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FOR IMMEDIATE RELEASE
ACTRA TO PACKAGE BUSINESS POTENTIAL
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- By Steven Vonder Haar - Inter@ctive Week.
- Jim Sha thinks he's sitting on top of another
Netscape Communications
- Corp. While such an outlook is typical of many Web
entrepreneurs, Sha can speak from experience. Having helped launch Netscape in 1994,
Sha now fronts for Netscape's
first high-profile joint venture company, Actra
Corp.
- This week Actra -- the progeny of a partnership
between Netscape and General
Electric Information Services, or
GEIS, in April 1996 -- steps out of the
shadows for the first time to tell the world what it's been working on for the
past year.
Carrying the full weight of Netscape's electronic
commerce strategy on its back,
Actra is arguably the year's most
influential new player in the e-commerce space. "We are
born with a silver spoon," Sha says of the pedigree and
marketing muscle that back
his start-up.
The support comes
not only from Netscape. GEIS (www.geis.com) is a leading supplier of
traditional electronic commerce services and
software.
"We'd like to be able to repeat the growth rate of
Netscape," Sha says. "With the
resources we have and the market
ahead of us, it's very doable."
Such aspirations are
no less grandiose than those of Netscape
(www.netscape.com). When it
comes to Internet business, Actra wants to do
everything.
With just a single product slated for release this
month -- but with more
commerce-related software in the
pipeline for release later this year -- it's much too
early to judge the viability of
Actra's approach to the e-commerce
marketplace. Industry watchers generally praise the
joint venture for bringing
valuable new ideas to the
e-commerce space, but they predict the company
will face a bumpy ride in its
efforts to claim a top spot in the
market.
"Actra has a lot of potential in this marketplace
if they choose the right
strategy," says Ullas Naik, vice
president at the First Albany Corp. investment bank in
New York. "But the path they
are choosing may limit their
ability to grow over the long term."
Actra's strategy is
to develop a framework that integrates the complex technologies used in
e-commerce into a single package that can be sold
to corporate users, either
piece-by-piece or as a turnkey
solution.
Everything from databases from Oracle Corp. and
search engines from Verity Inc.,
to security software from RSA Data
Security Inc. and payment systems from
CyberCash Inc., is incorporated
into Actra's offerings.
In short, Sha wants
to sell business solutions, not technology. "This is
an applications business," he says. "We are focused on
fixing people's problems." Sha
echoes Netscape's new mantra, which calls for more focus
on providing customers with
service that integrates
technology, rather than just selling software. The conversion represents a new
religion that Netscape Senior
Technology Vice President Marc Andreessen began preaching within the past month.
For Actra, the idea
is to integrate all aspects of a business exchange into the Internet commerce solution. That means not only the
transactions but the customer
service features needed to maintain relationships between buyers and
sellers, such as online inventory
tracking and order status updates.
"A pretty storefront
is only one piece of the puzzle," Sha says. "The key thing needed to enable electronic commerce is not selling.
It's delivering overall customer
satisfaction." Sha's pitch is likely to play well when
he tries to sell corporate
America on his vision of
e-commerce. "I haven't seen anybody take this broad
an approach to the Internet
commerce market," says Mike
Kennedy, vice president of advanced information
management strategies at the Meta
Group Inc. consulting firm. "If I
were a Fortune 500 company, I would be
interested in hearing about a
coordinated approach that could pull together all
my commerce activity under a
single umbrella." Other industry watchers, however,
remain guarded in their assessment
of Actra. "They've got great plans that look
great on the overhead projector,"
says David Alschuler, senior
analyst with the Aberdeen Group Inc., a consulting
firm in Boston. "Now they have to
execute."
Actra will roll out its capabilities throughout
the year. This month, it will
serve up systems that help bridge
the communication gap between the Internet and
traditional proprietary
electronic data interchange, or
EDI, systems. Later this year, the company will introduce integrated systems that streamline the ordering and selling
process.
Some of the company's product development efforts,
however, seem disjointed and
virtually unrelated. For instance,
Actra is working on a system designed to
handle subscription management
services for Web publishers.
While such a system
may find demand in the marketplace, it detracts from Actra's focus on enabling business-to-business transactions. It's
almost as if Actra handles the
publishing product simply
because parent Netscape had no better place to
park the project, says Stan
Dolberg, director of software
strategies at Forrester Research Inc.
"If they didn't have
some of this stuff from Netscape sticking out like a sore thumb, they'd be
pretty crisp," Dolberg says. "It's
hard to see Actra's rationale for business-to-consumer
products," he says. "Companies
will not be successful with
products in both the business-to-consumer and the business-to-business areas. The two sectors will diverge over
time."
Sha counters that electronic commerce involves
more than simply mastering
technology. Also critical, he
says, is a working knowledge of business issues and corporate practices in individual industries.
The company
(www.actracorp.com) has hired experts in a variety of
fields -- such as health
care, automotive, aerospace
manufacturing and retail -- to help in the development of industry-specific systems, Sha says.
While such an
approach may appeal to corporate customers, Dolberg echoes the criticism of First Albany analyst Naik, saying Actra's
strategy could limit its
long-range growth potential.
In developing
applications for specific industries, companies can find
themselves trapped in a
spiral of specialization. As
markets shake out into increasingly distinct vertical niches, companies like Actra have to become more specialized
in order to distinguish
themselves in the eyes of customers. However,
such specialization is difficult to maintain in many
industries, limiting the number
of markets that an applications
developer can address, Dolberg says.
Of the $3.2 billion
in sales that Forrester projects for electronic commerce software sales in the
year 2000, only 10 percent will go
to applications developers like Actra,
Dolberg says. The bulk will
stay with the core companies, such as Netscape,
that supply the technology that
underlies electronic commerce
systems.
"Applications companies will be driven into
vertical niches and will be
forced to get deeper into the
business practices of specific industries to
sidestep the companies that are
supplying the basic technology
platforms," Dolberg says.
As part of the joint
venture agreement, both Netscape and GEIS will sell products on Actra's behalf, giving the start-up an instant
global sales force of more than
600 marketers.
- But even with Netscape's shift toward a service
orientation, it may have
difficulty selling Actra's
turnkey solutions, Dolberg says.
"Electronic commerce is complex and difficult
to implement," he says.
"Actra's deals are going to be
like Netscape's worst nightmare because they
are so
service-intensive."
Sha views the
complexity that Dolberg describes as a key factor
validating Actra's approach,
which aims to simplify the way
companies implement commerce solutions. And given Actra's high-profile parents, it appears that Sha and his
team will at least have the
opportunity to prove whether they are right.
"We have high
visibility, thanks to the companies that are backing
us," Sha says. "We certainly
are not short of interest or
prospects."
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