PracticePeople In PracticeDotcom surveys add to gloom

Dotcom surveys add to gloom

The long-term survival of internet operations will be threatened by their inability to make profits and difficulties in recruiting top-level management, according to new reports.

A study by electronics giant Siemens has revealed that directors of UK companies do not expect their online ventures to yield any financial returns for another ten years.

As part of Siemen’s ebusiness report, 1,000 company directors were asked to rate the major benefits derived from using the web.

‘Increased profits’ was given a rating of just three out of 10, with respondents saying the most benefit to be gained from the internet was as a research tool, followed by improvements to personal communication and enhanced customer relations.

This is certain to add to the gloom surrounding the new economy, following a dramatic collapse in share prices and the folding of many hi-profile dotcom ventures.

And a survey by PricewaterhouseCoopers is adds to the gloom. According to the Big Five firm, the drop in online share prices may spark a recruitment crisis trying to fill top management positions.

Executives were originally attracted to new economy companies by the offer of share options and the possibility of massive growth in their company portfolios. But following the dotcom crash, many have seen the value of their options dwindle

A survey of finance directors’ share options at 28 online ventures found that their portfolio value had fallen on average by 53%.

Author of the research, Graham Ward-Thompson, said there would have to be a ‘radical overhaul of executive remunerations’ if dotcoms wished to compete for boardroom talent.

On a more positive side, the Siemens survey did reveal that despite the depressing market environment, companies are set to continue to spend money on online projects.

And most company directors said they expected the internet to help boost bottom line profits in the next ten years.

Alan Feeley, CEO of Siemens, said: ‘The hype of the dotcom boom made people believe that the internet was the ultimate solution to generate increased revenue for business on a grand scale. Our research has shown this is clearly not the case to date.’ Feeley said companies need to re-evaluate the way they are currently using the internet and ensure that business is at the heart of their e-business strategies.

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Online markets face doubtful future

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