Product Plan

Transcription

Product Plan

Bizzed Bundled Solutions: Global Product Plan
Contact: c/o Arc: eConsultancy
14 Wall Street, 20th Floor
New York, NY 10005
Phone:
Fax:
212.618.1791
212.618.1880
This global product plan is confidential and proprietary and is not for public distribution. It is intended only
for the persons to whom it is transmitted by The Company. Receipt or possession of this document does not
convey any rights to any party. You may not reproduce, distribute or disclose the contents of this plan or use its
contents, in whole or in part, for any use other then familiarizing yourself with Bizzed Bundled Solutions,
without the prior written consent of Bizzed. By accepting delivery of this plan, you agree to abide by this
limitation of use, to maintain the confidentiality of this plan and to return this plan and all other documents to
the company (a) upon the request of the company or (b) if you decide not to purchase any of the membership
interests.
This plan does not constitute an offer to sell any securities. Any such solicitation will be undertaken only under
appropriate documents and pursuant to all applicable securities laws.
The Company makes no representations or warranties with regard to any information set forth in
this document or its future performance.
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Table of Contents
1.0 Overview...................................................................................................... 4
2.0 Market Analysis............................................................................................ 6
2.1 Market potential ....................................................................................................................................... 6
2.2 Market Trends............................................................................................................................................ 8
3.0 The Offering – Online Financial Services via ASPs...................................... 8
3.1 Core products...........................................................................................................................................10
3.2 Non-core Products...................................................................................................................................68
4.0 Global Product Strategy.............................................................................. 82
4.1 Goal...........................................................................................................................................................82
4.2 Business Model.........................................................................................................................................82
4.3 Revenue model ........................................................................................................................................85
4.4 Contingency Plan.....................................................................................................................................85
4.5 Information Architecture.........................................................................................................................86
4.6 Technology................................................................................................................................................90
4.7 Target Audience ......................................................................................................................................93
4.8 Phased Approach....................................................................................................................................94
5.0 Competitive Analysis ................................................................................. 96
5.1 Cash Management Centered Model: “OneCore”............................................................................97
5.2 Accounting-Centered Model: “Intuit”................................................................................................ 100
6.0 Operational Plan ...................................................................................... 103
6.1 Business Structure.................................................................................................................................. 103
6.2 Legal ....................................................................................................................................................... 104
7.0 Customer Service ...................................................................................... 106
7.1 Possible Solution ................................................................................................................................... 107
7.3 Pricing ..................................................................................................................................................... 108
8.0 Marketing.................................................................................................. 110
8.1 Overview ............................................................................................................................................... 110
8.2 Purpose................................................................................................................................................... 110
8.3 Objectives .............................................................................................................................................. 110
8.4 Target Audience(s)............................................................................................................................... 111
8.5 Strategies............................................................................................................................................... 111
8.6 Marketing Program Recommendations ........................................................................................... 111
8.7 Conclusion .............................................................................................................................................. 113
9.0 Revenue Analysis..................................................................................... 114
10.0 Core Offering Evaluation........................................................................ 116
Table of Figures (Arc)
Bizzed Bundled Solutions
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Small Businesses Online......................................................................................................................................... 6
US Small Businesses Online: by employee size, 1998 to 1999................................................................... 6
Bizzed Bundled Service: Two EBPP Models....................................................................................................38
US Small Business Online Banking Feature Comparison..............................................................................65
US Small Businesses Online Banking: Geographic Coverage ....................................................................67
Bizzed Bundled Services Business Model ........................................................................................................83
Integration of Bundled Services & Diagonals ................................................................................................84
Preliminary Global Site Map ............................................................................................................................87
Clickstream, Technology Release II ..................................................................................................................89
Clickstream, Technology Release III .................................................................................................................89
Clickstream, Technology Release V..................................................................................................................90
OneCore Business Model....................................................................................................................................97
Intuit/QuickBooks Business Model.................................................................................................................. 100
Corporate Structure Dependencies............................................................................................................... 103
Integrating Partners’ Customer Service into the Bizzed Offering .......................................................... 108
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1.0 Overview
As a leading small business portal, Bizzed.com aggregates relevant content, community, and a host of
financial and business products and services in order to provide big business resources to the small
business owner. Its mission: “to be the strategic and practical backup partner to entrepreneurs in
work and life.” Initially, Bizzed.com has addressed the operational needs of small businesses by
facilitating quick and convenient access to a network of best of class online service providers. The
objective: “to provide solutions that when aggregated from multiple partners into a single resource
or function, achieves the small business goal of operating key aspects of business online.” In doing
so, Bizzed.com will enable small businesses to streamline archaic business processes, achieve
operational efficiencies, and acquire expertise and advice in Internet time.
Moving forward, Bizzed.com will offer “Bundled Services” or the integration of multiple,
complementary and related services – a solution that allows the user to capture and record the same
financial transaction across several applications. For example, the integration of the Bizzed.com
electronic bill payment and presentment (EBPP) solution with the accounting suite will permit bill
payments to be reflected in real time in the accounting application. The benefits: elimination of
redundant data input, ensured accuracy, and affordability.
Leveraging the unique capabilities of the Web, Bizzed.com will then develop a customizable user
interface, “MyBizzed,” in which the small business may aggregate preferred content, community
links, Web utilities, and applicable financial and business services. By providing the user with a
“portal within a portal,” Bizzed.com will furnish a seamless user experience and the robust
functionality reminiscent of desktop applications. The entrepreneur is therefore afforded ERP-like
functionality without incurring the prohibitively steep costs of ERP (Enterprise Resource Planning)
products. By locking its small business customers into a single platform of integrated financial and
business-related services, Bizzed.com will not only maximize the number of financial products used
by its customers, but also generate sustainable revenue streams due to the increasing dependency of
the user’s operations on “MyBizzed.”
Key objectives of Bizzed Bundled Services are as follows:
•=
To generate incremental revenues
•=
To enhance site stickiness
•=
To develop a premier customer acquisition/customer retention tool
•=
To provide a vehicle for targeted marketing
•=
To create new opportunities for cross-selling value-added products and services
In terms of Bizzed.com’s overall business strategy, the strategy of Bizzed Bundled Services will adhere
to a three-tiered rollout as shown in the diagram (see “Product”) below:
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In order to realize the objectives set forth in the Bizzed Business Plan, the Global Product Plan for
Bizzed.com’s Bundled Services will furnish a comprehensive framework for the definition, strategy
and rollout of essential financial services for small businesses. An overview of its key sections:
1)
Analysis of and strategy pertaining to individual financial products (Banking, Accounting,
Payroll, EBPP, and Sales & Use Tax Services);
2)
Analysis of the “MyBizzed” solution in which these applications will be integrated into a
single platform, thereby achieving the seamless user experience via a branded GUI;
3)
Competitive analysis of Internet players currently offering variations of an integrated
financial services platform;
4)
A marketing plan which will address the objectives, unique selling proposition, and tactics
necessary to drive traffic to Bizzed Bundled Services; and,
5)
Projected revenue streams for standalone services, promotional packages, and the
integrated platform from Y2000 to Y2002.
Given the many variables that revolve around the implementation of these services, the Global
Product Plan is meant to be a flexible guide only – subject to change and modification as the core
offering evolves over time.
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2.0 Market Analysis
2.1 MARKET POTENTIAL
According to Cyberdialogue’s “U.S. Small Business Internet Survey, 1999”), an estimated 3.0 million
US small businesses (SBs) are online as of Q1 1999, up from 2.6 million a year earlier. This new
number represents 43% of U.S. SBs or a 17% average annual growth in total number of SBs online.
SMALL BUSINESSES ONLINE
U.S. Small Businesses Online
1999
1998
Annual Gain
Projected U.S. SBs (000)
6,943
6,823
2%
SBs Online
2,993
2, 566
17%
Online Incidence (% of all U.S. SBs)
43%
38%
-
Plan to Go Online
558,000
(next 12 months)
540,000
(next 6 months)
-
Intender Incidence (% of all U.S. SBs)
8%
8%
-
(Source: Cyberdialogue, “U.S. Small Business Internet Survey Management Report 1999”)
Size matters: use of Internet escalates as the size of the business increases.
US SMALL BUSINESSES ONLINE: BY EMPLOYEE SIZE, 1998 TO 1999
U.S. Small Businesses Online: by Employee Size 1998 to 1999
1999
1998
Employee Size Range
000 SBs
Online Incidence
000 SBs
Online Incidence
1-4 employees
1,977
37%
1,637
34%
5-9 employees
484
42%
428
40%
10-49 employees
455
46%
428
46%
50-99 employees
76
58%
72
58%
A competitive imperative is the driving force for SBs to begin leveraging the products and services
offered on the Internet. However, small businesses are relying on word-of-mouth to learn about the
Web, thus indicating the lack of education and training available to SBs via other forms of media.
SBs are still hesitant to venture online due to concerns over security and privacy. And yet, despite
the claim that there is no need to go online by SB intenders, these same SBs believe that they are
behind the competition. While only 12% of SBs planning to go online believe that the Internet is
“essential” to their business at the present time, 40% claim that the Internet will be important
within 3 years (Source: Cyberdialogue). According to International Data Corp. (IDC), U.S.
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companies with fewer than 100 employees will spend more IT dollars towards the Internet than any
other segment except for the government – almost 13% more than the next-largest segment by 2003.
In 1999, SB web spending amounted to just over 12% of U.S. IT spending. However, by 2003, that
number is projected to more than double to 27%. The two looming threats – the European
conversion to the euro and the Y2K bug – are no longer impacting SB IT budgets. Hence, SBs are
now free to focus on Web spending. Cahners In-Stat Group predicts SB IT spending will soar from
$41 billion in 1998 to almost $75 billion in 2002 – a 9% annual growth rate.
In surveying the use of online financial services,
many small businesses are turning to the Internet
to manage their business investments.
Meanwhile, the increase in SBs using online
banking reflected a 50% annual growth rate, from
259,000 SBs in 1998 to 389,000 SBs in 1999.
And, 209,000 SBs use a combination of other
online financial services. According to
Cyberdialogue, SBs that “use any one type of
financial service are likely to use or be interested
in using another type of service” (See Chart
“Cross-Use and Intended Cross-Use of Financial
Services” below). As well, the most effective crossservice leverage is from non-banking to online
banking services.
Familiarity with the Internet coupled with the advantages gained from using one financial service
may inspire SBs to seek out other opportunities in terms of cash management and other related
business services. (For more in-depth market analysis of individual financial and business-related
services, see product sections: Banking, Accounting, Payroll, EBPP, and Tax.)
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2.2 MARKET TRENDS
•=
By the end of 1997, SB PC penetration reached 78%. It is expected to increase to 84.3%
by 2002. PC shipments to the SB segment are projected to be 14.2 million in 2002 versus
7.3 million in 1997. (Source: IDC)
•=
Web penetration from 49% of SB PC owners in 1997 to 68.5% in 2002. (Source: IDC)
•=
Currently, 2.6 million SBs use the Internet versus 2.4 million SBs that use email. (Source:
Cyberdialogue)
•=
Daily online use of the Web has increased markedly, from 74% of SBs that reported using
the Web or email last year to 88% of SBs. (Source: Cyberdialogue)
•=
More than 16 million SOHO business employees will become Web-enabled in 1999,
increasing to beyond 22 million by 2004. (Source: Cahners In-Stat)
•=
SBs that intend (“Intenders”) to use the Internet for the first time are older than current
online SBs (14.8 years in business versus 13.3 years), and approximately half are managed
by owners age 50 or older1.
•=
Intenders expressed significant interest in using a range of financial services, including
payroll, credit, accounting, direct deposits, federal tax payments, and credit card services.
(Source: Cyberdialogue)
•=
Wireless services are very popular with mobile SB owners and destined to become a
“business basic” by 2004. (Source: Cahners In-Stat)
3.0 The Offering – Online Financial Services via ASPs
The ASP Model & Market
Until the 1980’s, companies were relegated to building their own back-office systems, developing
proprietary code and maintaining an IT staff to manage their networks and systems. In the mid1980’s, packaged applications – e.g., enterprise resource planning (ERP) software – began to emerge
in the marketplace. Due to the increasing complexity of corporate systems, these packaged
applications were a cost-effective measure to reduce in-house development costs as well as a more
expeditious route towards implementing cutting-edge functionality. Even so, these applications not
only required a year or more to implement, but also often entailed substantial up-front costs for
installation and training. Meanwhile, small businesses with little to no IT staff were, for the most
part, unable to afford the up-front capital commitment for packaged applications.
The latest phenomenon in the way software is designed, delivered, and supported is the ASP or
application service provider. Essentially, an ASP is a service bureau on the Internet. It implements,
hosts, and manages a customer’s business application from a centrally managed facility and then
delivers the application over the Web. By hosting and maintaining the application, the ASP
eliminates the need for the application to reside on the SB’s premises. Instead of purchasing the
software, the customer “rents” the application on a pay-as-you-go basis.
Businesses can now outsource the intricacies of application implementation, administration and
operation to the ASP. To date, companies can leverage the Internet’s open standards and
1
This trend is in line with the maturation of the Net as a distribution channel. (Source: Cyberdialogue)
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connectivity to implement a wide range of applications such as employee information systems, ERP,
customer service, and supply chain management. As stated by Ann Winblad of Hummer Winblad
Venture Partners, “These apps on tap… are more than just the traditional software package ported
online… with application leasing, even the smallest customer benefits from the requirements for the
most demanding user, including the highest performance and [continual] updates of functions and
features.”
ASPs offer small businesses many of the following benefits:
•=
Cutting-edge, secure and scalable applications from specialized vendors
•=
No need for software upgrades
•=
Access to applications through a standard Web browser
•=
Faster operational implementation which accelerates a company’s speed to market
•=
Operational and maintenance expertise from the ASP
•=
Better cash flow due to reduced up-front costs and pay-as-you-go pricing
•=
24/7 technical and administration support
•=
Reduced IT staff in the face of an IT labor shortage
Hence, ASPs enable customers to use mission critical enterprise applications in an improved, faster,
most cost-effective manner. And, the cost-savings are substantial. A major software application can
cost tens of thousands of dollars per year due to licensing, training, consultants, dedicated servers
and support costs. ASPs can provide comparable services for thousands if not hundreds of dollars
per year. Outsourcing can actually limit liability depending on the service agreement – i.e., the
negotiated repercussions should an ASP fail to deliver. The overarching advantage: SBs can focus
on core competencies. Projecting into the future, industry pundits claim that companies will
outsource their entire networks. Companies will do seek solutions to customize and simplify their
operations. It’s becoming an “outsourced desktop.”
Despite the tremendous advantages of ASPs, businesses are still wary of turning over crucial office
functions to a 3rd party. Security remains the primary issue. Some companies voice concern over
being “held hostage” by technology; that is, if there’s a dispute, will the 3rd party cut off the service
and withhold critical information? Even so, ASP market is projected to soar. According to a recent
report by IDC, ASP spending is slated to grow to $7.8 billion by 2004, which translates to a 92%
compound annual growth rate from 1999 to 2004. And the sweet spot: small to medium-sized
businesses that have been excluded from the packaged application market.
Bizzed Bundled Services
Bizzed Bundled Services will capitalize on the emergence of the ASP market by offering small
businesses key online financial service applications via best-of-breed providers. Due to its vendoragnostic approach, Bundled Services will provide customers with an objective editorial viewpoint
and therefore act as effective product information filter. The goal: to aggregate those online
financial services that are essential to the efficient management of the SB’s business operations at a
single destination point.
Core products have been identified as Banking, Accounting, Payroll Services, Electronic Bill
Payment & Presentment (EBPP), and Sales & Use Tax Services. Non-core products are: 401(K)
Services, Human Resources, and Person-to-Person (P2P) Payments. The Phase 1 rollout of online
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financial services will include core products. Non-core products will be added to the core offering as
Bizzed identifies appropriate vendors.
3.1 CORE PRODUCTS
Core Products
Non-Core Products
Banking
401K Service
Accounting
Human Resources
Payroll Services
Person-to-Person (P2P) Payments
Electronic Bill Payment & Presentment (EBPP)
Sales & Use Tax Services
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3.1.1 Accounting
Definition
Online Accounting is a user-friendly web interface to a company’s business records being
professionally managed on a remote server.
Market Potential
“The Internet is producing an explosion of new products for the tax and accounting marketplace
that hasn't been seen for years.”
- The Electronic Accountant (www.electronicaccountant.com), March 7, 2000
According to the March issue of Accounting Technology magazine, Web-based accounting and time
and billing packages are beginning to proliferate on the Internet. These products offer high-powered
functionality at a much lower price point than is currently charged for similar PC-based software.
Given that these nascent technologies have only recently appeared on the Internet, it is difficult to
gauge trends in consumer adoption rates. However, 12 out of 23 million small businesses depend
on a PC for their business operations, and approximately 50% utilize accounting software. Whether
small businesses will easily switch from desktop applications to online accounting services has yet to
be determined.
Hummer Winblad’s Ann Winblad states, “Accounting software is an untapped [application leasing]
marketplace. Accounting is mission-critical to all businesses, large and small. [But] smaller businesses
have historically… had to work their way up to the best software only if they grew.” Winblad also
notes, “software-leasing services allow small and mid-size businesses to employ the very best
software—right from the start.”
Value Proposition
"Accounting is quickly moving from the era of quill pen and parchment to computer bits
and bytes on the Web," says Rick Telberg, an industry analyst in New York. And for small
businesses, he says, that's a shift that holds particular promise. "A big business already has
bookkeepers on staff and a big accounting infrastructure. So, for a small business to gain
access to a sophisticated financial-analysis system, that's a phenomenal leap in capability."
The scenario: within a fraction of the time that it takes for paper transfers, a company’s expense
reports are filed and approved online. Though their offices may be in two different countries, the
comptroller and CFO both modify budget information in real-time. Meanwhile, auditors evaluate
the company’s books off-site. Company executives can therefore take their accounting world with
them wherever they go. In addition, the company never purchases the software; it rents the online
service on a pay-as-you-go basis.
The immediate benefit of online accounting, a leased application, is cost savings. Small businesses
spend on average $2000 per month on first-year accounting software, hardware, and related
expenses. Small businesses are able to rent equivalent services from online accounting providers for,
on average, as little as $50 - $70 per month. Some services, such as NetLedger, only charge $4.95 per
month2. Moreover, in-house accounting systems are often replaced on a periodic basis. The
disruption can amount to thousands of dollars in time, equipment, and training.
2
Costs will vary depending on the size of the business and the complexity of its transactions (see Vendor
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Online accounting services now offer mainframe-quality performance, 24/7 availability, security,
and cost-efficient scaling to virtually any number of users, department, or accounts. Many systems
offer an array of accounting functions, including standard general ledger (GL) functions and
statements, real-time analytical reports, and customized financial reports. Because these services are
browser-based, they support data input and review from any location on, basically, any Internetcompatible device. Meanwhile, the security and privacy that had only been achievable on proprietary
systems are possible on well-engineered Internet-based networks. Multiple firewalls, end-to-end data
encryption, and audit logs provide more than adequate safeguards for hosted data against outside
intrusion. Mirrored databases and automatic data back-ups ensure that sensitive company data are
not lost or inadvertently destroyed.
Ultimately, Web-based accounting services allow small businesses to utilize far more sophisticated
products than is currently the case with desk-top solutions. Enterprise software vendors now target
small businesses with Internet-based versions of their high-powered systems. In sum, online
accounting is more powerful, more convenient, easier to use, and less expensive than alternate
solutions.
Strategy
To date, the small business accounting marketplace is a QuickBooks marketplace. There are over
two million QuickBooks users (see Case Study: Intuit). Moreover, Intuit is rapidly expanding its
online offering of integrated financial services – e.g., bill payment, payroll processing, online
banking – available through the QuickBooks desktop interface. In order to establish a beachhead in
this crowded market, Bizzed Bundled Services will first target new small businesses who have yet to
adopt an accounting software package and growing businesses in need of more robust functionality
than is currently offered by QuickBooks and other small business accounting packages (Peachtree,
M.Y.O.B., Champion). Hence, Bizzed.com will select a vendor that can provide the robust
functionality required by growing small businesses and MSBs.
