E-Commerce Drives B2B Innovation

By Kristy J. Folkwein  |  Posted 05-12-2011

E-Commerce Drives B2B Innovation

As e-commerce becomes more of a business strategy than a productivity tool, CIOs are playing increasingly important roles in business growth and achieving a competitive advantage.

Take the airline industry, for example, where CIOs have transformed business models, reduced costs and boosted convenience for travelers. Today, airline passengers are booking tickets, selecting seats and obtaining boarding passes online. When they get to the airport, passengers use electronic kiosks to check in.

Airline CIOs have aligned incentives with desired behaviors by making the automated options more convenient than waiting for a person to provide assistance. Bypassing middlemen, such as travel agents, has also reduced costs. Even with recent tussles between airlines and online booking sites, travelers benefit from IT advancements.

While many industries have been quick to utilize e-commerce, the chemical industry has lagged because of the required back-end investment in a sound business strategy and an integrated IT platform. My organization invested in an SAP-based global IT platform more than 20 years ago, so when market forces required us to offer more choices, we were ready.

We developed a Web-enabled business model in an industry with few online options. The result was the creation of the XIAMETER brand in 2002, designed to offer high-quality but standard silicone products online at market-based prices. The business model is highly efficient due to its Web-enabled order platform and streamlined services. In contrast, our traditional Dow Corning brand offers customized solutions, product innovation, technical support and new specialty products.

My role includes ensuring that the online experience of our XIAMETER customers matches expectations, and that the Web-enabled brand operates effectively and efficiently. The business model utilizes strict business rules -- a powerful factor in e-commerce -- to streamline the ordering process, consolidate orders and improve inventory management, which help keep operational costs low. There also are multiple self-service options, including access to product information and prices, online ordering, order tracking and order histories. Our global IT platform provides the backbone.

E-commerce: A Completely Different Culture

The online brand requires a completely different internal culture and way of doing business. If the XIAMETER brand were to customize orders or offer technical support for product applications, as the Dow Corning brand does, cost savings would be limited since staff time would increase and complexity would grow throughout the supply chain.

Today, more than 30 percent of Dow Corning's business is conducted online, up from virtually zero before 2002. In my role as CIO, I've been able to support the brand's success through strategic IT investments, an integrated enterprisewide business strategy, and an application interface that is convenient and easy to use. Having the internal mandate and discipline to enforce the brand's strict business rules has ensured that efficiencies are realized.

Based on customer research, we expanded the online brand in 2009 to offer more products, a new order-entry platform with greater self-service functionality, and the option to buy directly from local distributors. The XIAMETER brand now appeals to three customer segments:

  • those who are attracted by good prices;
  • those who like the convenience of 24/7 availability of information and ordering; and
  • those for whom security of supply is most important, since they can lock in longer-term contracts.

The business model is considered innovative in the chemical industry since it is based on smart customer segmentation, provides a new channel to market, offers a new way to interact with customers, and ensures an easy-to-use, self-service format.

The Takeaway

No matter which industry you're operating in, the lessons we learned during the course of this project will be relevant to you. CIOs are in a unique position to drive business success as never before. If you want to position your organization to use technology to drive business value, these four tips are for you:

  1. Be innovative and risk-taking in utilizing IT strategies to find new ways to address customer needs. Due to advancements in Web-enabled tools and services, CIOs have an unprecedented opportunity to drive corporate strategy. Success requires maintaining a broad, holistic view that utilizes IT to empower innovation.
  2. Make regular investments in the global IT infrastructure to stay ahead of customer requirements. Recognize that a new generation of consumers is comfortable with purchasing online, and these individuals are now embarking on careers in the business world. They'll drive the adoption of B2B e-commerce. The same people are moving into purchasing departments, and they are comfortable with--and many prefer--to do things online.
  3. Create and enforce clear IT policies throughout the organization to prevent adoption and utilization of renegade IT solutions that don't support corporate IT strategy.
  4. Tailor IT strategy based on customer research, audience segmentation and market needs. That kind of rigorous methodology and thinking will help shape your company's future and positioning to meet customer needs along the value chain.

Kristy J. Folkwein is vice president and CIO at Dow Corning. Send your feedback to editors@cioinsight.com