e-Business Service Provider Evaluation & Selection

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e-Business E. Robins - August 10, 2000


Good morning everyone, my name is Dr. Eddie Robins and I am TechnologyEvaluation.com's Chief Scientist. I head up the E-Commerce Service Provider research area. This morning we're going to discuss a proven, best of breed methodology for evaluating and selecting a Digital Business Service Provider (DBSP). During the presentation, we will use TechnologyEvaluation.Com's patented online selection engine, WebTESS, to guide you through a live, real time evaluation and selection. It should be noted that WebTESS and the models it uses are only representative of our more sophisticated desktop tool, TESS, and the models it supports.

We will review the critical differentiating criteria of a number of selected DBSPs chosen as a representative sample of the most common types of DBSPs a newcomer to the space may face. However, to help us understand the selection process, we need to get a handle on the DBSP space, and the companies that inhabit it. As a cautionary note, however, there are many facets, hybrids, and fringe areas, and any coarse characterization is of course subject to value judgments.

Unlike product selections, service comparisons depend on reference information provided by vendors and their clients, and are subject to value judgments and specific engagement situations. This is perhaps one of the hardest aspects of comparing vendors. However, there are many aspects that are not so soft which we can deal with, and provide measures of vendor capabilities and performance. We will also attempt here to map out the core corporate players and player types.

A Brief Market Overview

We are concerned here with DBSPs who enable business capabilities within digitally networked environments. This not only includes e-business operations on the web, but can also refer to intranet development capabilities (B2E for example), and government-to-consumer or citizen or other government etc. We have adopted the generic term Digital Business Service Provider or DBSP as the a way of describing the area, and reserved e-business service provider for profit taking companies building out digital capabilities to sell and buy over electronic networks.

From our research, there a number of flavors of DBSPs arising historically from advances in computer and network technologies. Briefly, the main DBSPs arose from seven sources:

  1. Legacy/Traditional Consulting Houses, which arose from the evolution of commercial uses of computer technologies from the late 1950's to the mid 1970's. Deloitte represents the traditional consulting houses, with EDS and CSC as representative of systems engineering companies that came out of that time.

  2. Network Consultants arose to service rising computer network needs during the 1980's. Lante and Proxicom are examples of this genre.

  3. Systems Integrators from the mid 1970's to mid 1990's evolved to meet the needs of tying together systems and products as generic products appeared in the marketplace, chiefly financial, MRP and technical systems. EDS, begun in 1963, moved rapidly to become a major systems integrator of the day. Osprey, a latecomer to this market, started in 1993.

  4. Product Centric service branches were established in the 80's and early 90's out of product developers such as Oracle and IBM. These companies developed services around their products as a means to symbiotically cross-sell products and services.

  5. Website Creators and Designers (Creatives / Early Pure Plays) stepped out in the early to mid 1990's as the early Internet began to show promise for business. Businesses migrated from teletext bulletin boards and created websites to do business in the new medium. Razorfish, Agency.com, and later Organic typify these technology driven creative organizations.

  6. Advertising Agencies developed technology wings from the mid 1990's (or later in many cases), creating websites for special events such as the Women's World Soccer Championship or special ad campaigns. Companies such as DDB Needham and JWT moved into the site building business, incorporating their Fortune 1000 branding and marketing expertise.

  7. Late Pure Play Service Providers evolved in the late 1990's dedicated to bringing businesses to the web. Dot-com's began their fantastic market ride at this time, giving these Pure Plays high revenue contributions - up to 50% or more of total revenue. However, since the dot-com meltdown, these DBSPs are turning to more traditional business partners. Scient, Sapient, Xcelerate are examples.

On the sidelines of the market are many fringe DBSPs offering services such as ASP, site hosting, and specialized services including language translation, educational systems, telecommunication services, advertising rich media, branding and marketing research to name but a few.

Service Provider Selection Overview

I'd like now to turn our attention to Service Provider selection, beginning with an overview of the problems and some solutions associated with the selection process.

