Page 5: New technology in corporate services
Corporate purchasing - or materials, resources and operations purchasing (mro) - covers the purchase of items such as office supplies, support services and consumables. Like many companies looking to reduce costs, Microsoft found that its own internal purchasing system was time consuming, labour intensive and inefficient. A paper based system is usually complicated to explain to users and suppliers. The answer was to develop a streamlined e-commerce application providing an easy-to-use online form for ordering anything from office supplies to lunch.
Microsoft developed MS Market, an Intranet application, which works through the firm’s internal communications network. It proved so effective that the programme has been expanded to include the ordering of virtually all goods within the company.
As total orders exceed £1.6 billion, Microsoft is able to negotiate excellent terms with the suppliers who are in turn assured of a consistent flow of orders. The cost for processing direct purchase orders has dropped from $60 per purchase to only $5. A typical transaction now takes three minutes and most orders are filled within 24 hours. The system has saved Microsoft $3 million per year.
PC World Business Direct, part of the Dixons Group Plc since 1996, is the business to business arm of PC World. It too decided on an e-commerce solution to tackle corporate purchasing problems. Publishing its Definitive Buyers Guide on the Web, it allows its business customers to order computer products and services and to track those products in real time. In most cases, the product is despatched within half an hour of the order being placed. A firm would know exactly where its order was and when to expect delivery.
The development of this system was partly in response to some of PC World’s biggest customers who wanted to conduct business electronically and avoid losing out to competitors. PC World Business Direct, like the rest of Dixons Group Plc, believes that the use of the Internet is absolutely critical to its business. It is both a medium of communication from supplier to customer and a catalyst for business growth.
Supporting financial services
The world of financial services is particularly well suited to e-commerce. The rapid growth of the Internet and the emergence of online services have forced many financial companies to examine new ways of doing business.
The Royal Bank of Scotland, one of the UK’s largest banks, was quick to appreciate the potential of this market and was the first to announce an online banking service. The firm has developed a long standing relationship with both Compaq, the computer hardware firm and Microsoft to maximise the synergy available.
For many busy customers, traditional banking hours are not convenient. Consequently the bank has developed a more flexible way for its customers to access its banking facilities. The cost savings can then be passed on to the customers.