The idea is no longer just to sell a product, but to capture
the revenue stream from the customer over the lifetime of the product.It may even extend to not just the
lifetime of the product, but the lifetime of the customer –- and then maybe that
of his relatives, friends and acquaintances.
Xerox Modicorp, the copier company has started a new
division, the Xerox business Service. Two years ago it used to charge large
customers like Citibank and Airtel for equipment. Now it charges them for every
bill they print. The Xerox euipment at Airtel culls information out of a
computer, prints bills for each customer with specialised messages in each bill,
puts the sheets together and folds and gums. If Xerox's international customers
want a set of colour manuals printed, Xerox transmits these documents to
different locations across the world where they are printed and distributed.
Hindustan Lever's site
www.avianceIndia.com
for its range of beauty products has trained beauty consultants make calls
at your home or workplace to draw up a schedule for you and to tell you what
Aviance products to use and how (the consumer pays for the products). These
beauty consultants are also Hindustan Lever's sales channel. They buy from the
Web site through credit cards and the company couriers its products to them,
since the orders come bunched together, transportation costs are manageable.
How well they
perform this principle depends on how well they do in their markets.Though companies have always been information processing units, the
difference is that in the New Economy, this is a much more critical function.
All e-biz is driven by the fact that more and more companies and individuals
are electronically connected. This means that information flow can now be
tailored to specific situations and individuals.Companies earlier could not offer an unlimited range of products both
because of the difficulties of handling information and because of economies
of scale. But now a dot-com operation can collect orders from several
customers, plan for aggregated quantity and place orders with the suppliers.
Dell computers
allows its customers to build their own computers. It passes on information
required to both its suppliers and to Federal Express. FedEx then lifts
different pieces from different suppliers and delivers it to the consumer.
Dell used to do this even earlier but the Net allowed it to streamline its
process further.
The Net allows companies to get their customers to do all
the work -– like in a fast food outlet and save on costs. Firms that are not
designing their systems to pass information between different geographical
locations, different business divisions, alliances and partners are bound to
fail as their costs will be higher, their responses will be slower and their
customers will be a dissatisfied lot. A case in point are the Indian
nationalized banks whose branch applications will have to be integrated into a
single network with centrally accessible databases before they can offer
anywhere, anytime banking.
The opportunities for companies to redefine their functions
is increasing-- with many
extending their businesses by getting into new areas, while others shrinking
their functions because the Net makes outsourcing easy.
Earlier automobile manufacturers chose to makemost components
themselves because of the hassles of dealing with too many outsiders. But its
getting easier to transact with many partners (due to lower costs) and design or
manufacture collaboratively. In Cisco all manufacturing is outsourced to
contract manufacturers who specialise in manufacturing. Even new product
innovations are done outside the company and Cisco simply acquires the company
after the product reaches a stage where it has to be marketed.
The reasons why companies are opting for e-biz exercises are:
·Revenue enhancement through better customer knowledge.
·Reduced procurement and human resources costs,
·Increased asset productivity by better planning and
inventory control and
·Increased revenues through better linkages, alliances
and value chain partners