Given that this market is still in its infancy, well-funded vendors capable of expanding the
functionality of their offering remains a crucial factor. Bizzed Bundled Services will also look to
those vendors that have established the appropriate links between their solutions and QuickBooks,
thereby allowing users to import their QuickBooks data into a Web-based application.
Product Analysis
Functionality should, at the very least, mirror the QuickBooks-like performance for general ledger
(GL), accounts receivable (AR), and accounts payable (AP).
Analysis).
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Basic Feature Set
•=
General Ledger
•=
Accounts Receivable
•=
Accounts Payable
•=
Customized financial reports
•=
Multi-user access
•=
Bill and invoice tracking
•=
Inventory tracking and control
•=
Time tracking
•=
Job costing
Future Enhancement
As more and more small businesses are establishing a presence on the Internet, online accounting
vendors are looking to link e-commerce applications into their systems. Integration of e-storefronts
into Web-based accounting applications allows for the real-time recording of sales-related
transactions. As well, many vendors perceive their core offering as a customer acquisition/customer
retention tool. Revenues are generated by value-added services such as bill payment, payroll
processing, and other business management applications. Hence, the prevalent trend towards
establishing financial hubs for a vast array of services will motivate these vendors to seek strategic
partnerships in which the integration of these services is made possible.
Vendor Evaluation by Bizzed
Bizzed Bundled Services has conducted an extensive evaluation of three major online accounting
service providers – Bizfinity, Biztone, and Netledger.
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Vendor Evaluation: Online Accounting Services3
Company
Bizfinity (launched January 2000)
URL
www.bizfinity.com
Products
Bizfinity Personal, Bizfinity Office, Bizfinity Enterprise
Contact Info.
2121 Staunton Court, Palo Alto, CA 94306
Target market
small and medium-sized businesses
Strategy
Initial focus on businesses in the Services, Retail, and Wholesale sectors. The
company seeks to expand its product platform with “modules adding broader
functionality (based on the original Modulus system developed by the Founders),
to help target additional vertical segments, and larger firms with up to 100
employees.” System will scale to accommodate SBs growth.
Features:
Product
Accounting
Desktop
Dashboard
eServices
BIZFINITY
Personal
Customer Invoices
Vendor Checks
Accounts
MyDesk
CPA Dashboard
Bizfinity Office
Accounts
Receivable
Accounts Payable
General Ledger
Sales Orders
Purchase Orders
Inventory
Job Costing
Budgets
Multi-Currency
Assemblies
Business
Calendar
eMail
Market Place
IP Telephony
Prospect
Manager
CFO Dashboard
CEO Dashboard
Sales Dashboard
QuickBooks Import
eServices Center
Storefinity
ePayments
Online Banking
InterShop DirectLink
HR & Benefits
Payroll
Tax
Instant Website
Sales
Automation
Marketing
Automation
Marketing
Dashboard
Warehouse
Dashboard
Bizfinity Personal, plus:
Bizfinity
Enterprise
Bizfinity Office, plus:
(Source: Bizfinity Executive Summary, October 1999)
Enterprise level benefits:
Access anytime, anywhere to business information through a standard Web browser;
3
For more in-depth analysis, see Accounting Services Evaluation and attached spreadsheet. Prepared by
Johnson Sze of Bizzed.
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Automated order processing, directly integrating Web storefronts with the accounting system;
Automatic stock replenishment as the system monitors supply levels, purchase order
generation, and electronic payments;
Self-service access to key data for vendors and customers;
Integrated financial transactions, including payroll, benefits, and bill payment;
Incremental services available as user needs grow, with reduced IT and support costs; and
Real-time collaboration between employees, customers, and partners.
Pricing Model:
Release
(2000) Product Name
Description
Target
Company Size
Price
Per User
Q1
bizfinity Personal
SOHO e-Store,
Payments, Accounting
1-4 employees
(Very Small Business)
Free
Q1
bizfinity Office
Small Business e-Store,
Payments, Accounting
5-19 employees
(Small Business)
5 users Free;
extras $5/mo
Q2
CPA Office
e-Business Office plus
CPA Dashboard
Small CPA firms
(excl. top 25)
Free
Q3
bizfinity
Enterprise
Medium Business eStore, Payments,
Accounting
20-99 employees
(Medium Business)
$50/mo;
extras $50/mo
(Source: Bizfinity Executive Summary, October 1999)
Additional Notes:
Bizfinity is currently offering a limited time trial of its services. Bizfinity Personal is being
offered for 1 year. Bizfinity Office is being offered free for six months.
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Company
Biztone
URL
www.biztone.com
Contact Info.
65 Club Street, Singapore 069439
(US) 111 North Market Street, Suite 1001, San Jose, CA 95113
Target market
Unknown
Strategy
Considers its offering as the first Enterprise Resource Management suite to
be delivered over the Internet. Modular approach.
Features:
Core Financials includes:
General Ledger
Accounts Receivable
Accounts Payable
Procurement
Logistics (includes inventory module)
Sales
Management Planning
Project Costing
Advertising
Manufacturing
Pricing Model:
Unknown.
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Company
Netledger
URL
www.netledger.com
Contact Info.
2955 Campus Drive, Suite 175, San Mateo, CA 94403-2511
Target
market
Small businesses. End of Y2000 target: 5000 small businesses.
Strategy
Primary business model is the value-add. Netledger is striving to build critical
mass. Volume is key. Transactions revolving around value-added services will
constitute primary revenue streams in the long-term. (Originally financed by
Oracle CEO, Larry Ellison.)
Features:
Features
NetLedger Plus
NetLedger Basic
Advertising
No
Yes
Multi-User
b
b
b
Check Writing
Sales Receipts b
Journal Entry, General Ledger
b
b
Billing and Payables
b
b
Invoicing and Receivables
b
b
Aging Reports
b
b
Inventory and Purchase Orders
b
Time and Billing
b
Access for Customers and Employees
b
Reporting
Enhanced
Basic
Import
Import QuickBooks®
and Quicken®
Import QuickBooks®
and Quicken®
b
(Source: Netledger Web site)
Pricing Model:
NetLedgerPlus is free for the first 30 days. $4.95 per user per month thereafter.
NetLedgerBasic is free.
Future Services:
Recently added functionality includes online credit card payments by small business customers
and bill payment. NetLedger is looking to add electronic storefronts, customer relationship
management and online supply procurement to its Web-based accounting application.
Additional Notes:
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NetLedger has recently partnered with OneCore and has integrated its application with
OneCore’s suite of online cash management services. NetLedger has also partnered with ADP
Payroll Services.
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Company
Intacct (launched February, 2000)
URL
www.intacct.com
Contact Info.
19925 Stevens Creek Blvd, Suite 200, Cupertino, CA 95014
Target
market
Small to mid-sized businesses, 5 - 500 employees
Strategy
Intacct is offering a horizontal accounting service and publishing APIs to allow
vendors in other vertical markets to participate by linking their applications to
Intacct accounting programs. The idea is to establish Intacct as a “financial hub”
for an array of Web services aimed at particular types of businesses – e.g., doctors’
offices, law firms, and machine tool companies. (Source: NetworkWorldFusion,
January 31, 2000)
Features:
General Ledger
Custom financial reports
Up-to-date analysis reports
Balance sheet
Income statement
Budget comparison
General Ledger
Trial balance
Statement of cash flows
Statement of retained earnings
Statement of changes in financial position
Unlimited budgets
Compare multiple years
Allows account numbers up to fourteen digits
Unlimited locations
Unlimited departments
Supports sub-accounts
Industry-specific charts of accounts
Historical graphs
Internal and external auditing functions
Multinational currency support
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HTML and PDF reports
Accounts Payable
Setup vendors as Open Item, Contract, or Balance Forward
Choose cash or accrual basis for expense recognition
Hierarchical vendor accounts
Print checks
Pay invoices online
Apply credit memos
Create purchase orders
Email purchase orders for online presentation
Place disputed invoices on hold
Customizable aging reports
Online purchase order tracking
Cash Requirements report
Pricing Model:
First three months free.
Basic services are @$49.95 per month. Includes access for two users and 10mb of transaction
storage. Basic service includes General Ledger, Accounts Payable and Accounts Receivable.
Special services – online bill paying, payroll processing, and invoicing – are billed separately.
Additional 5 users - $19.95 per month. Transaction storage @$20 per 10mb/year.
Additional Notes:
Intacct includes an XML interface that allows integration between Intacct and third-party
services such as payroll, checkwriting, invoicing, credit-card processing, benefits administration
and expense reporting.
Intacct also plans to partner with CPAs enabling them to brand Intacct services so they appear
as private services operated by the CPAs. (Source: Intacct website)
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Company
Eledger (launched in November, 1999 – open beta until April 15, 2000)
URL
www.eledger.com
Contact Info
1204 West Wooster, Bowling Green, OH, 43402
Target market
small businesses
Features: (current release)
General Ledger
Financial Reporting
Accounts Receivable
Accounts Payable
Invoicing
Future Features: (next release)
Inventory Control
Purchasing
Invoicing
Project Costing
Time Tracking
Quotes
eCommerce
Payroll Processing Integration
Tax Service Integration
eCommerce – Integrated On-Line Stores
Point of Sale
Pricing Model:
$19.95 per month for a single account. Includes 2 users and a free CPA account.
$4.95 for each additional user.
Additional Notes:
eLedger’s 15 employees come from Solomon Software.
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3.1.2 Payroll
Definition
Online payroll services: a pure Internet-delivered payroll system accessible from anywhere and
anytime, which includes payroll processing, reporting and tax filing.
Market Potential
Mirroring the dramatic changes seen in the accounting industry, the payroll industry has begun to
adopt the Internet as a significant business channel. The change is, in part, being driven by the
demand for Internet-related services by new entrepreneurs who are breaking away from larger
organizations and forming startups. Accustomed to high-powered business management systems,
these entrepreneurs are seeking similarly robust solutions for their small business operations. In
particular, small technology firms are pushing payroll providers to improve technologies to provide
Internet-based capabilities. Meanwhile, small businesses in the manufacturing and services sectors
still tend to maintain a hands-on approach to payroll.
According to Cyberdialogue, the outlook for the least used online business services – i.e., human
resource management, legal and payroll – is positive due to the increasing interest of newer SBs in
these services. Projected annual growth is relatively high, particularly in light of the current low rates
of use.
As Cyberdialogue states, “there is an unusually large percentage of Intenders this year that expressed
plans to begin using online business services.” (However, the percentages as depicted in the chart
below may be colored by the fact that many of these small businesses use the Internet for
information gathering only, not
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actual use.) In particular, online
payroll services have generated
far-reaching interest among SBs
both “online and intending to
go online.” Security continues
to pose a barrier to adoption.
Value Proposition
Traditional payroll processing
tends to be a labor-intensive and
time-consuming task that can
often lead to costly mistakes. A
small business with 20
employees spends an estimated
8-10 hours per month on payroll
processing. Due to the increased
complexities in the
administration of 401(K)s,
deferred compensation, and
pretax benefits, payroll has
grown even more complicated.
In addition, regulatory issues are
constantly changing. According
to the IRS, one-third of small
businesses are penalized for not
complying with tax regulations.
(Source: Cyberdialogue, “U.S. Small Business Internet Survey
Management Report 1999”)
Relying on outsourcing payroll to a traditional payroll service can be rigid and costly. Small
businesses must deliver the data to these bureaus during specified time windows and in standardized
form. Charges are based on the complexity of the payroll. Some disadvantages: small businesses lose
control over scheduling, turnaround time, and the ability to make last minute changes. What most
payroll services offer are: compliance with regulatory and tax requirements; easy adjustments to
payroll with the addition of benefits such as profit-sharing plans and workers’ compensation; and
specialists that can provide advice and guidance. However, small businesses must ensure that the
data provided to the service is accurate.
Internet-based payroll services provide small businesses with the control and flexibility of in-house
processing with the time savings, convenience, and regulatory know-how of traditional service
bureaus. Because the process is automated, same-day processing and reporting are possible. This
functionality increases the small business owner’s capabilities regarding cash flow management.
Moreover, many Internet-based payroll services provide online access for employees, thereby
allowing employees to not only view payroll data but to make selections and changes in benefits
packages. The sheer reduction in paperwork amounts to substantial cost savings.
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Strategy
Bizzed Bundled Services will identify a leading online payroll services vendor capable of providing
the essential functionality associated with payroll processing. Three considerations, ranging from
most important to less so, dictate the selection of a vendor:
1)
The ability to integrate the payroll processing application into Bizzed Bundled Services
online accounting solution;
2)
The potential for Bizzed Bundled Services to not only brand the payroll processing
solution, but also control and customize the user interface (template-based); and,
3)
The vendor’s ability to provide additional functionality that revolves around online human
resources and employee benefits management.
Product Analysis
Feature Set
Process payroll – (same day processing and reporting)
Produce checks and reports
Handle tax deposits and filings
Prepare W-2s and 1099s
Full service Direct Deposit (optional)
Submit payroll information to provider via the Internet
Capability to review and revise payroll information online
Access from multiple computers in various locations
Service employee payroll inquiries
Future Enhancement
Many online payroll-processing vendors have either expanded their offerings to include human
resources applications, 401(K) and other benefits, or intend to do so. Given that Bizzed Bundled
Services is also seeking to deploy value-added financial and business services, a single vendor who
offers a greater array of applications may be relevant when considering technical hurdles – i.e.,
integration with the online accounting suite.
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Vendor Evaluation: Online Payroll Services
Company
PayMaxx (launched in 1998)
Product
POWERPayroll
URL
www.powerpayroll.com , www.paymaxx.com
Contact Info
302 South Royal Oaks Blvd., Franklin, TN 370264
1-877-PayMaxx
Target market
Small businesses with fewer than 100 employees
Strategy
Seeks partnerships in order to service the small business market. Current
partnerships include Biztro, Inc.com, Snap.com, and First Mercantile Trust.
Partnerships can either be a link to POWERPayroll or a co-branded site in which
the word payroll is added to the partner’s name – www.payroll.brightlane.com
(PayMaxx & Brightlane.com). Internet partners receive an ongoing revenue share.
Sample screenshot of co-branded POWERPayroll & Brightlane.com: http://payroll.brightlane.com
Features:
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Y2K Compliant
On-Line Help
Data Validation
Multiple Earnings and Deduction Codes
Multi Department and Multi Work sites
Manual Check Calculator
PayView Details
Direct Deposit
Cafeteria and 125 Deductions
E-mail Confirmation
Simultaneous Multiple Pay Period Processing
Garnishments - Time and Dollar Sensitive
Pre-transmission Edit Reports
Standard Reports
24 Hour TurnAround
Tax Filing and Compliance
Electronic New Hire Reporting
Year-End W2 Processing
Pricing Model:
Flat fee: $30 per month plus $1 per employee. Direct deposit is an additional $3 per month.
(Current promotional offer: first three months free.)
Additional Notes:
“Founded in 1991, PayMaxx offers state-of-the-art products and services to meet a variety of
employer needs including Windows and Internet-based Y2K compliant payroll processing,
nationwide tax filing, 401(k) Administration, Abra HR Management Systems, and 401(k) and
General Ledger interfaces.
PayMaxx processes payroll for employers in all 50 states, for companies with 1 - 20,000
employees.” (Source: PayMaxx Web site)
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Company
Ceridian Employer Services
Product
Powerpay (launched March 1999)
URL
www.powerpay.com
Contact Info
1-800-WE PAY YOU
Target market
Small businesses
Strategy
Ceridian, the parent company, has been in the payroll management
business for over 65 years. Powerpay is its Internet initiative.
Features:
Prepared Payroll Checks
Current Register
Check Register
Company Totals
Monthly Posting Summaries
Year-to-Date Totals and Reports
Federal, State and Local Tax Filing
New Hires and Change Report
Worksheet for Next Payroll
Tax Filing Services are provided for an additional charge:
Collection of Payroll Tax Liability
Timely Deposit of Federal, State and local Payroll Tax
Timely Filing of All Quarterly and Annual Returns
Filing of Amended Returns As Needed
Reconciliation reports of Collection and Disbursement of Tax Funds
Response to Tax Agency Inquiries
Documentation of All Work Performed to Support Audit Requirements
Ensuring Compliance as Tax Forms and Regulations Change
(Source: Powerpay Web site)
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Additional Services:
Direct deposit, Special Management Reports, New Hire Reporting. All services are fee-based.
Pricing Model:
Varies according to number of employees, company location, and frequency of pay periods.
Average price is $27 for 10 employees, $63 for 25 employees.
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Company
Paychex
Product
Paylink
URL
www.paychex.com
Contact Info
911 Panorama Trail S., Rochester, NY 14625
(800) 322-7292
Target market
Small businesses with 1 – 200 employees.
Strategy
Founded in 1971, Paychex has over 100 locations and has been servicing
the small business community since its inception. The online version is an
extension of the parent. A leading U.S. payroll processor for small
business, Paychex was included in the Forbes Global’s “A-List.”
Features:
Payrolls ready for signature and distribution.
Employee earnings statements complete with current pay period and year-to-date wages, taxes,
and adjustments.
Payroll journals that detail current payroll information.
Department summaries of month-to-date payroll data.
Report of cash needed to cover payroll expenses and tax liabilities.
Timely and accurate notifications of tax liabilities and deposits.
Payroll worksheets to record your next payroll.
New Hire Reporting.
(Source: Paychex Web site)
Additional Fee-based Features:
Taxpay, Direct Deposit, Internet Reporting, Check Signing.
Pricing Model:
$35 per period (average) for a 10-person company.
Additional Notes:
Also known for its human resources and benefits outsourcing solutions for small to mediumsized businesses
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Company
Employeeservice.com (launched in late 1998)
Product
Employeeservice
URL
www.employeeservice.com
Contact Info
357 Tehama Street, Floor 3, San Francisco, CA 94103
1-800-604-9473
Target market
Businesses between 5 to 5000 employees
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Strategy
Clients
Petopia, iSyndicate, Stamps.com
Funding
EmployeeService.com is funded by eCompanies.com, First Analysis
Venture Capital and Mindful Partners. Third round funding: $11.4
million.
Key Payroll Service Features:
Check preparation, direct deposit and delivery
Checks and Direct Deposit Authorizations (DDAs) sent in hard copy and to each employee’s
Web site
W-2 reconciliation and submission (nationwide)
Year-end statements
Filing of 940s, 941s and state and local tax returns — all 50 states
Payment of FICA, FUTA, SUTA
Calculation of payroll deductions
Client time sheet reporting, vacation and sick leave tracking
Employee 401(k) loan management
Pricing Model:
Charges a flat monthly fee of approximately $100 per employee.
“EmployeeService charges a flat fee per employee, which could reach about $60,000 per year for
a staff of 50.” (Source: San Francisco Business Times, December 13, 1999) The price reflects the
combination of HR, benefits and payroll services.
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EmployeeService Private Label Program:
EmployeeService.com works with you to develop a Private Label web site that promotes your
company identity and your Private Label offerings.
EmployeeService.com hosts and maintains your Private Label web site, giving you the
freedom to focus on what you do best - servicing your customers.
EmployeeService.com manages every phase of the Private Label sales cycle, from initial click
through and RFP submission, to customer contact and contract signing.
EmployeeService.com supports all your Private Label customers with a bank of dedicated
Private Label phone lines - strengthening your brand and increasing your customer's loyalty.
You receive a generous commission every time your Private Label web site creates a new client
for EmployeeService.com. What's more, you continue to receive a commission every month
for each customer your site creates, both old and new!
You have the satisfaction of broadening your product/service offering while building stronger
customer relations and loyalty.
(Source: EmployeeService Web site)
Additional Notes:
‘Wall Street analysts agree that EmployeeService.com is the emerging pacesetter in “e-employee
services” for companies up to 5,000 employees. BankAmerica Securities Managing Director and eServices Analyst David Scharf says, “We believe Web employee service and benefits administration
represent compelling investment opportunities. EmployeeService.com has established itself as the
early leader in the ‘e-employee services’ space by bringing full HR, benefits and payroll service to a
large and fast-growing group of sub-5000 employee companies nationwide.” EmployeeService.com’s
clients include over 120 top public and private Internet and non-Internet companies, including
Stamps.com, Media Arts Group, ImproveNet.com, RedEnvelope.com, iSyndicate.com,
Embark.com.’ (Source: InternetWire, February 8, 2000)
After discussions with the company, it is evident that EmployeeService is providing a solution that is
difficult to sell over the Web due to its high price. The solution is best suited for rapid growth,
recently funded dot-coms who are looking to concentrate entirely on core business activities.
