Global Corporations Improving Chances in Digital Economy

The majority of global corporations are investing far more on e-business than they were a year ago, but they are not addressing their most pressing e-business priorities, nor are they sufficiently servicing customer transactions online, according to a study by PricewaterhouseCoopers and The Conference Board.

The survey found that global corporations are investing far more on e-business than they were a year ago — and devoting far greater senior management oversight to their efforts. More than two-thirds say they have in place a systematic, strategic approach to Internet-based initiatives with top-level executive involvement. More than half of the companies, however, say they have no method in place to assess the success of their e-business programs. Less than one-sixth said they regard themselves as cutting-edge in e-business innovation.

In an environment where many large, traditional businesses are still in a reactive mode on digital initiatives 79 percent of the companies said that e-business accounts for less than 5 percent of revenues. While all tout the importance of e-commerce, 25 percent concede that they haven’t established adequate e-business functionality beyond basic online “brochureware.”

The Conference Board group cited a number of barriers to e-business development, including a dearth of proven standards and the uncertainty over long-term costs of implementation, as well as behind-the-curve integration of tax, legal, privacy, and other macro issues.

“A lack of concrete e-business strategy isn’t stopping companies in their tracks,” said John Oldfield, manager of The Conference Board’s Information Management Center. “The study finds that even where companies lack a solid e-business strategy, they are still ramping up rapidly with their e-business plans. Companies are now using the Web to identify and help retain their most loyal existing customers. The next step is to identify and acquire new customers.”

About 90 percent of the participants in the study, most of whom are members of The Conference Board’s Information Management Center, represented companies with annual revenues of more than $1 billion, half with sales north of $5 billion. Prominent industry sectors are well-represented, 60 percent come from manufacturing and financial service companies; the rest reflect retail trade, energy/utilities, transportation and communications. Most of the companies conduct significant international business.

• Management Focus on E-Business Up Sharply
  Forty-seven percent of companies participating now have full-time units dedicated to e-business development, a marked increase from a year ago, when less than one-third of the group had defined teams in place. The number of companies reporting executive committee participation in e-business decisions jumped sixfold over last year. Admittedly, some of these resources were deployed as a result of Y2K concerns, though once in place most companies expect to maintain them, along with management oversight.
• Revenues Matter
  One year ago, reputation enhancement and brand recognition were the highest e-business priorities cited in the survey. This year, companies are setting more bottom line mandates for e-business: increase revenues, build customer loyalty, reduce operations costs, and access new markets. Nearly 80 percent of respondents called the creation of a convenient buying experience for customers on the Web “extremely important.”
• Five Big Barriers to Success
  Managers point to the huge and uncertain costs of implementation, more pressing corporate priorities, lack of proven benefits within the industry, lack of accepted standards, and the current low use of the Internet by customers and suppliers. Additionally, companies acknowledge that they are not up to speed on many of the key privacy, legal, taxation, and emerging intellectual property issues that their own e-businesses are creating.
• The Holdouts
  More than 6 percent of respondents say they still have not established external email, while nearly 14 percent of respondents do not have company-wide intranets. Approximately 4 percent of respondents report they have not yet posted a working Web site for external use. The survey projects 100 percent deployment within the next year.
• Connecting Front and Back Office
  Although 40 percent of respondents said their companies could handle customer orders electronically, only 28 percent are able to process payments online — a marked increase from earlier estimates, but still well below critical mass. Neither are most businesses up to speed on supply-side connectivity: 60 percent do not have extranets linking their own operations with key partners. Nearly 12 percent said they have no plans in place for supplier and partnership linkage.