Instant Advantage.com: Winning Strategies for the Online Economy, 1/e

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Leading Internet consultants Mendonca and Kirchoff begin with an expert briefing on the eCommerce revolution, and how its massive disruptions lead to both unprecedented risks and opportunities. Next, they introduce four powerful strategies for instant advantage in the online economy and demonstrates exactly how to reinvent your enterprise for eCommerce. For business and IT ...
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Overview

Leading Internet consultants Mendonca and Kirchoff begin with an expert briefing on the eCommerce revolution, and how its massive disruptions lead to both unprecedented risks and opportunities. Next, they introduce four powerful strategies for instant advantage in the online economy and demonstrates exactly how to reinvent your enterprise for eCommerce. For business and IT executives, Instant Advantage.com delivers all this and more:

  • Specific tactics you can use right now while you're transforming your organization for the long term
  • How to get your company to move in "Internet time"-and meet your customers' supercharged expectations
  • How to streamline your supply chains and deepen your relationships with partners, suppliers, and customers
  • How to create an OnlineAgile IT (OIT) blueprint for your enterprise
  • Best practices, benchmarking, and metrics for eCommerce systems

Finally, go one-on-one with three leading eCommerce executives in detailed case studies that illuminate exactly how they built world-class eCommerce organizations-and how you can, too. Whether you're a CEO, CFO, CIO, IT manager, strategist, or a line-of-business executive, Instant Advantage.com won't just get you "up-to-speed" with eCommerce-it'll get you ahead of the curve!

nnn
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Product Details

  • ISBN-13: 9780130179081
  • Publisher: Pearson Education
  • Publication date: 5/19/2000
  • Pages: 272
  • Product dimensions: 7.04 (w) x 9.23 (h) x 0.77 (d)

Read an Excerpt

PREFACE:

THE EMERGING DIGITAL ECONOMY

Over the past few years, the impact of the Internet has focused our attention on the new imperatives of innovation and speed. In ways that are still being defined, the Internet has unleashed new technologies and practices that are transforming our business environment. Not surprisingly, business and industry leaders are reacting swiftly, realizing that their companies must come to grips with the Internet if they want to succeed. They have found that there are no easy answers; there is no haven from the struggle: there is no turning back the clock.

From market capitalization to pricing to channel delivery, conventional business practices are undergoing radical change. Established business models are being redefined in the wake of technologies that remove the barriers between buyers and sellers, simplify collaboration and decision-making, and shorten time to market in every industry. What we have instead is a digital economy, emerging from the new possibilities opened up by e-commerce, global value chains, and e-communities. And it's booming before our very eyes:

  • Business-to-business e-commerce surpassed $100 billion in 1999 and is forecasted to reach or exceed $1.3 trillion by 2003.
  • Today, almost 200 million people are online worldwide: and in the next four years, that figure will have soared past 500 million.
  • By the end of 1999, $1 billion in US venture capital funds was invested per week in e-commerce start-ups.


The 1999 holiday shopping season produced a threefold increase in online sales over the previous year. The growth trend continues to beexplosive and relentless across industries, global regions, and classes of users - and cannot be dismissed as a bubble. Corporations and governments have begun focusing on the Internet's implications and opportunities in earnest.

Underlying the new economy is what can be called a quantum shift in the index of economic value. According to classic economic theory, a company's value was determined by its capital assets - its physical and monetary capital, plus the present value of the income stream derived from those assets. The effectiveness of the company in managing its assets would eventually result in a market presence and a perceived market value. As rational as this may seem to us, we find ourselves wooed by a new and revolutionary model of economic value, exemplified by the many Internet startup companies whose market cap has soared beyond the wildest expectations. They represent a new breed of businesses that create value through services and technology initiatives.

In this new environment, information - not physical assets - has become the new currency, the new gold standard. What increasingly determines a company's market value today relates to the following considerations:

  • How information is leveraged to enhance responsiveness to customers.
  • How information is used to accelerate sound business decisions.
  • How a company uses its online presence to differentiate itself in the marketplace.
  • How information is generated, stored, and applied to business purposes.


Information management is, in this sense, the key to building shareholder value, as leading companies are proving over and over again.

