Companies are no longer racing to be first past the e-business post
at any cost. As the economic slowdown fosters a more long-term
approach, firms are concentrating on efficiency and
cost-effectiveness.
When e-business burst into our lives some two years ago it promised
to revolutionise the way we do business with our customers and
suppliers. Claims that it would bring with it competitive
advantages, reduction in costs and a more efficient business
structure were accompanied by grave warnings about failure to take
the e-route. If you didn't jump on the e-business bandwagon, the
story went, it was unlikely you would remain in business in the
future.
The initial hype has now calmed down and organisations are looking
at e-business technology more rationally and with less urgency.
Be sure of your return
Mike Collins, EMEA marketing
director for e-business security and privacy at IBM's Tivoli
division has observed a new realism. "People are now saying you
have to have e-business in place, but be as sure as you can that
you'll get the return on investment," he says. "You have to work
out how many customers you are going to get, how you're going to
get those customers and at the same time make sure your system is
secure and you keep it private."
Gavin George, head of retail at e-business systems integrator Rubus
argues that the case for competitive advantage has also changed of
late. "Eighteen months ago there was this idea that [the] first
company online gets the largest market share and a sustainable
business model," he says.
"Now the online market is still growing dramatically, but the
forecasts of a couple of years ago were so exaggerated we are still
below what we were expected to do back then. The consequence is
this sense of urgency has disappeared. It's now about efficiency
and effectiveness rather than getting there at any cost."
A recent piece of research found that e-business spend continues to
increase but confirms that it is no longer a licence to spend for
the sake of being "out there", rather it is being used as a tool to
respond to competitors.
The survey of 550 senior communications professionals in the public
and private sectors by the Communications Management Association
(CMA) found that 80% of respondents had examined the overall impact
of e-business on their business strategy. Of those, 60% said
e-business is seen having an impact on all aspects of the
organisation and is "owned" by the board.
Better service, lower cost
Cost reduction and improved
service remained the number one priority for 58% of those surveyed
while 51% said e-business was an important tool to respond to
competitors. "Organisations may have held back on any increased
investment in information communications technology but they are
looking to increase adoption of e-business activity and processes
as part of their defensive strategies during economic recession and
tough market conditions," says CMA chairman John Wright.
Thus, organisations across all vertical sectors are continuing to
invest in e-business, with CMA figures showing that average
e-business spending is up. Those who responded to the survey
increased e-business expenditure from £3.4m in 2000, to £3.7m in
2001.
Despite the new realism pervading e-business expenditure, another
survey, by information management organisation ActionPoint,
highlighted continuing concerns over long-term effectiveness. The
insurance industry's attitude to e-business was investigated for
the research. "Insurers are cost conscious in the current economic
climate, but their belief in leveraging technology for customer
service suggests that they consider e-business to be a fair-weather
phenomenon," according to ActionPoint vice-president of marketing
John Stetak.
Getting rid of paper
Nine out of 10 of the insurance
organisations questioned said improving customer service and
cutting costs were their main priorities. They believe that
effective e-business can only be achieved if paper is removed from
the business model, but 74% of those questioned said paper was as
important to them as it was 10 years ago. They cited the biggest
barrier to removing paper as customer resistance.
Thus e-business strategy is being re-evaluated by many
organisations at present. While still crucial to many business
strategies, increasingly more care and attention is being paid to
its deployment. Resolving how to evaluate the effectiveness of
strategy may be the next, crucial step to ensure that UK business
remains competitive.
"The likelihood that the UK will be Europe's number one country for
e-business by 2005, supporting a flourishing information society,
looks increasingly unlikely," says the CMA's Wright.
Are you riding the second wave?
Or are you still
nursing burnt fingers from the first one?
>
>Let us know how you view e-business opportunities today.