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- FOR IMMEDIATE RELEASE
-
OPEN FOR BUSINESSES
-
- The progeny of Netscape and
General
- Electric, Actra aims to turn
electronic
- commerce into big business.
-
- By Andrew P. Madden (Red Herring)
-
- Combine lightbulbs and browsers, and
you just may see the
- future of Internet commerce. More
specifically, combine
- General Electric's GE Information
Services (GEIS) unit and
- Netscape Communications, and you get
Actra Business
- Systems.
-
- With this joint venture, these
unlikely partners want to blend
- GEIS's considerable experience in
business-to-business
- electronic commerce with Netscape's
early efforts in
- business-to-consumer Internet
commerce. Offering a set of
- commerce applications for the
Internet and corporate intranets,
- Actra was created to contribute to
and capitalize on the torrid
- growth of Internet commerce.
-
- According to a recent report by
Forrester Research, the market
- for commerce software will reach
nearly $3.2 billion by the year
- 2000. As for the amount of money
exchanged through Internet
- commerce, market research reports
vary wildly, but the more
- optimistic are well into the
billions of dollars (see "Give or Take
- $100 Billion"). Even the analysts
are overwhelmed by the
- hysteria. "It's going to be so many
trillions of dollars by a week
- from next Thursday," jokes Stan
Lepeak, vice president at the
- Meta Group.
-
- As more and more companies try to
put Internet storefronts on
- their existing businesses to reach
both consumers and other
- businesses, the demand for packaged
yet flexible commerce
- applications rises. Furthermore,
companies with sizable
- investments in electronic data
interchange (EDI) want to find
- their way onto the Internet without
trashing their existing
- systems. To cater to such companies,
software vendors need
- not only technological smarts but
also knowledge of a daunting
- range of business practices.
According to Actra CEO Jim Sha,
- "We recognized very early on that
this is not just a technology
- play; business expertise is
definitely required."
-
- With Netscape and GEIS behind it,
Mr. Sha believes Actra
- understands what companies need to
bring their businesses to
- the Internet. He says Actra will
help companies reduce costs,
- decrease cycle times, and improve
the overall quality of their
- business. However, Actra's focus is
murky in the eyes of certain
- industry analysts. The company
believes its suite of products will
- cater seamlessly to both
business-to-business and
- business-to-consumer concerns, but
this two-pronged strategy
- could prove difficult. Though the
two markets share certain
- characteristics, they may require
fundamentally different
- approaches.
-
- In praise of EDI
- While Internet commerce has
solidified its role as the next big
- thing, it should, like a gracious
incumbent, probably doff its cap
- to EDI. EDI is an arcane system for
transferring documents
- electronically between businesses
that's been in use for more
- than a decade. EDI connections
provided the first true
- mechanism for electronic commerce,
enabling computer systems
- to perform a variety of tasks like
ordering raw materials and
- scheduling production. But because
of a steep price and the
- need for proprietary software at
either end of a connection, EDI
- has been an option for only the
largest of companies. For some
- 40,000 of them, GEIS is the EDI
provider.
-
- That broad base of customers
partially explains GEIS's interest
- in Actra. With the rise of the
Internet, companies like GEIS have
- been prompted to find ways to bring
closed and proprietary
- EDI networks to the open standards
of the Internet. According
- to Ray Rike, Actra's vice president
of sales and marketing and a
- former GEIS executive, "We want our
customers to be able to
- protect their investment in EDI but
also allow them to extend
- EDI to the Internet."
-
- As a result, Actra considers
ECXpert, its EDI-over-the-Internet
- product, to be the centerpiece of
its CrossCommerce suite.
- According to Mr. Sha, "It's a good
foundation. We use EDI as
- a cornerstone to enable
business-to-business transactions, but
- we've also addressed the need to
build applications on top of
- that."
-
- For Netscape, the joint venture can
be viewed as more of a
- hedge. Netscape believes the
commerce market will evolve and
- wants to keep its hand in the pot,
but it didn't have the inclination
- to attack the market without a
strong partner. After the
- lukewarm introduction of its
publishing and merchant server
- products, the company began to see
its pricey commerce
- applications as wayward sheep that
were straying from its core
- business and its expertise in
volume sales of client and server
- Internet software. A strategic
partnership provided a suitable
- mechanism for leveraging Netscape's
existing commerce
- development and maintaining
customer relationships.
-
- Great ECXpectations
- Because different industries have
unique characteristics and
- quirks, a prepackaged commerce
product needs to allow for
- some alteration. Mr. Sha maintains
that companies are typically
- faced with two extremes. "On the
low end you have completely
- shrink-wrapped and uncustomizable
solutions, and on the high
- end you can do whatever you want,
but you have to do it all
- yourself," he says. In developing
its commercial applications,
- Actra has observed open standards,
used a distributed
- object-oriented architecture, and
created a high level of
- flexibility.
-
- Hence Actra's insistence that it is
an application rather than a
- tool company. Its products are
designed to permit customization
- without the bothersome task of
source code modification. And
- while this may seem standard, the
commerce space is new
- enough that Actra will be among the
first to offer such flexibility
- within an application. Its
customers can insert business rules or
- logic specific to their needs or
those of their trading partners by
- choosing from a group of "150 to
200 business rules out of the
- box," according to Mr. Rike.
Additional logic will be added,
- based on customer feedback, in
future versions of the software.
-
- Beyond ECXpert, Actra's
CrossCommerce suite includes four
- other server products. OrderXpert
Buyer and OrderXpert
- Seller allow a corporation to build
a comprehensive online
- system with merchandising,
transaction processing, and order
- processing capabilities for use
with other corporations. The
- seller product is scheduled to ship
in the last quarter of 1997,
- and the buyer product is supposed
to ship in the following
- quarter. MerchantXpert and
PublishingXpert, the two products
- of the suite that originated with
Netscape, let organizations
- market and sell products to
consumers online. They are in their
- third versions and have been
available for 18 months.