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Arc Recommendation:
The most promising alternative to ADP as the preferred online payroll services partner is PayMaxx.
The recommendation of a strategic alliance with PayMaxx is based upon the following points:
•=
Founded in 1991
•=
Named to the Inc. 500 List
•=
Named MVP finalist by PC Computing Magazine
•=
Willingness to co-brand payroll services with partners – provides a “powered by” only logo
which is unobtrusive. Allows partner to control “look and feel” of payroll service. (See
screenshot on p. 27)
•=
Actively looking to expand its reach through strategic Internet-based partners
•=
Also provides online 401(K) services and administration
•=
Rated favorably by PC Computing: see chart below
•=
Revenue share by Internet partners: TBD
Service
Pros
Cons
Verdict
ADP Emerging Business Svcs.
(800) 340-6590
$50 per pay period for a 10-person
company
Sign up online with
Solution Profiler, which
serves up payroll price
quotes and suggests extras.
More expensive than the
competition.
Five Stars.
The most well-rounded of
these services—and it offers
more than just payroll.
QuickBooks Online Payroll Service
(800) 332-4844
$20 a month plus $1 per employee
per pay period
Add one step to your usual
QuickBooks payroll process
and the service takes care of
the rest, including taxes.
Not as appealing to nonQuickBooks users or
companies larger than 50
employees.
Four Stars.
If you use QuickBooks for
your accounting, let it do
your payroll too.
PayMaxx PowerPayroll
(877) 729-6299
$40 per pay period for a 10-person
company
Take care of payroll from
anywhere. All you need is a
Web connection. Also
offers benefits
management.
Doesn't make sense for
companies larger than a few
hundred employees.
Four Stars.
Enter details online and get
checks delivered the next
day.
Paychex
(800) 322-7292
$35 per pay period, nationwide
average, for a 10-person company
Start with its competitively
priced payroll service and
add benefits and HR
services as you need them.
Doesn't yet offer full
Internet integration.
Three Stars.
Wait for the full range of
Paychex services to be
available via the Web.
(Source: PC Computing, December 1999)
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3.1.3 Electronic Bill Payment and Presentment (EBPP)
Definition
Electronic bill payment and presentment consists of two different components, as shown below:
Bill Payment
Customers pay bills electronically. This means accessing an electronic
checkbook and specifying a payee or authorizing a credit card payment.
Bill
Presentment
Bills are delivered electronically to the customer. Consumers and SOHOs may
receive bills via email or view individual or consolidated bills at a Web site.
Market Potential
About 2% of consumers use electronic bill payment through banks or PFM software. Industry
revenues total around $200 million. Many industry analysts believe that electronic bill payment
hasn’t been fully embraced because the industry hasn’t provided a “round-trip” solution – i.e., the
ability to not only pay bills electronically
but also receive and view them. In
addition, due to the lack of compatible
standards4 and the fragmentation seen in
the EBPP marketplace, the industry has
been unable to provide an easy-to-use and
efficient solution for either billers or
consumers. The result: a catch-22
situation in which billers have been
waiting for a critical mass of consumers
to utilize e-billing while consumers have
been waiting for a critical mass of billers
to present bills online. The result: a
standoff that has, to a great extent,
immobilized the industry. As stated in a recent report by the Internet Research Group (IRG), “It’s
no exaggeration to refer to IBPP* as a battleground, with vendors, banks, and service providers all
battling for market share that doesn’t yet exist.”
Meanwhile, the fragmentation of EBPP models (see Product Analysis) on the Internet has taken a
toll on billers and consumers – both have faced different sets of procedures, benefits, and cost
structures due to differing business models. The two keys to IBPP dominance are collecting
customers and giving them a secure and robust system. Bill payment alliances such as
Yahoo!/CheckFree and Intuit/CheckFree allow users to conduct secure bill payment, allowing bank
transactions without the bank. Bill presentment is still missing from the solution. The industry,
however, is in the midst of quick consolidation and defining standards. (CheckFree now controls 80
to 90% of the distribution market.) According to Killen & Associates, the “e-billing industry [is]
projected to experience major growth in annual revenues from roughly $4 billion in the year 2000
to $19 billion in 2005.”
4
Until the recent merger between the dual industry giants, CheckFree and Transpoint, both firms were vying
for market share with two incompatible standards
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Four dominant trends in EBPP are beginning to emerge:
•=
Critical mass will be the primary critical success factor for EBPP solutions providers.
•=
Banks are no longer the laggards; they are aggressively implementing EBPP solutions.
•=
True standards have yet to fully manifest in the market-space; moreover, industry standards
will be determined by market share rather than degree of openness.
•=
Since billers are willing to pay freight, they will begin to implement electronic bill
presentment due to sheer cost savings. Hence, companies that are now charging fees for
bill presentment face steep competition in the future. The day will come when billers will
drop the price point to zero. (Source: Internet Research Group, December 1999)
In a recent Forbes article
(February 2, 2000), small
businesses (and consumers)
are willing to convert to
electronic bill payment when
3 to 4 bills can be paid
online. Relatively few small
businesses, however, have
been utilizing EBPP to either
reach their customers or to
view and pay their own bills.
On the one hand, similar to
consumers, small businesses
are not burdened by
extensive accounts-payable
departments and are more
easily converted to an online solution. On the other hand, because small businesses usually require
several employees to “generate, approve, and pay invoices,” this target market has been largely
excluded from “online payment schemes.” Service providers are expected to begin targeting small
businesses to pay their bills online. As for those companies (large and small) that implement ebilling, 40% currently outsource the function. According to the Gartner Group, this number will
rise as the “use of low-cost and fast-to-implement outsourcing will grow significantly in the next
year.”
Value Proposition
The immediate economic benefit of EBPP revolves around the cost savings incurred from the
automation of the traditional billing process. The cost of issuing a paper-based bill – printing the
statement, stuffing the envelope, and postage – can range anywhere from $.50 to $1.50. In EBPP,
email alerts replace “snail mail.” Instead of printed statements, the customer views a Web page.
Paper payments and business reply mail are replaced by electronic credit card payments or direct
bank drafts. The result: the cost of a single bill can be reduced by 75%. Without having to rely on
traditional postal service, billers can also take advantage of faster payment cycles.
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Additional savings are incurred by the use of email versus help desk phone calls to address routine
customer inquiries. Customer service staff is also freed to focus on more strategic and complex
billing issues. As well, EBPP provides small business customers with the ability to:
•=
Access e-bills on demand – 24/7 basis
•=
View billing details and payment history
•=
Change payment options, schedule date of payments and recurring payments
•=
Eliminates postage fees
•=
Submit billing disputes via email
EBPP therefore allows the biller to provide better customer service, thereby cementing customer
relationships. To the small business, customer loyalty is of utmost importance.
The driving force, however, for change in the EBPP industry stems from the billers’ realization that
e-billing provides an interactive launch pad for e-commerce as well as a back office necessity and
vehicle for customer relationship management. In addition to the potential for tremendous cost
savings, companies may capitalize on EBPP as new source of revenue: EBPP facilitates the gathering
of market intelligence about customers in real-time; armed with customer profiles in hand, billers
can implement targeted marketing campaigns and extend their e-commerce offerings.
INTERNET BILL PAYMENT & PRESENTMENT: OPPORTUNITIES AND CHALLENGES
Internet Bill Payment & Presentment: Opportunities and Challenges
Factor
Bill Presentment
Bill Payment
Income Statement position
Profit Center
Cost Center
Customer service task
Simpler
Difficult
Degree of integration required
High
Medium
Ability to build consumer market share
High
Low
Ability to build business market share
Medium
Low
Overall publicity value
High
Medium-low
Cross selling value
High
Low
Customer stickiness
High
Medium-high
Web site complexity
High
Low
Fraud risk
Low
Medium
Can be done in-house
Yes
No
(Source: IRG)
Product Analysis
The “click to pay” capability is the most compelling consumer value proposition of EBPP, however
there is no real working model of a multi-biller, end-to-end payment and presentment in operation
at this time. Because the Bizzed Bundled Services EBPP strategy may revolve around two different
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solutions (B2C and B2B), it is necessary to pinpoint the models that are currently operating on the
Internet prior to putting forth a relevant strategy. To date, there are five models, as depicted below:
Model Type
Description
Players/Vendors
1
Biller-Direct
Each biller provides e-bills directly to the
customer. Generally involves custom
software EBPP (reserved by large
businesses) or proprietary e-billing system
that is linked to a 3rd party processor.
Amex, AT&T,
Florida Power Light
2
Biller-Direct Service
Bureau
Biller turns e-billing over to a 3rd party
that manages presentation and payment
process while appearing as an extension
of the biller’s own operation.
Derivion (VSBs, SBs
& MBs), Billserv
(MBs)
3
Customer
Consolidator
An integrated EBPP service that allows a
consumer to view and pay the scanned
image of any paper bill. (Sometimes
dubbed ‘optical scanning services’ by
industry pundits.) Process not fully
automated. Customer forwards paper
bills to consolidator.
Cyberbills,
PayMyBills, PayTrust
4
Biller Consolidator
– thick client
Electronic payment processor takes on
the lock box function of holding and
moving cash during the transaction and
performs an aggregation function by
presenting multiple billers’ statements at
a single, consolidating Web site. Bill
begins and ends in digital format.
Transpoint
OFX/BIS model,
PECO, GTE, MCI,
Mobil
5
Biller Consolidator
– thin client
(Same as thick) Multiple bills are
provided to consumers at one location in
summary form only – the consumer goes to
a particular biller’s Web site for more
detailed information. Bill begins and
ends in digital format.
Based solely on the
OFX standard –
CheckFree.
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Model 1: Biller Direct
Biller retains tight control over the billing system – e.g., adjust pricing or terms, add new services,
and launch a targeted marketing campaign. An IT staff is needed to maintain the billing system.
Downside: high cost, technology risk, manpower and infrastructure requirements. Upside: direct
control, one-to-one relationship with the customer, e-commerce vehicle. It is a prohibitive solution
for small businesses with little to no IT staff that must conserve cash and manage technology risk. As
well, consumers have to visit multiple sites to get their bills paid.
Model 2: “Direct Biller” Service Bureau
Biller enjoys the advantages of custom software at a fraction of the cost of the Biller Direct model.
Because the biller leverages the service bureau’s platform, infrastructure and IT expertise, this model
is, in essence, an ASP. While the service bureau model is not new in terms of outsourced billing, the
automation of the process is now an emerging trend in the industry. Billers can also add new
services to a branded Web page that is transparently hosted and maintained by the service bureau.
For small businesses, this solution is the most appropriate.
Model 3 – 5: Third Party Consolidator Model
Billers lose the control and autonomy of a proprietary e-billing system, but gain e-billing capabilities
at lower cost, technology risk, and investment in infrastructure and IT staffing. Since the customer
visits the consolidator’s site, the consolidator owns the customer relationship. Billers are unable to
capitalize on opportunities for e-commerce and new services. As well, they also forego the
opportunity to extend brand. The chief advantage of this model: billers are able to focus on core
business activities.
Strategy
There are two possible EBPP solutions that Bizzed Bundled Services can offer its small business
customers (see diagram below). First, Bundled Services can enable small businesses to automate their
billing processes, thereby allowing the SBs’ customers to view and pay bills – a B2C solution.
Second, Bundled Services can provide the SB with the capability to view and pay its own bills – e.g.,
bills from various suppliers, utilities, telecommunications companies, to name a few – which
engenders a B2B solution. At present, Bundled Services has deemed the B2C solution a priority,
and is identifying vendors best equipped to provide this service to its small business users.
Because many SB customers may also be small businesses, Bizzed Bundled Services will seek to cobrand the EBPP-enabled Web sites of its small business customers. In doing so, Bundled Services
further extends its reach and adheres to one of its primary objectives – i.e., building towards critical
mass. Therefore, the EBPP-enabled Web site hosted by the selected vendor will still be framed
within Bizzed proper. Bundled Services will benefit from network effects as the customers of its
small business customers are also exposed to the Bizzed brand and myriad services.
Note: Issues revolving around the B2B solution will overlap with Bundled Services online banking
solution. Since many online banking solutions provide the user with electronic bill payment, the
question remains: will there be confusion on the part of small business owners if they are presented
with two similar solutions? That is, bill payment can be conducted through the online banking
service and also from a third party consumer consolidator. Further investigation of these potential
conflicts in the implementation of this solution is recommended.
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BIZZED BUNDLED SERVICE: TWO EBPP MODELS
Service Bureau EBPP solution
(variation of thick client
consolidator model) - provides
JonesCo. with web site in which
Jones Co.'s customers can view
and pay bills via the Internet.
(Derivion)
Jones Co
customer 1
Jones Co
customer 2
Jones Co
customer 3
Solution A
bizzed.com
Small Businesses view and pay
thier own bills electronically.
(Powere by PayTrust,
PayMyBills.com, Cyberbills)
Bundled Services
Payment Extranet
Jones Co. extranet
site co-branded with
bizzed
(Consumer Consolidator
Model)
Provider
A
Provider
B
Derivion
Smith
Co
(Service
Bureau)
Coles
Co
Jones
Co
Solution B
Jones Co. submits billing data to
Service Bureau. Service Bureau
codes the data into a web page
Features
Solution A (B2C):
Enable customers to FTP billing files (ex. QuickBooks files) to service provider
Third party-maintained database of customer billing data
Customer billing data provided on HTML-coded Web site that is branded by the biller
Bill design and layout also controlled by biller
Customers can access, view, and pay bills on Web site (on demand, 24/7)
Customers can change payment options and schedule payments
Email contact on Web site for customer inquiries and billing disputes
Phone help desks to supplement email–based customer support
Email alerts – bill arrival, late payments, etc.
Paper-based bills can also be mailed to customers (optional)
Solution B (B2B):
Customers can receive and pay 100% of their bills online
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Customer can pay anyone online – paper checks sent to those billers who are not
electronically enabled to receive payments
Select payment options, schedule payments, set up recurring payments
Email alerts of bill arrival, late payment, and bill paid
Access complete history of bill payment information
Access details of bills (or if summary, then linked to biller’s Web site)
Integration with online banking service to enable payment through bank drafts
Creation of virtual checks that supply information necessary for tax purposes (optional)
Download information into appropriate financial management software (optional)
Future Enhancement
Consumer consolidator Paytrust is currently offering users the ability to view and pay bills via a Palm
VII. This capability requires a small wireless clipping application that can be downloaded from the
site and connection to its “Palmnet” service5. The ability to change or stop payment, however, can
only be done through the user’s account on the Paytrust Web site at this time. As well, the wireless
version of the bill payment service is unable to show real-time updates. Updates to account balances
must be done through the Web site.
The ability of small businesses to pay bills while “on the road” can be of real benefit in avoiding late
fees as well as facilitating more effective cash management.
Vendor Analysis
Despite the diverse vendors in the EBPP market (see vendor chart below), there is only one vendor,
Derivion, that is capable of providing Solution A to Bizzed Bundled Services small business
customers. Meanwhile, consumer consolidators (Solution B) willing to accommodate SBs are
Cyberbills and Paytrust. To date, few consumer consolidators are willing to service SBs due to
greater number of bills as well as the added complexities involved in managing these bills.
5
additional fee involved
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Company
Derivion (ASP/consolidator – SOLUTION A)
Product
Billsafe (formerly Billbox)
URL
www.derivion.com
Contact Info
950 East Paces Ferry Road, NE, Suite 1750, Atlanta GA 30326
(404) 760-1400
Target market
VSBs with 10 to 1000 bills per month (Billsafe only)
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Strategy
Funding
Features:
Proprietary software enables the parsing of SB customer billing data into Derivion-maintained
database
SB’s can FTP billing data (ex. QuickBooks files) to Derivion for parsing
SBs design bills and are able to brand Web site for bill presentment
Customers able to pay bills on SB Web site transparently hosted by Derivion via ACH or credit
card
Paper-billing also provided with service
SBs can utilize the EBPP Web site to capitalize on cross-selling opportunities – i.e. the ability to
add new services
Email submission available for customer billing inquiries
Pricing Model:
$.60 per invoice. No startup fees. (Product still in beta.)
Additional Notes:
Derivion is extending its reach into international markets. In addition to its established
Canadian office, Derivion is planning a UK launch by Q3 2000. Also on its agenda for
expansion is the Pacific Rim.
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Company
Cyberbills (consumer consolidator – SOLUTION B)
URL
www.cyberbills.com
Contact Info
2520 Mission College Blvd., Suite 102, Santa Clara, CA 95054
(408) 844-0340
Target market
Small businesses and consumers.
Strategy
Founded in 1998. Like most venture-backed companies in Silicon Valley,
Cyberbills is trying to build critical mass in Internet time. Prices are kept low.
Losses are being endured in the hopes of a massive valuation. CyberBills is
funded by Vertex Management Inc., Dotcom Ventures L.P., Kiwi Management
Company Ltd., TDF Management Pte. Ltd, Greenfield Technology Ventures and
Online Ventures. Also operates a consumer-only portal, www.statusfactory.com.
Private Labeling/Co-branding: Cyberbills offers a private label partnership in
which billers can integrate the Cyberbills solution into their Web site. Hence,
businesses can maintain control over branding. There is a fee to integrate and
customize the EBPP service. Co-branding is also possible. Cyberbills is targeting
banks and service providers to distribute its products. They will sell the EBPP
service at a discount and allow their partners to set their own retail prices or
bundle it with other products and services.
Features:
Startup kit – includes change of address stickers sent to billers. Billers then send bills directly to
Cyberbills.
Bills are scanned and shredded. Made available for viewing over the Web (PDF format)
User notified of bill via email (optional).
User establishes automatic rules for payment.
Payment is made by ACH deduction and paper check is issued and sent to biller.
Emergency overnight payments (optional)
Archive retrieval (optional)
Hard copy storage – files kept for four years (optional)
CyberAlerts – payment due, payment received, expected bill hasn’t been received
Pricing Model:
Option
Payees Price
Value-Added Feature
Business
ten
CyberAlerts, four archive retrievals per year, additional payees
$0.75/mo each.
$14.95
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Company
PayTrust (consumer consolidator – SOLUTION B)
Product
Paytrust Small Business Edition
URL
www.paytrust.com
Contact Info
29 Emmons Drive, Building B, Princeton, NJ 08540
(609) 720-1818
Target market
Small businesses and consumers.
Strategy
In the race for market share by consumer consolidators, Paytrust is focused on
building critical mass via a variety of rapid-growth tactics. The end goal: the IPO.
Paytrust has partnered with major corporations (Dell) and prominent Web
players (NextCard – the leading issuer of credit cards on the Internet). As well,
Paytrust is willing to co-brand its EBPP service in order to extend its reach. (See
screenshot below: OnMoney.com’s Bill Center – powered by Paytrust.)
Paytrust has also differentiated its core EBPP services by offering: 1)
SmartBalanceTM - a feature that allows users to access and combine their online
bank account information with Paytrust payment data; and, 2) a wireless
application that allows users to download billing information into their Palm
VIIs.
Funding
Founded in October 1998, the company is financially backed by American
Express, AT&T Ventures, GE Equity, Goldman Sachs, SOFTBANK Venture
Capital, Spectrum Equity Investors, and Thomas Weisel Partners.
Features:
Bill processing and payment – bill storage for 3 months
Contacts biller directly to send them billing information (paper-based or electronic)
Access to the Paytrust Web site to view and pay bills
Email alerts – bill payment due, expected bill has yet to arrive
Organizes and tracks bill payment history
User specifies payment options, automatic payments, recurring payments
Users able to access online banking information6
Customized Features:
Integration with QuickBooks
Dedicated account manager
Customized checks to billers which includes information for tax purposes
6
Must be a Paytrust enabled bank to provide connectivity for the user
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Co-branded OnMoney.com/Paytrust Billing Center (March 2000)
Pricing Model:
For small businesses, there is a $19.95 subscription fee plus $.75 per transaction.