COMPETITIVE PRESSURES

As a result of the new marketing paradigm, business executives everywhere are under pressure to catch up with the market leaders that have established their presence in the new marketplace. Companies are finding it harder to win new contracts, largely because of competition from fast-moving, innovative players who embraced the Internet early in the game. Online buyers are known to make a snap judgment about a company's worth in the course of a few mouse clicks. Companies must therefore find ways to project their value to a customer through the initial experience of their website. An instant advantage has become the selling proposition of our times.

Easier said than done. For many, the hurdles seem insurmountable. Beleaguered by changing trends and global competition, business and IT executives are concerned about the skills and technological resources needed to provide customers with the services they demand. They are asking themselves, "What do we need to do to act quickly to meet customers' raised expectations? What kind of business model or paradigm must we adopt to seize new e-commerce opportunities? What do we need to do to be agile and fast moving? How can we expand our offerings and enter new markets with our current infrastructure and service providers?" They are in search of an approach that balances stability and risk, while keeping their IT investments aligned with their business goals and initiatives.

NEED FOR EFFECTIVE ENTERPRISE STRATEGIES

Many business executives originally thought that being an Internet player only required them to develop a pretty storefront on the World Wide Web, and that would be that. However, the success of new e-business leaders like priceline.com and autobytel.com proved them wrong. A piecemeal approach to the massive changes associated with a digital economy falls far short of what is needed to achieve success and sustainable growth.

What is really needed is the realignment of business strategy with Information Technology (IT). While many have paid lip service to this alignment, companies operating successfully in the new Internet environment are living it. If one looks carefully at those companies, it becomes clear that the CIO not only reports directly to the CEO, but serves on the company's executive committee, working hand-in-hand with the CEO in the development of business and IT strategy. Not surprisingly, companies now are making the previously unprecedented decision to promote the CIO to the top spot in the company, as was recently the case at Compaq Computer Corporation.

We are now entering the second phase, or early maturation stage, of the Internet and the digital economy it spawned. The early winners are scrambling to protect their territory by developing comprehensive strategies for winning in a new environment. Companies that lost ground by being cut out of traditional supply chains - they have been "disintermediated" - are struggling to play catch-up any way they can. IT System Integrators are becoming IT/Business Strategy Integrators. Moreover, IT vendors are responding to customers by developing a 24/7 internal infrastructure that will be modular and accommodate explosive business growth. The IT industry is responding vigorously.

INSTANTADVANVTAGE.COM

This book is written for CEOs, CIOs, and other decision-makers in business and IT who need to understand and embrace the new dynamics unleashed by the Internet. It will help them develop comprehensive strategies for adapting to the realities of the digital economy. This book will also help those who have begun the journey to online success but are in need of a refresher, or those who are looking for confirmation and additional guidance along the way.

Unlike most books that survey e-commerce trends, this book offers business and IT managers the strategic pointers they need to begin their journey toward transforming their companies into e-businesses. Our discussion of the issues will help lay the foundation for a business and IT plan of attack that takes into account the lessons learned by the e-commerce pioneers. Interspersed throughout the book are proven approaches and best practices of some of the most successful e-businesses around the world. The book offers specific guidelines for developing e-solutions, modeled after the examples of the best-known online companies. In addition, we let you hear directly from CEOs and others who talk about the lessons they learned in leading their respective companies into the online era.

GAINING INSTANT ADVANTAGE

We believe the transformational strategies and tactics presented here will enable you to lay the groundwork for creating an online business in your enterprise. We earnestly hope that, by absorbing and applying the concepts presented in this book, you will:

  • Anticipate the impact of the emerging online ecosystem on your business.
  • Discover ways to better service and retain your customers.
  • Create and sustain competitive advantage through a 24/7 services model.
  • Leverage IT through constant innovation in the face of continuing market disruptions.
  • Establish a results-oriented plan with measurable ROI and benefits.
  • Maximize the payback across the total enterprise value chain.


You will find that the success factors in the digital economy come down to these:

1. Understanding and embracing the dynamics of the new online marketplace.
2. Leveraging Internet technologies to engage customers, partners, and suppliers in the creation of value.
3. Building an e-culture in your company that rewards vision, innovation, and the entrepreneurial spirit.

