What price ebusiness?

European businesses are "drastically underestimating the costs of transitioning" to ebusiness by about 50 per cent.

Analyst company Gartner Group will caution IT professionals attending its European Symposium in Cannes next week that in the run-up to 2003, almost 75 per cent of enterprises will underbudget ebusiness transformation costs.

Peter Sondergaard, Gartner Group's managing vice president, believes there is still an "unnerving tendency to separate IT, ecommerce and business, and as a consequence budgets are clearly being underestimated."

He will warn attendees that there is no "silver bullet" ebusiness solution on the horizon, and that no one single enterprise solution provider will be able to offer all the necessary software, systems integration and networking capabilities.

According to Sondergaard, businesses moving to e-business must address a new series of challenges which include enterprise agility, a focus on core competencies and processes, and a redefinition of the value chain.

Other success factors are instantaneous business response, the ability to scale resources and infrastructure across geographic boundaries, and plug and play IT infrastructure.

Sondergaard said that over the next 24 months reviewing these issues will be crucial, as Gartner Group estimates that by 2005, 25 per cent of consumer spending and 70 per cent of business to business commerce will be 'Internet involved'.

"While business leaders clearly acknowledge the need for fundamental change in the way they view the implementation of e-business, I find it troubling that over the next three years, 60 per cent of ebusiness initiatives are likely to remain tactical IT projects rather than strategic business mandates that demand business process transformation," he said.

Successful companies will take a "more holistic" approach and select the best of the new Web-enabled technologies, combining these with their tried and tested infrastructures to create a hybrid enterprise, said Sondergaard.

The gap between Europe and the US can be bridged, he said: "European IT infrastructures have a tendency to be more centrally organised and therefore more robust. This central organisation may also mean that although US companies are seen to be spending significantly more of their revenue on IT, they gain no additional business value."

vnunet.com will have full coverage of the Gartner Symposium throughout next week.