According to our research, DBSPs as a whole do provide quality service. However, opportunities are often missed to exploit either the capabilities of the service provider, or lost because client and vendor are mismatched at a fundamental level, and sometimes because of misrepresentation by sales teams - or even inadvertently by the client - in order to 'make the match'. Further, with the fast evolving world of Internet business, both sides can miss fundamental shifts in the marketplace.

The reasons for problems are manifold, and we shall discuss ten main issues:

  1. A rush to web by an ill-prepared user results in poor business decisions that often result from internal politics; slick sales presentations or overzealous sales people anxious to close a deal. Further, the actual business model can become confused in the new medium, and poor identification of the issues can lead to a poor outcome. Lack of foresight, for one example, may lead to a site that is not adequately scalable to meet Internet traffic. Business processes within the client organization must also be aligned to take advantage of the new channel.

  2. Identifying the core questions to ask of the service provider is the second issue that users have difficulty with, often because of time constraints or poor preparedness and planning. These questions should define the vendor selection criteria.

  3. The User has no ability to prioritize criteria relative to one another. As a result, final priorities are assigned out of internal political agendas rather than true needs and requirements. Decisions are then made based on vendor reputation or personal relationships rather than a long term view of the relationship. An 'out-of-box' thinking process could yield more appropriate decisions.

  4. The User's Project teams have no ability to gather objective, validated, updated data on the vendor alternatives. As you may well know, vendors have a tendency to exaggerate product, service and corporate capabilities if it enables them to move to the next phase of the deal.

  5. It is possible for the Vendor and client approaches to the engagement to be mismatched. Vendor approaches to an engagement can range from 'loose' control and seat-of-the-pants to an overly structured process that can delay or inhibit results.

  6. If the Vendor's Resource Management is poor or the vendor deliberately oversells its resources consistently, this can lead to delays, lost capabilities, lower solution quality, and significantly increased costs. Size of service provider is no guarantee that the necessary quality resources will be available when you need them.

  7. Selecting your DBSP for a short-term relationship can later lead to problems: short term may not turn out to be the case. Understanding the long-term survivability, strategic direction, and goals of the service provider, and the infrastructures the service provider has in place to safeguard your solution is an important consideration. Users can be left without support in the event the service provider folds, or is acquired by another entity, or proves inadequate for later site development.

  8. A User who selects a DBSP based on Brand Identity alone is asking for trouble. Branding perceptions of service providers abound. These may have some validity, but as time passes the perceived differences are going to become more perceptual than real. Differentiators are moving toward vertical industry experience and specialized technologies rather than brand.

  9. Subjective Evaluations on teams are difficult: no matter the decision, the nature of the team must be taken into account. Each engagement depends on individual competencies in the engagement teams - on both sides. From a business perspective, this amounts to an assessment of risk analysis, and forming the best match between vendor and client is needed to minimize risk to both.

  10. Finally, Vendor Technical Resources such as Test and Development Laboratories for specialized requirements can insure future technologies will work for their clients. Planning ahead and knowing the technologies to come is an important facet of a DBSPs job. The user should be assured that the vendor has those capabilities the user foresees requiring.

So, what's the solution?

The solution is to create a structured, repeatable and customizable process for evaluating DBSPs with validated and up-to-date data. TEC's best practices research methodology focuses on understanding the issues in making a particular technology or service selection. Through interviews with vendors, vendor clients, surveys, market analysis and, sometimes, personal experience, TEC's analysts create a selection process to mitigate the risks. The process is finally expressed in the TESS models from which WebTESS models are derived through an automated process.

At this point let us turn to the WebTESS model and describe the principal criteria in the model. You will see the model on the left hand side of your screen. It is a hierarchically arranged set of criteria, and there are four main criteria in the top level.

Number 1: Corporate Viability

Corporate viability is a critical, yet often overlooked category that examines the financial and management strength of the vendor, and the strategic direction it is taking in the marketplace.

DBSPs present a particular problem since many do not have earnings and appear at first sight to be losing propositions. However, because the market is so rapidly changing and expanding its horizons technologically as well as globally, heavy investments in expanding service offerings and global reach have resulted in most net losses.

