Fulcrum Technologies Inc. is a Canada-based company that develops, markets, licenses and supports software for indexing and retrieving information contained in electronically-stored documents. Fulcrum's products include a full-text indexing and retrieval engine and related application development tools. These products are used by large and medium-sized organisations to provide desktop access primarily to text-based information. In 1990, Fulcrum had 30 employees; by 1995, it had 250 full-time employees, (including 86 R&D; 78 marketing/sales; 50 technical & customer support; 36 management & finance/administration)

Mike Laginski, their Chief-Operating Officer says, "I can see the day when Fulcrum will conduct its entire business electronically: from making sales calls via e-mail and videoconference, via shipping the product electronically, to providing customer support over the Internet and receiving payment through electronic fund transfers." Others in the company tend to believe that there will always be a need for some form of human interaction in order to close and support a sale.

The Problem

The text retrieval software market is intensely competitive. The principal competitive factors are product quality, performance and price; vendor and product reputation; product architecture, functionality and features; ease of use and quality of support. A number of companies offer competitive products that target the same markets as Fulcrum. Fulcrum also competes indirectly with database vendors, such as Oracle Corporation, offering text retrieval capabilities with their core database products. Many of Fulcrum's existing and potential competitors, have significantly greater financial, technical and marketing resources than it has.

Due to the fast paced business environment and the short product cycles associated with the high tech industry in which Fulcrum operates, its competitivity depends largely on its ability to continue to improve its products and to develop new product in a timely manner. Accordingly, Fulcrum expects to continue to invest substantial amounts on research and development in the future. Gross research and development expenses totalled $3.3 million in 1993, $4.3 million in 1994 and $7.1 million in 1995, representing 19%, 16% and 17% respectively, of total revenue.

When Laginski joined Fulcrum in 1995, one of his primary tasks was to put together the Electronic Business Model. The objective of the EBM strategy is to make a license transaction totally electronic, from original sales call to final payment and product support, eliminating the face-to-face human interaction that is now practically required to conclude any sale. The goal is to conduct one third (1/3) of business electronically by 1999.

The EBM is implemented in a phased approach, to allow the company to evaluate the implementation and realign as needed. There are no sources of expertise who can provide Fulcrum with the guidelines and maps necessary to adopt an electronic commerce strategy. External consultants in this field are rather scarce. Fulcrum has become its own expert and it can only learn by staying extremely vigilant towards the environmental changes and the new technologies.

Capital asset expenditures, including those related to electronic commerce, are approximately 10% of 1996 revenues, twice as much as the amount allocated for 1995. Fulcrum's healthy financial situation over the last few years is a major factor in making this committed investment possible. While Canadian Banks are ready to invest in knowledge based industries, they rarely do. This is due to their antiquated business models. The banks have not yet re-engineered the way to financially support these industries, hesitating to invest because "the biggest business assets walk out the door at the end of the day."

The Outcome

Electronic commerce is not a technological fix but an integral part of a firm's long term business strategy. It may not increase sales, but it makes sales faster, cheaper and easier to get. Another reasoning behind adopting EC is to save time: speed up the process without sacrificing the controls. Therefore, EC allows Fulcrum to bring the income stream forward, to shorten the process from the request of information to the final product delivery for cash. Paul Rhoades, Director of Electronic Marketing agrees by stating that "electronic commerce brings a better understanding of the business process: it allows better analysis, understanding and determining of cost centres...all these things that you can do by paper but that makes it a lot more difficult and time consuming." The business case for electronic commerce here is the incremental costs savings rather than the increase in sales.

Fulcrum has also developed a sophisticated Internet site to provide its customers with up-to-date information on its business operations; products; customer support offerings, and courses. Their Internet site is monitored constantly and updated on a daily basis. Statistical monitoring ensures that trends are evaluated, best practices identified and less popular pages revised.

A major factor in this service is to acquire the right technology. Security issues raise the need for firewall software: and for continuously updating FTP site passwords. For example, when Fulcrum issues a password in order for the customer to come get the necessary patch on the FTP site, this password is immediately changed after the customer confirms they have received the product or information.

Overall, delivering customer support electronically results in the improvement of the quality and timeliness of products, services and information that Fulcrum provides to their customers. It also speeds up information transfers and reduces the amount of errors.