Welcome to 2001! We're jumping right in with thoughts on what makes for successful business, and specifically (that word that many now wrongfully dread!), e-business.
I recently had a very interesting conversation with Bill Conner, president of Nortel Networks' (NYSE: NT) eBusiness Solutions, about the company's eBusiness unit. Speaking from firsthand experience, many of us were burned in the decline in Internet-based stocks -- Yahoo! (Nasdaq: YHOO) in my case. However, e-commerce is actually growing, and in so many ways it will change the way we do business. Let's start from the beginning and talk about business first, meaning any business, whether it is vending donuts, having an online forum like the Fool, or selling axles to an automobile manufacturer.
What makes a business succeed is fulfilling the needs of customers. When you go buy donuts in the morning, you want to be able to get your favorite kinds ("mmm, donuts"). We at the Fool want to help you learn about everything related to money, and to have you feel that you're part of the Fool community. If I'm selling axles to an automobile manufacturer, I need to fill that order on time and within specifications. Doing any business over the Internet has the same requirement: a business needs to engage customers and fulfill their needs.
Years ago, I worked in a lumberyard, and we did very good business. Part of it was our location, and part of it was our prices. However, the primary reason we succeeded is that the owner supplied the type of lumber and building materials that our customers wanted. Also, we knew our customers personally, they held accounts with us, and when they came in we could fill their orders quickly (writing on paper) with exactly what they wanted. It was low technology, but 1,000 years from now the same thing will be important -- providing your customer with what he or she needs.
Nortel's e-business unit is working to allow online businesses with customer engagement tools. A good example that we all see is at Amazon (Nasdaq: AMZN). When I sign onto Amazon, the site already has my address and credit card in its database, and they have profiled the types of books I've bought. Because they know who I am, I don't have to spend time entering the same information again.
Mr. Conner spoke about how this practice is also useful for business-to-business commerce -- businesses can establish profiles of leading customers and provide services tailored to their needs. The software that Nortel Networks provides will allow online businesses to provide increasingly detailed customer identification tools no matter what "portal" you access the business through -- whether face-to-face meetings, email, a website, or a PDA.
OK, what does all this mean? According to Mr. Conner, "It allows businesses to maximize their return on customer relationships." So, any business can better tailor its products and services for each individual customer, much like the lumberyard that I worked in years ago. In the conversation with Mr. Conner, we talked about the possibilities of speech processing. He said, "One of our customers, Schwab (NYSE: SCH), has implemented our speech processing product. Instead of endless touch-tone menus, you speak your options into the phone. It's much more user-friendly, and it saves time."
Obviously, for businesses to survive in what can be a very impersonal environment (the Internet), they need to easily fulfill customer needs. If a customer calls about an order, the person taking the call should be able to pull the order up on a computer screen quickly and with minimal inconvenience to the caller. Also, a customer shouldn't need to spend time entering the same data each time an order is placed.
In conclusion, products such as the ones Nortel is selling are needed for companies that engage in business through the Internet. This is partly why I'm beginning to buy Nortel in my Pathfinder Portfolio (Nortel offers a free DRIP). There is significant competition in this industry, of course, including leaders Siebel Systems (Nasdaq:SEBL) and Oracle (Nasdaq: ORCL). What I find interesting about Nortel's entry into this market, though, is that it will provide a full range of services to customers -- from the actual telecommunications hardware, to the customer relationship software that runs over that Nortel hardware. This may provide Nortel with an edge over its software rivals.
To discuss this column, visit us on the Drip Companies board or the Nortel board.