Read More Show Less

Table of Contents

Introduction xv
Acknowledgements xxi
Part 1 Turning Business Inside Out: Disruptions and Opportunities 1
1 The Internet, Convergence, and a New Inflection Point 3
A New Paradigm 6
The Emergence of a New "Total Economic Value" Model 7
Customer-Driven Economic Value 9
In-Depth Understanding of Customers 10
Bloemenveiling Aalsmeer--the Netherlands 11
The Online Economy: Threat or Opportunity? 12
New Strategies for New Times 12
Change or Die 13
New Rules of Engagement 14
Rule 1 Address the Big Picture 14
Rule 2 Be Guided by the Customer's Proposition 14
Rule 3 Reinvent Your Enterprise 14
Rule 4 Build an Enterprise.com 15
Rule 5 Create an Infrastructure Blueprint 15
Beyond Re-Engineering 16
Begin with Questions 17
2 Disruptive Changes and New Opportunities 19
Disruptions Create Opportunities 19
Disruption #1 New Financial Dynamics 20
Disruption #2 Power Shifts from Sellers to Buyers 20
Disruption #3 Self-Help Drives New Business Models 21
The Changing Dynamics of Buying and Selling 21
Disruption #4 Shifting Supply Chain Boundaries 22
Disruption #5 New Paradigms of Value 23
Disruption #6 Diminished Advantage of Mass Production 23
Disruption #7 New Measure of Time 24
Disruption #8 An End to Global Boundaries 24
Disruption #9 Changing IT Deployment Strategies 25
Disruption #10 New Inflection Points in Computing 25
Three Major Internet Trends 26
The "Nirvana" of Computing 26
Internet-Driven Standards 26
The Internet is the New Platform for Services Innovation 27
The Future is Here: the Internet's Impact 28
3 The Online Economy: New Rules, Players and Growth Areas 31
Unusual Alliances are Succeeding 32
Virtually Integrated Alliances 33
Small and Large Enterprises Compete in the Same Markets 34
The Rise of E-Mediaries 34
The Internet Increases Efficiencies and Lowers Costs 35
Business Opportunities Across Industries 35
Turning an Old Industry on its Head 36
Crossing Global Boundaries 37
Hot Growth Areas in a $3 Trillion Industry 38
1. Business-to-Business 38
2. Business-to-Consumer 41
3. Consumer-to-Consumer 41
The Online Economy Impacts Organizational Structure 42
Increasing Demands on it Systems 43
The Online Economy: More Than Pretty Websites 44
Part 2 Strategies for Instant Advantage in the Online Economy 47
4 The Agile Enterprise 49
Five Strategies for Gaining Instant Advantage 50
A Framework for Assessing Online Advantage--Achieving Excellence 51
Strategy #1 Seize Market Opportunities 52
Guideline 1 Look at the Whole Economy 53
Automobiles and Auctions 54
Guideline 2 Monitor Online Change Indicators 55
Mass Customization 58
Changing Rules of Competition 59
IT Advances Fuel Online Economy 60
Guideline 3 Define Your Role and Relevance in the New Online Economy 61
Lessons to Be Learned 62
IT Implications 62
5 The Importance of Customer Management 63
Strategy #2 Become Your Customer's Advocate 63
A Customer Value Proposition Change 64
Customer Demands: Speed and Control 64
Provide Customers with the Ultimate Shopping Experience 66
Rule 1. Excel at Each Stage of the Customer Buying Cycle. Build Relationships 67
Branding is More Important than Ever 67
Rule 2. Match Your Processes with Customers' Expectations 70
Rule 3. Empower Customers to Help Themselves 71
Rule 4. Help Your Customers Succeed 72
A Shift in Customer Power 73
Priceline.com's Pioneering Business Model 73
The Internet Empowers Customers 73
New Paradigms 74
NonStop Service 74
Integrating Business and IT Strategies 75
The Internet Equals Mission Critical 76
Seamless Enterprise 76
Strategic Thinking 76
6 Reinvent Your Enterprise 79
Strategy #3 Reinvent Your Enterprise 79
Reinvention in the Digital Economy 81
Reinvention Begins with the Right Target 82
Reinvent to Build New Relationships 83
Create A Value Network Instead of Optimizing the Supply Chain 84
Delivering Value to Customers 86
Drive E-Efficiencies and Effectiveness 86
E-Innovate: Create New Services and E-Commerce 87
Excel in Building Relationships with E-Marketing, E-Sales, and E-Support 88
The New World of E-Marketing 89
The Ubiquitous Online Marketplace 90
E-Marketing and Customer Loyalty 90
E-Selling 92
1. Sales Infrastructure 92
2. Sales Process 93
3. Sales Tools 95
E-Support 95
Relationship Management Tools 96
Building Lasting Online Relationships 97
The Reinvention of Best Western International to Gain Instant Advantage 98
IT Blueprint for Unlimited Growth 98
Speedy Response Means Customer Satisfaction, More Bookings 99
Leveraging Web Technology 100
Enterprise-wide Mail and Messaging; Secure Intranet Access 100
Comprehensive Change Equals Instant Advantage 101
7 Setting the Stage for Action 103
Strategy #4 Integrate Business and It Strategies 103
Retain Key Customers/Increase Customer Loyalty 105
Challenges to Integrating IT and Business Strategies 106
Design Tools for Enterprise Integration 107
Getting Online, On Time 107
Ceos Drive the Transformation 108
