Although most large corporates and enterprises realise the long-term potential of an ebusiness strategy, many are still not investing sufficiently in the technology to integrate that potential with their existing infrastructure and business plan.
These are the findings of a recent report, Competing in the Internet Age - Challenges for Incumbent, by financial analyst PricewaterhouseCoopers (PwC).
One hundred UK-based ebusiness companies took part in the survey, which highlights that many are guilty of setting over-ambitious goals compared with the level of investment they are prepared to make.
Researchers found that 26 per cent of respondents would like to migrate more than 90 per cent of existing customers to ebusiness, but only one per cent has managed to achieve this. Only 11 per cent have fully implemented ebusiness systems, with 48 per cent still at the early development stage of building a website.
Respondents suggested that reluctance to invest in ebusiness is driven by a lack of recognition from the capital market. Over half of those questioned feel that investors do not recognise or reward ebusiness activity, while 72 per cent also had no intention of creating internet capital.
Embracing new strategies
Bill Bound, European leader for ebusiness at PwC and author of the report, said that European businesses have reached a point of no return. "They must embrace a new business model centred round an offensive e-business strategy. Only by doing so will they realise their e-business ambitions," he said.
PwC found that the aims of enterprises that had rolled out an ebusiness strategy tended to be defensive rather than moving into new territory with only seven per cent using ebusiness to strike outwards.
A more worrying revelation was that more than a third of companies admitted they do not have the necessary skills to implement e-business infrastructure and systems.
PwC highlighted the reason for the slow development of UK ebusiness as lack of investment - only four per cent of organisations invest more than 10 per cent of their revenue in ebusiness development at the moment. But the research suggests this is likely to grow to 15 per cent by 2004. Low levels of investment are reflected by only 12 per cent of ebusinesses reporting over 10 per cent of revenue from business to consumer online transactions, although this was double the amount of business-to-business transactions that now stand at six per cent.
Bound said: "Few businesses are making significant investments in e-business, many admit they lack the necessary skills and most are seriously underestimating the impact of the new dot com entrants."
This result is an indicator of a significant difference in approach between business-to-business and business-to-consumer-based enterprises. The report discovered that the level of investment in organisations with consumer applications is double that of companies who have a business-to-business focus.
Bound warned that ebusinesses must decide which route to take. "This will fundamentally affect their competitive position and must be taken into account if they are to survive," he said.
Getting priorities right
Business-to-consumer enterprises see increase in customer satisfaction and loyalty on the internet as the most significant challenge in establishing an ebusiness, according to the report. But business-to-business organisations see optimising operational efficiency and cost effectiveness as their main priority.
Not unsurprisingly, security issues are still one of the main hurdles to overcome. The report found that regulatory bodies and security technology providers still have some way to go to convincee-business of the safety of online transactions. PwC said that security will continue to be a concern.
The issue was cited spontaneously by 28 per cent of business-to-consumer and 10 per cent of business-to-business enterprises as the most significant challenge to successful ebusiness implementation.
The main threat to ebusiness companies still comes from the traditional bricks and mortar companies, with almost half of respondents agreeing that trading through traditional channels posed the greatest threat. Only 25 per cent of enterprises saw similar ebusiness competitors as a major threat. Startup companies were ranked as a major threat by only 15 per cent and minimal by 60 per cent, but this threat would increase by 2004.
Ebusiness versus bricks and mortar
The report concluded that within three years the ebusiness space would become an environment where there would be an even split between traditional enterprises with established ebusiness strategy and startup companies, with no single group dominating the market.
Bound said the research proves that European businesses do not lag behind the US counterparts in ambition in the ebusiness market. "However, it indicates that most are taking a defensive stance that pays lip service to the internet and fails to maximise its full potential," he said.
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