Published in Rapid Product Development
July 2000

Rapid Prototyping and the Internet: Risk Takers Wanted

Now that the "dot-coms" have entered the rapid prototyping marketplace, what will the future hold? Todd A. Grimm -- director of marketing for Accelerated Technologies, Inc. -- discusses the possibilities.

The rapid prototyping industry has already begun to enjoy the speed of data communications that the Internet offers. FTP and e-mail attachments instantaneously deliver the lifeblood of rapid prototyping systems: the STL or CAD file. Now, with the introduction of new Web-based services, the Internet promises to take rapid prototyping beyond data transmission and electronic brochures to innovative solutions that make business transactions faster, easier, and more efficient.

What will these new Internet solutions offer, and what will they do for the rapid prototyping industry? Some dot-coms believe that the answer is offering tools to expedite the request and delivery of quotations. Three companies currently offering request for quote (RFQ) solutions are Bits2Parts.com, ManufacturingQuote.com, and Protomarket.com. As the first Internet services to be applied to rapid prototyping, online price quotes will demonstrate all of the challenges and risks that are ever present with Internet solutions.

It is unlikely that predictions of the exact nature of the Internet's affect on rapid prototyping will prove to be accurate. The shakeout among the dot-coms is indicative of the perils of attempting make such a forecast. For many dot-coms, stock prices are falling, financing is drying up, and pink slips are more common than stock options. Reality has set in and is overcoming the raw exuberance initially felt for the Internet and its players.

Internet Success Factors

As demonstrated by Internet solutions for other industries and applications, the winners in the rapid prototyping e-marketplace must overcome three significant obstacles:

• Acquiring finances: It is expensive to develop, market, support, and operate an e-solution.
• Developing real benefits: If consumers do not realize a gain, they will walk away.
• Obeying the laws: Breaking the fundamental laws of business can lead to failure.

Heightening the challenge, those competing in the Internet race must be successful in each of these areas while operating at "Internet speed."

In the May 22, 2000, issue of B to B, a Crain Communications, Inc. publication, survey results showed that the median price for the development of a basic Web presence with minimal e-commerce capability is $113,500. Taking the development to the next step to include access to internal data-management systems bumps the median price to $850,000. A full-blown e-commerce site carries a median price tag of $1,950,000.

The financial requirements cited include only the cost to develop the application. Additional finances are required to create and fuel all other aspects of the business. PlanetCAD.com, a venture of Spatial, Inc., illustrates the high stakes involved in launching an Internet solution. In February 2000, Spatial announced that it had secured $6.9 million in long-term equity financing for the purpose of expanding the PlanetCAD suite of Internet applications, which includes Bits2Parts.com. This is in addition to previous investments.

With financial requirements starting in the hundreds of thousands of dollars, it is most likely that new Internet tools will come from outside of the rapid prototyping industry. Many rapid prototyping "mom-and-pop shops" and equipment manufacturers are ecstatic to report that they are no longer losing money. Very few RP companies have the resources to fund an e-commerce development project.

In the same issue of B to B, an article highlighted the perils of delivering the wrong Internet solution. Eric Antonow, director of strategy for the marketing agency Giant Step, stated, "Too many companies continue to think from their perspective rather than that of the end customer." When an organization operates from the baseline of what it wants -- rather than what the customer needs -- it is rare that a good product or service is developed.

Without real benefits to the customer, nothing can survive. For commodity items, the real benefit may simply be found in getting the lowest price. For all other products and services, the benefits will center on speed, efficiency, and value. Focusing on highly subjective needs and desires is not a simple task when developing innovative solutions. Predicting what will be wanted in the future is like shooting at a target that does not exist.

In business, there are fundamental laws that can be likened to the law of gravity. These are rules, processes, and practices that do not accommodate deviation. Established "brick and mortar" businesses spend years developing the practices, strategies, logistics, and processes that make them successful. Many new Internet players believe that the e-enabled world is so unique that these fundamental laws can be broken and major steps skipped.