-
- Since Actra opened its doors in
April 1996, a handful of large
- companies like Bay Networks, Wells
Fargo, and Boise
- Cascade have been testing Actra's
products. Laura Longcore,
- marketing systems manager at Boise
Cascade, is using ECXpert
- and OrderXpert Seller to complement
her company's
- long-standing EDI presence and an
in-house Internet ordering
- system that it uses with Fortune
1,000 customers. According to
- Ms. Longcore, the ability to
customize the products easily is
- essential: "We like the fact that
Actra's system is completely
- open and that it allows us the
flexibility to add things that are
- standard to our industry and that
probably wouldn't come in a
- package."
-
- Another customer, SportsLine USA, a
sports-oriented Web site
- with free and premium content and a
retail store, has been using
- Actra's PublishingXpert and
MerchantXpert servers. According
- to the company's chief technology
officer, Tom Eastwood,
- SportsLine uses the PublishingXpert
server to keep track of
- product definitions, membership
registrations, profiles, and
- billing. The MerchantXpert server
processes transactions at its
- store, from which customers buy
merchandise that SportsLine
- then obtains from other merchants.
Mr. Eastwood believes that
- the store's business-to-consumer
and business-to-business
- needs are both served well by
MerchantXpert. Retailers like
- REI and JCPenney have also been
using the merchant system,
- and publications including The Wall
Street Journal, USA
- Today, and The New York Times are
using the publishing
- system.
-
- No business like
business-to-business
- However, SportsLine's use of
Actra's products, for Internet
- retailing, and Boise Cascade's use,
for business-to-business
- commerce, appear quite separate to
some industry analysts.
- According to Stan Dolberg of
Forrester Research, Actra will do
- well to stay closer to its GEIS
roots. "Some products are part of
- a legacy from Netscape, but all of
their competency and, I
- believe, all of their success will
be in the business-to-business
- space. The two consumer-oriented
storefront products are just
- going to be a pain in their neck
for a while," he warns.
-
- In a recent Forrester report, Mr.
Dolberg provides compelling
- evidence of the strength of
business-to-business Internet
- commerce in comparison with
business-to-consumer. Cisco
- received nearly $500 million in
router and switch orders over its
- Web site in 1996. "By stark
contrast," he says, Disney.com saw
- cause for celebration when its
site's sales reached volumes
- equivalent to only two of its
countless retail stores during the
- 1996 holiday season.
-
- One way or the other
- Furthermore, according to Mr.
Dolberg, the
- business-to-consumer side of
Internet commerce is sufficiently
- different from the
business-to-business side that companies like
- Actra should pick one or the other.
And in the early stages, he
- says, it is clear that
business-to-business commerce will be much
- more lucrative. "It's a completely
different set of partners, a
- different set of channels, and a
different set of competencies," he
- says of the business-to-consumer
market. "The two are different
- enough that companies that fail to
focus are going to be roadside
- junk in two years," he concludes.
-
- Mr. Lepeak of the Meta Group
agrees. "The back end is
- similar, but with consumers you
have to deal with distinctly
- different payment issues like
credit cards, as well as very
- different types and frequencies of
users. There's a thin line
- between offering too much right out
of the box and not offering
- enough," he says. "Actra may have
bitten off more than it can
- chew."
-
- According to Mr. Sha, though, the
approach to both markets is
- sensible and manageable. "The
back-end functions for
- business-to-business and
business-to-consumer are largely
- similar. With the back end, you
have to build a product catalog,
- you have to process the payment,
and you have to deal with
- legacy integration and the customer
base," he says. "The
- incremental investment for
addressing a new market is fairly
- small because it has to do with the
front end." But while Actra
- believes that a convergence of
business-to-business and
- business-to-consumer is taking
place, Mr. Rike does
- acknowledge that the two markets
are still somewhat separate.
- "We're not saying there aren't
unique requirements for each," he
- says.
-
- Have faith, ye doubters
- Harry Tse of the Yankee Group, is
more optimistic about
- Actra's double-barreled approach.
He believes it can usefully
- apply its business-to-business
heritage to the consumer market
- on the grounds that
business-to-consumer is really a smaller part
- of business-to-business. "Coming
from the business-to-business
- side gives them a good
understanding of the ins and outs,
- politics, and procurement policies.
Once you have established
- these things, business-to-consumer
is actually a small subset of
- the functionality." That said,
though, Mr. Tse agrees that the
- revenues are currently to be found
in the corporate world: "I
- think for the foreseeable future,
Actra's business model leans
- heavily toward
business-to-business."
-
- In that corporate space,
competition is fierce, and, according to
- Mr. Lepeak, Actra needs to make its
presence felt quickly.
- "We're a little disappointed with
the delivery in terms of real
- products coming out and in terms of
relationships established
- with large companies," he says.
"The products look all right.
- Actra just doesn't have much of a
track record."
-
- Company with a past
- Some of Actra's competitors do.
Dallas-based Sterling
- Commerce is often cited as Actra's
primary competitor; it too
- comes from an EDI background, and
with its Gentran server,
- introduced in late 1992, and Web
Suite products, introduced
- this March, it has been on the
scene for a while. Furthermore,
- Sterling can boast of a solid
relationship with Netscape's
- nemesis, Microsoft, and it offers
extensions to Microsoft's
- merchant server. "We know the
ropes," says Susan Eskin, vice
- president of marketing and product
management at Sterling.
- "Our software products have had to
serve the needs of not only
- our largest customers but also
their smallest trading partners."
- Sterling also believes its
long-standing customer relationships
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