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New Zealand Engineering 1998 MayVirtual CompaniesJames Christopher is application development and support analyst for Fuji Xerox NZ Limited
Retail
The second type is retail business, which in the US alone is a multi-trillion
(it is a word, ask Bill Gates) dollar business each year. If only one percent
of this business can be done via the internet then it would still run into
the millions of dollars. Dell Computers is a prime example of what can
be achieved very quickly, as last year it passed the mark of US$1,000,000
of sales via the internet for one day. Other companies too are making
increasing amounts of money by selling products via a commercial site.
Although these have been slow to really take off in New Zealand, sites
like http://www.shop.co.nz and http://marketplace.xtra.co.nz
are growing as the number of connected users in New Zealand continues to
grow. What must be remembered though is that the internet is truly global
and companies looking at creating an e-commerce site should be prepared
for orders from around the world. The other type of company is the totally virtual company, which effectively
has no premises and a very reduced staff. There are examples of this style
of business popping up all over the internet every day, both large and
small. One of the best examples of what is possible is Amazon.com. Amazon.com
claims to be "Earth's Biggest Bookstore", offering over 2.5 million titles
with more than 1.5 million unique customers. It has no retail chain and
since opening in 1995 has rapidly become the leading online book retailer.
It effectively has an IT department and a warehouse, and due to the lack
of overheads can offer a lower price on many titles. Egghead, a large computer
supplies company in the US, recently decided to close all its outlets,
numbering over 80. It has decided to continue the internet side of the
business however, as the Net side of trading has continued to grow as the
brick-and-mortar stores have been producing a loss. This is along the same
lines as the example at the beginning of this article. A retailer with
a penchant for technology decided to experiment with newly available technology
at the time and developed a commerce internet site to help sell his clothing
range. The business expanded so much from the internet sales that he has
closed the store in favour of developing his internet site. Many virtual companies are small in size but large in service. It is
now possible for a company with only a few employees to have global influence.
One example of this is ILAN Systems Inc. in South Pasadena. The president,
Tom Reynold, runs the company from a couple of rooms in his house. The
company is five years old and has over 50 employees with annual sales of
almost $6 million, and yet many of the employees have never met. Other
companies have a pool of contractors they can use from all over the world.
Using the internet and other new office technologies a successful business
can be run from very meagre premises and with very low overheads. Porn
Companies may think that all of this is fine if you have a standard
product that can be sold by this method, but physical items are not the
only thing on offer from virtual companies. Sites now operate as subscription
sites, either on viewing or download, in fact, due to some of the questionable
content on the internet this is where a lot of the money is being made
at the moment. Many an entrepreneur has made big by offering subscriptions
to "adult" sites. Whether you agree with this or not, there are still a
lot of very rich, dirty old men who have made their money this way (ask
Larry Flynt). Several products are available at present and the numbers are set to
grow, both with new products and developments for some of the packages
on offer. Microsoft's Commerce Server effectively offers a wizard interface
for creating a site, but this is really only a start. Once the idea and
product market has been established it's really time for the marketing
analysts to step aside and the real work to be done. Several vendors offer
a virtual mall where they will build the site and handle the order processing
via their own site, but usually these are quite limited and are only good
for straight ordering of products, effectively processing orders much like
a telephone or fax process. To really reap the full benefits from starting
a virtual company or even just e-commerce from a real company, a fulltime
internet connection through a firewall is the best bet. This means access can be controlled in and out of the site, but more
importantly, access to other database systems within the company. This
means full order processing and inventory control can take place in either
the current system or a new one. Most of the RDBMS systems used today are
transactional and this is where the difficulty has been in the past. The
way the internet works makes it very hard to control what the user is doing:
they can exit half way through viewing a page, lose their connection, all
manner of problems. This is not a big problem when just viewing pictures
or text but when it happens during a database transaction it can cause
data corruption and a loss of data integrity. One manufacturer of internet
products which shall remain nameless (although not if you ask Microsoft)
built commerce pages which locked open a database table until the page
was completed. This meant that if one user happened to leave his browser
on that page then the whole table could not be used by any other users.
This is the area where a lot of development has taken place for products
like Microsoft's Transaction Server. This takes control of any data access
and by tagging a page transactional can either commit or roll back each
transaction depending on whether everything in the transactional statement
succeeds or fails. This sort of technology, combined with the ability now
to access almost any data source including flat file systems like mainframes,
means that almost any existing company can build a commerce site and even
switch to being a completely internet based service with little change
to their current systems. Bank
Moves are fully underway in New Zealand to create an acquiring bank,
a bank that can handle fully electronic transactions. SET, secure electronic
transactions, are set (no pun intended) to increase the security and accessibility
of online commerce. At least two banks are involved in research and development
that will allow users to pass their secure credit card or account number
to a third party bank which will then pass a key to the trader, effectively
hiding any secret information from the vendor. This will hopefully overcome
the stigma that still seems to dog virtual and real companies alike when
trading on the internet _ security. Users are still somewhat loathe to
pass their number over the internet but are happy to tell it to a stranger
over the phone, but as we all become more at home with the internet as
a whole this will diminish. To some companies, especially engineering firms, this may all seem irrelevant
but it is far from it. The largest growing system in the world now is the
corporate intranet. All of the technology that can be used for virtual
companies on the net can also be used internally. Microsoft implemented
a system for ordering supplies internally and saved millions the first
year, and shortened delivery times and papertrails while tidying up the
internal charging processes. Another field that is beginning to take off
is extranets, where partner companies are given secure access to a company's
intranet in order to access database and information systems, but that's
a whole other article. In short, virtual company numbers are going to continue to grow at the
rate the internet is growing and the earlier both the users and the companies
become more experienced with what is available, the more money there is
to be saved and made.
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