Case in point: $2 billion Société Générale de Surveillance Group (SGS), a Geneva-based provider of product verification, testing, and certification services. SGS was founded in 1878 to sample and certify grain shipments in international trade. The company branched out to monitor trade in other agricultural and industrial products and today, with 35,000 employees in 140 different countries, services industries ranging from minerals and petroleum to textiles and toys. The company's mission is to provide companies with the confidence to buy from international partners. "We physically visit a company and assess it on a set of open criteria such as competence to trade and capability to produce goods," says Hal Loevy, vice president of global strategy and development for SGS.
SGS sat out the early years of the Internet revolution. Senior management was unsure whether SGS could transition its business model to the online world. Fortunately for the company, it realized SGS's offline expertise has a ready parallel in online electronic marketplaces. "One of the key obstacles to e-marketplaces taking hold was the lack of trust," Loevy says. "Many buyers hesitate to buy from suppliers that are unknown to them. We can help them discover new suppliers they can trust."
In its nearly 1,000 offices and laboratories worldwide, SGS also had a strength that few competitors--and no startups--could match. "Being a bricks-and-mortar company with a global network was a luxury. We wanted to leverage that," says Loevy.
Near the end of 1999, SGS began creation of SGSonSITE (Safe Internet Trading Environment) services, which facilitate online trade by rating suppliers and inspecting goods prior to shipment. With the help of consulting partner Cambridge Technology Partners Inc., SGS built a scalable, open, flexible, and secure electronic platform based on cutting-edge tools including Java 2 Enterprise Edition (J2EE). The entire SGSonSITE project--from defining the strategy to design, development and testing--took only a whirlwind 12 months.
SGS's strategy is timely. According to a November 2000 report from Forrester Research Inc., global online exports will reach $1.4 trillion in 2004. Buyers on e-marketplaces will look to third parties such as SGSonSITE to help them manage risk when evaluating which previously unknown suppliers are worthy of inclusion in their supply chain, according to the report. SGS's extensive geographic reach may be a significant advantage. Using SGSonSITE's vendor ratings service, a New York-based buyer can quickly and efficiently determine whether to do business with a shoe seller in Taipei, for example.
Although B2B exchanges in general and third-party online inspection services in particular are not yet widespread, Loevy is pleased with how SGS's first major online rollout has fared. The pieces are working together well so far. Loevy's most important lesson learned? Be absolutely certain of executive management buy-in prior to embarking on a project of this magnitude. "This is more like a lesson confirmed, because it's always been said and it's always been true. If you don't have executive sponsorship, it's like you're pushing a large stone up a large hill," says Loevy.
SGS is far from the only large company late to the Web party. Companies that have so far abstained from getting involved with the Internet may be reluctant at this relatively late date to tackle the challenges of altering their business model, changing their employees' work habits and building a technically solid e-business platform. For these companies, SGS is an object lesson in how an old-world company can make good on the Internet.
A freelance writer based in Waban, Mass., Paul covers e-business issues for a variety of publications. Send her an e-mail at firstname.lastname@example.org.