InformationWeek

January 1, 2001

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E-Business Push Means Outlook For Services Firms Is Bright

By Marianne Kolbasuk McGee

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espite the demise of dot-coms by the dozens in recent months, E-business-related initiatives are among executives' priorities for 2001. To effectively pursue E-business opportunities, the use of third-party service providers is expected to increase this year, according to a joint survey by InformationWeek Research and Bear Stearns & Co.

Together, InformationWeek Research and Bear Stearns developed the Outlook on Digital Professional Services report to profile strategies for integrating digital professional services in E-business initiatives. Interviews with 150 IT and business managers responsible for selecting service partners or consultants to help in their companies' E-business initiatives were conducted last month.

For many businesses, the potential for E-business to create new revenue streams, provide better customer service, and facilitate cost savings through improved efficiencies simply can't be ignored. To achieve their E-business goals, 33% of survey respondents expect to spend more on E-services consultants this year than they did in 2000. Only 16% expect to spend less. About half expect to spend the same as last year.

Fannie Mae, a Washington mortgage lender, has aggressive E-commerce plans for 2001, says chief technology officer Julie St. John--and those plans involve help from E-services firms. In 1999, Fannie Mae processed $400 billion worth of loan transactions over the Internet. That figure soared to $700 billion in 2000.

Growth will continue this year, says St. John. To support that growth, Fannie Mae will offer new E-features and functionality to its lending partners, such as Web-based mortgage-application tracking capabilities.

Fannie Mae's 2001 IT budget is about the same as last year's, but a bigger portion will be earmarked for E-services this year, says St. John. About 80% of Fannie Mae's IT-related development will involve Webifying processes, she says.

The company's internal IT staff focuses primarily on application development related to internal processes, while outside services firms provide integration and Web-hosting capabilities.

Services firms such as Accenture, formerly Andersen Consulting, continue to see demand from clients that need assistance developing IT solutions for business-to-business applications such as supply-chain management, as well as business-to-employee self-services, says Glover Ferguson, chief scientist at Accenture. "B-to-B is an easier economic case to make. It's not as dependent on standards [as business-to-consumer]," he says. "We're often asked to contribute big new ideas. Companies are asking us to help figure out new technology and screw it in for them."