Microsoft Faces Many Challengers in E-Commerce Market
Microsoft enjoys market dominance in many areas, but the crowded e-commerce software market isn't one of them. According to GartnerGroup's Dataquest unit (www.dataquest.com), the leader’s role goes to Open Market Inc. (www.openmarket.com), which stands out with a 20 percent market share from its LiveCommerce and Transact products. Other contenders in the e-commerce space include Ariba Technologies Inc. (www.ariba.com), BroadVision Inc. (www.broadvision.com), ConnectInc.com, IBM Corp., Interworld Corp. (www.interworld.com), Intershop Communications Inc. (www.intershop.com), Netscape Communications Corp., Oracle Corp. and Trade'ex Electronic Commerce Systems Inc. (www.tradeex.com).
Crowding the market even further, ERP giants such as Baan Co. (www.baan.com), PeopleSoft Inc. (www.peoplesoft.com) and SAP (www.sap.com) are working on bridging the final mile between back-end systems and the Internet commerce tools. Driving this trend is growing market demand to bridge the front-end and back-office gap, says David Baltaxe, research analyst at Current Analysis Inc. (www.currentanalysis.com). "The perception of commerce applications as narrowly tailored software is transforming," he notes. These solutions are becoming "more broadly recognized as central to the overall business operation."
Microsoft’s latest thrust into the e-commerce market seeks to glue back-end and front-end systems together. The strategy consists of three new software products and services -- Microsoft BizTalk Server, Microsoft Small Business Commerce Services and Microsoft Commerce Server.
Microsoft's flagship e-commerce product -- Site Server Commerce Edition -- is a toolkit from which custom-designed e-commerce sites can be built. With the exception of IBM's Net.Commerce, most other popular e-commerce packages on the market are more turnkey, ready-to-run solutions. The packaged applications "do 80 percent of the work," says Jeetu Patel, vice president of research at Doculabs Inc. (www.doculabs.com), which has analyzed e-commerce products. "Toolkits do about 50 percent." One advantage of toolkits, however, is that they are more customizable than ready-to-run versions.
"We position [Site Server Commerce Edition] as a toolkit, rather than as an application," says Rebekkah Kumar, product manager at Microsoft. "Site Server Commerce Edition basically extends NT and IIS with commerce capabilities."
Microsoft Commerce Server, to be released later this year as the next-generation version of Site Server Commerce Edition, is aimed at both business-to-consumer and business-to-business e-commerce marketplaces. Commerce Server will include real-time marketing capabilities, including a personalization and targeting system, advanced catalog management, and business analysis with OLAP services.
A product being released in conjunction with Commerce Server, Microsoft BizTalk Server, supports XML-based data exchange and application integration over the Internet. The server extends Microsoft's Commerce Interchange Pipeline features found in Site Server Commerce Edition with additional interchange and data transformation capabilities, as well as enhanced trading partner management tools. "BizTalk Server is a business-to-business application infrastructure," Kumar says. "Commerce Server will take advantage of the business-to-business capabilities of BizTalk Server." Commerce Server will provide a commerce platform that leverages Windows 2000 Active Directory and integration with Microsoft SQL Server 7.0.
In a step closer to a ready-to-run solution, Microsoft Commerce Server will include "more robust sample sites," Kumar adds. "We've included samples to help you take advantage of up-selling, cross-selling, promoting, merchandizing and advertising, as well as corporate purchasing. Previously, we didn't do a great job of making them robust enough to take that site, modify the look and feel of it, and just run with it," she admits.
But Microsoft still has some ground to cover. A recent analysis by Doculabs of seven leading e-commerce tools shows Microsoft has its work cut out for it. Site Server Commerce Edition has strong merchandising features, especially in promotions, the report finds. "However, the more complex sales assistance and product configuration tools were found in IBM and Open Market," the report states. "Open Market was also the only solution that provided for digital coupons, a powerful method for driving traffic to a site. IBM and Open Market provided the most robust catalog models with an object-oriented implementation."
