By Charles Waltner, News@Cisco

August 2, 2002

The demise of B2B ecommerce has been greatly exaggerated. Certainly, it's alive and well at Cisco Systems and other leading companies throughout a cross-section of industries.

That was the message Wednesday night from Cisco CIO Brad Boston and a panel of distinguished technology executives speaking to members of the Churchill Club on the future of B2B ecommerce. Boston's co-panelists included John Herr, Vice President and General Manager at eBay; Shelby Bonnie, CEO of CNET; and Ken Harris, CIO of Gap Inc. Technology journalist David Margulius moderated the discussion.

The Churchill Club is a forum for business and technology leaders in Silicon Valley. Former speakers include Bill Gates, Steve Forbes, Mark Andreesen, John Chambers, Larry Ellison, Andy Grove, William Hewlett, and Meg Whitman.

The panelists agreed that despite the recent failure of once highly touted public exchanges and other third-party ecommerce facilitators, B2B technology has helped Cisco and other companies improve supply chain efficiencies with vendors and suppliers. And while B2B ecommerce still faces many technological, logistical, cultural, geographic and even psychological challenges, it continues to hold tremendous promise.

Boston and the other panelist said their companies have reaped substantial productivity gains from B2B technology. Cisco, for example, has improved productivity 20 percent over the last few years, with about half that gain coming from use of the Internet to improve B2B communications. Cisco now receives an impressive 92 percent of all product orders through the Internet, and 80 percent of all customer service requests come to Cisco online, Boston said.

Boston, along with his co-panelists, agreed that systems integration will continue to be the number one challenge to ecommerce, since partner companies typically operate disparate back-end systems and have varying degrees of technology capabilities.

"There's never been a time in history that there has been one standard in use for a given technology," Boston said. "All of Cisco's partners are at different levels of adoption and that will continue to be the case. Standards will always be a issue."

For its part, Cisco addresses standards issues with its partners by using a third-party translation service which takes Cisco's XML-formatted electronic data and converts it into the particular formats used by its partners. Boston noted this is the best solution for the problem at this time, since many of Cisco's partners simply don't have the capability to create XML interfaces for their order processing and manufacturing systems.

The panelists said that globalization also provides one of the more difficult challenges to B2B ecommerce since partner companies in different countries all have their own languages, cultures and business practices, not to mention technology capabilities. Ken Harris from the Gap, for example, said a clothing material manufacturer in Madagascar might not even have a good Internet connection, let alone the resources to integrate into a B2B ecommerce system.

But companies such as eBay are demonstrating just how far B2B ecommerce can go. John Herr said thousands of small businesses all over the world are taking advantage of eBay's buying and selling technologies. Such a service connects companies that would otherwise never have interacted with each other because of geographical barriers or operational logistics.

The panelist also said that while B2B technology has a great potential to automate the sales cycle, human beings will always be part of the process to work with customers on complicated issues and ensure satisfaction.

"You will always need sales people to help customer relationships and make sure your customers are happy. Technology can't do it all," Boston said.

Boston knows as well as anyone the limitations and potential of technology. Prior to joining Cisco in August 2001, he was the Executive Vice President of Operations at Corio, an enterprise-focused Internet application service provider. And prior to that, he served as Executive Vice President of product development and delivery at the Sabre Group, the airline industry's powerful ticketing and flight information clearinghouse. He also held executive positions at American Express, Visa, and United Airlines.

And despite any technological improvements, Boston said B2B ecommerce will only serve as a tool-albeit a very powerful one-to help companies be more productive and run more cost-effectively. Its success will always rely on the right business decisions.

Boston, for example, said B2B ecommerce can help Cisco maintain much tighter, inventory levels. But inventory levels must be balanced with the manufacturing capacity of Cisco and its vendors. Cisco partner manufacturers do not have infinite capacity to respond to all surges in demand, so Cisco must gauge that limitation with its inventory plans.

"Regardless of what happens with B2B ecommerce, it's not just about the technology it's also how you use it in your business," Boston said.

Charles Waltner is a freelance journalist based in Oakland, CA.