UPS debuts customs clearance and international returns solutions for small businesses

Listen to the podcast. Read a full transcript of the discussion. Sponsor: UPS.

As the world becomes "flatter" and globalization drives new opportunities for international commerce, how do small- and medium-size businesses (SMBs) jump on the bandwagon?

The Internet allows any business to gather orders and process them across borders very easily at low cost. For SMBs in the U.S., currency fluctuation are working in their favor for overseas commerce. And such free-trade drivers as the North America Free Trade Agreement (NAFTA), the Central America Free Trade Agreement (CAFTA), and World Trade Organization (WTO) measures are making it easier for goods to flow around the globe -- at least in theory.

The reality is that small business operators need to jump through complex hoops -- especially in a post-9/11 world -- to actually move their goods across borders, and back again the event of returns. Recognizing the opportunity and the challenge, UPS in early 2008 is debuting several new services to help SMBs join the Fortune 500 when it comes to expanded markets and international commerce.

I had the opportunity to moderate a sponsored podcast discussion on the global trade landscape for SMBs, and to learn more about the latest UPS solutions for expanding trade while reducing complexity and risk. Listen as global trade experts and UPS executives explore how (SMBs) can better market their goods internationally, deal with customs and border rules at increasing scale and with reusable automation, while further leveraging the Web for added efficiency.

UPS is helping to change the face of global shipping by being a market innovator with a solution called UPS Paperless Invoice. It uses UPS applications and the Internet to define commercial shipment invoice data for border clearance, eliminating the customer's chore of manually applying three paper invoice copies to each shipment. UPS will also soon deliver UPS Returns in 98 countries so shippers can use digital technology and UPS solutions to prepare the proper return labels so goods can be easily returned back across borders when necessary.

Join Laurel Delaney, founder and president of GlobeTrade.com, and Stu Marcus and Scott Aubuchon, both directors of new product development at UPS, for this SMB globalization opportunity podcast.

Here are some excerpts:

If you’re an American tourist and you're vacationing in Paris, your dollar buys fewer Euros right now. So you’d probably end up spending $7 for a cup of coffee, or even $50 for a taxi ride. A weak dollar can be good for the U.S. economy, though, because it makes American exports cheaper.

International shipping is at an all-time high. The Internet is making it easier for SMBs to trade internationally. Many of the free-trade agreements have helped, as well. But there’s still a lot of complexity involved in shipping across borders, and that’s something that we at UPS are very interested in helping our customers deal with and overcome.

For anything that’s not a document or a letter moving internationally, a commercial invoice is required to go with that shipment, in order to define what is contained in the shipment. So, for example, if you were shipping a cotton shirt, you’d need to document what type of shirt it is, where it was made, and what the fabric is. That process can be fairly complex and somewhat daunting, especially to folks who don’t do a lot of international shipping.

The U.S. Customs Bureau used to be part of the Treasury Department. It’s now called U.S. Customs and Border Protection, and it’s part of the homeland security function. So even though there’s freer trade, the documentation required for trade security purposes is still very important, and may be more important than ever.

UPS Paperless Invoice ... enables our customers to provide us with electronic data defining what’s in the international shipment -- that would be the commercial invoice data -- and provide that seamlessly and electronically, so that we can transmit it and use it for clearance on the other end. ... From the customer's perspective it really is completely paperless. They can take the data regarding the commodities they're shipping and either apply it within, or connected to, their shipping system.

Then, when they prepare the shipment, they simply designate the commodities that are in the shipment, transmit that information with the shipment upload, and we will use that information at the destination to clear the shipment. The customer doesn’t need to print and apply any paper at all in that process. This helps by saving them time, money, and paper.

One of the keys to dealing with duties, taxes, and a proper treatment of shipments is, in fact, the documentation. So getting that commercial invoice data correct, and consistently applied to each shipment, will be a big help with that. ... Because the data is moving electronically to its destination, it's not susceptible to being marred or lost in transit, as a piece of paper might. It’s also helped them to get their shipments cleared more seamlessly. We've seen that for a couple of our customers -- and we expect that the same will be the case for our customers who start using UPS Paperless Invoice in January.

How do we deal with returns? We hear that for some 70 percent of international returns, there is no standard operating procedure. They’re just done on an ad hoc, exception-by-exception basis.

... The research that we have done with our customers indicates that the most important reason customers want to have an efficient return process is for their own customer service. Exporting goods and shipping items globally is only one part of building your business. Offering customer service when things are wrong or customers need to replace items is really key to building customer loyalty and gaining additional business.

