At Intel, the emergence of Internet commerce
presents a dual challenge
By AMANULLAH BASHAR
Jan 22 - 28, 2001
In January 1998, Intel had exactly zero customers
placing orders over the Internet— phone, fax and EDI systems were
used to place and manage orders. A year and a half later, Intel took
$1 billion per month in orders over its Web-based order management
system, or about 25% of total sales. By 2003, 90% of Intel's sales are
expected to be transacted over the Internet.
To say that the Internet has transformed the
commerce landscape is to belabor the obvious. In just three years, the
amount of business conducted over the public network has soared, from
$50.4 million in 1997 to a projected $1.3 trillion in 2003, according
to research firm International Data Corporation.
What may not be so obvious is that the vast
majority of these transactions are happening between businesses. While
retail players like Amazon.com* and eBay* garner press accolades,
entire industries are shifting their business dealings to the
Internet. Supply-chain management, enterprise resource planning, and
other enterprise automation packages are speeding the shift to the
The writing is on the wall at Intel Corporation.
"Within five years, all companies will be Internet
companies," says Intel chairman Dr. Andy Grove, "or they
won't be companies."
Through September 1999, the Intel & e-Business
Series of articles will detail how Intel successfully developed and
deployed e-Business systems for its worldwide network of customers.
From the deployment of customer-driven e-Business systems to
large-scale collaborations with international governments and ISPs, IT
professionals and business managers will gain valuable insights about
solutions that can help them move forward their e-Business efforts.
Taking Intel Online
At Intel, the emergence of Internet commerce
presents a dual challenge. The company had to adapt its products and
services for an Internet-centric marketplace, even as it moved
business systems online.
Certainly, the benefits of online business
transactions were too compelling to ignore. With over $25 billion in
annual sales, and a worldwide network of business partners, resellers,
and original equipment manufacturers, Intel needed to automate
business-to-business transactions. The complexity of Intel's products,
combined with the rapid pace of product introductions, made
traditional forms of business communication and customer fulfilment
too slow, cumbersome and expensive. The decision was made to deploy a
Web-based order management system.
How fast did Intel ramp its e-Commerce effort? In
January 1998, the company had exactly zero customers online. Phones,
faxes, and overnight parcel carriers served as the conduits for
placing orders. By June 1999, over 560 companies in 46 countries were
using Intel's Web-based order management system to place orders, track
deliveries, post inquiries, and get product and pricing updates.
Today, this system produces nearly $1 billion in sales per month.
Just one year after introducing its Web-based order
management system in July 1998, Intel transacts more orders—in
dollar terms—over the Web than any other manufacturer. And volumes
are expected to grow dramatically. By 2001, the company projects that
more than 90% of its orders will be handled over the Web.
Customer satisfaction: Intel customers are rapidly
abandoning fax machines and EDI systems in favor of Web-based order
management. Clearly, there was pent-up demand for an efficient,
flexible, and standards-based e-Commerce system among Intel customers.
Customer surveys indicate overall satisfaction rates of 94% among
companies using the Web-based order management system. And both Intel
and its customers report significant savings in the form of lower
costs per transaction and faster execution of transactions. At Intel,
Web-based transactions take about 70% less time to complete than
transactions under the previous system.
Migrating $1 billion in monthly orders to an online
system is no small task. Intel IT staff worked closely with the
marketing and sales departments to ensure that compelling content and
services were provided in a strongly encrypted and customizable
environment. A tight feedback loop was created between Intel and its
customers to identify desired services and potential problems. Intel
also collaborated with international vendors, ISPs, and governments to
ensure that local infrastructures were able to handle growing
The results of this effort are certainly there for
Intel customers to see. Today, transactions are completed more
quickly, more efficiently, and with greater customer control than they
were just 12 months ago.
Building the Internet
Intel's involvement with Internet commerce goes
beyond moving sales activities online. The company provides services
and products that are the building blocks for the Internet economy.
Intel® Architecture-based servers and PCs have become nearly
ubiquitous on the Internet, with developers tuning their products for
the vast universe of deployed systems. Intel® network hardware and
components can also be found throughout the Internet, in hubs,
routers, network interface cards and other devices.
More recently, Intel has launched new services,
such as enterprise data services and online commerce solutions, to
help advance and broaden e-Business activities. Among the efforts that
are helping make mission-critical e-Business services and capabilities
accessible to a large community of businesses and organizations:
Intel Data Services provides Web hosting services,
back-end database hosting, and other services for ISPs and businesses.
Continued enhancements to the standard, high-volume server platform
enable scalable multiprocessing servers with two, four, and soon eight
processors. Development of next-generation processing and I/O
technology will power enterprise-class servers based on Intel®
The Future Is Now
Intel's engagement with the Internet continues to
grow. Acquisitions of leading networking technology firms such as
Shiva Corporation. And Dialogic help Intel drive cost-effective
product integration and further innovation. And the work is just
beginning. Over the months and years to come, Intel® products and
services will evolve to incorporate the Internet at every level. At
the same time, the way Intel does business will continue to leverage
the efficiencies and advantages of the public network.
About Intel: Intel, the world's largest chip
maker, is also a leading manufacturer of computer, networking and
communications products. Additional information about Intel is
available at www.intel.com