INDUSTRY VIEWPOINT - Wake up to the digital revolution

Denise Sangster, president and CEO of Global Touch, looks at the way e-commerce and cybersales are reshaping the sales process.

The digital age is redefining the market strategies of channel partners and vendors in the IT industry.

By the year 2001, it is predicted that more than 80 per cent of IT industry sales will involve some form of digital commerce. The demands and opportunities that this is presenting will have a huge effect on companies.

Questions have to be asked. Will digital commerce kill your bottom line?

Can the channel add value? Do vendors really need a channel in an e-commerce world? How will companies manage geographic revenue shifts in a connected global economy? How viable is the co-existence of a digital and physical channel? These are all issues you should be addressing.

With the digital age upon us, nearly every business process is being touched and reshaped as we re-engineer businesses.

We are seeing the dawn of a revolution in business relationships. The winners and losers will be determined by whether they harness digital technology and internet access into a pipeline of two-way interaction between final purchasers (companies and consumers) and channel partners.

In the past 10 years, our industry has witnessed the boom of the information age. Interactivity between purchasers and organisations was like an hourglass, with a bottleneck for controlling information and transaction flow in the middle. Intermediaries offered varied levels of access and flows of input. This was further constricted by limitations of technology in providing robust, secure and convenient access to relevant information. And, in many cases, intermediaries became self-perpetuating and added to the bottleneck effect.

The rules of the digital economy are killing off these old-style intermediaries and replacing them with 'infomediaries'. Digital transmission over public networks creates the ability to exchange information, negotiate deals, provide identification and communicate more efficiently and effectively than anything that came before.

The 'gatekeepers' of these information pipelines are infomediaries who attempt to enhance relationships with customers, rather than intermediaries who make their living by restricting interaction across the pipeline.

Today's channels are being transformed into interlocking value chains with new entrants - the value-add providers. These VAPs make up the pipeline, maintaining a sustained transaction flow driven by one-on-one relationships.

Our businesses will face key issues. How will we adapt to the real-time economy? How can channel partners continue to add value and keep their technical skills high with smaller and smaller profit margins? Will the internet shift business away from local resellers in favour of companies operating in lower cost regions? Will cyber selling complement or compete with today's channels? How will companies cope with revenue shifts cross borders? And how will the industry cope with the overall shift from simply finding final purchasers to retaining and growing relationship with existing ones?

The essence of this type of competition is simple: offer unprecedented levels of information exchange between final purchasers and organisations, match the final purchasers' needs and interests and wrap as much value around this information as possible. Final purchasers' expectations are changing and they will force the changes through the value chain and vendor organisations.