PricewaterhouseCoopers sheds light on trends

In this brave new world of e-business, part of the mystique is that no-one knows what they're doing, and everyone is, to coin an...

In this brave new world of e-business, part of the mystique is that no-one knows what they're doing, and everyone is, to coin an oft-used term, "fumbling in the dark".

David Bicknell

e-business

Faced with a world of uncertainty, many organisations latch onto the leadership shown by a few organisations - Amazon, General Electric, Cisco - and take on board their pioneering experiences, and try and replicate them.

So, it's a huge help when reliable figures begin to emerge on which organisations can base their e-business thinking.

According to some recent figures from PricewaterhouseCoopers (PWC), which produces a regular "trendsetter barometer" together with BSI Global Research (www. barometersurveys.com), one of the key ideas currently emerging is that service companies have substantially higher e-business revenue expectations than their product sector counterparts, and consequently are earmarking much more in support.

The group of trendsetter companies chosen by PWC serves as a useful benchmark for e-business expenditure. Currently 75% of these companies are involved in e-business, while trying to capitalise on "new economy opportunities" and accelerate their growth.

On average, these companies are planning to spend about 11% of their operating budget in support of e-businesses over the next year. Such an investment is set to drive 14.9% of revenues for their parent companies.

Breaking down the research into the services and product sectors, 84% of the services companies have e-business operations, against 68% of companies in the product sector.

The services companies are projecting that their e-business will contribute an average of 20.6% of corporate revenues, and will commit 17% of their operating budget to achieve it. In contrast, for product sector companies, they are planning to achieve less than half the revenue impact - just 9.4% - and consequently, are only committing a modest 5% budget allocation.

The PWC research has also examined the relationship between IT spend and e-business. In overall terms, IT represents 62% of e-business budgeting, or about 7% of operating budget. This is split more or less evenly between staff costs (51%) and hardware and software applications (49%).

But when the figures are broken down into the service and products sectors similar to above, the e-business IT budget commitment for services companies is 10.6% of operating budget, split 57% for IT personnel and 43% for applications.

The lower-level expectations for product sector companies are evident in that they are committing just 3.1% of their operating budget for e-business IT, and with a reverse split - 56% for hardware and software, and 44% for personnel.

It seems the regulatory way is now clear for the giant Covisint online exchange being developed by the big three automakers GM, Ford and Daimler Chrysler to open for business.

Having already cleared the US government's regulatory process a couple of weeks ago, now Covisint has the backing of the German government, which has ended its own review.

But while Covisint has been cleared to open its virtual doors, some technical issues still apparently have to be addressed as the participating companies start sharing some data but look to keep critical business information away from the eyes of their rivals. A pilot programme involving a small group of Covisint users was scheduled to begin last week.

After eight months as a much-quoted concept, it is now time for Covisint to really prove it can work.

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