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Arc Recommendation:
The only vendor that can meet the requirements for Solution A is Derivion. For Solution B, the
recommended vendor is Paytrust. While Solution B is less of a priority than Solution A, Arc deems
the B2B component of the EBPP solution not only viable, but a potentially powerful service that can
enhance site stickiness and, at the same time, generate incremental revenues. Speed to market is of
the essence. Before banks and other financial institutions provide this service, it is necessary to
capture the loyalty of the small business community at the outset due to the tremendous switching
costs involved in changing bill payment providers. It is therefore recommended that Bundled
Services does not limit its EBPP solution to the B2C component – i.e., Solution A.
The key differentiator of the Paytrust offering is its wireless service. Enabling the small business
owner to view and pay bills either online or through the Palm is a compelling value proposition. As
well, Paytrust is willing to co-brand its service with other players, thereby allowing Bundled Services
to maintain its vision of providing the user with a seamless online experience.
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3.1.4 Sales and Use Tax
Definition
Web-based business tax filing service. Up-to-date state and federal tax forms are supplied online,
enabling small business owners to file and submit their taxes through the Internet.
Market Potential
While online consumer tax filing services proliferate, Web-based business tax filing is a nascent
industry. To date, industry analysis of the market-space is negligible. Only one vendor – Nation Tax
Online (NTO) – provides an online business tax filing service. U.S. businesses, however, file over
500 million business tax returns per year. For a breakdown of returns, see chart below:
U.S. Market: Overview
Type of Return
Number of Returns
State Sales & Use Tax Returns
45,000,000
State Unemployment Insurance
5,000,000
State Qtly Wage & Tax Reports
20,000,000
State Wage & Tax Payments
80,000,000
Employer Qtly 941 (FICA, M-care)
23,000,000
Employers – 941 series payments
90,000,000
Employers FUTA – 940 series Returns
5,000,000
Annual Federal W-2 Returns
6,000,000
Misc. State/Local Returns
226,000,000
Sub-Total
500,000,000
(Source: Nation Tax Online Presentation)
Value Proposition
Paper-based business tax filing is time-consuming and error-prone7. Businesses are required to stay
up-to-date with jurisdictional rates and ongoing changes in regulatory requirements at the local,
state, and federal levels. Meanwhile, businesses spend, on average, $25 to file a single paper-based
sales tax return.
A Web-based service enables businesses to streamline tax filing by eliminating inefficiencies and
significantly reducing filing errors and paperwork through automatic tax calculation and secure
electronic transmission. Tax information, tax payments, and transaction filing fees occur
simultaneously and online. As well, filings are archived and can be referenced easily. The benefits: a
substantial savings in time, labor and expenses.
7
estimated 30% error rate
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Strategy
Bizzed Bundled Services will seek to partner with Nation Tax Online, thereby affording its small
business customers the ability to file business taxes via the Internet.
Product Analysis
Due to the single vendor that dominates this market-space, the relevant feature set of online
business tax filing services will be covered in the vendor analysis.
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Company
Nation Tax Online (NTO)
Vendor
Sales & Use Tax Online
URL
www.nto.com
Contact Info
2901 2nd Ave. S, Suite 270, Birmingham, AL 35233
(877) 786-3453
Target market
All businesses.
Strategy
Founded in 1980, Nation Tax Online is positioning itself as the dominant player
in the business-to-government (B2G) sector. Because regulations vary from state to
state and locale to locale, NTO has a clear first-to-market advantage. There are no
other players with a comparable offering on the Internet.
NTO has established relationships with 40+ states, the Federal Government (IRS
& SSA), the Federation of Tax Administrators, and the Multistate Tax
Commission (MTC). NTO is currently developing a joint online business
registration service with MTC.
Features:
Single easy registration process
Automatic calculation and processing of the filing and payment of the business tax form
Instant notification of tax liability
Updates state jurisdictional tax rates
Returns are archived and available for future online retrieval
ACH or credit card payment options
Option to file early, warehouse transaction, and maximize interest
Transactions protected by 128-bit Secure Socket Layer (SSL) encryption
Email reminders of tax filing due dates
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Co-branding: Nation Tax Online actively seeks co-branding partnerships as exemplified in recent
partnerships with Peachtree Online Services, BizProLink, and InRetail.com. Revenue share by NTO
partners is 10% of each sale/transaction. See sample screenshot below:
Co-branded InRetail.com & (powered by) Nation Tax Online Site
Pricing Model:
Average $3.95 per transaction8
Additional Notes:
The service is not operable in 17 states as of yet. NTO projects that businesses will be able to
file taxes in all 50 states by the end of year 2000.
8
filing fees vary
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3.1.5 Online Banking
Definition
Online banking transforms the personal computer into a bank teller. Electronic cash management is
made available through the Internet, thereby enabling users to conduct essential tasks such as
account-balance inquiries, wire transfers, ACH transactions, and bill payment in a Web-based
environment. Since the online product should provide the same functions as a large bank
commercial product, users enjoy many of the benefits of using an ATM – except for cash deposit
and withdrawal.
To date, small businesses use one of three methods to access online banking services:
•=
The Web: This involves using a standard Web browser (such as Netscape Navigator or
Internet Explorer) to access account information via the bank's Web site.
•=
Finance Software (Client-Server Applications): These programs (ex. QuickBooks) enable
small businesses to track and manage financial information, and are also capable of
exchanging data with the online banking service in real-time.
•=
Bank-Branded /Proprietary Bank Software: These programs are provided by the user’s
bank and operate on the desktop. Users connect to their banks through a private data
network. Depending on the banking provider, features can vary from basic tasks such as
account-balance reviews to more sophisticated uses – e.g., investment tracking.
Market Potential & Trends
According to a recent Killen & Associates (www.killen.com) study, "Global Cash Management
Services for the Business Market: Strategic Positioning for the New Decade,” the worldwide market
for Internet cash management services in the small-to-midsize business segment amounts to an
estimated $80 billion. In “U.S. Small Business Internet Survey” (1999), Cyberdialogue cited that
online banking will be a “fast growth sector” of the small business market-space. Small businesses
using online banking services grew by 50% in the past 12 months. While nearly 400,000 small
businesses bank online, another 400,000 small businesses actively seek banking information online.
In comparison to small businesses new to the Internet, small businesses with 3 or more years of
online experience are twice as likely to use Web-based banking services.
To date, the prevalent trends seen among small businesses using online banking are:
•=
Small businesses tend to go online to check account balances and transfer funds;
•=
Inter-bank transfers, wire transfers, and bill payments are not as widely used; and,
•=
Only one in ten business banking customers use international banking services.
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Moving forward, small businesses
that intend to use online banking
exhibit interest in the following
features:
•=
integration of financial
information with inhouse accounting
applications;
•=
assistance in enabling ecommerce transactions;
access to financial
expertise and advice;
and,
•=
guidance concerning
international
transactions.
While small businesses appear to be less concerned over security issues, lack of need and the
persistent notion that online banking is complex and time-intensive constitute barriers to adoption.
In order to migrate
small businesses to
an online banking
solution, financial
services providers
must not only better
educate SBs but also
develop user-friendly
interfaces in order to
overcome hurdles to
adoption.
Booz, Allen &
Hamilton Inc., an
international
management and
technology
consulting firm,
reported that 20% of the 285 North American banks that it surveyed already operate Web sites and
that 69% will offer a range of online banking services (including account-balance inquiries and online bill payment) within the next three years. From the standpoint of major financial institutions,
the challenges in serving the small business market-space primarily revolve around customer service,
sufficient bandwidth, and the ability to sell bundled profile-specific solutions to their customers.
Financial institutions must also develop content strategies that suit branches, agencies, call centers,
and Internet and PC-based channels. Meanwhile, the rapid development of wireless technologies
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requires that online financial services providers address the possible use of mobile telephones,
personal digital assistants and pagers (see Future Enhancements) by their small business customers.
Value Proposition:
"Cash flow is extremely important for small businesses. They want to be able to monitor it at
three in the morning from home."
- John Hall, manager of public relations, American Bankers Association
For the small business owner, online banking offers three key benefits: increased efficiency,
reduction in time and labor, and round-the-clock access. First, electronic banking provides up-to-theminute financial information to small businesses, thus allowing users to make more timely decisions
concerning the management of their funds. Small businesses can quickly move money between
accounts to cover bills while earning the maximum rate of interest on their cash reserves. The ability
to boost operating cash through more effective cash management may reduce the need to borrow
funds. Close monitoring of accounts mitigates data-input errors regarding cash flows – e.g., bill
payments – as well as allow small businesses to avoid overdraft fees and other service charges
Second, convenient access through the PC to online accounts lessens the need for bank visits to
cover routine matters. Finally, users may access accounts on a 24/7 basis, from the office or home –
a convenience that is particularly germane to the time-starved entrepreneur.
While online banking facilitates quicker and more cost-effective cash management, it fails to address
the small business community’s most pressing issue – i.e., limited access to capital. Small businesses
often require substantial latitude when it comes to establishing a line of credit or borrowing against
the future. While many credit-granting programs are being automated and small businesses are
capable of electronically transmitting loan requests, computer programs will simply verify the
accuracy of information and decide yea or nay. Subjective factors that might sway a bank’s loan
officer – e.g., the vision and passion of the entrepreneur – are no longer part of the decision.
Additionally, small businesses encounter far more complex circumstances regarding cash
management than the simple account-balance inquiries provided by online banking. For example, if
the small business experiences unforeseen adversity, a solid banking relationship can be pivotal in
supporting the business through a period of crisis.
Strategy
Recognizing that electronic banking cannot supplant the intimacy and trust that evolve from the
small business community’s longstanding offline banking relationships, Bizzed Bundled Services will
seek to form a syndicate of banking partners that offer both bricks-and-mortar and online banking
capabilities. In order to initially penetrate the national small business marketplace, Bizzed Bundled
Services will identify and partner with prominent banks with a significant regional presence. This
strategy is two-tiered; it allows Bizzed to leverage existing small business relationships with its
selected banking partners, as well as capitalize on the path of least resistance for user adoption. This
lowered threshold spares users the normally high switching costs related to changing banking
solutions. The creation of a flexible syndicate of banking partners will also permit the inclusion of
additional partners as more and more regional and community banks establish an online presence.
Moving forward, this same strategy will apply to extending the reach of Bundled Services into
international markets.
According to Speer, an Atlanta consulting firm, virtual banks are lagging behind their bricks-andmortar counterparts in the following areas: privacy protections, data collection, marketing, and the
overall functionality of the Web sites. The evaluation of 41 financial services Web sites, including
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Nbank, NetBank, and Lending Tree, resulted in the conclusion that virtual banks remain “userunfriendly.” In addition, the lack of a network of branches as well as the inability to provide human
interaction and advice in more complicated transactions amount to significant hurdles in utilizing
virtual banks as part of the Bundled Services banking solution.
Product Analysis:
In determining the appropriate vendors for the Bundled Services banking solution, analysis will
cover the product’s essential features, technical considerations revolving around functionality, and
future enhancements as currently being explored and developed in the industry.
Feature Set:
Online banking should provide the small business owner with the following capabilities:
•=
Review of account balances and transaction history
•=
Online stop payments
•=
Transfer of funds between accounts
•=
Real-time updates of summary level intra-day activity
•=
Access to investment products info, balances, real-time quotes, trading activity
•=
Link to personal accounts
•=
24/7 Customer Service
•=
Initiation of ACH and wire transfers
•=
Downloading of account activity to cash management applications
•=
Online bill payment
•=
Message Center
•=
Low account balances alerts
•=
Review/paydown of line of credit or commercial loans (optional)
•=
Online tax payment (optional)
•=
Electronic bill presentment (optional)
•=
Direct Deposit of payroll
Future Enhancements:
With the advent of third generation (3G) wireless technologies, Net devices can be transformed into
“portable banks.” For example, Bank of America has partnered with 724 Solutions in order to
enable users to access current account balances and transaction details as well as conduct real-time
funds transfers and bill payments over wireless devices. Harris Bank is in the midst of a 4-month
pilot program that allows customers to view financial information over PCS digital mobile phones.
In addition, customers can view personalized investment portfolios, access stock quotes, receive
stock alerts, and peruse the news. Recently, w-Trade Technologies (www.w-trade.com) is rolling out
its new w-Bank wireless banking system. The solution allows Internet-based banking through a range
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of wireless handheld devices, including cellular phones, personal digital assistants, and pagers.
Several large North American banks are currently investigating the w-Bank system.
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Potential Vendors:9
U.S. Online Banking Providers
Company
First Union
Product
Online Business Banking
Geographic coverage
East Coast: Maine to Florida
URL
http://www.firstunion.com
Features: (online demo)
Review previous and current day cash position and transaction information
Make online stop payments and book transfers between your First Union accounts
Search for check postings by amount or check number
Make direct tax payments with T-tax for $5.00 per transaction
Account information is available by 7 a.m. (Eastern time), and all reports can be printed for
detailed analysis and tracking.
Real-time update of summary level intra-day activity, including electronic debits and credits
from First Union's Wire Transfer, Automated Clearinghouse (ACH) and other transaction
processing systems.
Pricing Model:
$15.95 / month
9
Online Banking Vendor Analysis prepared by Bizzed/Citigroup
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Company
Fleet Financial
Product
Fleet Web Banking for Business
Geographic coverage
NYC, Long Island, Buffalo, NY; CT; ME; MA; NH; NJ; RI
URL
http://www.fleet.com
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Review account information
Mac compatible
View your current account information, including balances and posted transactions for up to
the past 90 days.
Pay bills to individuals or businesses anywhere in the U.S.
Transfer funds between your Fleet accounts.
Communicate with Fleet or Quick and Reilly via message center
Multiple person access to account information
Review checking and savings account balances in real-time
Transfer funds between Fleet accounts
Transfers to accounts at other financial institutions
Access to the following types of Fleet accounts:
Checking
Cash Reserve
Savings
Credit Card
Galaxy Access
CDs
Mortgage
IRAs
Home Equity
Consumer Installment Loans
Download posted transactions to financial management software, such as Managing your
Money, Quicken, and Microsoft Money
Pricing Model:
No monthly service fee
$4.50 monthly fee for bill payment service plus $.50 transaction fee per bill payment
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Company
Chase
Product
Chase Online
Geographic coverage
TX, NY, CT, NJ
URL
http://www.chase.com
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Features:
Up-to-the-minute deposit account information and 60 days of transaction history, including
which checks or deposits have cleared and when.
Payroll Payment Service – pay employees electronically by depositing salaries directly into their
bank accounts – either at Chase or another bank (nominal fees apply).
Tax Payment Service – pay your FICA and certain other federal business taxes electronically
(nominal fees apply). This service complies with the IRS mandate requiring businesses incurring
more then $200M in aggregate annual federal taxes to pay these taxes electronically and
eliminates the need to go to the branch to make your tax deposits.
Personal Account Linkage – If you are the only signer on your Chase business checking
account, you can link your business and personal accounts. You can transfer funds between
your linked business and personal deposit accounts, make payments from either account and
see business and personal account information on one screen.
View account information for most Chase business credit products including Business Credit
Card, Business Credit, Checking Line, Business Revolving Credit, and Personal Executive
Revolving
Line of Credit. Shows you your current statement plus three additional statement cycles.
FREE, unlimited bill payment and 13 months of payment history.
Will notify you by ChaseMail if you do not have sufficient funds in account for a future dated
payment so you can make a deposit or transfer funds to cover payment.
Customize account names to easily identify your accounts.
Add/Delete accounts from your Chase Online Banking profile.
More operating systems compatibility, Macintosh® included.
No rights privileges
Pricing Model:
Online banking and bill payment are free
Tax Service is $5.00 / month, Payroll – $10.00 / month
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Company
Bank of America
Product
Online Banking (web-based)
Geographic coverage
22 states; including West Coast, Arkansas, Florida, Georgia, Illinois, Iowa,
Kansas, Maryland, Missouri, North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, and Washington, D.C.; but not available in
the Northeast, or Montana, Wyoming, Utah, Colorado, SD, ND, NB, WI,
MN, LA, MS, AL.
URL
http://www.bankofamerica.com
Features (on-line demo)
Check balances in your checking, savings, money market savings, CD, and IRA accounts
Check outstanding balances on some loans and lines of credit or Bank of America credit cards
Keep track of balances, payments and interest earned for your Bank of America accounts
View transactions that have cleared your checking, savings and credit card accounts
Download transaction information to Managing Your Money, Quicken, or Microsoft Money
Submit service requests like re-ordering checks and requesting check or statement copies
Communicate with Bank of America via secure messages for assistance or information
No bill payment
No direct deposit
Mac compatible
Pricing Model:
Free – no monthly charge
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Company
Bank Boston
Product
Business Focus - Office Link (web-based)
Geographic coverage
MA, RI, CT
URL
http://www.bankboston.com
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Determine your cash position at any time with OfficeLink’s balance forecasting feature and
customized balance alerts.
Move money between accounts linked to a Business Focus BankBoston Card.
Get up-to-the minute account balances anytime, 24 hours a day, seven days a week.
View account information for up to the last 60 days — sorted by date, transaction type, and
more. Make immediate transfers and schedule future-dated or ongoing transfers to occur
automatically between accounts linked to a Business Focus BankBoston Card.
Set customized alerts to notify you if your account balances are above or below target amounts
you specify.
Forecast balances based on scheduled OfficeLink transactions.
Communicate securely with BankBoston Customer Service via OfficeLink e-mail, without
having to exit the program.
Pay bills free for the first three months — after that pay only $4.50 per month.
Make payments to virtually anyone in the United States.
Control the timing of bill payments, allowing you to control cash float.
Set up ongoing, fixed-amount payments, such as your lease or loan payments.
Check the status of bill payments to determine which have cleared and which are outstanding.
Cancel or change payments up to 11:59 p.m. the night before they’re scheduled to go out.
Set up bill payment alerts to be notified when payments are still outstanding after a
predetermined amount of time.
Track amounts paid to any given payee for the current calendar year or previous calendar year.
Pricing Model:
Banking online with OfficeLink is free.
OfficeLink’s Online Bill Payment feature is free for the first 3 months. After that, it costs $4.50
per month.
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Company
Bank One
Product
Bank One Online10
Geographic coverage
AZ, CO, FL, IL, KY, LA, MI, OH, OK, TX, UT, WV, WI, (currently not
offered in Michigan, Chicago area, West Virginia, and Florida)
URL
http://www.bankone.com
Transfer money from account to account
Get updates and answers from customer service representatives through messaging system
within 48 hours
View account activity anytime you want (45 days), print it, or download it into your financial
management software
Online enrollments for Bank One customers
Bank One Online Bill Payment and Electronic Billing
Pay bills online
Receive your bills electronically
Check payment history up to one year
Pricing Model:
No monthly fee
$4.95 each month for up to 20 Bill Payment transactions and $0.30 per transaction over the
count of 20 each month, and authorize the Bank to deduct the Service fee from the checking
account you designate on the 20th of the month.
10
Product appears to be the same for either personal or business customers
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Company
Suntrust
Product
Suntrust Internet Banking
Geographic coverage
Florida, Georgia, Tennessee, Alabama
URL
http://www.suntrust.com
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Review account balances and transaction information on your accounts:
Checking
Savings
Money Market
Credit Cards
Access 3SM Equity Line
Real-time account balances
Transfer funds between Suntrust checking, money market, and savings
Send secure messages via Suntrust message center
Electronic bill payment to individuals and companies
Schedule bills to be paid automatically
Review payment history for last 120 days
Stop payment capability
Pricing Model:
Free for online banking only
Bill payment is free for first 90 days and then it is $7.95 a month
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PC Banking
Company
Wells Fargo
Product
Wells Fargo Business Gateway –(PC banking via private network)
Geographic coverage
Arizona (324), Minnesota (175), Oregon (121), California (1,058),
Montana (41), South Dakota (52), Colorado (114), Nebraska (29), Texas
(406), Idaho (17), Nevada (139), Utah (24), Illinois (10), New Mexico (99),
Washington (137), Indiana (44), North Dakota (26), Wisconsin (48), Iowa
(48), Ohio (1), Wyoming (7)
URL
http://www.wellsfargo.com
Features:
Transfer Funds between your accounts.
Set the Account Balance Warning screen - A fuel gauge for each account!
Pay Federal Business Taxes online.
Initiate stop payments, order checks
Monitor all transactions with Gateway Activity Tracking.
Assign access rights to your accountant or employees.
See detailed lists showing each check in your deposit with Deposit Detail.
Link or unlink Wells Fargo accounts as needed.