Commerce Site Server provides a strong merchandising -- or business-to-consumer -- toolkit, but is surpassed by other tools when it comes to buy-side, or business-to-business functionality. The Doculabs analysis rated Ariba's ORMS as the highest among buy-side solutions. ORMS also includes a powerful Java interface and offers extended services such as procurement of contract services, travel and expense reports and the recycling of goods.
Still, Microsoft is making some inroads into the business-to-business e-commerce world. For example, Merisel Inc. (www.merisel.com), a leading distributor of computer products, built a commerce application called SELline II with Microsoft Site Server Commerce Edition. SELline II enables its 25,000 resellers to log onto a Web site, check product availability and location in multiple warehouses, check pricing, place an order and check order status in real time. Using the Site Server Commerce Edition’s Commerce Interchange Pipeline, SELline II permits an end customer to gain access to this information through the reseller's Web site, allowing Merisel to provide virtual inventory for its resellers.
Microsoft -- along with IBM and Trade'ex -- received high marks from Doculabs for integration with a variety of systems. Commerce Site Server integrated well with Microsoft Back Office applications; and IBM and Trade'ex received high marks for integration techniques with SAP. Microsoft also received high marks for order processing, due to its workflow model, called pipelines. "Microsoft has strong infrastructure ties with its own back end, and has some of the best analysis capabilities out there," Patel says.
One big limitation to Commerce Site Server, however, is the fact that it only runs with Windows NT, industry observers point out. "The sticking point with Microsoft's solution is that it obviously only runs on NT," says Chris Zeller, manager with Trifecta Technologies (www.trifecta.com), which develops and manages e-commerce sites. He notes that many customers initially develop e-commerce sites on Windows NT, then deploy on Unix systems. "Actual production-level deployments are occurring on more Unix than NT," Patel agrees. "When we asked large, global 2,000 customers what systems they're implementing e-commerce on, they were all unanimous -- 'we'll go out and develop on NT, but when it comes to implementing these systems, we're interested in doing Unix implementations and deployments.'"
The Doculabs report notes that most of the ready-to-run packaged solutions are easy to deploy, while "the toolkit solutions from Microsoft and IBM took longer to implement, but they both provided powerful setup wizards for creating a custom look and feel to the site that was not available in the packaged applications." The report also noted that "none of the e-commerce solutions provide robust development environments, especially the packaged applications."
Packaged e-commerce applications may be more appropriate for companies that are still formulating business processes. For example, one small telecommunications service provider looked at the leading solutions, including Microsoft and IBM. The company wanted a system for customers to access their account information and wanted to interface an e-commerce system to its billing platform. The company went with a smaller vendor, SpaceWorks (www.spaceworks.com), for more focused and personalized service. Larger companies with established business processes, however, may require the greater amount of customization that Site Server and Net.Commerce can provide, says the company's president.
Microsoft Site Server Commerce Edition has "the capability to create an online presence today, that maps to the business logic that you want to put in place," Kumar says. But implementing any type of e-commerce system requires some rethinking of business processes, she points out. For example, Merisel didn't want to have to re-engineer their established relationships with resellers. Yet, the company wanted to add new features that were previously unavailable, such as see-through inventory to the company's back-end SAP and AS/400-based inventory management systems.
Not all applications are strictly retail or procurement operations, either. Hockaday Donatelli Campaign Solutions (HDCS, www.campaignsolutions.com), for example, recently implemented IBM's Net.Commerce on Windows NT Server running on an IBM Netfinity to handle electronic donations to political campaigns and charities. Working with Trifecta Technologies, the company built an Internet Donation Management System (IDMS) that collects donations and pertinent information from online donors. IDMS went live in August 1998 when it accepted its first donation. "It captures information, takes donations and it runs it through a Net.Commerce payment server at the back end, linked to CyberCash," Trifecta’s Zeller says. Information is then stored in a DB2 database, where it can be accessed by business managers.
With Net.Commerce, all the pieces required for an e-commerce platform -- including administrative tools -- came in a nice package, Zeller says.