How far will dot.com woes go?

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Everyone is aware now of the downfall of the dot.com companies. Only the typical financial idiots (anyone who has dealt with venture capitalist will know what I mean) are surprised. Indeed the two reasons for the debacle are greed and greed, on the part of the investors on one hand and the entrepreneurs on the other.

It is to no one's advantage that so much money has been lost on the stock market, because that means that there is less to be invested in more worthy causes. I have some sympathy for those who expected to grow rich on share options, because the dot.coms couldn't afford to pay high salaries (where did the money go though?) and attracted staff with share options . Few people have now made anything out of this, but worse there are a lot of individuals going bankrupt since they borrowed money to buy into the schemes, only to find the shares crash in value. There is a report that 25 Microsoft staff alone have filed for bankruptcy as their shares have nearly halved in value, and that must be a small number compared to all the start-ups affected.
All IT professionals I talk to are confused by all this. Anyone with any knowledge of business and IT could see that the whole concept was flawed from the beginning. There are three basic requirements, all of which must be met for success. A good user friendly front-end, market awareness and solid logistics. With few exceptions, these criteria were not met. The relative success of Amazon.com has a lot to answer for, because they, by being the first, got free advertising; creating a public image consumed all the resources of the rest.
But even Amazon is struggling because they didn't have the logistics, i.e. order processing, invoicing, distribution, etc. There was also probably too much emphasis placed on CRM. To compound the problem, there are far too many user unfriendly sites; indeed I would go as far as to say that most sites put me off because of the over complexity of their Web pages. It would appear that most have been designed by frustrated graphics artists, and that few have ever been tested on normal users, with the speed constraints of the current Internet!
Some sanity has now returned and the obvious has matured. Most established retailers are introducing Web based services. In effect this is a new variant on opening a new shop, but it does need a lot of thought expended on just what is practical. Established retailers of course have the logistics and a lot of market awareness. But this is where the professionalism of the IT systems becomes so important. Lessons need to be learnt from the dot.com fiasco, both technically as well as from a business perspective.
Fortunately the B2B applications have not had the high profile of the dot.coms. In any case they are being developed by professionals as an extension of core IT applications. But this is a new technology, based around XML, and as such there was an acute shortage of skills and development tools, which as usual provided the opportunity for new companies to appear who could cover the short fall. In particular Ariba, CommerceOne, i2, etc, companies providing various forms of B2B application frameworks and services, prospered. But now the core technologies and the relevant software tools are maturing, and most companies are interested in building their own application. The impact on Ariba, et al is not as bad as the dot.com disaster, but it is hurting!
The most significant development is the introduction of J2EE and in particular Enterprise Java Beans. Thus core run-time and development tools such as WebSphere, WebLogic, etc. now provide much of the facilities that were special features of the earlier products, making much of those products redundant. To a large extent this is true for products targeted at developers as well, such as the earlier Java systems from Apptivity or Bluestone, all good products but containing much code that was necessary at the time, but is now superceded by core systems.
In five years time there will be no Dot.coms, only companies conducting normal business which includes C2B and B2B e-commerce. It is not so clear what will happen to the more technical software tools vendors. Most likely many of them will have been acquired by IBM, Microsoft and the rest.

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article 2001-06-29T00:00:00.000Z Martin Healey
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