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E-commerce gains ground as software options grow

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To prepare for what could be a rough financial ride next year, many U.S. companies are searching for ways to cut operating costs, reduce inventories and trim their work forces.

For an increasing number of companies, e-commerce is turning out to be the answer.

As more pressure is put on corporate budgets, businesses "will have to move more toward an electronic-commerce type of setting," says Tim Washer, director of enterprise markets for Access Media International, a New York-based research company.

E-commerce allows companies to cut their product shipping costs, the time from order to invoice and the staff needed to process the order.

"Human hands are needed very little," Mr. Washer says.

A competitive tool

Paul Cimino, founder and CEO of Snickelways Interactive, an e-commerce developer based in New York, agrees that Web-based businesses might have an edge in a shrinking economy.

But, he points out, the business-to-business Web site is more often used as a competitive tool rather than just a hedge against a shaky economy.

"The Internet is really changing the way goods and services flow down the supply chain," Mr. Cimino says.

One of the fastest-growing segments in business-to-business e-commerce is small businesses, an area Access defines as being a company with fewer than 100 employees.

Of the 7.1 million small businesses in the U.S., about 2.5 million are online, and 900,000 of those have Web sites and engage in some type of electronic commerce.

While the Fortune 1,000 companies are pretty much saturated with the virtual experience, small-business Web sites are expected to hit the 2 million mark by the end of this year.

One reason for the increase in small-business-to-business Web sites is the wide availability of software.

A few years ago, many users experimented with off-the-shelf products and were basically turned off by the experience.

"No matter what anyone says, there is no such thing as turnkey," says Mr. Cimino.

Companies can probably get close to 50% of the code and graphics they need from off-the-shelf products, but then they have to customize and integrate the product into their operations, he says.

"That's why software integration is a multibillion-dollar market," Mr. Cimino says. "You have tools out there that come out of the box, but they have to be integrated."

Snickelways uses Microsoft Windows NT and its own SiteServer technology as the framework in its Web structures, then plugs in a lot of third-party software.

This includes tax, shipping and postage, and credit authorization software, most of which has already been sanctioned and approved under Microsoft's "sphere of influence," Mr. Cimino says.

The Snickelways crew provides content development, interface design, legacy integration and database design. The company also supplies its own Channel MasteryG software, which allows users in a particular market to host an extranet that can support trade at a variety of levels.

Turning to outside expertise

Relying on outside producers such as Snickelways and Redwood City, Calif.-based Broadvision to create e-commerce Web sites is becoming the preferred route among small and even medium-size businesses, relieving them of such tasks as inventory tracking, customer personalization and security with relatively limited resources.

Larger businesses have also turned to outside expertise to design Web-related business systems. Massachusetts energy supplier Boston Edison, for example, uses an electronic product acquisition system based on the Pecos Procurement Manager from Westwood, Mass.-based Elcom Systems.

Installed across Edison's intranet in 1996, the system automates the utility's $400 million purchasing operation and controls the flow of more than 70,000 annual product buys.

Of course, launching an effective Web site doesn't mean customers will use it to buy online.

That was the case with Plymouth, Mich.-based Broder Bros., a leading distributor of blank clothing such as T-shirts and caps.

Last year, Broder Bros. launched a business-to-business Web site to offer more services to its customers. But while many customers use the catalog portion of the site to browse through product descriptions, relatively few use it to order any merchandise, says Jenny McGuire, Broder Bros. marketing and public relations specialist.

"People are just now getting into the technology of the Web site. Right now, we are trying to strengthen our site because we've had trouble with speed and accuracy," says Ms. McGuire, adding that it's not efficient to place Web orders at this time.

"The site is nice," she says, "but it's not something that we are really on for a lot of commerce."

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