A.  EnronOnline has been a extremely successful e-Commerce project in the energy industry.  As of September 14, 2001, it has completed over 1.4 million transactions worth $800 billion.  Currently, 60% of Enron's transactions are done via EnronOnline and the company's transaction costs have been reduced by 75%.    

Our business model for leveraging the internet has proved invaluable and is inherently strong.  We built EnronOnline in collaboration with input from commercial as well as technological experts.  Over the past 22 months, we have successfully the EnronOnline e-commerce platform to:  

1) Access new markets and customers
In addition to enhancing its Natural Gas and Power businesses, EnronOnline has enabled Enron to get into other markets, for example, broadband, paper, freight, metals, weather, petrochemicals, and even financial instruments from all over the world.  The system has been instrumental in reaching many more customers than previously possible via telephone or face-to-face meetings.  

2) Manage high volume of products and transactions
Enron does more than 5,000 online transactions in an average day.  Before EnronOnline, a buyer might have needed to make numerous phone calls to hunt down prices; now s/he can go to EnronOnline and instantly buy or sell a commodity at a market-driven price, with no transaction fee.  The easier price discovery attracts more companies to EnronOnline.  More trading builds liquidity and more liquidity tends to narrow bid and offer spreads, resulting in better prices and more deals for Enron.

To paraphrase Smart Business (September 2001), a long-term gas contract, that in 1981 took two years to execute, and in 1997 took two weeks - now takes less than a second online [thanks in part, to EnronOnline].  Because of the technology and software EnronOnline has developed, it is relatively easy for Enron to add new products to trade online, further making it easier to move into new markets without having to wait for long lead-times required to develop new systems.
 
3) Improve Competitive Position And Bottom Line

EnronOnline has truly differentiated itself in the industry by using the internet effectively.  The results have been widely reported in the media.  Internet Week (October 2000): "Enron is a company that fundamentally transformed itself on the Internet - having whipped its existing businesses into online ones, ridden the Net into many new markets, added $60 billion in revenue last fiscal year, and has beaten Wall Street earnings forecasts in the first two quarters of this year . . . [Enron's] second quarter net income rose 40% from the year-earlier quarter to $404 Million, on 196 percent higher revenue of $50 billion . . . the Internet trading marketplace Enron launched in late 1999 is allowing the company to pounce on market conditions with startling efficiency. EnronOnline now does more than $4 billion a day in trades, in everything from coal and steel to storage services and weather derivatives. 

Enron was praised in Smart Business magazine (September 2001) as No. 1 of the "Smart Business Fifty" list for successfully embracing the Net to expand and enhance the business.  

Forrester Research (Forrester Report April 2001) predicts online energy trading will explode from a $400 billion market in 2000 (with EnronOnline dominating most of the wholesale energy trades), to $3.6 trillion in 2005.  Enron leads the field with double the online trading volume of its nearest competitor.  


 -----Original Message-----
From: 	Zaccour, David  
Sent:	Wednesday, September 12, 2001 11:20 AM
To:	Taylor, Liz M.
Subject:	MBA Question for Louise

Liz,

	I work for Anthony Dayao as part of the EES IT group but formerly was in Enron Net Works under Steve Stock and met Louise briefly in 1999.  I'm in the middle of the Rice University Executive MBA program and for one of our final exam questions, we are permitted to consult internal resources.  The question is regarding how we (Enron)  have used the Internet to differentiate ourselves from other organizations (Competitors) in the industry.  During our Rice MBA classes, EOL was brought up several times so it's considered very highly by the school.  I would be remiss if I didn't mention its strengths during our exam.

	My professor has provided me assurance in writing (Email) that any answer will not be published.

	I appreciate Louise' and your time in helping me on this school exam paper.

	Regards,
	David Zaccour
	713-853-6659
	832-978-3471 (Cell)

Exam Question:

2.	Working with whomever you deem is appropriate in your organization, identify the three organizations in your industry, which in your opinion, use the Internet and World Wide Web the best.

If your organization is not one of the top three, what does it need to do on the Internet and World Wide Web to move to the "best" category? If your organization is among the top three organizations in your industry, what uses of the Internet and World Wide Web have differentiated your organization from other organizations in your industry?