Traditional financial measures such as the quick ratio, business risk, EPS, etc. for these corporate missionaries are not appropriate as measures of financial strength of Pure Plays at this time, though they are applicable to the traditional organizations. Other revenue based measures are employed such as revenues to cost and revenue increase year to year per employee.

Other measures such as engagement win rate and ability to meet demand have been incorporated into the corporate viability since this reflects a cognizance of the market on the part of a vendor.

Strategies to meet corporate challenges are also considered. For example, recruitment in the current labor-short market is critical. Measures such as personnel retention rate and recruitment techniques are evaluated.

In addition, the global reach of a vendor has some importance for larger internationally based or internationally reaching organizations.

Global reach means the ability for a vendor to build technical expertise in one location and transfer it to another. The effectiveness of transferring skill sets over language, distance and cultural divides is a test on corporate management and infrastructure effectiveness.

Viability might not be that important for every engagement. Engagements generally last about 3 to 6 months. However, as the Internet world becomes more complex, continuity with a technology partner, we predict, will become more important.

Number 2: Services Scope & Characterization

This factor covers what would be product functionality and 'quality'. In this criterion we assess the vendor's ability to deliver services.

Ability to deliver is judged on two main aspects: scope of services the vendor actually covers, and management of resources to serve the client base. Finally, we add overall performance measures of quality drawn from client referrals where available.

Service delivery does not simply depend on size of the organization, though of course large firms have - or should have - more ability to deliver people. There is evidence of distrust on this score by the user community, in part evidenced by small providers beating out a large provider. Some large providers consider that small providers cannot deliver quality, something we have found so far is not the case for an appropriately sized engagement.

Quality of service depends on a number of factors. Among these are (a) delivery of services through structured processes: written procedures detailing inputs and outputs, deliverables and tools to perform the tasks should be clearly visible to the user, and evidence of vendor staff having been appropriately trained; (b) the facilities and methods for training new recruits and company staff should be known - for example ad-hoc mentoring programs or two day courses are not likely to produce the same results as intensive courses or consistent knowledge exchange programs with incentives; (c) the ability of the DBSP to commit to provide the right personnel at the right time, subject to penalties.

Much of the vendor's ability to meet these requirements depends on internal infrastructures. Existence and allocation of resources for the development of knowledge management and knowledge tools to the delivery personnel are important ingredients for time critical projects. The sub-factor Resource Management & Resource Depth considers these aspects.

Other issues that surround this factor relate to packaging of services and solutions. Vendors are, in general, attempting to wrap components into standard packages they can then customize and deliver. This may reduce costs (depending on the vendor and the specific engagement), and increase the reliability of the system. However, no data is available as to the effectiveness of such 'packaged' approaches, and how real the packaging is.

Number 3: Project/Market Segment Focus

Under this factor we consider the Internet market focus of the vendors, engagement size and vertical industry preferences of vendors.

It should be borne in mind that particular cases are subject to reconsideration: for example a small lead project that generates a higher engagement level may interest the vendor.

Also, vertical market experience includes web 'verticals' such as online marketplaces, auctions, malls, portals, and enterprise solutions (i.e., EAI) etc. in which the vendor may specialize.

In addition, experience with business types such as dot-coms and brick and mortars helps in understanding the vendor's positioning. Hence factors relating to this choice have been incorporated.

Number 4: Technical/Cultural Origins

A number of vendor clients we have spoken to approached their decision by winnowing away categories of vendors. Though we do not condone this per se, there is some merit in consideration of required technical expertise, culture, corporate size, and how the client-vendor relationship can work. The recently reported case in the Wall Street Journal of Lipton-Brisk's experience with Agency.com underlines many of the issues that can arise with a mismatch.

In reality, we find the branding issue can misrepresent a company, but can help in avoiding obvious mistakes. Like all stereotypes, one should dig beneath the surface of the company to determine the realities. Within our model, we have tried to not be so black and white in the corporate categorizations.