Print any page
Bank online, 24-hours a day, 7-days a week.
See up to 45 days of Account Detail.
Bank from your office, home or on the road.
Enrollment:
At the end of your 30-day trial, your account will be billed one time for the software - $9.95 if
you download the software via the Internet or $14.95 should you elect to receive the software
through the mail.
Pricing Model:
For a monthly service fee of $10.00, you'll have unlimited access through Business Gateway to
all your linked Wells Fargo accounts. Cancel within the first 30 days and you will not be
charged.
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International Online Banking
Company
Royal Bank Financial Group
Product
Royal Direct Internet Banking
Add-ons
online customer demo
Geographic coverage
not available to U.S. based businesses
URL
http://www.royalbank.com
Features:
Accessible 24 hours a day, 7 days a week through the Internet
Check balances and transactions for Canadian and/or US dollar business accounts and VISA
Foreign exchange - transfer money between your Canadian and/or US dollar business accounts
(to a maximum of $100,000 per day)
Transfer money between your Royal Business Operating LineTM and your business account
Pay your bills - currently 2,400 creditors on line, the largest such list in Canada. Access our
National Creditor Search to see which creditors can be paid. Access to 6 months of payment
history.
On-line Tax Filing is available through the Internet to save you time paying and filing your taxes
including GST, PST, Harmonized GST and payroll source deductions. The cost is $2.00 per
filing.
Download business account information to one of the Quicken 99 versions (Quicken Basic,
Deluxe and Home & Business editions)
Download business account information to QuickBooks 6.0 or QuickBooks Pro 6.0
Track loan and mortgage balances
Make loan payments
View Mutual Funds and GICs
View monthly account billing statement at a glance, including volume activity and fees
Message center where customers receive news / info from Royal Bank
Pricing Model:
Subscription fee of $8.50 a month following a 90-day trial period.
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Online Banking Software Provider
Company
nFront
Product
nBusiness
URL
http://www.nfront.com
Features:
Multi-User - Customer defined access for subordinate and external users, advanced permission
structure and audit control, unlimited users.
EFTPS - generates "same day" electronic tax payment requests.
Wire Transfer - generates real-time electronic wire transfer requests.
Stop Payments - generates real-time electronic stop payment requests.
ACH Draft - creates "continuous" ACH transfers allowing user to debit customers electronically.
ACH Disbursements - offers electronic transfer to external bank accounts viaACH; multi-user
security permissions control disbursement availability; supports invoice recording.
Balance Reporting - displays all account information in asset and liability categories allowing
user comprehensive financial information.
Direct Deposit - creates "continuous" ACH disbursements to employees' bank accounts.
Cash Concentration - facilitates ACH cash transfer from external bank account to internal
bank account.
Bill Payment - interacts with bill payment provider allowing customers to pay vendors
electronically.
Book Transfer - facilitates "on-us" ACH transfers between internal accounts.
Cash Flow Manager/Daily Transaction Journal - offers graphical and tabular presentations of
previous day and historical debits/credits; provides quick and easy cash flow analysis.*
Advanced Security - Customized passwords and multi-user access control parameters, 128 bit
SSL encryption.
Other/Technical
Microsoft NT "FAT" server-based
Advanced SQL Reporting
Full audit capability
On-line databases - one-time data entry
Dynamic text control (bank controls screen text)
Online help
Y2K Compliant
Real time status confirmations (between bank and end-user)
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Business Application Integration (Microsoft Money™, Quicken™, Quick Books™,
Comma Delimited.
FEATURE COMPARISON
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U.S. Small Business Online Banking: Feature Comparison
Products Features
Online Demo
Review current cash
position and transaction
history
First
Union
Fleet
Financial
Chase
Bank of
America
Bank
Boston
Bank
One
SunTrust
b
b
b
b
b
b
b
b
b
b
b
b
b
b
(90 days)
(60 days)
(60 days)
(45 days)
(60 days)
b
b
b
Make online stop payments
b
b
Transfer funds between
accts.
b
b
b
b
b
b
b
Real-time update of
summary level intra-day
activity
b
b
b
b
b
b
b
Access to investment
products info, balances,
buy/sell, quotes
b
Link personal accounts
b
b
b
24 hour Customer service
b
b
b
b
b
b
Free
Free
Free
Free
Free
b
b
Free for
3 mo. >
$4.50/
mo.
$4.95/
mo for
up to 20
> $.30
each
$7.95
per mo.
b
b
b
TBD
Pricing
$15.95
per mo.
Free
ACH and wire transfers
b
b
Download acct. activity to
financial apps
b
b
b
Online bill payment
$4.50/
mo. +
$.50 per
trans.
Free
Message center
b
b
b
Alert of low acct balances
Paydown LOC or loan
Review LOC or loan
b
Online tax payment
b
b
b
b
b
b
b
b
b
b
b
b
$5/mo
b
Electronic bill presentment
Direct Deposit of payroll
b
b$10/
mo
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US SMALL BUSINESSES ONLINE BANKING: GEOGRAPHIC COVERAGE
U.S. Small Business Online Banking: Geographic Coverage
State
Bank
State
Bank
Alabama
SunTrust
Nebraska
Wells
Nevada
Wells
Alaska
Arizona
BOA, Bank One, Wells
New Hampshire
First Union, Fleet
Arkansas
BOA
New Jersey
First Union, Fleet, Chase
California
BOA, Wells
New Mexico
Wells
Colorado
Bank One, Wells
New York
First Union, Fleet, Chase
Connecticut
First Union, Fleet, Chase, Bank
Boston
North Carolina
First Union, BOA
Delaware
First Union
North Dakota
Wells
Florida
First Union, BOA, Bank One,
SunTrust
Ohio
Bank One, Wells
Georgia
First Union, BOA, SunTrust
Oklahoma
BOA, Bank One
Oregon
BOA, Wells
Hawaii
Idaho
BOA, Wells
Pennsylvania
Illinois
BOA, Bank One, Wells
Rhode Island
First Union, Fleet, Bank Boston
Indiana
Wells
South Carolina
First Union, BOA
Iowa
BOA, Wells
South Dakota
Wells
Kansas
BOA,
Tennessee
BOA, SunTrust
Kentucky
Bank One
Texas
Chase, BOA, Bank One, Wells
Louisiana
Bank One
Utah
Bank One, Wells
Maine
First Union, Fleet
Vermont
Maryland
First Union, BOA
Virginia
First Union, BOA
Massachusetts
Fleet, Bank Boston
Washington
BOA, Wells
Michigan
Bank One
Wash. D.C.
First Union, BOA
Minnesota
Wells
West Virginia
Bank One
Wisconsin
Bank One, Wells
Wyoming
Wells
Mississippi
Missouri
BOA
Montana
Wells
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3.2 NON-CORE PRODUCTS
3.2.1 401(K)
Definition
Retirement or 401(K) plans can be set up and administered over the Internet, thereby granting
round-the-clock access to plan sponsors and plan participants.
Market Potential
According to Cyberdialogue, one in five small businesses (21%) offers 401(K) investment programs
to its employees, while nine percent provide information regarding 401(K) plans online. A higher
percentage – two out of three – of SBs that number 50 or more employees offer 401(K) plans. Given
that the reasons most commonly cited for lack of an employer sponsored retirement plan are high
cost, inferior plan features and lack of access to a real employee benefit plan, online 401(K)
applications may address a viable need in the small business community.
Value Proposition
In many instances, the efficiencies gained over the Internet allow financial institutions to offer
401(K) plans at a lower price point to small businesses. Hence, set-up and administration fees are
affordable. As well, online 401(K) applications enable SB employees to manage and submit their
401(K)s from any computer. In addition to online 401(K)-related information and advice, customer
service often includes access to experienced administration and bookkeeping.
Features
Employee retirement benefits
Customized plans (optional)
Strategic partnerships with leading investment management firms
Wide selection of investment opportunities and vehicles
Options on vesting schedules and employer contribution
Educational materials to community the 401K plan to employees
On-site enrollment meetings – (may include AV presentation and support material)
Ability to set eligibility requirements, deferrals and vesting schedules
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Vendors
Company
BenefitStreet.com
Vendor
BenefitStreet.com
URL
www.benefitstreet.com
Contact Info
2420 Camino Ramon, Suite 208, San Ramon, CA 94583
(925) 328-4540
Target market
Small to medium-sized businesses
Strategy
Founded in 1994 as a traditional paper-based 3rd party administrator. Company
shifted its focus to providing benefits administration over the Web in 1998. Now
concentrates on positioning itself in the market-space as an ASP.
Features:
Online 401(K) statements
Automated online enrollment
Multiple location enrollment meetings
Participation graphs
Discrimination testing
Online Health & Dental Plan enrollment and tracking
No Cost Daycare Plans
Flexible Spending Accounts
Executive Supplemental 401(K) Plan
(Source: Benefitstreet.com Web site)
Pricing Model:
$650 initial set-up fee. $5 per plan participant. $100 minimum per month even if the company
has fewer than 20 employees.
Additional Notes:
Benefitstreet.com has developed a network of financial advisors for their customer base.
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Company
PayMaxx (launched in 1998)
Product
Power401(k)
URL
www.power401k.com
Contact Info
302 South Royal Oaks Blvd., Franklin, TN 370264
1-877-PayMaxx
Target market
Small businesses with fewer than 100 employees
Strategy
Seeks partnerships in order to service the small business market. Current
partnerships include Biztro, Inc.com, Snap.com, and First Mercantile Trust.
Features:
Note: Power401(K) can only be implemented with Powerpayroll. It is not a standalone service.
Plan administration and compliance:
Annual Plan Valuation Report
Compliance testing (Top heavy /ADP/ACP/ 415 nondiscrimination)
Calculation of employer contribution
Preparation of signature-ready government forms
Benefit processing
Investment Management:
Six (6) classes of investment alternatives
Three (3) mutual funds within each investment class
All funds valued daily
Quarterly performance evaluation
Reports to employer
Employee statements
Internet access for participants (employees)
Internet access for plan sponsors (employers)
No front-end or back-end loads
(Source: Power401K Web site)
Pricing Model:
One-time installation fee is $500.
Annual administration and document preparation fee is $720 plus $24 per participant.
Alternative payment scenario: monthly installments of $60 per month and $2 per employee.
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Company
Ceridian Employer Services
Product
Powerpay (launched March 1999)
URL
www.powerpay.com
Contact Info
1-800-WE PAY YOU
Target market
Small businesses
Strategy
Ceridian, the parent company, has been in the payroll management
business for over 65 years. Its Internet initiative, Powerpay, encompasses a
range of services including payroll and retirement plan services.
Features:
Daily valuation administration
Integrated record-keeping
Government compliance
Diverse investment vehicles
Comprehensive enrollment material
Interactive Internet availability
(Source: Powerpay Web site)
Pricing Model:
Varies widely according to the needs of the company. Requires a sales person to provide
individual quotes.
Note:
Powerpay’s PowerK offers small businesses a wide variety of leading mutual funds. Ceridian, its
parent, serves over 15,000 small businesses. Because of its legacy as a bricks and mortar player,
Ceridian has the added advantage of long-standing relationships with SBs and, therefore,
extensive customer service experience.
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Company
Fidelity Investments
Product
Fidelity e401K
URL
www.fidelitye401k.com
Contact Info
1-800-300-1706
Target market
All businesses
Strategy
As the largest mutual fund company in the world, Fidelity is seeking to
expand its traditional bricks-and-mortar financial products and services to
the Web.
Features:
25 Fidelity mutual fund investment options
Online access for employee enrollment, planning and account management
Online access to plan information
Option to offer plan account loans (only 1 outstanding loan at all times)
Two options for employee eligibility: Immediate or six-month
Four options for vesting profit sharing contributions: Immediate, 3 year, 4 year, or 6 year
Three options for non-discrimination testing: Materials only, Limited, Comprehensive
(includes IRS form 5500)
(Source: Fidelity e401K Web site)
Pricing Model:
Initial set-up fee is $750. Annual participant fee is $20. In addition, Fidelity charges an annual
record-keeping and trustee per plan fee of $1750 .
Additional Notes:
Fidelity has developed an online vehicle for employee education concerning retirement
planning. The site includes a portfolio planner and interactive tools that aid in investment
allocation decisions.
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Arc Recommendation
If Bizzed selects PayMaxx’s payroll processing solution, then offering the PayMaxx Power401K
service becomes a potentially powerful value-added component to the Bundled Services offering.
However, Power401K is not offered as a standalone service. As an alternative, BenefitStreet offers a
comparable service at a lower cost. In addition, they do not charge the additional annual
administration and documentation fee that PayMaxx charges. Despite Fidelity’s reputation, its
solution may prove cost prohibitive for VSBs. In addition, the potential for private labeling or
integrating the service into the Bundles platform is dubious.
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3.2.2 Human Resources
Definition
Online human resources application: the set-up and administration of HR through an outsourced
services provider.
Market Potential
According to the Small Business Administration (SBA), small businesses typically spend between 7%
and 25% of their time handling employee-related paperwork. In a 1998 report, Forrester claims that
paper-based administrative burden can consume as much as 80% of the HR department’s time.
Meanwhile, the SBA estimates that the human resources function costs SBs under 20 employees an
average of $5,000 per employee – twice what it costs larger businesses. Online HR applications can
narrow this significant gap. To date, human resources outsourcing generated $13.9 billion in 1999
and is projected to reach $37.6 billion by 2003. (Source: Dataquest, San Jose, CA).
Value Proposition
Because small businesses are often chronically understaffed and part-time, online HR applications
can streamline workflow, reduce paper transactions, and improve employee communications.
Electronic HR can be easily updated and is accessible by employees on a 24/7 basis. It can also link
branch offices to the home office.
As well, online HR services offer employees self-service benefits administration, enabling them to
change health insurance plans, update contact information, and increase contributions to flexiblespending accounts and 401(K) plans through an Internet connection at any time. Communicating
the benefits of an online HR application to the organization is a critical success factor. The
workforce must accept the change and adopt the new technology. Security, however, is still a major
concern among small businesses.
Features
Online management of employee records
Administration of benefits
Creation of reports and statements for both employees and managers
Employee self-service via the Internet – providing employees with the capability to make
changes to their own records
Compliance – ensuring that policies meet requirements set forth by federal law
Payroll tracking (optional)
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Vendors
Company
Employease
Product
Employer Suite
URL
www.employease.com
Contact Info
One Piedmont Center, Suite 500, Atlanta, GA 30305
1-888 EASE NET
Target market
Small to medium-sized businesses
Strategy
In addition to SBs, Employease is striking partnership deals with vendors
such as Fortis Benefits and Foundation Technologies in order to provide
functionality to large corporations (Ford Motor Co.)
Features:
Centralized Database: Ability to manage current and historical HR and benefits information
across divisions, locations, carriers, and benefit plans
Payroll Interface: Ability to track and manage payroll information
Report Writer: Generate custom or standard reports on employee and benefits information
Compliance: Manage compliance issues revolving around EEO, HIPAA, and COBRA
Invoices: Eliminate manual reconciliation of carrier invoices by generating self-bills based on
plan eligibility and billing rules
Benefits Statements & Confirmation Statements: Improve communication with employees by
revealing the value of the “hidden paycheck” as well as confirm benefits elections
Employee Notes: Maintains employee-specific content regarding performance management,
training and employee relation issues
Resource Center: Maintains departmental, enrollment, and claim forms
Share Work: Allows access to vendors such as brokers, third party administrators, benefit &
COBRA administrators
Pricing Model:
Initial set-up fee varies, but can cost up to a few thousand dollars. Average monthly fee is
approximately $4 - $5 per employee.
Additional Notes:
The company is experiencing rapid growth, expanding from 100 customers to 850 over the
course of a year – largely through word of mouth. Average Employease customer has between
200 and 1,000 employees in its organization. Depending on the size of the company,
implementation time ranges from a few days to a few weeks.
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Company
Ebenefits.com
Product
VirtualHR Silver, VirtualHR Gold
URL
www.ebenefits.com
Contact Info
135 Stillman Street, San Francisco, CA 94107
03.27.00
(415) 495-7585
Target market
Small businesses with 2 – 100 employees
Strategy
Features:
Virtual HR
Enables managers to keep and organize secure employee records
Administer benefits
Create reports for employees and managers
Check where policies comply with federal law
Allows employees to check and update their own basic records
HR Management Tool
Eliminate paperwork
Manage benefits
Maintain employee records
Create reports for employee data analysis
Track compliance requirements
Faciliate recruiting
Promote employee communication
Provide customers with integrated e-access to vendors of insurance and payroll
administration
Additional Note:
Ebenefits is looking to expand into payroll services. Current customer base numbers 11,000
SBs. Service can scale to accommodate businesses with up to 1000 employees.
Pricing Model:
VirtualHRSilver is free. VirtualHR Gold is $30 per month and includes additional
functionality, customizable features, and enhanced customer service.
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Arc Recommendation
Employease and Ebenefits are the clear leaders in the outsourced HR applications market.
Ebenefits, however, is a more appropriate partner for Bundled Solutions due to its aggressive
customer acquisition strategy and, hence, free service to SBs with 2 to 100 employees. As well,
Ebenefits will co-brand their online HR services. The outstanding issue: the exclusive partnership
between Ebenefits and ADP. That is, does this relationship prohibit Ebenefits from entering
partnerships with other players in the SB market-space? Employease’s initial set-up costs are steep
for SBs. Its target market revolves around larger SBs in which more complex set-up and
implementation of HR services will, in turn, generate higher revenues.
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3.2.3 Person-to-Person (P2P) Payments
Definition
Person-to- person (P2P) payment application is an electronic funds transferring system via e-mail
through the Internet.
Market Potential
Companies comprising 1-19 employees account for 89.6% of the GDP and many operate on a small
budget. The process of securing a merchant account and coping with the many technical hurdles
becomes financially and logistically difficult for VSBs. According to a recent report by International
Communications Research, small business owners are now searching for alternative online payment
solutions. Despite the lack of industry data, it appears that SBs are turning to the emerging P2P
payment providers for transactions that can range into thousands of dollars:
“Cathy Rowekamp, 48 years old, of Winnsboro, S.C., sells antiques online. Once shipping
charges are thrown in, her prices are in the thousands of dollars. Buyers of her chests, dressers
and rockers must get a form from PayPal through the mail confirming their street address to
conduct transactions larger than $200.”
To date, vendors are aggressively vying for eyeballs. Industry pundits claim that the first vendor to
acquire 5 million customers will dominate the market.
Value Proposition
Although the need for a quick and convenient Web-based payment mechanism was driven by online
auctions, the ability of P2P vendors to provide a secure, instant and verifiable payment is having a
powerful impact on e-commerce in general. P2P solutions require only a credit card or checking
account as well as a valid email address, thereby allowing SBs to bypass the sometimes arduous and
expensive process of applying for merchant accounts. Given that these P2P transactions are often
free, online vendors may also deem credit cards an expensive way to get paid. As well, there is
tremendous potential for companies to begin using P2P solutions for sending rebates or refunds to
customers. (Source: ABCNews.com)
How It Works
Sender of funds selects method of payment – credit card or checking account
Sender specifies email address of receiver and amount of payment
Receiver opens email and replies with specification of how they would prefer payment (credit
card, debit card, checking account, or paper check)
Credit card transactions clear almost immediately
Check-based transactions depend on clearance from the sender’s bank
In general, the above process applies to all of the vendors evaluated in this document. Vendor
analysis will therefore focus on any differentiators seen in the core offering.
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Vendors
Company
Bank One
Product
eMoneyMail
URL
www.emoneymail.com
Contact Info
One First National Plaza, Chicago, Illinois 60670
(312) 732-4000
Target market
Consumers
Strategy
Bank One is looking to quickly mainstream eMoneyMail and is actively
seeking partnerships for co-branded solutions.
Features:
$1.00 per transaction regardless of the size of payment
Payment size limited to $500
Requires checking account or Visa card
If sender uses a Visa card, the funds are available within 2 – 3 days.
Payments are treated like transactions.
Only online money transfer service that utilizes 128-bit encryption security
$1.00 charge for recipients if they request a paper check
Customer can transfer funds to and from any accounts in the United States.
Additional Notes
Bank One is the first national financial institution to jump into the P2P solutions market-space.
They are clearly looking to leverage the brand as a known and trusted provider of financial
services to gain market share. The next step for eMoneyMail: international expansion.
