It's Olympics year again, so we will soon be treated to the familiar sight of our brave boys and girls struggling to keep up with yet another squad of US super-beings. But playing catch up with the US is not an activity restricted to the sporting field. According to a Gartner study, published at Internet and Electronic Business Europe 2000 in Paris at the end of last month, Europe is now lagging 12 months behind the US in ebusiness, and will not catch up for at least five years.

"European companies do not exhibit the same enthusiasm for changing their business model [to exploit the internet] as those in the USA," said Alexander Drobik, vice president of ebusiness at Gartner.

So just how far behind is Europe? There are now several benchmarks to highlight its progress relative to the US.

The Organisation for Economic Co-operation and Development (OECD) has suggested that the number of secure websites found in a country is the best way to measure the development of internet economies. On this basis, the US lead is amply demonstrated. A survey this year by market researcher Netcraft showed that Europe has less than 8000 secure websites, compared to 34,000 in the US.

According to Gartner, 56 per cent of adults in the US use online services, compared to 30 per cent in the UK, 20 per cent in Germany and only 15 per cent in France. In financial terms the pattern is similar. The value of ecommerce transactions in the US is approaching $250 per person, compared to $100 per person in the UK. In Germany, transactions are two-thirds those of the UK, and in France are less than half.

These figures reflect mainly business-to-consumer (B2C) patterns, but the message is the same in business-to-business (B2B). Ebusiness software provider Commerce One claims that $400bn worth of business is traded through global industry exchanges using its Marketsite application. Of this amount, the company estimates that only $140bn is generated in Europe, with over $230bn originating in the US.

This is a sobering message for Europe's ecommerce ambitions, especially after the blow to dotcom confidence delivered by the failure of boo.com and the postponement of several stock market flotations.

Changing business models
But Gartner believes it can point the way to catch up, saying that European companies must 'net-liberate' themselves by changing their business models to make the most of the ecommerce opportunity. "Net-liberating is not an investment in technology, it's an investment in change management. Ebusiness is an operational process issue," said Drobik.

For example, Gartner believes that European enterprises are too focused on tactical applications, such as e-procurement, when the key IT focus should be e-marketplaces, an area where the US is ahead. E-marketplaces offer a fresh spin on the traditional idea of a supply chain by allowing companies to come together online in communities to buy and sell inventory, rather than simply using the internet as a means to cut purchasing costs. Gartner forecasts that e-marketplaces will lead to $2.7 trillion B2B sales in 2004.

A successful case study of the sort of organisational change Gartner believes is necessary is US brokerage company Charles Schwab, which merged its internet and conventional businesses together. Wall Street was initially unimpressed, and the company's stock dropped from $41 to $28 overnight. A year later, Charles Schwab had one million new customers, and it was lauded as a visionary company. Having taken 20 years to accumulate its first $100bn of customer investments, Charles Schwab's most recent $100bn came in six months, thanks to the internet.

"The lesson we have learnt is that the internet has to be embedded in your business model. It's more than just adding a dotcom to your name," said Bob Duste, Charles Schwab's European chief executive.

Removing e-barriers
Duste's early experiences in the UK demonstrate the transatlantic differences. "When Schwab bought a UK brokerage company, their people raised lots of barriers to using the web. They talked about high phone costs and low PC penetration. We showed them that if you provide a compelling reason to get onto the net, then people will do it." Charles Schwab now generates 75 per cent of its UK business through its website.

Recognising the importance of the ebusiness revolution in maintaining European competitiveness, the European Commission (EC) launched its e-Europe initiative in December last year to accelerate the uptake of digital technologies across the continent.

"The European legislative environment has held back B2B development," said Jeffrey Baumgartner, an EC expert on ebusiness. "The member countries are still squabbling over issues such as VAT harmonisation. However, dealing with these differences has made European companies better at internationalising their business. This experience will give us an advantage against the US."

Baumgartner claims that online book retailer bol.com, part of the German media group Bertelsmann, proves his point. "We believe that bol.com will catch the market leader, Amazon.com, next year," said Bertelsmann board member Dr Klaus Eierhoff. "We will achieve this by internationalising more quickly. Bol.com will soon be available in 13 country and language versions, including Chinese. Amazon cannot currently match that."

However, while Baumgartner's theories may be sound, he could have picked a better example, as bol.com recently announced that it has pulled its planned flotation owing to what it claimed were unfavourable market conditions.

Gartner predicts that during the next two years the first B2B failures will emerge, and that the fallout in the overcrowded dotcom market will continue. Europe's response will be critical. "In Europe people don't like failure," said Drobik. "The attitude in the US is different, risk is part of the culture. European managers are less inclined to lead, they want others to go first."

Europe cannot afford to let such conservative attitudes slow its ecommerce development. It seems that leading from the front is the only tactic that will win this race.