and hauling garbage in Silicon Valley. The brick-and-mortar crowd once so negatively and arrogantly derided is now the "C" crowd (CEO, CIO, CFO).
There are some interesting exceptions to the rule including Amazon.com. Amazon.com based its business plan on an Internet model and was successful (although it took a long time for the financial reality of that model to prove true). However, Amazon.com did something that other dot-coms did not do they built an information processing infrastructure. At the heart Amazon.com is a data warehouse. From the beginning, they knew they needed an information infrastructure. The information infrastructure was complex, expensive and took some time to build; however, Amazon.com built it anyway and thus is enjoying long-term success.
Contrast Amazon.com with companies such as Toys "R" Us. These other companies wanted all the fruits of e-business without building the information infrastructure needed to support the business model. What happened to these companies? They failed and, in some cases, they did so spectacularly.
The lesson is that successful dot-com experiences begin with an information infrastructure. In most cases, the data warehouse is the heart of the infrastructure.
Now consider another company and their interpretation of e-business United Airlines. Someone at United saw e- business as an opportunity to increase profitability. United Airlines thought that by taking the travel agent out of the loop, they could make more money and put travel agents out of business. They thought that by inventing e- tickets and getting the consumer to do their work for them, thus putting reservation clerks out of business, they could be profitable.
This is exactly what United (and other airlines) did. They are more profitable today for it at the expense of consumer happiness. Never has there been more animosity toward airlines. United failed to ask consumers what they thought of this new e-business world. They neglected to consider some very good reasons for having a travel agent and reservation clerk. All United sees is profits they forget the consumers, the very people they call customers.
Perhaps there are more lessons to be learned about e-business.
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