Preparing for the second e-business wave

A new study entitled The Quiet Revolution, undertaken by the Confederation of British Industry and KPMG Consulting has found that 93% of UK companies have included e-business in their corporate strategies, while nearly all of them expect e-business to have some impact on their activities in the next few years.

At present, e-business is primarily a small part of corporate revenues, with 76% of companies surveyed generating just 5% of their revenue from e-business. But this is predicted to double to 10% of revenue for 58% of companies in the next two to three years.

Greater numbers of companies are beginning to consider e-business as a primary strategic objective, with one-third of companies already having set up an e-business unit, as well appointed an individual to represent e-business interests at board level.

More importantly, one in five companies, labelled ‘e-pioneers’, are currently engaging in complex, business transforming aspects of e-business, including customer relationship management and integrated supply chain management.

The remaining companies are split fairly evenly between ‘e-followers’, those companies that have grasped the basics and are exploiting the internet for marketing and knowledge sharing, and ‘e-laggards’, businesses that have yet to evolve their businesses beyond e-mail and basic IT-related services.

Significantly, the study does not show a geographical split in e-business readiness across the country or a split across businesses of different sizes, suggesting that the awareness of e-business as a strategic and ultimately revenue-generating tool is spreading relatively evenly across the industrial landscape.

Alan Buckle, CEO of KPMG consulting said the real danger in the ‘second wave’ is the advent of a digital divide between companies that ’embrace web-based technologies to transform themselves and their markets’ and those who do not, or who followed the wrong strategy.

In the light of these comments it is significant that e-pioneers appear to be split evenly across all sectors, with the frontrunners being telecoms, utilities, retail and financial services, while the e-followers make up one-third of all sectors.

One worrying sector, according to Nigel Hickson, the CBI’s head of e-businesses, remains the manufacturing sector, where 41% of companies have been classified as e-laggards, despite the ‘significant potential internet technologies have to transform this particular sector’.

And like the problems that have faced the boomers, the e-business generations is unlikely to enjoy a smooth ride, despite CBI director general Digby Jones’ assertion that Britain is in a prime position to enter the global e-business market.

The study revealed a diverse range of barriers to e-business growth, including the integration of new e-business technologies with outdated IT systems, lack of co-operation from customers and supplier, and a general lack of awareness of the potential benefits of e-business.

Companies will also be hampered by the cost of implementing such solutions, and the need to provide adequate web security, a problem that has plagued many dot.coms, who have suffered at the hands of hackers.

Jones says a primary concern for the UK is ensuring companies attract sufficient ‘intellectual capital’ to drive e-business.

It is well known that the US has long been attracting some of the world’s best intellectual capital.

‘In Californian, cricket is the fast becoming a popular sport, because 25% of IT workers in Silicon Valley are Indian,’ says Jones.

If the UK is to keep pace with the US and European giants like Germany and France, the government must ensure its network of support services, such as UK Online, encourage not only established companies but also SMEs to enter into e-business initiatives.

‘To do this government will need to consult widely with business and regulate lightly where necessary,’ Jones says.

Britain cannot become complacent about its e-business capabilities. While most would agree the UK’s position as an e-friendly place to do business is a valid one, companies on the ground will need to continually skill themselves if Britain is to maintain its competitive position.

Otherwise, Jones warns, ‘the e-laggards and e-followers will be left behind’.

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