Wireless banking, the rise of application service providers and a
new dotcom crash were some of Gartner Group's predictions at its
annual symposium in Cannes. Nick Huber identifies four key trends
that were discussed
E-marketplaces set to crash
The dotcom market is heading for a second crash as companies in
the much-vaunted business-to-business (B2B) marketplaces struggle
with a limited take-up.
That was the stark warning from Gartner Group this week. The
company also urged European governments to overhaul both their
e-business strategy and their regulatory frameworks to boost growth
in the new economy.
Despite the hype and a flurry of investment in B2B services,
according to Gartner, the actual value of transactions,
particularly within e-marketplaces, is still very low. It predicted
the B2B market crash could be less than one year away.
As recently as this spring, only an estimated 25% of all
European e-marketplaces were actually conducting transactions and
only half will be doing business online by the end of the year,
Gartner claimed.
The company also predicted that a growing number of companies
will start to double their e-commerce investment over the coming
year as the complexities of e-business investment sink in.
According to Alexander Drobik, vice-president of business
management at Gartner, “The crash will be more subtle than the B2C
crash. There is still a lot of investment and people setting up
business plans. But venture capitalists are getting more ruthless,”
he said. Gartner also called on European governments to step up
e-business investment and focus their efforts more clearly.
Flexible competition laws and employment schemes to combat the
e-business skills shortage were among areas for government action
highlighted by Gartner.
ISPs to beat the banks in online market
Internet service providers (ISPs) are set to dominate the
lucrative wireless banking market at the expense of high-street
banks.
That was the banking industry wake-up call issued by Gartner
Group. Gartner predicted telecom ISPs will pose a 26% greater
threat to retail banks in 2003 than they do today. The threat will
ride on the back of an explosive growth in mobile banking and
wireless devices. By 2003, the number of mobile banking users in
Western Europe will outstrip the number of Internet banking
customers, Gartner claimed.
And by 2003 more than two-thirds of the European population will
also have data-enabled mobile phones, Gartner forecasted. As
traditional banks no longer have first-mover advantage, ISPs will
attack the new wireless banking market by taking advantage of their
technology infrastructure and customer loyalty, according to
Gartner.
Gartner analyst Laura Starita said, “The established banks will
keep their core competencies of high-end risk management, portfolio
management and regulatory compliance. “However, the portals have
big opportunities to provide micro-payments, authorisation, low-end
risk management and transaction processing. This could make them
the preferred point of contact for existing traditional bank
customers,” she said.
Starita added that ISPs could cut banking charges and overheads
by charging customers for goods, based on the price of the call,
plus a charge for processing payments. ISPs could also run credit
lines and offer personal loans using this charging method,
conference delegates heard. It was stressed, however, that banks
are aware of the threat to their market and are partnering with
some of the major ISPs.
Deutschebank and AOL, for instance, are developing wireless
banking in Europe while ABN-AMRO has entered a joint venture with
KPN to develop a pan-European banking portal. But Starita warned
that the wireless banking revolution does face obstacles. She cited
establishing a common infrastructure for processing customers’
micro-payments as one example.
Growth in e-tracking to allow closer customer
scrutiny
In five years time companies will be able to capture 30 times
more data about their customers, due to online tracking and
embedded sensors, Gartner Group predicted. But the company also
warned that the revolution in data capture raises major privacy and
legal issues for companies to grapple with.
By 2010 some 70% of the population in developed nations will
spend 10 times longer interacting with people in the e-world than
in the physical one, according to Gartner’s predictions.
The successful companies of the future, Gartner argued, must
grasp the needs of customers and employees interacting in virtual
communities, dubbed the “always-on” environment. But they must also
ensure their customer-tracking technology remains within legal and
civil liberty boundaries, Gartner urged.
According to Alexander Linden, senior analyst at Gartner, “The
always-on environment with the growth of targeted and relevant
information means people’s attention will be a scarce
commodity.”
He added, “Only by redesigning their businesses and by totally
rethinking their processes and consumer models will companies
harness the full benefit of customer tracking technology. The key
issue is shifting from what is technically feasible to what is
socially and legally permissible,” he said.
“Those who fail to address privacy implications when evaluating
customer-facing technologies risk seeing the entirety of their IT
strategies derailed.”
ASPs vital to e-trade growth
Application service providers (ASPs) should form an integral
part of future e-business projects, Gartner Group has urged.
Predicting the e-business landscape of 2005, Gartner believes
that the intricate integration demands of e-business projects will
be too complex for suppliers and consultancies to deliver without
the help of ASPs.
Peter Sondergaard, general vice-president at Gartner, said,
“Despite the ‘all-singing, all-dancing’ sales pitch of the big
application vendors, no single packaged application source will
represent more than 40% of a firm’s application requirements.
“By 2005, critical investment and strategic decisions around
integration efforts will be twice as complex for enterprises as
yesteryear’s enterprise resource planning environment.” But IT
managers should be careful when choosing which ASP to partner in
such a fast-changing market, Gartner warned. It predicted that, by
2004, more than 80% of existing ASPs will have either gone to the
wall or have been consolidated.
Companies should include contingency plans in their ASP
arrangements as insurance against such volatility, Gartner
advised.
By 2005, we will also see the emergence of three main
e-marketplaces, according to Gartner. They are businesses services,
to support the supply chain; commodities, replacing markets and
auctions; and integration services.
In the new e-marketplace traditional bricks-and-mortar companies
have the advantage over dotcoms due to factors such as brand
identity and their size.
Sondergaard said, “The future will belong to hybrid
brick-and-mortar-type businesses. Pure dotcom companies must
overcome their disadvantages in brand identity, economies of scale
and retained expertise by offering added value in other areas.”
Gartner also predicted that the rise of the Internet and wireless
sector will place a greater importance on “client-focused”
applications.