John Stokdyk - We're off to see the Wizard

Entering the world of electronic commerce is like visiting Oz – a dreamland filled with dangers and ugly surprises, where the only people offering help are heartless, brainless or cowardly.

Everyone from Bill Gates and Tony Blair to your local software supplier is talking about electronic commerce, but the people actually doing it are more elusive than the Wizard himself.

Systems and finance people are putting in so much overtime on year-2000 bugs that few have have had the time to contemplate IT’s next big thing.

And when proposals have shown up for unproven electronic sales systems – usually backed with highly dubious revenue projections – accountants have had every reason to react in the usual way to requests for hard cash. Until now.

By following Dixons’ example and introducing the equivalent of the Freeserve internet access package, accountancy software house Sage has brought electronic commerce within the reach of two million small businesses. As well as getting a free internet address and Web space, Sage.com subscribers will be offered online ‘shopfronts’ for as little as £25 a month.

When it was announced along with the company’s interim results earlier this month, the Sage.com initiative grabbed national headlines. At a stroke, the Newcastle company pulled the rug from beneath its competitors.

‘Sage recognised that accounting software companies’ shares were flat, so it wrapped itself in the internet flag and the price took off,’ said one rival, with just a hint of green in his eye.

Sage managing director Graham Wylie admitted that the Sage.com announcement was driven by pressure from analysts who wanted the company to unveil its internet strategy – even though, as companies ranging from Baan to Great Plains, Pegasus and Dragnet (see next page) point out, none of the company’s software packages can import or process sales placed at Sage.com.

Until they can, Sage.com will not actually deliver the things that make electronic commerce attractive to finance managers – lower transaction costs, instant posting of receipts, more efficient and accurate data entry and even build-to-order capabilities.

Sage’s development team is working on that, said Wylie, and should be able to generate some kind of file transfer mechanism in a couple of months.

The company’s US subsidiary, State of the Art, has been working with e-commerce company Intershop and will probably provide a more integrated online catalogue system some time next year.

In the old days, say around 1994, programs that were announced and marketed before they were ready were labelled ‘vapourware’.

But in the brand-driven electronic marketplace, perception is reality.

If only a few of its 350,000 UK customers sign up for Sage.com, the company will host one of the country’s largest online commercial portals. When subscribers think of e-commerce, they will think of Sage.

As the patron of this online community, Sage will gain not just a new marketing tool to strengthen its links with customers, but the means to conduct e-commerce of its own.

Wylie and his managers will have noted that PC manufacturer Dell now sells almost a third of its machines direct to customers via the Web – running rings around its larger rival, Compaq.

If Sage emulates Dell’s online success, it will cast a shadow over the 2,000 companies that resell its software. The more software Sage sells direct, the less income will go to third-party dealers – many of whom are accountancy practices or their offshoots.

And clients who may have paid fees for IT advice from their accountants could discover a cheaper source of help on the internet.

Whether it likes it or not, the profession will find itself caught up in the e-hype tornado. It is time to face up to the Great Oz, even if it means obeying his order to ignore the man flapping around behind that curtain.