Now, I think we should move on to the demonstration of WebTESS to see if WebTESS can be help in selecting a DBSP. Although everyone has been given instructions on getting to the WebTESS Service Provider Model on our site, I'll go through it again, briefly just in case some of you may have had difficulty. First, go to our website, www.technologyevaluation.com. From the front page, select the tab marked "Vendor Selection Tool." Then, within the blue-bordered box titled "Current Category: All Categories", select the "GO" button beside "e-Business Service Provider". This should spawn another browser window in which you should see the WebTESS application. You will want to maximize this window for best viewing. The great beauty of WebTESS is its ability to provide project teams with a statistically valid framework for comparing vendor options. In it, we have scored each vendor according to its ability to meet the criteria. WebTESS aggregates the scores upward through the hierarchy, while simultaneously accounting for the effect the criteria weights.

Now, I would like everyone to click on the Select Choices option on the menu bar at the top part of the browser window. I'll be referring to the top menu bar several times during the demonstration. It is located in the top frame of the WebTESS browser window to the right of the spinning globe logo. In the 'Select Choices' window, you should see a list of vendors on the left hand portion of the window and vendor details on the right hand side.

By clicking the check boxes next to the vendor, you can include or exclude it from your selection.

There are ten vendors in all, and because of the number of vendors involved in the model I will attempt to discuss them by category, and then where necessary point out the differentiating aspects of the vendors in the category.

Our contenders are the following.

A. Traditional Consulting Houses

Deloitte, EDS and IBM Global Services span this category. As can be appreciated, these companies can easily be differentiated. These companies have re-organized (or renamed their services) to create e-business consulting infrastructures.

Deloitte's focus is in the mid- to high-end market segment, often leveraging legacy clients, and providing services that now include e-business consulting practices. Deloitte initially offered some bargain pricing to dot-com businesses to gain experience. This practice is long since over, but negotiation is still possible if you have something unique to offer. Deloitte, with its association to financial services, can offer a broad range of management consulting and financial services. Under its e-business 360 Assurance program it has focused on risk control. Where it has been weak - the creative and e-business package offering - Deloitte has invested in and partnered with such companies as US Interactive, Personify, NEXTLINK Interactive (announced just this past week) etc.

EDS by contrast, is the e-builder of choice for the heavy lifting in the more traditional sense, though it to offers major management consulting capabilities, and like Deloitte, has partnered its way into the more creative elements. It also has ASP and hosting service offerings.

IBM Global Services is the behemoth of the group, and covers all market segments, but despite its size, it has had to partner with other technologies - i2, ARIBA, and Siebel to name but a few, and will provide technology agnostic solutions to its customers, even at the cost of not providing full IBM solutions. To choose among these service providers is a matter of culture, price and looking closely at your business requirements. For example, Deloitte's name as a partner for a new e-business may be what you need to get more VC financing - i.e., its reputation precedes it. Making these kinds of decisions, therefore, can hinge often on a single criterion. It may be behooving to you to convince your VC there is a better way!

Market Challenges

  • Branding issues which harkens back to the large and very frequently failed IT projects

  • Managing cultural and rapid organizational change has sapped management direction

  • Internal education in e-business has meant a difficult re-orientation for many staff members

  • Partnering / Investing to ensure future technological leadership - there has been a rush to form partnerships for brand image changes as well as technical requirements

  • Ensuring the right mix of services - many are still struggling with this

  • Keeping and obtaining personnel


  • A very large personnel base and mature business process resources

  • Large legacy base of clients

  • Focus on backend legacy integration over Y2K years may yet pay off

  • International base

B. Pure Play Service Providers

APPNET, ORGANIC, RAZORFISH, SCIENT, and XCELERATE fall under this category, and represent a diversity of Pure Plays, though they can and do overlap. To remind you a Pure Play is a company created for the specific purpose of bringing businesses and business capabilities into the web environment.

