"By applying the techniques and technologies of e-commerce to our own business we are changing the way we address the market so that we can lower cost, risk and time factors for our clients," says Paul Wootten, the USKO executive director who heads the listed firm`s new E-commerce division.
"USKO has taken the risk and cost out of electronic commerce projects with a new division that leverages its existing skills and product base to provide fast, cost-effective, plug and play solutions to business problems," he says.
The contribution to the bottom line from applying e-commerce principles to a business can be dramatic. (See table).
Wootten says "E-commerce isn`t electronic funds transfer, and it`s not Web site development, and it`s not Internet access: it`s business to business and business to customer communications using digital data rather than the written word."
Wootten believes that most firms offering e-commerce products aim to take a few cents from the transaction processing fees charged by the banks. "That`s dumb because the banks are going to fight all the way to maintain their revenue flows. Instead, we`re looking at all the transactions above and below the bank transaction which is essentially an electronic funds transfer. We believe that the need is greater and the volumes larger outside of what the banks are doing."
Wootten says USKO has spent the past two years acquiring the elements to build an e-commerce company. "We have sought companies with the skills, products and customer bases that we can leverage into e-commerce-enabled firms. As a result of our acquisitions we have over 70% of the Top 1000 companies in the country as our customer base."
USKO`s investments were premeditated. "Blue Sky Networks gave us deep knowledge of data transmission; Spearhead has people who understand corporate processes intimately through their experience implementing SAP projects; through UskoTech we have people who know how to build reliable systems, and the Mediswitch technology taught us switching and how to handle information in a multi-system, multi-standard environment.
"We are now building partnerships and joint ventures with people in vertical markets who can use our technology platform to deliver e-commerce solutions, almost on a plug and play basis. The point is that if you think putting in an e-commerce solution takes six months and costs R500 000, you`re talking to the wrong suppliers," he says.
Wootten says that firms such as Amazon.com and Cisco have demonstrated some of the benefits of e-commerce technologies and strategies. "The way to make money is raise your margins by cutting your costs; e-commerce is ideal for this," he says.
There are four forces driving e-commerce:
Bandwidth is getting cheaper and more plentiful
Activity-based costing proves that time is money
Higher quality at competitive prices
Speed to market is the key competitive edge
"The way to compete these days is to trim the cycle times everywhere in the supply chain," Wootten says. "It is a fundamentally new way of doing business, and far removed from the present `Let`s do a Web site and hope someone notices it` approach.
"We`re helping companies identify time-based costs, finding ways to eliminate or minimise them, and monitor them. What you can measure you can manage, and we have managed the costs down to a "pay-for-use/benefit" basis."
One of the technologies USKO has developed is used in the Mediswitch products. This is an e-commerce application tying medical service providers such as doctors, pharmacists and pathologists with medical aid administrators.
A medical service provider can now establish, typically through the same computer accounting system they`ve had on their desks for years, whether a patient is eligible for medical aid, has funds still available in their medical plan, and can book those funds.
Medical aids with advanced information systems, such as Fedhealth, provide not only on-line claim approval, but also the date when the funds will be deposited into the medical service provider`s account, all within a matter of seconds.
This is likely to reverse the trend of many doctors who provide services only to patients with whom they have accounts, and leaves the hassle of claiming from their medical aids to their patients.
Fedhealth`s payments will typically be faster than patients`. This has obvious benefits both for the doctor`s cash flow and the patient`s access to his services.
"Nearly every medical aid says that it is a fallacy that they make money by not paying accounts on time. Activity-based costing has shown that the length of time it takes to process a claim is more expensive than the interest earned by not paying quickly."
But a successful e-commerce strategy requires that the business understand its inherent supply chain logistics extremely well, irrespective of what industry they are in.
"Profitable businesses have a high regard to quality, and continually strive to strip out dead, costly time in the delivery of whatever service or product they supply," Wootten says.
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