Strategy #5 Create An E-Infrastructure Blueprint 109
Comments on the Chart 111
The Net Imperative 113
Charles Schwab Meets the Online Challenge 114
Change: Seeing the Handwriting on the Wall 114
Balancing Risks and Rewards 115
The Deployment: "Lightning and Thunder" 115
Part 3 Best Practices in the Digital Economy 117
8 Transition to an E-Business 119
It/Business Integration: The New Baseline 119
Resources and Tools 121
E-Resource Categories 121
Standards-Based Online Infrastructure 123
An Example of an Architecture Blueprint 124
Key Technical Attributes of an Online Infrastructure 124
Connectivity 124
Interoperability 124
Networked Applications Support 124
Manageability 125
Scalability 125
Designing Your Website 126
Content Management 128
Application Integration 128
Intranet Solutions 131
Managing Your Intranet 132
Extranets 132
Guidelines for Developing an Extranet 133
E-Commerce Technologies 133
E-Commerce Deployment 134
Enterprise Portals 137
Key Capabilities of Portals 138
E-Applications 138
Management and Security 139
Security Solutions 140
Storage Architecture 142
Storage Advances 143
Storage Pooling/Virtualization 144
The Future Storage System: Open SAN 144
A Strategy for the Internet Future 145
9 Building Your E-Company 147
Transforming the Enterprise 147
E-Business Cuts Costs 149
Drivers of the Internet Economy 149
The New Online Model 151
Challenges of E-Business 152
Internal Enterprise Perspective 152
External Enterprise Perspective 155
Product Engineering and Development 156
IT Values in the 24/7 E-Business Environment 157
Critical Dimensions of E-Business 157
E-Commerce in A Global Village 158
The New Customer Proposition 159
Solution Building Blocks--(Get "Up and Running" Faster) 160
Platform Integrity 161
Networked System Architecture (Design it to Last) 161
Agile Architecture 162
Distributed Server Architecture in the E-Business Environment 162
Storage Architecture for Today's E-Business 163
Involve Professional Services on Your Team 163
The Dream Team 164
Insurepoint: A Case Study 164
Microsoft and Compaq Team Up to Provide Revolutionary Tools 165
Benefits 166
"No User-Visible Failure--No Business Disruptions" 167
Part 4 Internet Pioneers 169
10 Online Stories of New and Established Enterprise Players 171
Robert Rodin, Ceo and President, Marshall Industries 171
Beyond Linear Thinking 173
Transformation of the Supply Chain 173
Action Versus Extinction 173
The Global Online Economy 174
Bob Davis, Ceo, Lycos, Inc. 175
Disruptions and Opportunities 176
Speed is of the Essence 178
Anne Perlman, President and Ceo, Moal 179
E-Auctions and New Paradigms 180
Reassessing Total Economic Value 181
New Tools for the Digital Economy 181
The Internet Creates Level Playing Fields 182
Jim Sachs, Chairman and Ceo, Softbook Press 183
'Be' Your Customer 184
In the Footsteps of Fred Smith: Looking Beyond the Surface 185
A Global Online World 185
11 New Players Lead the Online Revolution 187
Amazon.com Revolutionizes Customer Service 187
Mass Customization 188
Enhanced International Language Capabilities 189
Priceline.com's Pioneering Business Model 189
Keeping the Doors Open 190
Compaq Out Front 191
More Bang for the Buck 191
Drugstore.com, Inc. 192
IT Integration for Uninterrupted Performance 192
Creating an E-Infrastructure Enterprise Blueprint 193
Autobytel.com Revolutionizes Selling and Buying Automobiles 193
Expanding Customer Horizons 194
4 Million-Plus Customers 194
Pioneers Create a Motley Fool 195
Netgrocer.com's Online Shopping Cart Revolutionizes Food Industry 196
Groceries on the Net: Instant Advantage 197
E-Commerce Pioneers Around the World 198
12 Established Players Concede Nothing to Dot.com Companies 203
It's Everyone's Internet: A Trucking Company Excels 203
"Technology is the Future of our Company 204
Competitive Advantage 205
A Visit with 21st Century Truckers 206
Digital Satellite Communications 207
Integration of Business and IT Strategies 207
Barnes and Noble Stays on Top With Barnesandnoble.com 208
24/7 E-Business 208
The 24/7 It Team 209
24/7 Availability and Growth 210
The Big Test 211
Bank of America Offers E-Retailing Bundle 211
Old Line Asia Pacific Companies Join The Digital Economy 212
South China Morning Post 212
The Hong Kong and China Gas Company, Ltd. (or Towngas) 213
Alltel Uses the Internet As Leverage to Maintain Market Leadership 214
Scalability for Internet Growth 214
Availability 24/7 215
Clients Aren't What They Used to Be 215
Lexis-Nexis--Information at the World's Fingertips 216
Creating an Internet Niche 217
A Clear Compaq and Microsoft Message 218
Solutions at Internet Speeds 219
Internet-driven Opportunities 219
Epilogue 221
Is Increased Profitability A Realistic Expectation? 221
Winners and Losers 222
Execute, Check, Fix And Plan 223
Collaborative E-Commerce 224
A Final Word 226
Glossary 227
Bibliography 235
Index 239
Read More Show Less