APPNET (soon to be joined with COMMERCE ONE) has a vertical Internet focus in building e-Marketplaces. This made it an ideal acquisition target for COMMERCE ONE whose products APPNET had been using. APPNET walks between the interactive marketing /management consulting and heavy systems integration lifting camps needed to establish its e-Markeplace clients. APPNET builds highly scalable non-proprietary systems, something that won it the UCC (Universal Code Council) e-Marketplace building contract to create a marketplace that will eventually cover 22 industries.

SCIENT is more like the traditional consulting houses in its offerings, but there the sameness ends: it has developed a unique culture and systems that have made it one of the most profitable pure plays. It has good resource management capabilities, which we believe is one of its main differentiators in the market place, as well a bent toward the management consultancy / launch side of a Deloitte Consulting.

ORGANIC focuses in the B2C consulting side where marketing aspects such as brand identity and creative elements come into play. ORGANIC has grown internally, largely, and partnered where it has lacked the capabilities. It has recently built a new technologies laboratory in New York. ORGANIC comes closest to the brand marketing/advertising creative event type of service provider among the companies represented in this model.

RAZORFISH arose out of a similar genre as ORGANIC, but has since tried to grab the high road to growth through acquisitions, chiefly in the US and Europe, to gain footholds in strategic consulting, branding and marketing and special technologies including broadband and wireless.

RAZORFISH's revenues per employee are about 30% more than ORGANIC's, which can be attributed to Razorfish's diversification, and ORGANIC's B2C focus requiring traditional IT rather than innovative technology solutions.

XCELERATE has moved in an interesting direction: it has focused on development centers called 'Supercenters'. XCELERATE clients are generally in the mid to lower-market engagement size. These have a short time fuse and need good test and development capabilities, particularly in the e-Marketplace and B2C. Xcelerate also prefers a fixed time /fixed fee. As you can see, a combination of factors allows Xcelerate to come to the fore, though its competitors would be just behind.

Market Challenges

  • Perceived branding and sometimes size makes it difficult for them to be convincing strategy solutions innovators to traditional Fortune 1000 companies

  • Growth - the faster these companies can grow locally and internationally the more likely they are to survive. However, this growth phase may need to be tempered by investor demands for earnings.

  • Managing growth requires international expertise and scalable management systems to take full advantage of a virtual internal community of expertise.

  • Reaching full-service capabilities and integrating different capabilities as a result of acquisition.

  • Creating the vertical market expertise

  • Maintaining and obtaining expertise is now harder with the Internet stock meltdown.


  • All round capabilities and culture have drawn expertise to these companies where they can offer larger stock option plans: however, a market turndown is a challenge as noted above.

  • Internal management systems have been designed from the ground up in the Internet/Intranet age, and the corporate management can (or should) be more efficient than more traditional organizations.

C. Traditional Systems Integrators

LANTE, and OSPREY are traditional integrators/network companies. LANTE was founded in 1984 during the era of PC networking, and OSPREY more recently in 1993 in the systems integrator tradition.

LANTE was directed into Internet technologies in 1996 after helping Microsoft showcase its Internet offerings that year. LANTE made the change effectively (many have not) in keeping with its belief in bringing emerging technologies to market. However, it has been a long time in growing, as its current head count has only recently increased beyond the 500 level. Its focus e-Marketplaces may well push it to be considered as a Pure Play. LANTE went public in February of this year.

OSPREY is also now changing its hat, and has been approaching e-business cautiously but steadily, with increasing pace. OSPREY, however, is more the generalist, and is able to 'wrap' solutions for its vertical markets. OSPREY is a privately held company. It is focused on migrating businesses to the Internet through the business process it labels as the "Osprey Migration Path". OSPREY also provides application host and outsourcing capabilities to support its clients, and looks for clients with $100M -$1B in sales largely in industries involved in moving and manufacturing of goods.

Each of the vendors above should therefore come to the fore given their differentiating features, when the appropriate scenario is defined in the WebTESS model. However, this is not always so obvious because it can depend on other evaluation criteria such as quality, service and other considerations. The degree of differentiation may not always be that clear as a result.

WebTESS Demo

Now that we've discussed each of the vendors in our model, let's take a look at some of the other parts of WebTESS.