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Company
X.com/Paypal.com (owned by Confinity)
Product
PayPal.com
URL
www.paypal.com
Contact Info
165 University Avenue, Palo Alto, CA 94301
03.27.00
(650) 623-0980
Target market
Consumers
Strategy
Aggressive customer acquisition
Features:
The method is known as X payments.
P2P service is free.
Sending funds requires that both the sender and receiver establish accounts with X.com. (Note:
Accounts are free.)
Once accounts are set up, depositors are sent a Visa ATM/debit card
Receiver has a choice of payment – automatic deposit to bank account, e-dollars for spending
online, or paper check.
PayPal offers software to enable payments through Palms.
Additional Notes:
Confinity’s (PayPal) business model is to generate revenues from the float. When customers
beam money to other customers, PayPal captures the interest while the funds float around the
system.
The system is closed since both sender and receiver must establish accounts with X.com in
order to complete the transaction.
The combined customer base of X.com and PayPal is well over half a million. The merger of the
two companies has given the new entity a clear lead in the marketplace.
X.com/PayPal received $23 million in second-round financing from Goldman Sachs Group
and idealab! Capital Partners. Use of the funds will revolve around international expansion,
new mobile device platforms, and customer acquisition.
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Arc Recommendation
In addition to PayPal and eMoneyMail, Arc investigated PayMe.com. However, PayMe.com is poorly
engineered and designed. Although referenced on PayMe.com, the parent site, BillSender.com, was
not found on the Internet. Despite its idealab! origins, these factors are indicative of a lack of
professionalism. While PayPal’s service is free, its recent merger with X.com has positioned its
service as X.com’s premier customer acquisition engine. The closed system – coercing both payers
and payees to open accounts with X.com – does not bode well for a co-branded partnership with
Bizzed Bundled Services. eMoneyMail engenders a $1.00 charge for all transactions, however, it
commands brand recognition due to its Bank One lineage and, also, utilizes 128-bit encryption.
Finally, eMoneyMail is seeking co-branded relationships with other online players in which it will
assume a “powered by” role in the relationship. eMoneyMail is therefore the recommended solution
for the P2P solution.
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4.0 Global Product Strategy
4.1 GOAL
Bizzed Bundled Services will provide small businesses with a single destination point where users
may access a Web-based platform of secure, scalable, and integrated financial applications – i.e.,
banking, accounting, payroll, EBPP, and business tax filing. The core offering will enable small
businesses to outsource mission-critical cash management and business-related tasks to best of class
ASPs, thereby streamlining outdated business processes, reducing costs, and saving time.
4.2 BUSINESS MODEL
The Ideal Scenario
Until recently, SBs visited multiple Web sites in order to access online financial or business-related
services – that is, one service/application per site. Users were also managing multiple logins.
Meanwhile, desktop software (QuickBooks) users have been able to aggregate financial services to
some extent, however this capability entailed periodic downloads in order to synchronize
information as well as the manual input of transactions, holdings and balances – a time-consuming
process that often results in a dated snapshot. With the advent of ASPs, small businesses can now
migrate from desktop software to Web-based solutions. Moving forward, the optimal scenario is the
“outsourced desktop” – that is, the aggregation and integration of “rented” applications via a
customizable easy-to-use interface.
The Business Model
Upon the inception of Bizzed.com, financial services were offered to SBs by linking users to best of
class service providers. Small businesses traveled to the relevant vendor’s site, thus leaving
Bizzed.com proper. This process results in a disjointed user experience and dilutes the Bizzed brand.
In the next generation of Bizzed.com, customers will sign up for and utilize an array of financial
services through a single Bizzed-branded user interface. Selected vendors will therefore deliver their
services through templates that meet Bizzed’s functional specifications and design requirements. By
registering through Bizzed.com, SBs will be able to customize a homepage-like “MyBizzed” and select
their preferred financial applications. By consolidating account information on their MyBizzed
financial services pages, users need only make one stop with one login.
In turn, Bundled Services will integrate financial applications offered on Bizzed.com. A single
transaction will be recorded across multiple, relevant applications in real time. Manual and
redundant data input is eliminated. As shown in the diagram of the Bizzed Bundled Services
business model (see diagram below), Bizzed will seek to establish connectivity with a pool of banks.
By partnering with banks that operate in major regions across the United States, Bizzed will ensure
nationwide coverage of SBs. This same strategy will be used to extend Bizzed’s reach into
international markets. The objective: to build towards critical mass in Internet time.
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BIZZED BUNDLED SERVICES BUSINESS MODEL
Internet
Tax
Payroll
Accounting
bizzed.com
Bizzed.com
EBPP
Banking
Banking
Bizzed Bundled Services will expand to include other financial and business-related applications
such as online human resources services, 401(K) applications, and person-to-person (P2P) payments.
Bizzed will not only empower SBs to more effectively manage their finances, but also service the
needs of their employees. Given that a core application such as payroll utilizes much of the
information necessary for human resources, Bizzed will leverage the shared data to provide SBs with
corporate intranet-like functionality. This initiative will capitalize on the prevalent trend in the ASP
marketplace in which vendors are providing a combination of services that link payroll, human
resources, and 401(K) applications. In order to maintain its competitive imperative, the Bizzed
Bundled Services platform must outperform other Internet players who are also positioning
integrated business-related services as a key differentiator.
By delivering integrated services through a single destination, Bizzed will create a highly effective
platform for cross-selling value-added services and conducting e-commerce. Through effective data
mining, Bizzed will conduct targeted marketing campaigns and offer personalized advertisements via
the user’s MyBizzed page. Moving forward, Bizzed Bundled Services will offer its array of integrated
services through wireless devices. The small business owner will conduct myriad transactions –
account inquiries, bill payments, processing payroll, filing a business tax form – through personal
digital assistants (PDAs) and mobile phones. The capability of extending m-commerce and m-apps to
SBs represents a critical success factor in Bizzed’s planned expansion into foreign markets.
Bundled Services and Bizzed Diagonals
Bizzed Diagonals will take a unique approach to vertical segmentation by adapting Bizzed for specific
groups of users across the small business community, defined by their “business intentions” or
demographic business groups, rather than along traditional industry lines. Bizzed plans to introduce
the first two diagonals in the 3rd quarter of this year Government Selling and International
Starters. It is expected that unique services targeting these audiences will be introduced into the
Bundles offering.
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INTEGRATION OF BUNDLED SERVICES & DIAGONALS
Internet
Tax
Government Diagonal
Payroll
Currency
Converter
Accounting
EBPP
bizzed.com
Bizzed.com
Banking
Government Diagonal
International Diagonal
Banking
Acquirer
World Link
4.2.1 Key Features
•=
Partnerships with a variety of best of class vendors/ASPs (preserving the Bizzed.com
vendor-agnostic stance in the market-space)
•=
Platform that integrates essential online financial and business-related services
•=
Plug-and-play functionality that allows the flexibility to add new applications
•=
Delivery of all services through a single Bizzed-branded GUI
•=
One login via Bizzed user registration that provides access to consolidated accounts
•=
Creation of a larger platform for e-commerce and targeted marketing
•=
Implementation of m(mobile)-apps(applications) and m-commerce
4.2.2 Key Differentiators
•=
Citigroup brand – the promise of “financial integrity, safety and trust”
•=
Durability of Citigroup/e-Citi initiative compared to other integrated services players in a
period of dot-com shakeout
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•=
Integrated financial services offer increased ease, efficiency, and cost-savings
•=
One login to access accounts and services from many vendors
•=
Seamless and branded user experience
•=
Targeted marketing campaigns that address user preferences
•=
Platform for additional e-commerce offerings
•=
Ability to leverage rich content and Web utilities of parent site, Bizzed.com
•=
Ability to leverage the Bizzed community to educate the user on cash management and
business-related inquiries and concerns
•=
Packaging of Bundled Services with Intentions-Driven Diagonals to service specific SB
needs – e.g., International Starters and Government-Selling
4.3 REVENUE MODEL
Until Bizzed Bundled Services accumulates sufficient information concerning the usage patterns of
its financial services offering, it will continue to provide services on a piece-rate basis. Many of the
services are priced according to volume – that is, either number of employees or number and
complexity of transactions. Given that SBs can range from 1 to 99 employees, there is a considerable
differential seen in volume-based pricing of services for VSBs (very small businesses), SBs and MSBs
(medium small businesses). To offer one subscription price for an integrated platform of several
services poses excessive risk to Bizzed.com at this point in time (see Revenue Analysis and attached
spreadsheets). Piece-rate pricing, however, presents billing complexities not only for the user, but also
for Bizzed.
Incremental revenue streams for the Bizzed Bundled Services model encompass: lead generation
fees; percentage-based fees from actual sales/transactions; affiliate e-commerce fees generated from
targeted marketing campaigns; and, sponsorship and CPM fees from advertising on the MyBizzed
financial services pages.
4.4 CONTINGENCY PLAN
Although Bizzed Bundled Services will conduct thorough due diligence on the quality of its service
providers, there are factors revolving around its relationships with vendors that are beyond its
control. Among these factors, are:
•=
Quality of outsourced product/service deteriorates;
•=
Product/service becomes obsolete or is no longer considered a best of class technology in
the market-space;
•=
Inadequate vendor safeguards concerning the security and privacy of customer data (ex.
inappropriate use or sale of customer data) compromise Bizzed’s relationships with SBs;
•=
Contract disputes arise between vendors and Bizzed and/or vendors and Bizzed’s
customers that affect the quality and reliable delivery of the service;
•=
Failure of vendors to continue upgrades and/or keep up with the technological advances in
the industry over time; and,
•=
Failure of vendors to provide adequate customer service.
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Given these uncertainties, Bizzed Bundled Services will develop relationships with alternate vendors
in order to facilitate the rapid replacement of a selected vendor. Moreover, Bizzed will closely
monitor the technological developments in those industry sectors relevant to its core financial
services offering as well as the competitive status of its network of vendors. Because only one vendor
can provide a reliable solution, respectively, for its EBPP (Derivion) and business tax services
(Nation Tax Online), Bizzed will also seek to expand its core offering to include value-added
products – human resources, 401(K) and P2P payments services. In the event that the business tax
or EBPP solutions fail to meet Bizzed standards, the value-added services will buttress the core
offering. The objective: to provide at least five integrated services in the Bundled Services platform.
4.5 INFORMATION ARCHITECTURE
Overview
The Bizzed Bundled Services will be an integrated online financial services application for small
businesses. The interface and experience will be entirely Bizzed driven, while the functionality is
supplied by partners’ technology. This single Bizzed interface will unify the user’s experiences
throughout the financial service process, resulting in an offering that appears to the user as a
seamless online application
In the application’s first iteration, the projected feature set is accounting, payroll, tax, EBPP, and
banking. Additional partners will be added as time progresses and the information architecture
must be scalable such that it supports the Bizzed brand and sensibility. Also, the Bizzed application
will provide high-level application-wide functionality that spans all of the partner sites.
Documentation for the application’s information architecture will include top level site maps
documenting global and local navigation, generic formatting for screens with simple functionality, as
well as detailed screen maps for screens with complex functionality integration. This process
includes meetings with Bizzed team members to ensure the Bizzed sensibility and end goals; the
design team to ensure the visual brand; the development team to ensure executable solutions; and
potentially Bizzed partners to ensure interpretation of business processes. The end goal will be a
Functional Specifications document, a pre-cursor to the Technical Specifications, a document
prepared by the developer detailing the technical needs required to implement the Functional
Specifications. A Functional Specification is used as a guide by developer and the Bizzed partners
during the technical development and execution of the Bundled Services.
To ensure compatibility, the developer will interview potential partners to evaluate the ease of
integration into the Bundled Services site. To facilitate the process, the Information Architects and
Design team should compile a User Interface Requirements document, outlining the proposed
Graphic User Interface. Should a potential partner not meet the technical requirements to
integrate, the launch schedule may be impacted as a replacement vendor is found.
4.5.1 Focal Points for Unifying User Interface
In creating the Bizzed application, there are two aspects to the information architecture that need to
be reviewed: the screen level, where the business processes and functionality reside, and global level,
where the navigation metaphor acts as a binding agent to the business processes. The screen level
will require the least amount of development as Bizzed is able to utilize the information architecture
of its partners.
In developing their respective applications, the partners have collected a knowledge-base
surrounding the relevant business processes. This industry knowledge should be leveraged such that
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applicable screen level functionality, as in which entry boxes belong together, is mirrored in the
Bizzed application. Advantageous to both Bizzed and its partners, users are presented with an
interface that was developed by a team dedicated to researching one particular business process.
Thereby Bizzed offers a best of class solution in its interface and the partner propagates its processes.
One aspect of the screen level that will require attention is the interface copy. The tone and
language must be consistent throughout to demonstrate consistency and ease-of-use.
The global level is more complicated, as it is sub-divided into two. The base information architecture
is straightforward and will be based on the following preliminary global site map.
PRELIMINARY GLOBAL SITE MAP
Tools and Feature Sets
Bizzed
Administration
Administration
Bizzed
Customer
Service
Customer
Service
Profile
Instructions
Billing
Preferences
Glossary
FAQ's
Help (Contact
Info)
bizzed
.com
financial
desktop
Accounting
EBPP
Tax
Payroll
Banking
Built upon the information architecture, however, is the navigation metaphor, a means of
representing the types of information and functionality housed within the different layers of the
architecture. The lynchpin of the application, the navigation metaphor should explain to the user
how the partner applications are organized, where specific functionality is located and how to access
it, as well as understand how to manage a Bundled Solutions account. Often, a combination of
devices are used to convey such complex information; for example, the Bizzed home page uses both
HTML links and pull- down menus as a means of navigating the site. In terms of Bundled Solutions
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a large part of the navigation metaphor will come from the functionality in BizFinity. Accounting is
currently identified as the application into which all shared information must be compatible.
Unfortunately, the BizFinity global navigation model is not strong enough to hold the required
functionality needed for the Bizzed application.
BizFinity Navigation Assessment
Navigation
Metaphore
•=
System of hierarchical nested controls.
•=
Each level of control employs unique strategy for accessing content.
Top-level navigation employs Tabs metaphor; next level employs
icons; next level employs HTML-like text fields, tabled displays, and
functionality.
Copy Voice
Copy is restricted to cursory identification of content values and types.
Impact on Bizzed
look-and-feel
Each top-level category of functions is displayed in its own color palette and
subsequent levels of integrated vary on this theme. Color as a tool for
identification will need to be replaced or updated to reflect the Bizzed color
pallet.
Comments
Complex and initially disorienting UI designed to parse out a large quantity
of information. The UI is sufficiently different from the Windows-model
(and has its own logic of color and presentation) that it will prove difficult
to match the look and feel of the Bizzed UI.
4.5.2 Phased Roll-out
To satisfy the speed to market requirements, the Bundled Solutions interface launch will mirror the
phased roll-out of the technical launch (For an overview of the Technology roll-out, see Section 4.8).
However, unlike the technical architecture, the information architecture must be fully designed at
the first launch. This initial work is critical as it minimizes changes to the application interface-changes that, as the launch proceeds, risk alienating users at a time when building the user base is a
priority.
Release II
The Bizzed application will debut in Technical Release II. The financial desktop landing page will be
instituted, as well as the Bizzed global navigation and branding. The financial desktop landing page
will be, in essence, the opening screen for the Bundled Services Application. In this iteration, it will
function similarly to a portal – it will lead the user to self-contained applications and serve as a
repository for related content and marketing campaigns. Information at this stage is not shared and
the interface is acting as a store front, developing users’ comfort level with the navigation.
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CLICKSTREAM, TECHNOLOGY RELEASE II
bizzed
.com
bizzed
community
bizzed general
content
diagonal(s)
financial
desktop
Accounting
Banking
Tax
EBPP
Payroll
Release III
Technical integration is launched and with it, new tools and functionality will be introduced. The
application interface will include administrative tools, integration specific functionality, and
application-wide functionality. For the first time, the user will be working, truly, on an integrated
platform and the Bizzed application.
Features for the financial desktop landing page will continue to highlight content, but it is also the
gateway to an integrated application. Global navigation ad application-wide functionality will be
introduced first on this screen.
CLICKSTREAM, RELEASE III
bizzed
.com
bizzed
community
bizzed general
content
diagonal(s)
financial
desktop
Accounting
Acquirer
EBPP
Tax
Payroll
Banking
Release V
Note: Technical Release IV is not applicable to Bundled Solutions.
Technical Release V takes integration to the next level with full personalization and customization.
Bundled Services will now react as an application; recognizing the user, tailoring content delivery
and, most important, allowing the user to customize his own reports. Personalization and
customization are a technical environment that identifies the user and the users data and then based
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on user-determined parameters, delivers specific financial data to one screen. For Release V, this
feature will be limited to the financial desktop, which will evolove into My Financial Desktop.
Subsequent releases, however, may include additionally, fully customizable pages.
CLICKSTREAM, TECHNOLOGY RELEASE V
mybizzed
.com
bizzed
community
bizzed general
content
my diagonal(s)
my financial
desktop
Accounting
Acquirer
EBPP
Tax
Payroll
Banking
A very preliminary visualization of the Release V functionality is as follows. All of the applications
are listed and user specified data is listed for quick reference.
4.6 TECHNOLOGY
Overview
The Bizzed Bundled Services product plan model assumes a distributed technical architecture. That
is, the Bizzed system acts as the central control center to coordinate all of the common data fields
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between the different partners and, also, maintains consistent data throughout the entire distributed
system.
In this model, a user will first initiate a session on the Bizzed server. When they wish to perform
tasks such as EBPP or Payroll, the user will then navigate to a Bizzed partner’s system. While users
are no longer technically on the Bizzed site, the “look and feel” of the User Interface and the
Information Architecture will remain consistent. Users therefore feel as if they are utilizing the same
application. The partner’s server will handle all the data storage and retrieval, the business logic and
the presentation of data to the end user. Predefined transactions – those that involve data that may
be of interest to other Bizzed partners – trigger the transmission of data to the Bizzed server for
routing to relevant partners.
TECHNICAL INTEGRATION MODEL
Bizzed
NTO
Jane Internet User
BizFinity
(Source: Inventa)
Benefits of this model include:
Bizzed does not have to be significantly involved whenever changes to the partner site are made
because business logic remains on the partner’s sever. This reduces development time.
Each partner serves content directly to the user that will significantly decrease the number of
servers that Bizzed would otherwise require if they were hosting the entire application.
Accessing the partner directly, the user experiences transactions in real time. Hence, users do
not have to wait for other backend processes to complete before they view the results of their
transactions.
Concerns of this model include:
Scaling and security issues are the responsibility of each partner site and cannot be directly
controlled by Bizzed, except through contractual obligation.
4.6.1 Shared ‘Common’ Data Set
At the core of this model is the Bizzed System that maintains a database of common data used
throughout the site. The actual profile of shared data fields – e.g. street address, cash balance, etc. –
will be determined by examining the partner applications and identifying the common data sets
between each of them.
In some cases, this common data set will be structured differently for each partner. An example: the
data fields used to capture an employee’s name. One partner application may break the name down
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into four components, ‘salutation’, ‘first name’, ‘middle initial’, and ‘last name’, while another may
only have ‘first name’, and ‘last name’. Yet another application may have only one field called
‘employee name’. The shared data set must not only capture the data in the most granularly
required format – in this case, the four different parts of the name – but also transform common
data into differing formats, such as the single field called ‘employee name’.
4.6.2 Back End Analysis Due Diligence
In order to ensure that potential partners can emulate the Bizzed Information Architecture and
User Interface, it is essential that a technical integration analysis be done of each partner’s system to
determine the expected success to meet these needs.
While the business qualifications are essential, the technical feasibility partner analysis cannot be
downplayed. Short-changing this process could result in problems such as discontinuous UI
metaphors from one partner application to another, thus causing decreased usability and user
confusion. Successful completion of a back-end integration analysis should be accomplished before
the finalization of a partnership.
4.6.3 Process Timeline
In order to illustrate the sequence of events required to limit the challenges and potential
roadblocks in this development effort, a high-level sequence map is as follows:
1.
The Information Architecture and User Interface set requirements need to be clearly
defined.
2.
Back End Partner Evaluation
3.
a.
Ensure that vendors are willing andcan technically emulate the IA and UI
b.
