UK plc drags its e-heels over trading

UK ebusiness has the potential to leapfrog the US but is being stalled by British companies, which are failing to evolve with their customers.

According to the Business Barometer 2 research published last month by Cranfield University and Microsoft, UK ebusinesses recognise internet trading as a valuable revenue stream, but remain firm in the belief that ebusiness will not alter the way companies trade.

More than 64 per cent of businesses are still reluctant to use an internet-based trading channel.

The indication is that UK companies are being slow to re-engineer their infrastructure and business strategy to adjust to the ebusiness market. However, the survey also found that senior directors predict that up to 40 per cent of revenues will be generated through ebusiness within the next six years. The results of the research indicate that little progress has been made in adopting a new business model to reflect online market trends.

Customer benefits
The problem is compounded by the attitudes of senior executives in control of ebusiness management, who are spending less time enhancing the services required by users and customers.

Only 12 per cent of businesses admit to spending a reasonable amount of time with customers or working on customer-facing benefits, compared to the 21 per cent identified six months ago. The research also found that chief executives of ebusiness companies are failing to see the need to involve the end users in shaping their online services and products.

Analysts predict that over the next three years more than 21 per cent of revenue could be generated by ebusiness, with the potential to double to 39 per cent within six years. Currently only nine per cent of total revenue is generated by ebusiness.

Murray Steele, head of the strategic management group at Cranfield University, which carried out the research, said: "Although senior executives see the need for ebusiness, they only appear to see it as an add-on channel to market." He said there was no indication that they propose to change the way they do business, or how they conduct their marketing in support of ebusiness. "We wonder how the benefits of ebusiness will be implemented and led if not by chief executives and senior executives," said Steele.

"The biggest problem is fear of the unknown from the senior directors. Most of the technology resides at the bottom of the tree and the people at the top have no understanding of it or what can be done with it," he added.

Consolidation of business
The survey revealed an overall tightening of business strategy, with enterprises displaying an increasing focus on existing businesses and services. According to Cranfield University, business consolidation has replaced growth as the key ebusiness strategy.

One of the main threats cited by UK respondents was still fear of losing customers to US-based enterprises. Some 38 per cent of senior IT managers believed that, with the erosion of global market barriers, customers would be lost to ebusiness active firms primarily in the US. A further 31 per cent saw Asia Pacific-based ebusinesses as another threat to the market. This means that less than a third of UK ebusinesses see rival European companies, including UK competitors, as a major threat.

Neil Holloway, managing director of Microsoft UK, who commissioned the report, said: "Senior UK IT directors don't realise that Britain is actually in a position of great strength to leap frog their American counterparts." He said that Europe has been united in building up its mobile communications infrastructure, which has put it in a dominant position to exploit up and coming technologies such as Wap. Now that the wider audience is available, "it's time to take our heads out of the sand", he added.

The results of the report show that a pure ebusiness model for companies is not top of the list of enterprise priorities. In fact, a pure ebusiness structure was the fifth most popular choice by IT managers.

Top of the list was a people-to-people service-based model, or a business-to-business strategy. Business-to-business was closely related to the second choice of ebusiness combining supply chains. The other alternatives, above a pure ebusiness model, were the traditional structures of direct and indirect sales.

"Companies have no choice but to change their attitude. However, they have more time than previously thought. It has become clear now that we will not become a totally internet based world in the next few years," said Steele.