More than anything else, the Internet's impact on business-to-business commerce is that the cost to switch shrinks every day. Previously, organizations became joined at the hip as much from inertia, comfort and the expense associated with changing suppliers as they did from extracting favorable contract terms and good pricing. The Web has changed all that. As a consumer, I'm just as comfortable buying a book from Amazon. com as I am from BarnesandNoble.com. I encounter no costs when switching from vendor to vendor; there are only benefits, perceived or real.

In the same light, as a business consumer, I can now be just as comfortable buying my office supplies from vendor A as I would from vendor B. Again, there's no cost to switch and all I experience are the benefits of lower pricing and/or better customer service.

Many business sectors will be forever changed once their customers have a choice. The long-distance market has changed so much that it has become unrecognizable compared to the way it looked prior to deregulation. Already, the advent of daytraders (folks who trade stocks online during the day from the comfort of their desks) has shrunk brokerage-house margins. In many areas, the emergence of significant numbers of individual investors has wrested control from institutional investors. In turn, the market makers (those who trade with enough clout to actually move the price of a stock up or down) have realized that individual investors, when gathered into larger groups, can be influenced and manipulated. In short, the game on Wall Street has changed. At first the changes were small, but ultimately they are significant. The changes have made some companies a great deal of money, while other companies have been squeezed.

What Lies Ahead? Most of the business-to-business sites you'll see in 2000 are just now in the planning stages. It is reasonable to assume that both the proliferation of sites and the ability to quickly set up and tear down business-to-business applications will lower the degree of customer lock-in with any vendor. Certain industry segments will be reduced to price competition and profit margins will fall. We've already seen this with the falling spreads (the price between the bid and the ask for any traded security) in the stock market. The only real solution is product differentiation.

And product differentiation is where you come in. The "product" in this case is not only the physical product you sell, but the online experience you provide. To use our bookseller example again, Amazon.com and BarnesandNoble.com sell the same books, for the most part. However, all their investments are poured into differentiating and promoting their users' online shopping experiences.

Unfortunately, your focus is probably on propagating a sanitized version of your in-house systems for a tightly defined (read "controlled") external user population. This approach simply will not cut it--it's just not enough to win over potential users and shoppers.

In other words, "build it and they will come" just isn't enough anymore. We've seen evidence that your site will contribute significantly to the success of your underlying products. IT groups that successfully differentiate their products through adept implementation and progressive thinking will, by definition, finally move from an overhead department to a line organization. All you need to do is look at the contribution Cisco's IT staff has made to the company's bottom line. The question now is, how do you proceed?

Getting There From Here The answer is twofold. First, you need great technology. Next, you need to get personal.

For an example of great technology, accurately targeted and elegantly implemented, check out quote.com's LiveCharts applet. For all my enthusiasm about Java, I usually groan when I see an unexpected "Starting Java" status message as my laptop struggles to load it over a dial-up line. But with quote.com's LiveChart applet, it loads quickly and it's bundled with features, providing everything you need to track the market. It's all there for free, enticing investors to use the site. Just a few years ago, this same functionality was available only to a select few.

Personalization and customization are quickly becoming imperative. Simply put, consumers like to interact with products they can control and do not like to interact with products they cannot control.

To differentiate your product, your site must transform itself on the customer's whim. This flies in the face of decades of IT practices that have tightly controlled content, presentation and transaction behavior. But the imperative is clear: In order to prosper in the digital economy, you must use your customer information to create a higher degree of satisfaction for your consumers than your competition can. Only then will you be able to win the coming price wars.

Brian Walsh is the founder of bwalsh.com, a Portland, Ore., consulting firm specializing in Internet and client/server product strategies, development and testing. Send your comments on this column to him at brian@bwalsh.com.