Have you opened your eyes to e-business?

E-business may represent an overawning challenge to the department, but IT chiefs cannot afford to bury their heads in the sand,...

E-business may represent an overawning challenge to the department, but IT chiefs cannot afford to bury their heads in the sand, reports Rob McLuhan

A straw poll held at the IT Directors' Forum on the cruise ship Aurora in July, revealed that fewer than 5% of companies had a clearly-defined e-business strategy communicated to all levels of management. Instead, it was mainly enterprise resource planning and internal computing projects that were taking up most of the directors' attention.

While that may seem surprising, the pace of Internet development is so rapid that many companies are struggling to keep up. Scratch beneath the hype, and all kinds of concerns about e-business start to emerge, from uncertainty as to its real benefits to worries about security and the lack of resources to make it happen.

However, some observers also detect a willingness to let others make the running - a complacency, which, they say, could lead to trouble.

"Companies can't afford to hang around on the margins - they have to get to grips with e-business if they want to survive," insists John Higgins, director-general of the Computing Services & Software Association (CSSA).

Higgins argues that the new model should be recognised not just as a means of selling over the Internet, but also of improving performance in supply chains or customer service.

Uncertainty about how to get started was one of the main findings to emerge from the CSSA's recent survey of user organisations around the world. Another was a lack of trust of the new medium among businesses and consumers.

In the UK, the top two barriers emerging from a recent National Computing Centre (NCC) survey of IT users were the precedence given to other projects and the shortage of skills - both cited by about 80% of respondents as a factor, and by 50% as a major factor. Lack of demand from clients and partners was also cited as an obstacle, although this declined from two-thirds last year to only a third this year.

Where problems occur it is often through a lack of experienced project leaders and first-line developers, says Kenny Robertson, head of IT business solutions at billing agency Vertex. "The main system principles of scale, performance and resilience haven't changed, but there are fewer people that understand those principles and have the experience of putting them into practice," he says.

Companies face real difficulties with recruitment and it is clearly wise for them not to let media hype influence business decisions. But some observers see the barriers cited by users more as rationalisations than real issues, masking a dangerous complacency.

"Cultural inertia is the biggest stumbling block of all," comments Hugh Macken, secretary of IT directors' association Certus. "US companies seem to be much better at understanding intangible business benefits and this makes it easier for them to grasp the nettle. Here in the UK, we are still locked into bottom-line payback."

David Henderson, head of IT strategy practice at PricewaterhouseCoopers, agrees that a lack of imagination is widely evident. "Motivation to change exists with a few visionary companies, but the majority have a tendency to stifle creativity and entrepreneurial activity," he argues.

Where there is change, it is usually brought about by factors such as the growth of trading exchanges, where the benefits are clear and the impetus comes from outside. But companies are slow to recognise the value of new business ideas proposed by employees and, as a result, these seldom bloom, Henderson believes.

"One reason for this is an uncertainty as to whether e-business should be handled by IT or another part of the business. This causes confusion, because it means that people aren't prepared to go out on a limb and take a chance," he says.

There is also a view of IT professionals as innately conservative, unwilling to stick their heads above the parapet by advocating risky projects.

"No one wants to be the manager who gets a project turned down because it's too zany," says Elizabeth Daniel, senior research fellow in the information systems group at Cranfield School of Management.

A genuine concern for the long-term reliabilityofnew systems encourages a caution that clashes with theprevailing Internet culture. A Cranfield study showed that companies were unsure about how to marry the conventional process of thorough engineering and testing, with the notion of beating rivals to market with speedy installations.

Ultimately, however, the lead for e-business should come not from IT or marketing but from the top, argues Jim Norton, head of e-business policy attheInstituteof Directors.

"Dumping the responsibility on just one departmentis disastrous - you need each board member to be thinking about how it will bring about change," he insists.

A problem, Norton believes, is that many board directors simply do not understand the point of e-business because they belong to a pre-computer generation and rely on their assistants to access the Internet. Most will be reluctant to admit their ignorance of what it can do because of their fear of being embarrassed in front of their peers.

System suppliers, however, tend to take a more sympathetic view of a client's problems. Craig Probert, European sales director at e-business applications provider Tenfold, says, "Internet banking launches haven't been a great success and the times to market are massive. Many organisations have bolted together numerous technology solutions in the hope that they will source high volumes of demand, but these have often failed and the person who takes the blame is the chief executive."

Gregory Darmohray, director of European operations for e-commerce software provider Webridge, agrees, "Typical times for roll-out are a year and when companies learn that they get scared off. There is not even going to be feedback until they see a prototype and a lot of manufacturers are reluctant to put their careers on the line that way."

Suppliers, however, see an opportunity in addressing anxieties about time and cost through rapid application development. For example, Tenfold guarantees to build a complete e-business solution in nine months. Speed of installation is also a major selling point at Webridge, which had a major extranet up and running for Honeywell within 45 days - with no compromise on security.