The results of the model are dependent on a particular scenario defined by the weights assigned to the criteria. This scenario requires a company that is more like a pure play with management consulting and systems integration capabilities.

The model can be used to filter for those companies who best meet this particular pattern. This is a winnowing process to get quickly to the short list of candidates; we shall be looking for five short list candidates.

Score Card

The winnowing process is easy to do. You should all be in the ScoreCard window, which is the opening window. If not, please click on it now.

On the left hand side is the model tree, a hierarchically arranged set of criteria. On the right hand side is a graph that displays the results for all vendors, and a drop-down combo from which you can pick the name of a vendor. Under it is an assessment of the selected vendor, which shows four items:

The Rank: this is the standing of the vendor against all the other vendors with Rank one being the best.

The Weighted Average: is a score that takes into account all the weights and scores of the criteria. Changing weights can effect the decision.

The Composite Index: this is a special value that shows just how variable the scores are for the vendor. A number close to one means the scores a uniform: a number around 0.80 means the vendor has some good strengths and some bad weaknesses.

Percent Match is a value that reflects a tradeoff between how variable the score is (what you tolerate in variability of strengths and weaknesses) and the Weighted Average - the intensity of the score. From a risk perspective, if you rank by weighted average and then by Percent Match and the ranks agree, you have more security in the claim that the vendor is the best. If not, you may want to rethink the result.

In the lower right hand side, you will see two buttons labeled "SCORE BOARD" and "COMPARATIVE RESULTS". Click on "COMPARATIVE RESULTS", and rankings for the options will appear.

Note that the vendors are color coded, and that each colored bar in the graph corresponds to the score for the associated vendor.

You will note that under this scenario, EDS is the lead contender. However, the decision process is often one that, despite assessment of overall capabilities given the scenario, concerns of culture can dominate. If this is of major concern, the weight for this factor can be changed. However a shortcut exists. Click on TECHNICAL/CULTURAL ORIGINS in the tree on the left, and the values are normalized to that criterion.

You should see for TECHNICAL/CULTURAL ORIGINS that SCIENT, OSPREY, RAZORFISH, LANTE, and XCELERATE appear in the rank positions 1 through 5. In this scenario, we are seeking service providers who fit the characteristics of a Pure Play, but also have strong systems integration backgrounds.

To eliminate Vendors, we go to the "SELECT CHOICES" window. On the left is a list of vendor names on which you can click. Click on SCIENT now, and you will see on the right hand side details of the vendors. The text information is shown on the right for you to compare vendors. In the list of vendors on the left, you can deselect vendors from consideration by clearing the checkmark in the box to left of the vendor name. In our case, you can clear the five other vendors - that is, remove APPNET, Deloitte, EDS, IBM and ORGANIC.

Weigh Criteria

To change our scenario, we must go to the Weigh Criteria window. Click on the Weigh Criteria window now, and you will see the criteria weights.

Weights represent relative levels of importance for the criteria. Within the decision tree in the left pane, click on any one of the criteria, and its sub criteria will be displayed in the right panel with their respective weights. You can create customized weights by clicking on the colored bars to the right of the criteria. Repeating this process for each criterion establishes your decision scenario. If you click on the Model name at the very top of the tree, the four major sub-factors appear. Their weights effect the decision most since they are the topmost and heavily weighted criteria. As you drill down through the tree, you can set more weights, but the deeper you go, the less effect the change in weight will have on the decision.

View Ratings

Let us go now to the View Ratings window. The view ratings screen displays how the vendors perform across all the criteria defined in the model. You can display comparative ratings by one choice (all the criteria ratings for one vendor are displayed) or by one criterion (all included vendors are rated across the criteria highlighted in the tree in the left panel). To see how one vendor option rates against the criteria, go to the 'view ratings' option on the top menu bar and select the 'one choice for all criteria' option. This brings up a list of all the criteria and shows how the vendor displayed in the 'Option' text box scores. Now - to see a comparison, go again to the 'view ratings' option on the top menu bar and select 'all choices for one criterion.' This lists all vendor options taking part in this selection with their accompanying ratings.

