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Diamond Technology Partners' Sviokla Says Digitally-Enhanced Pricing Ranks With Invention of Money in Economy-Transforming Consequences 05/17/2000 Chicago, May 17 /PRNewswire/ - When money was invented as a medium for facilitating commerce, it unleashed a torrent of economic activity that previously had been constrained by the reliance on barter as the only mode of trade. In an analogous manner, today's proliferation of computer-mediated transactions -- and the wave of economic activity that they are beginning to unleash -- is triggering the start of economic transformations of comparably revolutionary scale, says John J. Sviokla, vice-chairman of the Diamond Technology Partners Incorporated (Nasdaq: DTPI) e-business services firm. "We are on the cusp of qualitative changes in commercial transactions that will remake the way market activity takes place," says Sviokla, a former Harvard Business School professor who explores these issues in his chapter in "The Biology of Business," edited by John Henry Clippinger III (Jossey-Bass). "We are about to see a cataclysmic change in the way in which customers express what they want and suppliers express what they are offering, and it will take commercial markets to a new and utterly unexplored level. Digitally-enhanced prices will become more personalized, and people will have opportunities to trade in ways that have never before been imagined." Adds Sviokla: "This type of thinking about economic activity will require a significant conceptual leap. An analogy might be what it must have been like thousands of years ago when someone handed you a little piece of shiny metal when you had been used to thinking in terms of cattle. At that time, money dramatically facilitated the process by which people could buy and sell, and these new capabilities promise to have a comparable impact." Two important factors are converging to spur this transformation:
"We are at a point in history when information and communications technologies are making it possible, on the buyer side, to capture and communicate much more detail about the range options that a customer might find acceptable and the relative importance and value that the customer ascribes to each of the options," explains Sviokla. "A similar set of technology-enabled capabilities makes it possible for suppliers to capture and communicate much richer and more detailed information about what they have to offer and what they would charge." A rudimentary example of the use of more granular information is provided by travel reservation systems that allow airlines to employ complex algorithms to potentially price each and every seat at a different fare in order to maximize a flight's overall profitability. Another example is emerging in connection with a new service from OptiMark Technologies Inc. that is being used to more efficiently match buyers and sellers involved in large-block stock-market transactions. Based on advanced computer algorithms that quantify the fainter and fainter willingness to buy or to sell at prices farther and farther above or below the market price, the OptiMark service makes it possible for a trader to embed trading preferences and trading strategies right into the transaction order. "The idea behind it is to make it possible to express preferences along a continuum rather than a single point," explains Sviokla. "Instead of simply saying, 'Sell 1 million shares at $10,' You want to be able to say something like, 'I would be willing to accept up to 1/8th of a point less to liquidate my entire order and will require 1/8th of a point higher price-per-share if the buyers merely want 75% of the number of shares I am looking to sell.'" Beyond the financial sector, the logistics arena appears particularly ripe for these kinds of services. For example, a construction contractor might be willing to specify his flexibility in acceptable delivery dates for, say, a shipment of lumber and to match different discounts in delivery charges reflecting his flexibility. "Technology is beginning to make it possible to make these kinds of things feasible, and we are going to see a market system in which many prices for goods and services could exist simultaneously," says Sviokla. "This is not an easy possibility to imagine, but it is real." The changes also raise a mind-boggling array of new business challenges and opportunities. "For one thing, businesses leaders need to make sure that their organizations assign their very best people to work on their strategies regarding the new Web-based electronic exchanges that are being developed," emphasized Sviokla. "These exchanges have the potential for providing a wealth of information about the trajectory on which buyer-seller relationships are likely to evolve." But, perhaps most important, emphasizes Sviokla: "Companies need to focus a lot more of their resources on gaining a much better understanding of the specific needs of their customers. They particularly need to learn as much as they can about possible customized offerings that their customers are likely find valuable, but that those customers have not been able to express because of the bandwidth constraint that, in the past, had been a barrier to communicating that desire." About Diamond Diamond Technology Partners Incorporated (Nasdaq: DTPI) is an e-business services firm that helps clients develop and implement Digital Strategy(SM) -- business strategies for the digital age. These digital strategies typically transform client business models and create dramatically different e-businesses that deliver sustained market leadership. Headquartered in Chicago, the company serves clients worldwide across a range of industries including financial services, consumer and industrial products and services, telecommunications and energy, healthcare and insurance. Diamond's Web site can be found at www.diamtech.com . CONTACT: David Moon, 312-255-4560, or moond@diamtech.com, or Joan
Lufrano, 312-255-5307, or lufranoj@diamtech.com, both of Diamond
Technology Partners/ 13:13 EDT
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