At Intel, the emergence of Internet commerce presents a dual challenge

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 digital economy.

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 e-Commerce demand.

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® Itanium™ processors.

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