E-business as usual

A raft of research shows that, despite the dotcom slump, Internet strategies are still at the top of most companies' business...

A raft of research shows that, despite the dotcom slump, Internet strategies are still at the top of most companies' business agendas.

Confused and sceptical they may be, but most organisations are still convinced that Internet technology has a key role in their future business strategy.

A series of surveys conducted over the last six months suggest that investment in e-business is set to increase as firms look to Internet technologies to help them improve earnings by reducing costs and boosting productivity.

PA Consulting surveyed the CEOs of the UK FTSE350 companies in May in order to gauge their interest in the Internet and e-business. The survey's authors were expecting a variety of views, ranging from the bullish to the highly cautious, and were surprised by their findings:

"What has emerged is a much more consistently positive view of the intrinsic business value of Internet technologies, and an indication that new e-technology spending will revive," says the report.

Sixty-six percent of all respondents were maintaining a "high" level of interest in Internet technologies, with 30% claiming that interest was at the "medium" level.

This interest was reflected when respondents were asked to indicate their planned investment in this area. Forty-four percent were expecting to increase spending, while 22% indicated that their spending in Internet and related technologies would remain steady. Only 14% expected a decrease. This is reassuring news for an IT industry struggling to fill its order books.

These investments will be much more pragmatic and based on thorough evaluation rather than a "keep-up-with-the-Joneses" approach. All of the respondents said that there would be renewed interest in e-business in the future, but in a more measured way.

According to the respondents, much of this interest will come from board level, with 66% expecting to see "e-business transformation" coming high on their agendas.

PA Consulting believes that industries that are dependent upon multiple processes, such as financial services, insurance, retail and manufacturing, have the most to gain from e-business transformation.

According to the latest Computer Weekly/Kew Associates survey of UK IT expenditure, spending on e-commerce applications and infrastructure is rocketing by 59% this year. Closely behind in growth terms is customer relationship management (CRM) expenditure with 50%, followed by application service provider (ASP) and broadband infrastructure spending at around 30%.

These figures tail out towards 2003, but, if accurate, represent a huge investment in building a robust framework for the continued uptake of e-business throughout every part of British industry.

Finally, research from Forrester that was released in July claims that UK online business trade will pass £300bn in 2005, up from just £13bn this year. A hefty 41% of this will be facilitated by online marketplaces, believes Forrester analyst David Metcalfe.

Forrester believes that growth will be driven by industry giants in petrochemicals, which will hit £70bn by 2005, and motor vehicles.

For the research, Forrester spoke with senior e-business executives from 50 UK-based firms with mean annual turnover of £800m. Interviewees invested an average of £2.5 million in business-to-business projects in 2000, and 60% of those responding expected this spend to rise by 2002.

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