Well, that's a very brief overview of WebTESS and only begins to cover all of its capabilities. It also allows you to create charts and reports and contains a full on-line Help feature. To wrap up, I'll just take a few moments to give you some general pointers on how to use our technology.

Both WebTESS and TESS, the desktop version, offer major advantages if you want to use them for adding to the quality of your own research. Each model is fully documented with comments on the factors and models.

Trend Note

The marketplace has many trends that make it an exciting and engaging place to be. However, those trends make e-business an ongoing expense rather than a capital expenditure, since they force a continual upgrade of user sites for them to remain competitive.

Let us take a look at the roots of the major trends in the DBSP marketplace.

Technology as an Enabler of Business Capabilities

Number one has to be technology. When the technology develops, new business opportunities and capabilities follow. Hence knowing when a new technology has reached adequate maturity to deploy and use should be the enabling point at which business examines its potential, and service providers develop the skill sets to deliver new technology services to clients.

This is the position wireless has reached / passed. Wireless connectivity is changing the face of ramps onto the Internet, with wireless portals, and potential for marketing and sales in B2C, business opportunities in the B2B and M2M. So far, this technology is establishing the infrastructure, but the potential for Internet business opportunities is, in our opinion, just beginning.

Wireless technology is changing the demographics of the Web, giving low cost access to the Internet and increasing the use of languages other than English on the Internet. From 1998 to 1999, English as the principal web language declined by 4%, according to OCLC. This impacts B2C, B2B and B2E markets. With increasing standardization in the telecommunications industry, distanceless billing, international automated taxation handling, distance learning, remote health care, and e-procurement to name but a few instances, will create many new business opportunities which we believe are not fully factored in to the estimate of the size of the e-business marketplace.

The introduction and rapid spread of XML and JAVA based systems is further adding to the usefulness of PDA and cell devices, with for example the establishment of the SyncML wireless communication protocol standard.

There are many other technology examples, but we shall press on.

Market Consolidation and Fragmentation

Technology changes and advances are putting pressure on service providers to find ways to reduce costs and better serve their customers. This means more standardized capabilities, 'packaged' or 'wrapped' solutions, whether these are created as having real value or are for marketing purposes. However, such solutions focus on specific vertical markets, a fact which is fragmenting the DBSP market.

Many users are still in the infrastructure build-out phase, and placing demands on their DBSPs to provide services. Hence from the DBSPs we see a trend to increased partnering with service provider specialists (wireless, e-learning, CRM, SCM, ASP, etc.). This should also lead to more acquisitions and mergers - such as the Commerce One acquisition of APPNET, driven in part from COMMERCE ONE's need to have bodies to implement their e-Marketplaces. Another example - albeit for different reasons other than technology - is the absorption of Ernst & Young's management consulting arm into Cap Gemini, with origins as a systems integrator, and USWEB and Whittman-Hart. Consolidation and acquisition make it more interesting to the user who may wonder where his service provider may go.

Sound strategic advice in the new media and technological environment means a marriage of management consulting and technology on a scale and depth of integration not previously required. From our research, strategic consulting is the driver for many sales; however, many service providers have image problems and real functional problems to overcome.

User Impact

From the user perspective, the pressure of new technologies will lead to the complicated issue of who to select as a service provider. Though details of the technological requirements may not need to be understood by executive decision makers, the quality and service of the solution, and awareness of the business relationships the service provider has, could play an important role in the decision. Further, processes within the service providers should be examined to deal with the core service needs by the organization - something particularly true of B&M's. Consolidation in the marketplace is going to increase, with potential consequences to users. Knowing the signs for potential status changes in your DBSP, its strategy, and its strengths and weaknesses can help steer the user through the fast-paced and changing landscape.

I should add that our desktop product TESS is also available and you can contact our sales department concerning TESS and model licensing.

Thank you all for participating and please e-mail any additional questions you have to e-commerce@technologyevaluation.com and we will get back to you as soon as possible.

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