Preface

PREFACE:

THE EMERGING DIGITAL ECONOMY

Over the past few years, the impact of the Internet has focused our attention on the new imperatives of innovation and speed. In ways that are still being defined, the Internet has unleashed new technologies and practices that are transforming our business environment. Not surprisingly, business and industry leaders are reacting swiftly, realizing that their companies must come to grips with the Internet if they want to succeed. They have found that there are no easy answers; there is no haven from the struggle: there is no turning back the clock.

From market capitalization to pricing to channel delivery, conventional business practices are undergoing radical change. Established business models are being redefined in the wake of technologies that remove the barriers between buyers and sellers, simplify collaboration and decision-making, and shorten time to market in every industry. What we have instead is a digital economy, emerging from the new possibilities opened up by e-commerce, global value chains, and e-communities. And it's booming before our very eyes:

  • Business-to-business e-commerce surpassed $100 billion in 1999 and is forecasted to reach or exceed $1.3 trillion by 2003.
  • Today, almost 200 million people are online worldwide: and in the next four years, that figure will have soared past 500 million.
  • By the end of 1999, $1 billion in US venture capital funds was invested per week in e-commerce start-ups.


The 1999 holiday shopping season produced a threefold increase in online sales over the previous year. The growth trend continues tobeexplosive and relentless across industries, global regions, and classes of users - and cannot be dismissed as a bubble. Corporations and governments have begun focusing on the Internet's implications and opportunities in earnest.

Underlying the new economy is what can be called a quantum shift in the index of economic value. According to classic economic theory, a company's value was determined by its capital assets - its physical and monetary capital, plus the present value of the income stream derived from those assets. The effectiveness of the company in managing its assets would eventually result in a market presence and a perceived market value. As rational as this may seem to us, we find ourselves wooed by a new and revolutionary model of economic value, exemplified by the many Internet startup companies whose market cap has soared beyond the wildest expectations. They represent a new breed of businesses that create value through services and technology initiatives.

In this new environment, information - not physical assets - has become the new currency, the new gold standard. What increasingly determines a company's market value today relates to the following considerations:

  • How information is leveraged to enhance responsiveness to customers.
  • How information is used to accelerate sound business decisions.
  • How a company uses its online presence to differentiate itself in the marketplace.
  • How information is generated, stored, and applied to business purposes.


Information management is, in this sense, the key to building shareholder value, as leading companies are proving over and over again.