Security is an ever-present concern, particularly in the aftermath of Powergen's embarrassing failure to secure customers' credit card details on its Web site (Computer Weekly, 27 July). But suppliers are less convinced that this is an issue.

"There is a perceived problem of the network being insecure, but it just isn't true," claims Clive Keyte, director of interactive at e-business services company ICL. "Firewall technology is so sophisticated now that you can create a walled garden that allows people to go out but not to come in," he adds.

In practice, the most stringent requirements can be met. He cites the case of Internet bank First Direct, which demanded ever tighter security specifications during the installation of its online service, but ended up by being fully satisfied.

Is the public sector also being slow to get involved in e-business? Certainly, the Government wants consumers to be offered the Web as a transactional channel and suppliers are keen to win that custom.

However, ICL is finding that it is under no pressure to provide such channels until Web transactions become more popular with the public. For example, Keyte points out that councils do not see the point of providing computer users with alternative means of paying their taxes because users tend to be relatively affluent and generally choose to pay by direct debit.

Among smaller businesses a lack of momentum towards e-business is also apparent.

Touring the country with an e-tailing application aimed at small- and medium sized enterprises, Gary Allden, NTL's head of marketing, was struck by the degree of ignorance he encountered. "Most of these companies didn't even know what the term means," he says. "For some it referred to systems that helped run thebusinessmore effectively; for others it was a Web front window for showing their wares."

But by no means all the commentary iscritical.IanKilpatrick, managingdirectorof e-businesssolutions providerWickHill, arguesthatwhereas Americans have tended totakearevolutionary approach to e-business, the British are more evolutionary.

"In the US they are much keener to be early adopters," he says."Thatisfacilitatedby cheaper hardware and a much larger domestic market,which means investment can be recouped a lot faster."

Kilpatricksuggests thatthe Aurora poll actually masksahigh level of tactical activity. While UK organisations may not have a clear idea of what to do with e-business, they are nevertheless in the process of Web-enabling existing systems, so will be well placed to exploit them commercially as and when business opportunities occur.

However, what companies should not be doing is adopting a wait-and-see attitude, says Andrew Glen, e-commerce campaign manager at Sun Microsystems.

"There is definitely an attitude in some quarters that it's not necessary to be there first," he says. "Some are willing to accept mistakes as part of the learning process, but others prefer to wait. We would suggest that companies don't put it off."

Glen advises that a company makes a start by doing a pilot, which enables it at least to begin adapting its business processes and acquire the technology, but without necessarily making it the major focus.

That is a view which is widely shared by e-business advocates. Another is that companies take the trouble to become informed about the sheer range of improvements that e-business can bring about in different areas.

"Businesses have to understand the potential," says Higgins. "Huge financial benefits are beginning to flow from e-business and there needs to be an education process that demonstrates what these new technologies can offer."

Get with the plot!

Our experts debunk your e-xcuses

It offers no real business benefits

John Higgins, the CSSA's director-general, says, "Anyone who thinks that is kidding themselves. There are a lot of examples, not just e-tailing necessarily, of making rapid improvements in supply chain or customer service at little cost."

It takes too long

David Masding, the National Computing Centre's head of operations, says, "If you're concerned about time delays, shouldn't you start now?"

Other projects come first

Andrew Meyer, chairman of the e-commerce working group at the British Computer Society, says, "Companies shouldn't dismiss e-business out of hand. They need a proper strategy, looking at what is going on in their industry and making an informed decision."

We don't have the skills

Hugh Macken, secretary of IT directors' association Certus, says, "It is difficult for IT directors to justify paying premium rates for new skills when the tangible benefits are often difficult to demonstrate. They come up against a fairly traditional senior management who look at the issue from a contractor's perspective and wonder why it costs so much." <

It's not an IT issue

Masding says, "Stand up and be counted: if you ever wanted to take the lead now is your moment."

Security on the Internet is terrible

Masding says, "The Powergen incident has set back confidence in e-business by six months at least. Trust is essential to secure e-business. Ensure you have rigorous procedures in place to avoid risk and that your business continuity plans are up to date and realistic."

None of our partners or clients want it

Masding says, "Chicken or egg? Your customers and partners may not be actually using the Web now, but are they planning a strategy? Wait too long and your customers might be enticed to go elsewhere."

I'd rather not stick my neck out, thanks

Elizabeth Daniel, senior research fellow at the Cranfield School of Management, says, "Companies should encourage an entrepreneurial spirit. People need to explore and try things out, perhaps with a small project to start with."

E-businesses are losers

John Higgins, of the CSSA, says, "Don't be put off by Amazon.com not making money and the volatility of Internet share prices - these are distractions. Companies should be using today's technological developments to win business advantages."

What's it all about, anyway?

Jim Norton, head of e-business policy at the Institute of Directors, says, "Board members often don't know what the fuss is about, because they never personally use the Internet. So before you go to them with an e-business project, get each one to sit down and try it out - that will hook them."

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