Ensure that vendors are willing and can technically integrate with the Bizzed core
system
Finalization of partnership should be completed once all technical challenges have been
identified and understood.
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4.7 TARGET AUDIENCE
Due to the highly fragmented nature of the small business community, it is difficult to accurately
segment the target audience for Bundled Services. SBs may be categorized according to employee
size (see below), revenues, industry sector, or intentions-driven goals. As well, SBs exhibit different
needs depending on the stage of their life cycle.
Market segments with the greatest potential for penetration by Bundled Services
VSB startups that have yet to adopt a desktop accounting software and/or banking solution
SBs that have outgrown the basic functionality of QuickBooks and are in the market for more
robust functionality
Rapid growth technology SBs who are Internet-savvy and desire to outsource applications that
will allow them to focus entirely on core competencies
Cash-starved SBs who are looking for low-cost, efficient alternatives to streamline essential
and/or routine business processes
Potential hurdles to acquisition of market share
The ASP market is still relatively new. The rate at which SBs will adopt outsourced solutions for
managing their business processes is unknown.
Internet players who offer bundled financial services to SBs will be competing with Intuit.
Whether or not they will succeed depends, to a great extent, on Intuit’s aggressiveness towards
expanding and integrating the financial services on its own platform.
Major financial institutions are rapidly developing Web-based bundled financial services and
targeting the SB community.
4.7.1 Segmentation
Upon segmenting the SB market according
to number of employees, the largest
categories of small businesses fall into the
9-and-under employee size range.
Meanwhile, in recently released figures by
Wells Fargo and the National Federation
of Independent Business, four out of five
new start-ups initially employ no one other
than the owner(s). Seven out of ten
startups are based in the owners’ homes.
VSBs and/or SOHO businesses appear to
present a compelling opportunity for
Bizzed Bundled Services.
SMALL BUSINESSES ONLINE (EMPLOYEE SIZE)
(Source: Cyberdialogue, 1999)
4.7.2 Volume
Despite the greater volume of VSBs online in comparison to other larger small businesses (see chart
below), this market segment may be difficult to penetrate due to:
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Many VSBs already use QuickBooks and/or online banking solution and, therefore, may be
resistant to change;
Lack of sufficient education concerning the Internet and/or lack of time
Persistent concerns over security on the Web
SMALL BUSINESSES ONLINE (1998-1999)
(Source: Cyberdialogue)
4.8 PHASED APPROACH
See Chart Insert
The Bundled Solutions end goal is a fully integrated, personalized and customized financial services
offering. However a phased approach provides Bizzed the opportunity to begin building a brand and
client base around the bundled services, while simultaneously building the informational and
technical architecture. Based the Developers roll-out schedule, the application will be launched in
five releases, not including the current model.
For the effects of this model on the front-end architecture, please see Section 4.5.2 Roll-out.
•=
•=
Current Model: Stand-alone services
°=
Individual servers
°=
No integrated UI
°=
Staggered roll-out based on contracts
Release I: Front-end Integration
°=
Individual servers
°=
no functional integration
°=
single user name
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•=
•=
•=
°=
Bizzed UI
°=
content managment
°=
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Release II
°=
Bizzed server
°=
functional integration
°=
single user name and password
°=
integrated Bizzed UI
°=
personalization
°=
implicit and explicit
°=
main release for diagonals and verticals
Release III
°=
Bizzed server
°=
°=
°=
°=
Partner Integration (back-end)
Release V
(release IV is not applicable to Bundled Services)
°=
personalization
°=
Bizzed server
°=
°=
°=
°=
full customization and personalization
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5.0 Competitive Analysis
Competitive Environment
Within the highly competitive small business market-space, the three major types of competitors to
Bizzed Bundled Services are: 1) Bundled Financial Service and/or Business-Related Services
Providers; 2) Branded Financial Institutions; and, 3) Leading Small Business Portals. The concept of
bundling and integrating Web-based financial services on a single platform is the Holy Grail in the
online financial services arena. To date, competitors are scrambling to overcome technology hurdles
as well as determine best practices regarding vendor relationships, promotions, pricing, market
positioning, and the optimal combination of services.
Competitors
Bundled Financial Services and/or Business-Related Services Providers
Bundled Services Providers aim to furnish a range of integrated financial and/or business-related
services to the small business. Many of these providers have secured a foothold in the market
through a single strong core offering – e.g., accounting, payroll, or HR and benefits management –
and are currently expanding their services via strategic partnerships with other vendors. In turn,
these partnerships allow for co-branded services and the integration of functionality. For instance,
ADP, an established online payroll services provider, is broadening its platform to include
automated HR (via Ebenefits) and accounting (via Netledger). By leveraging an established customer
base, these players generate incremental revenues through value-added services.
Players: OneCore (see Case Study), Intuit/QuickBooks (see Case Study), Biztro, ADP, Brightlane.com,
and AtYourBusiness.com.
Branded Financial Institutions
Premier financial institutions are rapidly expanding the range of services offered to small businesses.
As opposed to a vendor-agnostic SB portal, they are providing these services through a small
business “gateway” or “center” on their main Web sites. To date, the spectrum of services offered by
Chase include: banking, payroll, tax payment, personal account linkage, and bill payment. Wells
Fargo offers banking, payroll, retirement plans, merchant accounts, and tax payment.
Players: Wells Fargo, Chase and American Express.
Leading Small Business Portals
Small business portals have primarily assumed the role of an infomediary in the financial and
business-related services space. As an expert, product information filter, and advisor, SB portals tend
to direct SBs to best of class vendors. In doing so, they are increasing the value of their Web real
estate and, also, generating revenues by facilitating e-commerce. In this case, SB portals are
considered indirect competitors to the Bizzed Bundled Services offering.
Players: Onvia, Inc.com, Office.com, Work.com, bCentral.com, Yahoo! Small Business, and
Allbusiness.com.
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5.1 CASH MANAGEMENT CENTERED MODEL: “ONECORE”
The Company
Founded in 1998, OneCore (www.onecore.com) is a “virtual non-bank” that provides small
businesses with a fully integrated suite of financial services. The “core” of OneCore’s service revolves
around an operating account that earns money market rates on all cash balances. Hence, SBs can
monitor their cash-flow status in real-time as well as download financial information into the major
SB accounting software packages.
Business Model
OneCore partners with best of class financial service providers, private labels the outsourced
applications, and delivers the services through an integrated, branded GUI. By registering for a
OneCore account, the small business moves its operating cash into one of the money market
accounts sponsored by OneCore’s partners (Federated Investments or Scudder Kemper
Investments). The SB can access a host of financial services – banking and bill payment, payroll,
401(K) administration and credit and merchant card services – through OneCore’s financial
network of partners. Meanwhile, administration of all services flows out of the OneCore.com,
interest-bearing money market account. SBs must pay for these services on a piece-rate basis.
ONECORE BUSINESS MODEL
Merchant
Card Svc
Credit
Card Svc
EBPP
Tax
Payroll
401K
Leasing
OneCore.com
OneCore.com
(OneCore
(OneCoreAccount)
Account)
Online
OnlineBanking
Banking
Loans
Integrated Applications
Internet
OneCore offers a seamless user
interface for financial services
applications. Functionality for certain
applications appears fully integrated.
Desk-top
QuickBooks
Peachtree
M.Y.O.B.
Champion
Major Small Business Accounting Packages
Value Proposition
OneCore seeks to provide an integrated platform of financial services for small businesses. Its focus:
cash management. In contrast to Bizzed.com, OneCore positions itself as a financial services
aggregator – not a small business portal.
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Objectives
Help small businesses and entrepreneurs master everyday finances with a comprehensive online
cash management tool. Acquire 100,000 users in the next three years
Act like an EFO™ (Electronic Financial Officer™)
Top notch, integrated cash management products and services
Daily activity reports
Financial expertise
24x7 access
Features
Network of best of class partners that provide financial services
Integrated and branded GUI
One login to access multiple and integrated financial applications
Windows Explorer-type navigation
Services include: banking, bill payment (B2B only), payroll processing, 401(K) administration,
credit and merchant card services
Download links to the major accounting software packages
Multi-user access (inc. owner-specified levels of access)
Account protection (invested funds protected up to $25 million)
Smart Alerts – emails which notify the user of overdrawn balances, payment due, etc.
Nationwide branch network for quick deposits only
Future Features
Insurance products such as health benefits and workers compensation
Customized Smart Alerts
Value-added services such as high speed access and e-commerce-enabling services
Key Differentiators
Spectrum of financial products have been effectively private labeled and integrated into a single
OneCore branded interface
Compatibility with the major accounting desktop packages
Implementation of Smart Alerts and Smart Statements which aggregate and integrate financial
information thus providing the services of a personal administrator
Providing customers with advisory and expert services – i.e., the “Electronic Financial Officer”
Funding
As of January 2000, OneCore secured $30 million in a third-round financing. Investors
participating in this round include: Century Capital Management, Paine Webber Group Inc,
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Merrill Lunch, and Onex Ventures. The funds will be used to expand OneCore’s services,
marketing initiatives, and infrastructure.
Competitive Analysis
Given that OneCore is positioning itself as a financial services aggregator in a highly competitive
market-space, its Achilles heel is lack of brand recognition. A relatively new Internet pure-play,
OneCore must spend heavily to create brand awareness. (To date, OneCore has created a strategic
marketing partnership with Inc.com.) Even then, OneCore does not have the backing or reputation
of a well-known institution such as Citigroup. Because OneCore has focused on developing its
integrated financial services platform, OneCore’s content and community services are relatively
nonexistent. Its ability to attract and retain customers – site stickiness – is limited to enticing small
businesses to register and utilize its platform. Because brand is not the differentiator for OneCore,
its competitive strategy revolves around a lower price point for its services. According to a recent
Forbes article (April 2000), its online payroll services are “80% cheaper” than the big payroll services.
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5.2 ACCOUNTING-CENTERED MODEL: “INTUIT”
The Company
Intuit is in the “late stages of a boxes-to-data transformation” from a leading PC accounting software
manufacturer to a Web-centric enterprise. Its goal: to migrate the customer from the desktop to the
server (PC to Web). By leveraging its 15 million software relationships, Intuit intends to become the
premier financial shopping mall of the e-finance universe. At present, its small business-related
products and services generate approximately 40% of Intuit’s annual revenues.
Business Model
Intuit views its premier software packages (Quicken, QuickBooks, and TurboTax) as profitable
customer acquisition/customer retention tools for its financial services portals, Quicken.com and
QuickBooks.com. Through its QuickBooks software, Intuit is providing a host of integrated
financial services that will help QuickBooks users automate critical business activities through
Internet-connected services (see diagram of business model below). Business data is shared between the
accounting system and each service in real-time.
INTUIT/QUICKBOOKS BUSINESS MODEL
An Intuit messaging protocol exists within the banks’ firewalls, allowing users to
query their banks’ databases for account balances.
Online Banking (40+ banks)
QuickBooks
QuickBooks
Software
Software
Interface
Interface
QuickBooks.
QuickBooks.
com
com
Site
Merchant Postage
Builder
Acct.
Svc.
Direct
Mail
Leasing Purchas& Loans ing Svc.
EBPP
Tax
Payroll
Online Financial Services:
Online applications
are viewed and accessed
through the QuickBooks
software interface
Internet
Online e-Business Services introduced with their
new Internet Gateway on QuickBooks.com
Desk-top
(QuickBooks)
Accounting Software
In order to launch this platform, Intuit has partnered with other best of class vendors and created
connectivity with over 40 banks. As well, Intuit has created the “QuickBooks Internet Gateway”
(QuickBooks.com) that offers a variety of B2B services to help SBs set e-storefronts. Among its
partner-providers, are: E-Letter®, E-Stamp®, First Sierra, Intelisys, Storage Technology, Signio,
Upshot.com™ and Wells Fargo Merchant Services, an alliance between Wells Fargo Bank and First
Data Merchant Services Corp.
Value Proposition
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Given its mission of becoming the financial products superstore on the Internet, Intuit seeks to
provide small businesses (and consumers) a wide spectrum of Web-enabled products and services.
Because these services are integrated with QuickBooks, SBs are afforded a convenient and efficient
vehicle in which to manage their business operations. In contrast to OneCore, the centerpiece of
Intuit’s offering revolves around accounting – not cash management.
Objectives
•=
To expand the range of e-business services on its newly launched Internet Gateway
•=
To enable small businesses to conduct e-commerce by providing them with the necessary
tools to set up shop on the Internet
•=
To upgrade the feature set of its QuickBooks software to incorporate other financial
services
•=
To drive its millions of loyal desktop users to its Internet properties thereby increasing the
value of its online real estate
Features
e-Finance Services (in addition to Accounting)
•=
Merchant account service
•=
Online banking and bill payment (note: no bill payment and presentment for SB
customers)
•=
Business tax tracking (not filing)
•=
Payroll processing
e-Business Services
•=
Postage Service through E-Stamp Corporation
•=
Merchant Account Service through Signio and Wells Fargo & Company
•=
Automated Direct Mail Service through Eletter
•=
Leasing and Loans through First Sierra
•=
Purchasing Service through Intelisys
Note:
Intuit is currently expanding “My Accounts” on its Quicken service, thereby allowing consumers to
create a consolidated view of their personal finances from a single location on the Web. Consumers
will be able to access their bank account balances, credit card transactions, investment portfolios,
and online bill payment anywhere, anytime. The Quicken service will be available on the major
portals – Excite, WebCrawler, and AOL. It is highly probable that this same type of service will be extended
to small businesses on QuickBooks.com in the near future.
Key Differentiators
•=
Ability to target its 5,000,000 SB customers with a wide range of financial and businessrelated services
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•=
Established online player through its Quicken.com financial portal
•=
Widespread brand recognition as a leading software manufacturer
•=
Strategic partnerships with best of class service providers
•=
Strategic alliances with major portals – Excite, WebCrawler, and AOL
•=
Ability to leverage its profitable line of software products to finance its Internet initiatives
Competitive Analysis
Intuit’s key advantage – its premier software and customer base – may ironically become its Achilles
heel given the projected explosive growth of the ASP market. The issue: the future of desktop
software applications. In contrast to online accounting services, QuickBooks isn’t an “anywhere,
anytime” Web-based application. Moreover, there is a fundamental split in the user’s attention
between the desktop application and the QuickBooks.com financial portal. Despite Intuit’s drive
towards providing SBs with online financial and business-related services, Intuit has yet to migrate
or announce any intention of migrating its accounting software to the Web. Fear of cannibalizing its
hugely successful desktop software market may, in turn, be an impediment to making the leap
towards becoming a true Internet player. In delaying, is Intuit shooting itself in the foot? Even if
Intuit rises to the occasion, there is the formidable challenge of changing customer expectations as
well as perception of its role in the small business community.
This confusion is that much more apparent in the management of its Web properties. For small
businesses, there is the small business section on Quicken.com and, also, QuickBooks.com. While
Quicken is a full-fledged financial portal – replete with rich content and community services –
QuickBooks.com is essentially an information-only site geared towards marketing its desktop
software. Intuit has yet to launch a consolidated small business portal – a one-stop shop in which
content, community and e-finance/e-business services intertwine to create a cohesive offering.
Intuit, however, commands numerous strategic advantages: a tremendous customer base; powerful
brand equity; a profitable and established track record; and a seasoned management team that has
guided the company through dramatic changes. It is, by far, the 800-pound gorilla in the small
business market-space.
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6.0 Operational Plan
Overview
The operations of Bundles will be scaled to provide a sufficient infrastructure to support the
development and integration of the various Web-based applications. Also, the ongoing staff will be
charged with maintaining the growing database of user’s financial information. Further, an
additional core staff will maintain relations with the parent organization—Bizzed.com—which will
share resources for customer service, legal, licensing and operations.
6.1 BUSINESS STRUCTURE
As described on the following chart, the Bundles organization will share resources with the entire
Bizzed operating structure. Customer service, licensing, marketing and certain core integrated
technologies will be shared to reduce redundancy and ensure continuity within the total Bizzed
community and suite of services, of which Bundles is one major component.
CORPORATE STRUCTURE DEPENDENCIES
eCiti
Sales and
Marketing
Customer Service
Advertising, Licensing, Content
Project Manager
Technology
Includes Sales and Tech Help
Business Manager
Bizzed.com
Shared Technology & Security
Exlusive Deals &
Billing Support
Business
Development/
Financial
Legal Services : Proprietary & Licensed Technology
Legal
Technical Lead
Program Manager
Marketing Director
Bundled Services
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6.1.1 Headcount – Bundled Services
Business Manager
Grow product offering
Oversee revenue models and financial projections
Billing oversight
Project Manager
Operational planning based around site activities
Project Schedule maintenance and timing
Oversight of third party vendors
Technical Lead
Shepherd integration of additional partners
Due diligence on potential partners
Expanding functional capabilities
Program Manager
Oversight of Bundled Services Program
Interface with Bizzed mother site
Interface with Diagonals
Maintain contractual relationships with partners and outside content providers
Marketing Director
Brand
Adverting campaigns
Sales goals
6.2 LEGAL
Legal questions around the Bundled Services application primarily fall into two categories,
ownership and liability, and both are subject to contractual negotiations with potential partners.
Who owns the users’ data?
For purposes of data mining, marketing, and market research, users’ data and behaviour
patterns can become a valuable commodity, both to Bizzed internally and as a commodity to be
sold in the marketplace. There is some cost associated with data mining, but the additional
revenue can be a minimal effort source of additional revenue. However, data mining and
ownership of users’ data needs to be specifically addressed with the current technology model
being proposed. Users’ data will reside on the partners’ servers and integrate into the Bundles
application via Bizzed servers. This technical model does not allow for dual access to user data
and behaviour patterns. If data mining is seen as a valuable source of income, it must be
negotiated into each partner’s contract.
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Who is liable for users’ data?
Users will be entrusting the Bundles application with financial information that is essential in
the day-to-day operations of their businesses. To lower the threshold for potential adopters, a
clearly stated liability policy should be available to users. Additionally, there should be no
doubts between Bizzed and its partners around liability for any data.
What is the general liability to customers for data integrity and who bears the burden in
the case of technology failure, acts of nature, etc? Is liability time based, i.e. 24 hours or less
equates to no liability?
What policies guarantee security and what are the ramifications if that security is breached?
To what extent is data integrity guaranteed? And who is liable if the data is corrupted?
To what degree should liability be attached to the customer service experience? Specifically
around business practices?
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7.0 Customer Service
Overview
Bizzed Customer Service is currently in the process of being developed and designed. Vincent Pette
will be taking on the role of Customer Service Manager in the beginning of April and he and his
team will be selecting a Bizzed customer service provider in April or May. Based on the functionality
of this center and the Bundled Services critical success factors a solution can be developed to
support the Bundles application.
To date, Bundled Services has identified high quality customer service to be a critical success factor
in the marketplace. However, high standards of service also mean higher costs. Current vendors
under evaluation by Bizzed are equipped to offer complex solutions, however the cost can become
prohibitive such that customer service is a loss leader.
Critical Success
Factors
Proposed Solution
Hurdle
Compromise
Support the model of
a Bizzed branded
application
Train pools of CSR in each
application being offered so all
questions are answers by a
Bizzed Representative
High cost
Bizzed CRS fields initial call
and then escalates to the
appropriate partner.
High quality
information and
encounters
Bizzed CSR oversees each
encounter with a partner CSR
High cost
Attempt to maintain a central
database of all encounters.
(This compromise includes
technology hurdles)
Low cost to Bizzed
(either through low
overhead or pricing
model)
Guarantee and percentage of
Partner CSR based on volume
Shift the Customer Service cost
to the partners
Working solution for
Technical Release II
Currently low
user base
Compromises
unified model
Some cost can be shared, but
often at the sacrifice of the
critical success factors
Timing
Use the current solution in
Miami even though it cannot
provide application support
Dependencies
In developing a workable Customer Service solution, there are many dependencies that should be
considered.
Bundled Services
Revenue Model
°=
Does the model support free customer service or volume base or subscription base
pricing?
°=
Is a combination solution a viable alternative?
Pricing Model
°=
Does the Bundled Solution pricing model preclude the customer service pricing
model?
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Are there guidelines established by the market?
Product position in the market
°=
Who does Bundled Services identify as competition?
°=
What is the Customer Service model for those competitors?