An obvious law is that businesses need to make more money than they spend. Until recently, the Internet world operated under the tenet of spending lots of money, without profit, to secure a strong market share for the future. The sharp decline in Internet-related stock prices is proof that profitability is a law that cannot be broken.

Another law relates to the buying-and-selling process. If a consumer is forced to skip steps in the buying process, no business will be transacted. An example lies in professional services, such as legal, financial, and consulting. Would an online, reverse auction of professional services satisfy all of the steps in the consumer's evaluation process? When experience, skills, and personalities strongly influence a business relationship, conversation and interviews are an essential part of the selection process. Skipping the discussion and discovery step is a breach of the comfortable way to select professional services.

Online Quoting

Acquire financial resources, deliver real benefits, obey the laws, and deliver at Internet speed -- these are the fundamental keys to success. The winners in the race to offer online quoting tools to the rapid prototyping industry will be the companies that surmount these obstacles.

Each of the three companies offering online quoting services has different ideas concerning the desired real benefit:

• ManufacturingQuote.com promotes competitive quotes from jobs shops delivered via e-mail to potential customers. RFQs are posted to a broad base of suppliers with a single mouse click. In an upcoming release, the company will add tools to manage quotations and orders. As the name implies, this tool addresses many manufacturing processes.
• Protomarket.com focuses on getting the best price and delivery. Target services include rapid prototyping, rapid tooling, casting, and CNC machining. RFQs are posted to select vendors and a desired price can be stated. Providing visibility to quoted prices, Protomarket.com creates a reverse auction for rapid prototyping.
• Bits2Parts.com offers rapid RFQ generation and response, job routing to specified vendors, electronic payment, and rapid prototyping service listings. The real benefit promised here is that the RFQ process is streamlined and managed for efficiency on both ends of the supply chain. Integral to the solution is a structured RFQ process driven by a database of vendor capability.

Beyond the acceptance of these solutions' benefits, another question is whether or not the buying public will develop confidence and trust in a supplier when a faceless intermediary stands in the middle of the process. Over time, the public will cast its vote as to the winning solution. The vote will be driven by the delivery of real benefits and adherence to the customers' preferred methods of operation.

Internet Speed

As with physical products, the first to market with an innovative Internet application will capture the majority of the market share. Building from an environment where communication is instantaneous and change is the norm, the industry operates at Internet speed. For the cautious pragmatic, this means moving quickly without the support of thorough research, analysis, and testing. The e-world is moving so quickly that companies are often driven to operate on gut feelings and intuition.

Balancing financial demands, delivering real benefits, and doing business according to consumer requirements is challenging and demanding. When the process is accelerated to Internet speed, the course becomes treacherous. Some dot-coms will appear from nowhere and rise to phenomenal heights. The rest of the competitors will discover that operating at Internet speed only served to hasten their demise, condemning them to bad decisions destined for failure.

Delivering innovative solutions at Internet speed is analogous to reducing time-to-market -- the goal of brick-and-mortar companies worldwide. Rapid prototyping is a tool that promotes speed while protecting a product from fatal flaws. The Internet community could use a similar tool.

What does the future hold for the partnership of RP and the Internet? Marrying the two will offer solutions that make it faster and easier to get the job done. The tools that are still being used two years from now will be those that offer real benefits, work the way the customers prefer, and deliver on the promise of creating value. Internet solutions will become an integral part of the RP process only when buyers of rapid prototyping services voice their approval, with an eye toward value, confidence, convenience, and trust.

Contact information:
Todd Grimm
T. A. Grimm & Associates, Inc.
3028 Beth Court, Edgewood, Kentucky 41017
Phone: (859) 331-5340      Fax: (859) 514-9721
tgrimm@tagrimm.com      www.tagrimm.com

T. A. Grimm logo and Marketing Engineered for Sales Results
are service marks of T. A. Grimm & Associates, Inc.