ELECTRONIC COMMERCE
AT AIR PRODUCTS
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Development of IT in Chemical Industry
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Electronic commerce capability was becoming a
strategic necessity for companies in the highly
competitive international gases and chemicals
business.
A shift emerged in priorities from the building of a
corporation’s internal infrastructure in 1995 to
enabling the same infrastructure to connect with
customers, suppliers and partners in 1998.
Comparison of Chemical Industry IT
Priorities in 1995 and 1998
About
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An international corporation with headquarters in Trexlertown,
Pennsylvania.
Globalization strategy: acquisitions in Europe, Asia and Latin
America.
Serving customers in technology, energy, healthcare and industrial
markets.
Chemical industry safety leader.
Geographically diversified, with more than half of the sales outside
of the U.S.
-Operations in more than 30 countries
17,200 employees worldwide.
Known for their innovative culture and operational excellence.
About
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With sales of $4.6 billion in 1997, Air Products held the
number two position in the gases industry in the United
States, behind Praxair, and was fourth largest provider in
the worldwide market.
Realization of the Electronic Commerce
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The increasing strategic
attention of the senior
importance of electronic
commerce commanded the
executives of Air Product.
Air Products MIS Vice
President Joe McMakin and
his colleagues recognized the
opportunity they could
improve service to customers
by automating the buying,
selling and distribution of
products, while simultaneously
improving productivity and
realizing cost savings.
How MIS Supports the Air Products
Business Areas?
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McMakin’s core MIS group developed the infrastructure and cross
information services supporting the business areas of Air Products
worldwide.
CEO Perspective: IT Part of Strategic
Decision Process
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In a 1996 survey of 100 CEOs of Fortune 100
Companies, it was discovered that the IT function had
become a strategic competitive function rather than an
infrastructure necessity at the world’s largest
corporations
The survey results showed that chemical industry CEOs
were more convinced than those in any other industry
segments surveyed that IT should be an integral part of
business strategy.
A central reason for CEO involvement in IT strategy was
the need to build multi-million dollar global IT systems
to support international expansion.
CEO Perspective: IT Part of Strategic
Decision Process
From Air Products’ 1997Annual Report
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“Over the past few years, we virtually reinvented the
way we do business, moving to a market-facing
organization in our two largest markets, North
America and Europe, and centralizing our customer
service operation in North America. New work
processes and procedures and new technologies have
made us even more responsive to customer needs,
more efficient in running our plants, higher in quality,
and lower in cost.”
THE INTERNET: BOTTOMS UP EVOLUTION
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Chronology of technological innovations;
 1960s
first seeds on modern internet
 1989 official launch of internet
 1990 first intranets appear in organizations
 1992
 1993
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universities and technology centers adopt the Intranet
official launch of web
1990, John PFEIFFER (director of research and
engineering systems), aka “the father of internet” at Air
Products, coordinated employees’ access to info
available on the academic, government and scientific
servers connected to the net.
The Web Enters the Scene
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In 1993, with the launch of web, the necessity to use
arcane computer commands and the UNIX language
was abolished. How?
 Web
facilitates the utilization of the Internet via
browser softwares
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Web not only made the communication across
geographic boundaries easier but also promoted
the marketplace.
Pfeiffer alerts management in 1994
“The Internet will become the integrating vehicle for
many of the challanges that the company faces today
in global communications. Another growth element
that will fuel the use of the Internet for non-technical
users will be access to the Internet via desktop
graphical interfaces. Today, this is not in place.
However, within six months, we will see a whole new
market emerge to fill this void.”
Air Products on the Web
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Both Steve Cameron (Communications Manager) and
Bill Townsend (IT Manager) believed that these
innovations would trigger a technological change.
The former MIS vice president gave them approval to
recruit employees and start working on Internet
related “skunkworks” projects and hire a marketing
team to assist in design and development of Web
site.
On January 8, 1996, the site is announced to have
been launched via a press conference.
The Conferance
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However, only 1 local report shows up at the
conference. But, they had a message to deliver to the
1000 employees, including the executive management
who did show up.
“The primary reason Air Products has a presence on
the Web is to help build our competitive advantage
through lower costs and reduced cycle times. Our Web
site today communicates vast amounts of corporate,
product, and technical information. Tomorrow, however,
it will allow us to provide a transactional medium for
many of our products and services.”
The Web Site
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Within 2 weeks of its launch, the AP Web site was
getting
2.000 hits (files accessed from the web browsers) and
 170 visitors per day.