Customers know that, in the past, having items returned internationally was really a time-consuming and burdensome process. You have receivers who need to return items internationally, and they may not be familiar with shipping internationally. The shipper who sent it out really has a knowledge base in doing global commerce. Now, the receiver has these items and no way to efficiently get them back.

With UPS Returns, which we are expanding to 98 countries, UPS is going to be the first carrier to offer this type of solution to shippers. Now shippers can use the same UPS technology with which they export goods to prepare the return label and get it to their receiver to initiate the return process. A shipper can now prepare a label and a commercial invoice and have it e-mailed directly to the receiver. Where in the past you would only be able to fill out a manual label and put in the mail, now the receiver can get it immediately, and then use the label and the invoice to initiate the return process. ... This is going to begin in January 2008.

Listen to the podcast. Read a full transcript of the discussion. Sponsor: UPS.

Another option for BEA: Sell yourselves to a big, honking telco

While the potboiler of the Oracle-solicits-BEA story simmers on the front burner, there could be another option for BEA's board. Rather than BEA -- which states it will be happily acquired for $21 per share -- awaiting another software vendor to rescue it from the flinty grips of Oracle, why not seek out an entirely different sort of buyer?

A handful of the world's largest telecommunications carriers, I should think, ought to give serious consideration to BEA's plight. BEA would would do well to become the R&D arm, underlying infrastructure differentiator, integration hub, and sales/marketing channel lead into leading enterprise accounts for any carrier that needs to jump-start its business services offerings.

Now, I have suggested Microsoft might broaden its appeal to datacenter architects the world over by buying BEA, but Microsoft remains drunk on its growth potential as a Windows Everywhere vendor. And Microsoft would, seemingly, rather be late to the Web 2.0 bubble with a Facebook stake than late to the heterogeneous enterprise IT environment with a BEA-enabled segue to full IT and SOA solutions offerings.

Be that as it may, consider how a BEA would fit into a full-service telecommunications carrier's dominion in this pending new world of services, SaaS, subscriptions and the need for technology differentiation as carriers increasingly find themselves competing against Google, Apple, Microsoft, Salesforce.com.Yahoo!, Amazon and eBay.

Right. So if a Verizon, at&t, Sprint, Deutsche Telekom, Orange (France Telecom), or other large carriers were to consider having BEA as part of their organization, what would they get? First, consider that carriers were behind a lot of purely technical advances in computing, with Unix, networks, patents, and R&D emanating from such places as older AT&T, Bell Labs, Westinghouse, and even General Electric. So the precedent of carrier conglomerates being in the IT supplier and R&D business is fairly well established, and the recent history of these global giants outsourcing their IT is the exception over the past 50 years. IBM and Microsoft would not be where they are otherwise.

We also hear the lament that carriers are bit pipes that perform the commodity work of building the networks and engaging and servicing the end users while the content, infrastructure and software developers earn the higher margins and jump first on the new opportunities. There is truth there.

Nowadays carriers are shouldering the mammoth costs of making the world ready for TCP/IP everything while trying to integrate for a triple and quad play offering of Internet, phone/voice, entertainment, and mobile. And for what? So others like Google or Disney can monetize the new advertising models, Apple can sell the music and (maybe) video/TV, and Amazon can sell the rest. And so Microsoft can follow their lead and carve out the industry?

Well, what if the carriers returned to their technical roots, and began the IT pioneering work again that would allow them to keep (and sell) faster, better, cheaper underlying technology (like Google and Amazon have done so well) while leveraging standards and open source as appropriate, and while also providing strong software infrastructure products (and increasingly services) to the large enterprise BEA-type, leading adopter accounts. I think many large businesses would welcome buying software, services and support from their largest networks, telecom, and mobile providers. There's one throat to choke, and the efficiencies and discounts of volume, global purchasing. Of course, they would have to execute very well, which means they need excellent technology and technologists -- and BEA has certainly been that.

A savvy carrier that executes well -- and exploits IT rather than be disintermiated by it -- could offer some fascinating bundles of BEA-type solutions (on premises, off premises, hybrids, lo-cations, grid, virtualized) with their other business-class offerings. They could build BEA middleware-empowered appliances or platforms that could drop into these accounts and tie-in back to the optimized networks and datacenter services.

These carriers could race to SOA and SaaS benefits quickly and directly, in ways that benefit their futures -- rather than be held in the waiting as Microsoft figures out the Live world and IBM deliver business services via SOA that further disintermediates the carriers and networks providers.

