The new realism rules in e-business:

Companies are no longer racing to be first past the e-business post at any cost. As the economic slowdown fosters a more...

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.

Read more on IT legislation and regulation