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In 1998, the site reached its highest activity levels
with
 over
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12.000 hits and 850 visitors per day.
Out of the 500 e-mail inquiries per month,
approximately 10-20 were being logged as
possible sales and designated for follow-up.
Cumulative Hits and Users
The graph indicates that the number of daily hits on the AP
Web Site is increasing.
Customer Relations and Marketing
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The Web catalogue enabled the customers to
access any desired info about gases and related
equipment in their convenient chairs.
The cost of printed editions of the catalogs,
brochures and even annual repots diminished.
The cost saving were projected to increase as the
market shifted from paper based marketing to the
electronic medium
“Call me now”
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In 1997, “call me now” button, an interactive
component, was added to the Web page. By
clicking the button, a customer service
representative would call the customer. It was a
type of “push” marketing which sent/pushed more
targeted pages to the potential customer. Result of
the first six months;
the system was accessed 2000 times
 125 calls were completed
 Only a few sales were transected
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The Intranet
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Emerge of Intranets in 1990s.
 Web-based
communication system for employees
 Security systems or “firewalls” to keep interlopers out.
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In 1998, over 50.000 documents were available
via Air Products’ Intranet.
 The
Intranet of Air Products evolved from hundreds of
disparate sites that departments micromanaged. Thus,
resulting in a more organized system for communicating
and collaborating. (Bottom – Up Design)
Business Week
“From AT&T to Levi Strauss to 3M, hundreds of
companies are putting together intranets. At Compaq
Computer Corp., employees tap into a Web server to
reallocate investments in their 401(k) plans. At Ford
Motor Co., an intranet linking design centers in Asia,
Europe and the United States helped engineers craft the
1996 Taurus. Scientists working in fields such as genetics
and biotechnology credit intranets with allowing them to
share information with colleagues and quickly shift
through volumes of data that might have taken days to
find in the past.”
Deploying the Internet
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Operating system
Win 95 was selected
 By 1998, 6500 employees at the corporate headquarters had
Internet access. 2000 professionals in the European Division
were the next in line.
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Dual Web browser
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1997, MS’s IE was chosen over Netsape.
Electronic commerce solutions;
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MS Siteserver was selected over;
Netscape Merchant Server
 Open Market Electronic Commetce Suit
 Oracle Internet Commerce Server
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Air Products’ Internet Infrastructure
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Employees’ increased access to Web and
consequent reduction in amount of paper circulating
within the company
 Employee
directories
 Training and procedure manuals
 Human resource policies
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Policies differ from country to country.
1100 engineers worked hard to develop the
Intranet which enabled to decrease weeks of labour
on proposal to 24 hours.
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However, the costs of communications started
increasing.
 Higher
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bandwidth became necessity
“Electronic commerce on the Internet is exploding
and we have to figure out how to do it.”
Arthur KATSAROS
Extranet Strategy at Air Products
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Extranet:
Part of a company’s intranet
Providing limited access for users outside the
company
Via internet (usually)
Main Reasons for the Implementation
of Extranet at Air Products
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Liquid Business, Reduction in Inventory Level
Satisfying Customer Needs Properly – Vendor
Managed Inventory (VMI)
Cost Reduction Through Limiting Customer Service
Staff
Conclusion
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Financial Concerns
Proper Integration Into The Existing Architecture
Wide Range of Customers  Broad Range of
Requirements & Needs
Increase in Market Share & Operational Efficiency
Questions
1 - What are the benefits of new work processes and
new technologies in Air Products?
2 - Name the main reasons of implementation of
Extranet at Air Products
3 - How was the software selection in the IT
implementation process after the official
announcement of the Internet?
Answers
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1- They have made Air Products more responsive to
customer needs, more efficient in running their plants,
higher in quality and lower in cost.
2- The business that Air Products operating in is liquid
business which means that keeping inventory level low is
crucial for the companies. Moreover, it’s also beneficial
for the customers to check the volume and type of
products offered by Air Products to make the most
correct decision through extranet. Extranet also ensures
cost reduction through limiting customer service staff.
Answers cont.
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3- First, the Air Products selected MS Win 95 as
the operating system.
Secondly, the company was using dual-browser, MS
Internet Explorer and Netscape, the latter was
abondened in 1997.
Finally, the IT team’s vendor selection was in favour
of MS SideServer where Netscape Merchant
Server, Open Market Electronic Commerce Suite
and Oracle Internet Commerce Server were among
the options.