I know it's a stretch, and it bucks current thinking. But something like a BEA-at&t mashup -- as long as BEA stands alone inside the maw to well-service its current and new direct software customers -- has some very interesting synergies. Remember that at&t owns Sterling Commerce, which has been doing quite well at a higher level of SOA and supply chain efficiency work.

A BEA-at&t-Sterling mashup -- an integrated and optimized hub of business ecologies and commerce -- is rather attractive on many levels. Meanwhile, the BEA software intellectual property remains to be harvested, and could be quickly expanded upon with a flush R&D budget. An acquired BEA could be the tail that wags the at&t (or other carrier) dog.

Yes, Oracle's synergies with BEA are formidable and may be worth $17 per BEA share. But an innovative, imaginative telco with a 20-year business and consumer services development horizon (with both built on a common yet differentiated technical foundation), may enjoy synergies that do place BEA at $21 per share, comfortably. It's time for telcos to master the entire IT spectrum (again) and provide full solutions, at aggressive prices. It is, after all, about the ability to deliver the goods through the pipe that counts.

Time appears on Oracle's side in increasingly spooky BEA bid

It's getting late, many couples have embraced and moved on to the snug parlor. One pretty but aging player stands on the dance floor, and only one partner so far has stepped onto the parquet with an outstretched hand.

As the music winds down, as the richer prospects don't appear at the ball, our player still chooses to wait for sweeter succor. The grinning suitor pulls the hand back a bit, yet remains poised on the floor ... waiting as the night grows cold, waiting as the crowd thins, knowing that time must surely be on their side.

And so we have the Oracle solicitation of BEA Systems. By its actions, the BEA board's decision not to take Oracle's offer of $17 per share -- yet not to entirely dismiss the offer -- has left BEA in a limbo state that will only deteriorate its chances as time goes on. Activist investor Carl Icahn holds the orchestra's baton, and has let it be known that the music cannot go on much longer.

Even as ICahn has called to place our belle up for crass auction, another bell tolls for BEA. That is, as the quarter wears on and BEA's sales and business development activities are soured by the specter of a pending ownership change, the value of the company will probably begin to trail off, and could plunge.

Why? Because all of BEA's competitors -- not the least of which are IBM and Red Hat -- will be making merry mischief in the enterprise accounts. While Oracle and BEA stare each other down on the metaphorical dance floor, the whisperings of FUD are getting louder and clearer in the background.

How many contracts will be put on hold until this clears up? How many fewer BEA salespeople will make their numbers this quarter while the intrigue persists? How many savvy IT buyers will demand aggressive terms to close sooner rather than later?

BEA is between a rock and hard place, and time will only benefit Oracle, which knows the game well and has proven its tenacity and cunning in the not-distant past with PeopleSoft and Siebel. Tick tock, The Raven ... Poe's slow creep of inevitability and the dank chill of nevermore harsh reality.

If BEA spurns Oracle too much, and any deal appears entirely lost, the BEA stock plunges back down toward $11 per share, or an awkward auction. That's the rock. The hard place is that as Oracle stays in the game but refuses to budge from its $17 per share offer for weeks and weeks, with enough time for the short-term market conditions to work their decomposition effects against BEA. If its sales and pipeline numbers flag as it nears its next quarterly SEC filings, Oracle may be able to set its offer even lower. Investors may flee, driving the price down more. Oracle retracts and offers lower. And so on. BEA will simply be worth less over time. Investors will demand clarity.

To rescue itself from this fate, if BEA works the street hard to prop up sales in the near terms, it will have to do so with incentives and price-cuts -- which will hurt revenues while propping up contracts and deals. Tick Tock ... nevermore. The result in investors eyes will be nearly the same.

Yes, BEA only has a limited period of time to play hard to get. And that time is only in the matter of weeks or very few months. During that time, Oracle has no downside but to wait, watch, make mischief in the field -- and let IBM, TIBCO, Red Hat, and Microsoft do the rest ... nevermore.

The BEA salesepeople, whose near-term diligence may only pay off in the form of a pink slip anyway, are especially vulnerable. How will they respond? Is this dance actually on the parquet of the Titanic for them?

Without the outside chance of a white knight swooping in to pluck Belle BEA off of the dance floor of discontent, Oracle is a Halloween trick that remain less likely to further tempt with additional treats. And Oracle will still get what it wants, probably at an even better price. It is a spooky time for BEA, to be sure ... nevermore.