www.elance.com
TerenceNet is an online consulting, development, and research firm that delivers solutions to small and medium- sized businesses. A fair amount of its
work is procured from Elance (www .elance.com), a Web site that puts free- lancers in touch with firms seeking bids for projects. Elance charges a commission managing of customer information so that whoever interacts with the customer has all the relevant customer information at hand.
Customers further expect personalization of service. Online business allows direct, ongoing communication with customers; thus, preferences and buying patterns can be tracked and analyzed to provide individual service. By reducing the time to process orders, online business allows firms to customize products to individual customers. Thus, products from music CDs to PCs to bicycles to automobiles can be made to order online.
Online business forces companies to rethink their pricing of products and services.
Customers now have access to a wide range of competitive prices and sellers for prod- ucts, driving down profit margins and the price of products. Some observers have spec- ulated that online business will drive profit margins to miniscule levels. Although some initial studies have confirmed the lower prices for goods purchased online, the highest- volume sellers do not always have the lowest prices. Prices are offset by branding, awareness, and customer trust.
The Internet is not used only to sell to customers online. It is also used to provide ser- vices to customers. In fact, sometimes it can be difficult to know which is more valuable, the product or the service. For instance, what is more valuable, a piece of machinery or the ongoing monitoring of that machinery and receiving an alert before it malfunctions?
The increasingly important focus is on staying in closer contact with customers, understanding them better, and eventually, becoming customer driven by delivering personalized products and services. As Frances Cairncross9notes, the shift is taking place from running a company to keeping customers happy. This shift is having a pro- found effect on company structure and offerings.
To demonstrate a completely different side of the working-outward arena, we turn to the other side of the coin, from being a seller to being a buyer.
Being an Online Customer
Companies large and small are transacting business via the Internet. Some use it as their main means of business. Here is an example of one entrepreneur—Terence Channon, CEO of TerenceNet—who is a heavy user of the Internet as both a buyer and seller of services. The story comes from Gartner EXP.13a
of 10 percent of the value of jobs set up through the service. The following is a typical day’s journal for Channon’s use of Elance.
8:15 A.M. My working day starts with e-mail and checking Elance. I signed up with Elance a few years ago to see what kinds of online work were being offered for freelancers. I think I was one of Elance’s first customers. The site’s first postings were mainly for online work—
Web development and the like—just what my firm does. Recently, I have noticed engineers advertising for AutoCAD draw- ings, so the site seems to be broadening.
There are lots of freelance Web sites and online marketplaces, but I like Elance because it’s where I got my first paid job. I won a job through another site—but never got paid. Elance is a very active site, with 30 to 40 new postings a day; others only have three to four.
This morning I bid on 10 projects.
11:05 A.M. I check Elance several times a day or when I get an e-mail noti- fication that I have received a message, like right now. I’ve logged onto My- Elance—my own personal Elance Web page—that shows all the work I have bid on, which bids are open and which are closed, and all the projects where my bids have been declined or accepted. It also shows all the projects I have offered, the number of bids I have received, and so on.
A company is considering me for a job I bid on, so its new message to me is flagged. This company tells me it has set up a private message board on Elance for us to talk privately about the work.
At first, I used Elance to supplement my company’s income. Now I can pretty much count on the site as a revenue source.
It may not be steady revenue, but there are enough postings on it, and I win enough of my bids that I can rely on it for work.
I put considerable thought into the bids I make. Some people just cut- and-paste a generic statement of what they do. I don’t do that; I respond to a request by setting out exactly what we can do and pointing to examples of similar work. I think this shows commitment and knowledge.
3:00 P.M. When you sign up on Elance, it’s like joining a community. Everything is very open. I can see who is bidding on a job, read their experience, look at the work they have done (such as Web sites they have developed), and see how they have responded to a posting. I can also see who has won a bid.
There’s a lot of trust involved on both sides because we don’t have con- tracts. I have to trust that the client will pay me. The client has to trust that I will do the work. Elance has a feedback board where I can see that I have a top rating from the companies I have worked for and from the people who have worked for me. Everyone can see these ratings.
I have found everyone to be very pro- fessional on Elance, cordial in fact. The bidders all feel as if we are in this together; we don’t feel or act like competitors. Naturally, we promote ourselves and our work—but we do not talk down others. I’ve made some won- derful contacts on Elance. Some short jobs have turned into relationships.
TerenceNet is now on retainer with one company because it liked our initial work.
Another company liked our devel- opment work and wanted more function- ality on its Web site. We were busy at the time so I put a posting on Elance. I got (Case Continued)
WORKING ACROSS: BUSINESS-TO-BUSINESS
Streamlining processes that cross company boundaries is the next big management chal- lenge, notes Michael Hammer,14a well-known consultant in the IT field. Companies have spent a lot of time and effort streamlining their internal processes, but their effi- ciencies generally stop at their corporate walls. The winners will be those that change their processes to mesh with others they deal with so that they have chains of activities performed by different organizations, notes Hammer. This is not a technical challenge, as most have viewed supply-chain management (SCM), but a process and management challenge, he believes.
Working across businesses takes numerous forms. Here are three. One involves working with co-suppliers; a second is working with customers in a close, mutually dependent relationship; and the third is building a virtual enterprise, in fact, one that might evolve into an e-marketplace.
Coordinating with Co-suppliers
Collaborating with noncompetitors is a type of working across. For example, two food manufacturers might have the same customers (supermarkets and other retailers) but not compete with each other. Hammer calls such companies “co-suppliers.” Their form of working across is illustrated in this example.
30 bids in five days. When I whittled them down to the bid with the best exam- ple of the kind of work I wanted, it was from a company in Bulgaria. This com- pany did the work at a fair price and delivered on time, and I have since given it other work. I had to pay via Western Union, but Elance has a payment system where you can transfer funds between bank accounts.
7:30 P.M. One last check on Elance.
Usually, there are not many new job post- ings in the evening, but I want to make sure I have responded to all my messages.
There are 10 new postings tonight—one for designing a business card, two for company logos, one for 1 million Web site addresses, one for writing a press release, and one for programming in Dreamweaver. None of them interests me.
I put out a posting for some Palm work a few days ago and gave it a five- day bid period. I’m surprised I have received nine bids so far. I did not know there were so many wireless developers out there.
There are not many job postings on the weekends, so I’m taking this weekend off to spend with my family.■
(Case Continued)
A major point of the Semco and TerenceNet case examples is that both are very customer-centric. They keep themselves attuned to the market by continually asking what customers need. This customer-centricity is also changing the strategic use of IT in the working-across arena.
CASE EXAMPLE