Young ebusiness service companies will lose out to traditional suppliers as large corporates look to steer clear of dotcom failure fever.
According to a report by analyst firm Richard Holway, the old guard, such as Andersen Consulting, IBM, Sema and Logica, will succeed over the new breed of ebusiness suppliers because they are trusted for their project management skills and quality of delivery.
Traditional suppliers are starting to regain ground in the ebusiness services sector from suppliers such as MarchFirst, Framfab, Razorfish and Pixelpark, and are expected to double their ebusiness services revenue this year. In 1999, these companies made 10 to 15 per cent of their revenues from e-services. This will increase to 20 to 30 per cent for 2000.
The findings, published next month in Ebusiness Services Report by analyst Pete Foster, highlight how the FTSE 100 companies are poised to embrace full-scale ebusiness integration.
However, they have taken note of the dotcom failures and this, the report says, will adversely affect the new ebusiness service companies.
"These new companies initially focused on the dotcom market, and early in the year the share prices of these startups rocketed, as did the valuations of their service suppliers. But the bubble burst and now the repeated dotcom failures have rebounded on the service companies that helped to build their businesses," said Foster.
"Meanwhile, the bricks and mortar companies have realised there is more to the web than brochureware [an online version of a company brochure]. Over the last year they have come up to speed on the ebusiness potential, but are not so inclined to rush to a new e-services agency when the traditional companies have served them well in the past," he added.
Foster says that although big business "will go the whole hog and focus on back-end integration", there will be no recreation of the technology boom seen earlier this year.
"The market has slowed and will continue to slow," he said. "Ebusiness will not be the driver it was. The dotcoms were very gung-ho, but the large corporates realise it is about more haste less speed, so the speed of growth will be nothing like it was. The boom times are over."
However, Foster predicts that by the end of next year, the corporate move towards strengthening their ebusiness operations will "help the market at that time".
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