Positioning of Customer Service in the market
°=
Is Customer Service a value add?
°=
Is it an additional bundled service that requires payment?
Owning the Customer Service experience
°=
Is there a cost effective means to maintaining a single data base of encounters?
7.1 POSSIBLE SOLUTION
Bundled Solutions will need to incorporate the Partners’ Customer Support centers in the effort to
provide quality customer service. The question becomes, how does Bundles own each encounter?
And how does it ensure the quality of each encounter?
Drafted below is one model for incorporating partners’ existing customer service.
First Encounter – speak with a Bizzed CSR who can answer high level questions and give
general guidance.
Escalation I
users with an application-specific question are escalated to a partner CSR
users with a complex Bizzed question are escalated to another, more knowledgeable
Bundles Services CSR
Escalation II
The partner CSR is unable to answer the question
°=
Users are passed to a more specialized CSR within the partner customer support
infrastructure, or
°=
Escalated to a highly trained Bundles CSR, whose knowledge crosses applications and
integration features
Escalation III
The more specialized partner CSR is discovers the problem is a Bundles application-wide
problem, or
The customer experience is unsatisfactory
°=
The user is escalated to a highly trained Bundles CSR, whose knowledge crosses
applications and integration features
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INTEGRATING PARTNERS’ CUSTOMER SERVICE INTO THE BIZZED OFFERING
800.00BIZZED
[email protected]
Customer Service
Escalation I
from Bizzed CSR to
Bizzed CSR for specific
assistance with billing,
maintenance, etc.
Partner CSR for application
specific questions and problems
CSR pool
CSR specialists
Banking
CSR pool
CSR pool
CSR pool
CSR specialists
CSR specialists
Accounting
Payroll
CSR pool
CSR pool
CSR specialists
EBPP
CSR specialists
Tax
Escalation II
from Partner CSR to
Bizzed Bundled Services CSR
Specialist for cross-partner
application assistance.
Partner CSR Specialist for more
detailed application specific
questions and problems
Escalation III
from Partner CSR Sprcialists to
Bizzed Bundled Services CSR
Specialist for cross-partner
application assistance.
Bundled Services
Specialist
Bizzed : Provider TBD
This model, however, does not address the need for all CSR to share common encounter records.
7.3 PRICING
Pricing for customer service will be determined as part of the larger Bundled Services Revenue
Model. Customer service pricing should be reflective of the larger offering. An analysis of pricing
models and customer service models shows that standards vary from industry to industry and pricing
plan to pricing plan. A potential solution is to offer customer service free for an initial period when
the users’ learning curve is the most steep, and then charge per encounter.
Vendors for Bizzed Bundles
Pricing plan
Customer service
PayMaxx
http://www.paymaxx.com
$17.95 plus $1.50 per
customer
Included in flat fee
Payroll Online –
http://www.payrollonline.com
$17.95 plus $1.50 per
employee
Assigned a representative for
basic questions
ADP – http://www.adp.com
$30 flat fee plus $1-1.50 per
transaction
Service line from 9-5
Powerpay.com –
http://www.powerpay.com
N/A
N/A
Payroll
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Vendors for Bizzed Bundles
Pricing plan
Customer service
Paychex.com –
http://www.paychex.com
Software initial set fee
Built into the per employee
model
$100- Then 1.50 per
employee
Human Resources
http://www.employeeservice.com
$50-$100 per employee
Built into the per employee
model
Per pay period
EBPP
Cyberbills –
http://www.cyberbills.com
$29.00 flat fee for under 100
employees
7/24 hour service line
Billserv.com –
http://www.billserv.com
Transaction based $1 per
24/7 service line
PayMyBills.com –
http://www.paymybills.com
$8.95 a month per 25
transactions
24/7 service line
Pay trust –
http://www.paytrust.com
$8.95 per month per 25
transaction then .50 per
additional
24/7 service line
www.eledger.com
19.95 per month for up to 3
users including CPA copy
30 day free tech support – then
14.95 per incident. E-mail free
www.intacct.com
First (3) months free…
$49.95 per month
$19.95 per month for (5)
additional users -$20 per 10 mb
per year of historical
transactions
www.netledger.com
30 day free trial followed by
$4.95/user per month
9am-5pm phone service and
email.
www.bizfinity.com
6 months free trial, includes
up to (5) users $10/ month.
Each 5mb of storage: $5 a
month
$3.95 per transaction
7:30am – 4:30pm phone service
Accounting
Tax
www.nto.com
Outstanding Pricing Issues
An aspect of this model that must be noted is the roll-out of additional services. If Bundled Services
offers a Human Resource module or a module that supports a Diagonal in six months, will this
module have free support? Or will pricing be based on the customer’s membership time with
Bundled Services?
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8.0 Marketing
8.1 OVERVIEW
Bizzed.com’s Bundled Services is poised to play a pivotal role in providing SBs with the robust ERPlike functionality traditionally reserved for big businesses. An integral component of the success of
this offering is contingent upon the strategic positioning of Bundled Services relative to its direct
and indirect online competitors. Marketing represents the driving force for defining not only the
positioning of Bizzed’s Bundled Services, but also for conveying the core messages, values, and
advantages of online financial services to the small business community.
While the Citigroup brand commands broad recognition in the national and international arenas,
the Bundled Services initiative may engender unique marketing and brand-building requirements. It
is not a given that an offline brand will translate seamlessly to the online environment. Success in
brand-building and marketing on the Web is dependent on creating and maintaining one-on-one
relationships with customers. These relationships must be well managed to sustain durable customer
life cycles. Marketing recommendations, to a great extent, revolve around this point of
differentiation between online and bricks-and-mortar (BAM) awareness-building. The goal: to drive
a high volume of qualified traffic to Bizzed’s Bundled Services and thereby convert browsers to users
of Web-based financial and business-related services.
The following section provides a menu of strategic considerations and tactical recommendations
with regard to marketing Bizzed’s Bundled Services as informed by Bizzed.com’s overarching
business objectives.
8.2 PURPOSE
The purpose of the Bizzed Bundled Services marketing initiative is “to entice small businesses to
utilize online financial services in the management of essential business operations”. The message of
Bizzed Bundled Services is to convey the following values: Security, Convenience, Increased
Efficiency, and Cost-Effectiveness. And the unique selling proposition: Bundled Services will
provide ERP-like desktop functionality for small businesses at an affordable cost.
8.3 OBJECTIVES
To enhance the success of the Bizzed Bundled Services endeavor, the objectives for marketing
Bundled Services are as follows:
•=
Support revenue growth generated by the use of standalone and integrated financial
services by SBs;
•=
Communicate to a broader demographic than is currently associated with Bizzed.com in
order to aggressively accelerate single application sales and the sales of packaged and
integrated services;
•=
Build small business awareness – re: the use of integrated financial services online becomes
an integral part of managing internal business operations and processes;
•=
Build a broad base of newly formed small businesses who have yet to adopt financial and
business-related applications;
•=
Convert small business users who currently use desktop applications and paper-based
systems to the use of online financial and business-related applications; and,
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Increase the registration of small businesses on Bizzed.com in order to build towards
critical mass.
8.4 TARGET AUDIENCE(S)
See Global Strategy, Section 4.7, Target Audience.
8.5 STRATEGIES
To achieve its marketing objectives, Bizzed Bundled Services seeks to:
•=
Leverage the Citigroup brand and reputation for “financial integrity, safety, and trust” to
build a loyal base of small business customers;
•=
Establish the “MyBizzed-Desktop” as the premier vehicle for managing small business
operations on a day-to-day level;
•=
Be Where the People Are: Bizzed.com’s Bundled Services must strategically position
advertising its robust desktop functionality in qualified high traffic zones online and off;
•=
Drive traffic by marketing the enhanced and seamless user experience of “MyBizzedDesktop”;
•=
Inspire user conversion (browser to user) and retention by offering promotions (free trials
and free value-added services such as beepers and DSL set-up);
•=
Capture and track user information to develop and deploy a robust database for the
purpose of targeted marketing campaigns and promotions;
•=
Communicate to Bizzed.com’s registered users how the “MyBizzed-Desktop” provides a
maximum level of security and ease at an affordable price point; and,
•=
Educate users on the benefits of using ASPs as well as supplying information and advice
online regarding basic cash management and accounting practices.
Strategic placement of the brand will ensure that Bizzed Bundled Services becomes a recognized
leader in the small business portal space with regard to providing integrated financial services.
However, in order to drive qualified traffic to the site, the marketing programs that are employed
must educate the small business community on the advantages of using ASPs. Small businesses must
know that these services are provided by best of class online providers backed by the promise of the
Citigroup brand.
8.6 MARKETING PROGRAM RECOMMENDATIONS
Webcasts/Live Events
To promote the launch of Bizzed Bundled Services, Bizzed.com can create a webcast event – that is,
an event that broadcasts live streaming video, audio, and chat over the Internet. Creating a rich
media experience concerning the use of integrated financial applications as a learning vehicle for
small businesses will alleviate concerns over security, ease of use, and cost. In addition, Webcasts
afford opportunities for co-sponsorship, advertising, and other partnerships. Webcasts may also
include live testimonials by SBs that currently use online financial services, thereby adding
credibility and inspiring camaraderie among Bizzed.com’s small business customers.
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Data Mining/Targeted communications/Direct marketing
Data mining can be leveraged to extract patterns from Bizzed.com’s customer interactions with the
financial services section of the site. Hence, data mining can be used to answer such questions as:
•=
What size and type of small businesses are currently most interested in using online
financial services?
•=
Who are the most profitable small business customers regarding online financial services?
•=
What financial services products are most popular?
•=
How can Bundled Services increase market share?
•=
What customers are likely to defect to competitors?
By utilizing data captured from user registration, SBs can be identified and reached through direct
mail and email communications. Targeted marketing can include: targeting mailings, opt-in email
broadcasts, and custom digital newsletter creation and messaging. Targeted marketing can be used
to publicize the launch of Bundled Services and relevant promotions as well as generate sustained
interest among prospects and current customers. Marketing initiatives should also be directed to
small business organizations and other comprehensive list sources.
Preferred partners/Distribution program
Strategic partnerships with other leading premium brands can be used to establish Bundled Services
as an optimal solution for small businesses. Distribution of existing or specifically created content
(e.g., how-to’s of online accounting packages) can be syndicated to other online sites devoted to the
interests of small businesses. For example, a small business organization can place a Bizzed Bundled
Solutions button or “how-to” feature article on its site that links back to Bundled Services. Another
option would be to co-brand a Bundled Services mini-site and allow the preferred partner to import
the mini-site into the parent site. Hence, the preferred partner will also enjoy the brand
enhancement from the Citigroup name.
Online Banner Media
Banners can be placed on high-traffic sites as well as sites that specifically target small businesses.
Formats can include: keyword template, transaction enabled, pull-down menu, search box, and
animated graphics.
Digital newsletters
Digital newsletters can furnish SBs with updates on service, pricing, policy changes and site
functionality. As well, they can provide industry highlights and headlines that will educate and
entertain users. A feedback loop is created in which SBs can indicate other financial and businessrelated services that are of interest for future enhance of Bizzed Bundled Services core offering. Five
to six newsletters – opt-in only – per campaign is recommended.
Online PR & Messaging Campaigns/Search engine optimization
An initial press release would announce the launch of Bizzed’s Bundled Services and relevant
promotions. The release can be sent to all of the major online publications – New York Times on
the Web, USA Today Online, News.com, MSNBC, CNET, to name a few. Press releases can be
launched throughout a campaign in order to sustain interest among the press, generate continual
media placements, and enable Bizzed to provide editors and publications advance notice on its
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financial services offering. Meanwhile, messaging campaigns to newsgroups, mailing lists, and online
communities is an effective way to reach niche audiences.
Since 80% of all traffic to a site comes from search engines, it is essential that Bizzed place in the top
of search engine rankings. It is recommended that Bizzed Bundled Services stay abreast of search
engine requirements, submission, monitoring and tracking. Because each search engine employs a
proprietary algorithm for indexing, Bizzed Bundled Services will attend to the individual spidering
and indexing requirements for each search engine and other directories on a continual basis.
Essential tasks are: establish a baseline; key word phrase optimization; and search engine results
analysis and reporting.
Peer Networking
In conjunction with community services provided by Bizzed, Bundled Services will create bulletin
boards and other community utilities that revolve around the financial services offering. Hence,
users will be allowed to communicate with each other on such basic topics as running a business,
and best practices in cash management and accounting.
Traditional Marketing
BAM media marketing tactics can complement online marketing solutions, such as:
•=
Positioning-focused buys;
•=
Creation and operation of small space creative which promotes Bundled Services in major
metro newspapers;
•=
Fractional page units to run in small business trade magazines; and,
•=
Niche TV spots centered on online financial services as provided by Bizzed Bundled
Services.
8.7 CONCLUSION
Marketing of Bundled Services is essential to ensuring the short and long-term profitability of the
online financial services component of Bizzed.com. The migration of small businesses to the use of
ASPs requires the education and trust of the customer regarding the use of Bundled Services.
Although Citigroup has an established offline brand, marketing tactics must foster optimal levels of
brand awareness revolving around Bizzed and its core financial services product offering – not only
at the time of launch, but also during the life of the site. A well-planned, well-executed marketing
plan will create a foothold in the domestic market that is necessary to expand the Bundled Services
offering to international markets.
In order to expand the core product offering, it is key that Bizzed Bundled Services establish a
feedback loop with users in order to determine specific value-added services moving forward— e.g.,
implementing surveys, effective data mining, and ongoing discussions with provider-partners. Given
the hyper-competition in the small business market-space, an increase in value-added services,
improved quality of each service, and more robust functionality will serve to maintain Bizzed
Bundled Services’ competitive advantage on the Web.
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9.0 Revenue Analysis
Highlights
Revenue analysis covers both the offering of stand-alone services and Bundled Services promotional
packages in which users receive a 30% discount when they sign up for 3 or more services. Three
scenarios – base, aggressive, and conservative – will be used for the analysis. Meanwhile, integrated
services have not been included due to outstanding issues concerning subscription pricing (see
below). In particular, the EBPP solution engenders fees that are not only difficult to gauge for
predictive subscription-based pricing models, but also can scale up to hundreds of dollars per month
depending on the number of invoices. That is, a small insurance company with numerous monthly
invoices can pay up to a thousand dollars a month for electronic bill presentment. Subscriptionbased models are difficult to deploy on the Internet. Moreover, beyond a certain price point,
subscription pricing can prove to be a serious obstacle to customer acquisition.
Note: Incremental revenues for Internet players may experience flat to slow growth until the site hits critical
mass – at which time, revenues may increase dramatically due to network effects. It is difficult to determine the
timing of the inflection point.
Factors that affect assumptions:
Q2: the launch of the second generation Bizzed.com. The excitement and publicity
surrounding the launch may incur a spike in site usage and registration.
Q3: User estimates may be affected by the aggressive marketing of the Bundled Services
promotional packages. Site traffic may spike during this period.
Q4: User estimates may be impacted by the launch of the Bundled Services integrated platform
in Q4. Both usage and conversion rates may increase.
Implementation of a personalization engine may have a positive impact on conversion rates,
since the marketing of financial services will be geared towards user preferences. Hence,
conversion rates for Years 2 and 3 have been increased accordingly.
Vendor pricing and revenue share:
Prices and revenue share for all three years is fixed. The validity of fixed pricing and revenue
share over the course of 3 years must be challenged with more extensive vendor research.
Integrated Services
Outstanding issues revolving around subscription-based pricing for integrated services are:
Determining Usage on Bizzed: In order to manage the risk of appropriately pricing a
subscription-based offering, an understanding of the types and size of SBs using the integrated
platform is recommended. Even then, the variables associated with the pricing of individual
services may include: number of employees, number of invoices/size of customer base, and
number of states in which the SB conducts transactions. Because pricing depends on unrelated
variables, it will be difficult to establish a relatively uniform scale of subscription rates based
solely on the size of the SB.
Value of Premium: Bizzed will need to assess the premium charged for integration. How much
is the SB willing to pay for the upgrade in functionality? This evaluation may require further
market research – i.e., focus groups, surveys, and 3rd party research.
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Prohibitive Pricing: At what price point will the user shy away? Individual services may appear
cheaper to the user – i.e., let the user do the math – than an expensive subscription price. If the
user has 1000 bills per month, the cost of EBPP itself is $600 ($0.60 per invoice). Add the other
services into the mix and the subscription may ratchet up to $1000. SBs look for convenience,
utility, and price point. At what point does price become a hurdle as opposed to an advantage
in terms of sales?
Vendor Cooperation: Will vendors agree to a subscription-based model? If customers believe
they are paying too much for a subscription, will this impact the individual vendor’s brand and
credibility? If subscribers feel like they’re getting a “great deal”, will it cannibalize and/or
jeopardize the vendor’s offering through other channels or partners?
Employee Size: The size of the business in terms of number of employees impacts the price of
online payroll processing. (Note: assumes ADP is the selected vendor.)
Customer Base: The relevant industry sector as opposed to the size of the SB will, to a great
extent, determine the number of invoices to customers. A construction firm with 99 employees
may have far fewer invoices than a small insurance company that may have hundreds, if not
thousands, of invoices per month. Hence the EBPP solution may be far more expensive for a
VSB than a MSB. Derivion’s charge of $0.60 per invoice presents a significant obstacle to
subscription pricing. To date, there are few, if any, market statistics on the number of invoices
per small business in the different industry sectors.
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10.0 Core Offering Evaluation
After researching the identified model, product offering mix and the market, Arc has identified an
alternative core offering and the ramifications of such a change.
If payroll is being offered, then Human Resources and 401K solutions are a logical extention.
Limiting the offering to just payroll is not a logical break in the business processes. Payroll, by
nature, is a blurred offering. It affects cash management and yet is focused on the needs of
employees. Inevitably the line will blur between a bundled financial services and corporate
intranet functionality - and many vendors, they are offering a combination of these services
already (ADP, PayMaxx, Powerpay). Why not take advantage of their efforts and just hook up
their solutions to the Bizzed system? Embrace it and strengthen the offering since the
technology is available and proven.
Derivion's EBPP solution is of real benefit to SBs with e-storefronts - those that are conducting
e-commerce. Traditional bricks-and-mortar SBs have paper-based bill payment solutions, but
those SBs that are gearing up to put their offerings on the Web can really take advantage of an
online bill presentment solution. Bundled Services is not currently focused on helping SBs
create e-storefronts, therefore this solution can. In fact, allowing SBs to pay their own bills - bill
payment - with a consumer-consolidator like Paytrust may be a better start.
Lastly, remove banking from the immediate mix. SBs already have banking solutions, so offer
other value-added services first and integrate the users into the Bundles application. The SBs
will switch banking solutions after Bundles Services has won their loyalty. The banking piece of
the application is not required in the offering because synching is through accounting.
Furthermore, the technical and political hurdles for integrating banking into the mix are very
high for an offering with no incremental revenue stream.
Arc Offering
Arc suggests an initial core offering of Accounting, Payroll, Taxes, Bill payment, HR, and 401K.
P2P Payments are an interesting feature, but the market is too new and unproven for the initial
launch.
Vendor Recommendations:
1) Accounting - Bizfinity
2) Payroll & 401K - PayMaxx (will co-brand)
3) Tax - Nation Tax Online (will co-brand)
4) Bill Payment - PayTrust (will co-brand)
5) HR - Ebenefits (will co-brand)
All of the above vendors have quality solutions at reasonable prices and, importantly, are willing to
co-brand.
Another potential vendor is Derivion. Since it sought out Bizzed as a partner, it may be worth
including Derivion for bill presentment. But strategically, Derivion is primarily an e-commerce
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enabler - SBs that don't have e-storefronts may not bite. Ultimately, Derivion is a solution that's
born of convenience, but it may not be the stickiest solution.
Ramifications
All of the solutions above will affect the revenue analysis included in this product plan. Each new
core product generates incremental revenues and the removal of banking, a loss leader, is significant.
It removes the cost of creating connectivity with a pool of banks and everything else to make that
solution viable. Furthermore, changes in the core offering affect the packaged promotions.
A new core offering also impacts timing. New vendors need to be identified and reviewed from all
relevant perspectives: financial feasibility, business practices, front-end integration, back-end
integration and Bizzed viability.
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Product Plan

Transcription

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