COMPETITIVE PRESSURES

As a result of the new marketing paradigm, business executives everywhere are under pressure to catch up with the market leaders that have established their presence in the new marketplace. Companies are finding it harder to win new contracts, largely because of competition from fast-moving, innovative players who embraced the Internet early in the game. Online buyers are known to make a snap judgment about a company's worth in the course of a few mouse clicks. Companies must therefore find ways to project their value to a customer through the initial experience of their website. An instant advantage has become the selling proposition of our times.

Easier said than done. For many, the hurdles seem insurmountable. Beleaguered by changing trends and global competition, business and IT executives are concerned about the skills and technological resources needed to provide customers with the services they demand. They are asking themselves, "What do we need to do to act quickly to meet customers' raised expectations? What kind of business model or paradigm must we adopt to seize new e-commerce opportunities? What do we need to do to be agile and fast moving? How can we expand our offerings and enter new markets with our current infrastructure and service providers?" They are in search of an approach that balances stability and risk, while keeping their IT investments aligned with their business goals and initiatives.

NEED FOR EFFECTIVE ENTERPRISE STRATEGIES

Many business executives originally thought that being an Internet player only required them to develop a pretty storefront on the World Wide Web, and that would be that. However, the success of new e-business leaders like priceline.com and autobytel.com proved them wrong. A piecemeal approach to the massive changes associated with a digital economy falls far short of what is needed to achieve success and sustainable growth.

What is really needed is the realignment of business strategy with Information Technology (IT). While many have paid lip service to this alignment, companies operating successfully in the new Internet environment are living it. If one looks carefully at those companies, it becomes clear that the CIO not only reports directly to the CEO, but serves on the company's executive committee, working hand-in-hand with the CEO in the development of business and IT strategy. Not surprisingly, companies now are making the previously unprecedented decision to promote the CIO to the top spot in the company, as was recently the case at Compaq Computer Corporation.

We are now entering the second phase, or early maturation stage, of the Internet and the digital economy it spawned. The early winners are scrambling to protect their territory by developing comprehensive strategies for winning in a new environment. Companies that lost ground by being cut out of traditional supply chains - they have been "disintermediated" - are struggling to play catch-up any way they can. IT System Integrators are becoming IT/Business Strategy Integrators. Moreover, IT vendors are responding to customers by developing a 24/7 internal infrastructure that will be modular and accommodate explosive business growth. The IT industry is responding vigorously.

INSTANTADVANVTAGE.COM

This book is written for CEOs, CIOs, and other decision-makers in business and IT who need to understand and embrace the new dynamics unleashed by the Internet. It will help them develop comprehensive strategies for adapting to the realities of the digital economy. This book will also help those who have begun the journey to online success but are in need of a refresher, or those who are looking for confirmation and additional guidance along the way.

Unlike most books that survey e-commerce trends, this book offers business and IT managers the strategic pointers they need to begin their journey toward transforming their companies into e-businesses. Our discussion of the issues will help lay the foundation for a business and IT plan of attack that takes into account the lessons learned by the e-commerce pioneers. Interspersed throughout the book are proven approaches and best practices of some of the most successful e-businesses around the world. The book offers specific guidelines for developing e-solutions, modeled after the examples of the best-known online companies. In addition, we let you hear directly from CEOs and others who talk about the lessons they learned in leading their respective companies into the online era.

GAINING INSTANT ADVANTAGE

We believe the transformational strategies and tactics presented here will enable you to lay the groundwork for creating an online business in your enterprise. We earnestly hope that, by absorbing and applying the concepts presented in this book, you will:

  • Anticipate the impact of the emerging online ecosystem on your business.
  • Discover ways to better service and retain your customers.
  • Create and sustain competitive advantage through a 24/7 services model.
  • Leverage IT through constant innovation in the face of continuing market disruptions.
  • Establish a results-oriented plan with measurable ROI and benefits.
  • Maximize the payback across the total enterprise value chain.


You will find that the success factors in the digital economy come down to these:

1. Understanding and embracing the dynamics of the new online marketplace.
2. Leveraging Internet technologies to engage customers, partners, and suppliers in the creation of value.
3. Building an e-culture in your company that rewards vision, innovation, and the entrepreneurial spirit.

Read More Show Less

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