State of the Market Preview: The Brick-and-Mortar Web Opportunity

The Web is growing up, and growing up fast. A few years ago, technocrats and entrepreneurs ruled this new communications medium and fueled the dot-com frenzy.

"The companies that were able to leverage Internet technology early were blank sheet firms, start-ups with no legacy systems and therefore able to make dramatic changes in business processes that established companies couldn't easily match," says Patrick O'Brien, co-founder and COO at Blue Meteor Inc., a Chicago-based ASP.

Because of the Internet's phenomenal success, established companies jumped into this area as quickly as possible. In our research for the upcoming State of the Market issue, VARBusiness found that dot-com enterprises will account for only 13 percent of solution providers' revenue in 2001. Sixty-seven percent will come from brick-and-mortar companies adding e-business functions to existing applications. And another 19 percent will be generated by Internet spin-offs from these corporations.

While those companies did not have a blank sheet, they did have products that interest customers, distribution channels to deliver them, and support structures to handle customer inquiries. The start-ups have had difficulty putting such support systems in place and that is one factor in many of them falling by the wayside.

In comparison, established companies have proven mission-critical applications: order entry systems, ERP suites, customer service applications, manufacturing software and supply chain systems. What they want to do is marry those systems with the Web. By adding features like Web browsers to existing systems, corporations can provide a wider range of end users [employees, suppliers, customers] with access to needed information and streamline business processes. This transition has been taking place: JC Penney.com, Sears.com, and Bluelight.com (Kmart) now generate more unique visitors each month than Etoys.com.

Such aggressive adoption of the Internet results in tremendous opportunities for solution providers.

"With large companies embracing the Web; we have so much business now that our major challenge is hiring sufficient personnel to keep pace with demand for our services," says Shannon McWilliams, president of the Network Commerce Group at Mainline Information Systems, a Tallahassee, Fla.-based firm that specializes in integrating mainframes and the Web.

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