16.4 Dot.com organizations

In comparison with bricks-and-mortar organizations, the dot.coms are generally characterized by higher speed of development, fewer organizational resources, and more openness to outsourcing many parts of their business processes. They also have additional requirements, such as start-up funding, not normally needed by bricks-and-mortar organizations. What is similar is the need for ERP connections in B2B, and excellence in Web design and in B2C propositions.

Funding

Many dot.coms seek consulting advice in relation to creating a business plan and raising finance. Many large consultancies offer this type of service, including various types of incubators and accelerators. Incubators and accelerators help entrepreneurs who have a good idea, but lack the staff and/or expertise to take the business through the pre-operations stages. The incubators usually offer a network of contacts and sources of finance, in addition to expertise in building Web sites. The work is sometimes performed on a “no success, no fee” basis and payment in equity or equity options (see section 30.4) can sometimes be negotiated.

Independent consultants and non-executive directors are often used by dot.coms. Here the focus is on expertise in a specific market sector, a network of contacts, and experience of building entrepreneurial businesses. Many successful entrepreneurs use the money they have made and their expertise by investing in and advising new start-ups.

There are of course the traditional corporate finance advisers who provide advice on the process of raising finance and structure deals. Integral to corporate finance advice is legal and tax advice. There are many firms that specialize in funding negotiations and advice on corporate structure.

IT platform and infrastructure

The traditional providers of technology consulting are obvious players in this arena; however, much of the success of pure-play Internet consultancies comes from winning contracts to build the Web sites for dot.coms. Since a dot.com could start with a clean sheet of paper, there are no legacy ERP systems to integrate, so they use Internet-only technology from the beginning. The outsourcing of much of the deployment of IT infrastructure, running of systems, and possibly development comes quite naturally if the existing IT infrastructure does not need to be changed. Financial resources are often not sufficient to make investments in hardware and software or to build the expertise to run the systems. Another reason for outsourcing the IT infrastructure is the need to scale the business fast, hence adding capacity on a flexible basis is important. Vendor-based financing of IT equipment is relatively common, with the caveat that it is risky to finance start-ups.

Dot.coms often use a wide range of independent consultants and contractors when building their online business. Contacts and personal referrals create a