1. E-commerce @

2. Air Products (A.P) Company overview Specialised in Industrial gases and Chemicals products –Presence in steel, metal, glass, food processing…. 18,000 Employees worldwide (15,000 in 97) $ 5.7 Billions sales in 2000 ($ 4.6 billions in 97) $ 2.7 Billions sales in industrial gases sales in 97 (4 th world producer) Presence in 30 countries

3. The Industrial Gases (I.G.) Market Consumption by region

4. I.G. Market (2) Production by company

5. IT & the I.G. industry Most innovative in the Chemical sector –Standardized Services –Cost reduction Conviction of CEO: IT should be an integral part of the business

6. AP Points of View John Pfeiffer, MIS VP ?-1996 –Father of Internet at AP –Early 90’s: employees access to information on the Internet –Predicted the demand growth for email and internet access via graphical interface –Predicted the role of Internet in business challenges

7. AP Points of View Joe McMakin, MIS VP 1996 - ? –Internet will change the way we do business Steve Cameron, Communication Manager and Bill Townsend, IT Manager –Internet Economy will drive technological change at AP –Web site is to be a transactionnal medium (1996)

8. Problem Identification How to reoganize a company around Internet Traditional Brick and Mortar company Strong potential of Internet : –Growth in Productivity –Customized services –New sales channels –Marketing –Lower Cost

9. Problem Identification Potential Problems –Initial Investment –Strategy to follow –Speed of Change –Resistance to change –Harmonisation of sites

10. 2 Different approaches Air Products –Internal approach –No or Few outside expertise Structural change Testing approach BOC –External approach –Intervention of outside expertise (IBM&American Express) More Conjonctural approach Fast Implementation

11. AP: Internet will definitely change the business New competitors (intermediaries, Auctions, trading…) Intervention of IT in every part of the business Not only concern a presence on the web –Huge infrastructure to be built –Concerns in Internet, Intranet, Extranet – E-commerce needs convergence of those three elements 1st: Internet is a sales enabler 2nd: Internet will draw new business models –New sales channels –Value added marketing –Existing customers’ portal

12. E-Business Evolution Evolution from marketing to transactional medium Marketing (On-line presence) –Institutional information –Brochures –Catalog –Possible contact (4% logged as potential sales) Interaction –Call me now Button –E-commerce solution –VAM to potential client Free MSDS Product locators and specifiers

13. E-business Evolution (2) Transaction –Real E-commerce Existing customers ordering on-line Auctions Participations to industry platforms EDI Real time access to information –Order tracking –Invoicing –Order status –…etc.

14. E-business Evolution (3) Transformation –Application of knowledge to others activities –New business models All web-based Business –Customers AND Suppliers –Supply chain optimization –Advanced personalization

15. Concerns Big investments to be made in the infrastructure Harmosation of Intranet sites Access to information Quality of info collected Multilingual Access Resistance to change –IT culture of the company plays a role in the education of employees Communication cost Peoples and resources Convergence of Data (intranet, extranet, internet)

16. Concerns for the Intranet Allows to centralize data Reduces cycle time Extend the sources of information –Pb: How to structure and organize them Gain in productivity Do not inhibit creativity and initiative Link it to Internet –Separation of info –Created more added value

17. Architecture WCA framework Customers –Searches info on products through the web –Searches Contacts for info or transaction –May try to buy on line –Ease the buying process of existing client –Info on delivery date, tracking of the order Products –Availability, location of products –Customization of orders –Price

18. Architecture WCA framework Business Process –Process operation Get the relevant information throughout the organization Assemble into a database within the intranet Serve the required information to the customer on internet –Architecture Software (ex: MFG PRO, SAP) capable of collecting the info. Presence in every involved department 100% reliability

19. Architecture WCA framework Participant –Every department that can deliver info (production, invoicing, transport…) Information –Define what the customer’s want –Many steps of selection of information Technology –Necessity of building huge infrastructure

20. Customer Products Status Invoicing Web site Ordering process Customer status Data Flow Diagram Ordering for existing customers

21. Alternatives Do nothing Improve while keeping the same way of working Improve by injecting external expertise

22. Do Nothing Stop the improvement process, Keep the existing Benefits: –No short term cost –Savings on R&D –Relocation of resources –No management of change

23. Do Nothing (2) Disadvantages –Long term cost Increasing communication cost Intranet inefficiency –Too much unorganized information available (Quantity, not quality) –Loss of competitive advantages Loss of leadership (Image, sales) Decreasing Productivity

24. Keep the same way of working Continue the internal improvement process Benefits –Rely on internal expertise –Mastering of costs –Parallel evolution of process and employees training Less resistance to change

25. Keep the same way of working (2) Disadvantages –Slow implementation Loss of ground face to competition –No optimal feedback –Human resources problems Recruitment Competence

26. Inject External Expertise Development through Consulting and Benchmarking Benefits –Keep Internal expertise –Avoid others’ mistakes and benefit from their experience –Optimal feedback –Cost efficiency (no cost due to testing)

27. Inject External Expertise (2) Disadvantages –Internal resistance of change –Consultants have no real experience of the business and the firm –Gap between external methods and company’s culture –Short term costs

28. Decision grid

29. Recommendations Take alternative 3: Inject external expertise Will allow to keep competive advantage Improve the intranet Do not be too much ahead of customers Do not give up traditional sales methods !

30. Business Results-to-Date Result Commitment Current Status (run rates) Projected Status (run rates) Target Internet Corporate Sales $40 Million$100 Million$1 billion by 2003 New sales via the Internet $125,000$250,000$100 million by 2003 eProcurement cost reduction $3.0 Million$5.0 Million$10 million/yr by 2003 On-line Procurement $50 Million$100 Million$100 million in FY01 Internet facilitated transactions 3.2%6.5%80% in 2003 SBU’s with an e-business strategy 17 completed 17 by FY01