InformationWeek

The Pacific Rim represents a region that--while not yet an E-business powerhouse--is on the verge of an Internet explosion. The number of Internet users in the Pacific Rim is expected to increase 72% this year to 72 million and will rise to 188 million by 2004, according to Gartner Group Asia. Still, the region's stark digital divide will result in Internet penetration of less than 6% in poorer countries; that, along with other social and cultural conditions, makes business-to-consumer E-commerce a tough sell in the Pacific Rim.

"Overall, the technology sector is [declining] here, but China is a market we're looking into very aggressively," says Joseph Poon, CEO of SAR1 Innovations Ltd., a network operator and E-commerce service provider in Hong Kong. SAR1 earns 70% of its revenue from Hong Kong and only 30% from China, but Poon says the world's most populated country is "a huge untapped market." The company has had to postpone any significant B-to-C efforts and earns almost all of its E-business revenue from B-to-B commerce, Poon says. While data-communications services for businesses in Hong Kong are advanced and reasonably priced, Poon says it's another story in the consumer sector, where broadband access is rare. Large numbers of people in Hong Kong carry cell phones, but wireless networks there don't yet support data.

SAR1's decision to pursue B-to-B commerce more vigorously than B-to-C is in line with most companies around the world. Forty-two percent of respondents to the InformationWeek survey identify B-to-B as their primary approach to E-business, while 18% say their primary approach is B-to-C. About a quarter say they're pursuing both equally.

In Europe, businesses are about two years behind North America in terms of Internet adoption because, in general, business leaders are more conservative in implementing new technologies, and startups have less access to venture capital, says Nevin Cohen, a senior analyst at eMarketer. Online exchanges have suffered from unrealistic expectations in the United Kingdom, and businesses have yet to see even a marginal benefit from switching from their legacy electronic data interchange systems. Consumer beliefs also conspire against widespread E-commerce in the United Kingdom, where online shoppers are skeptical of Internet security. There are cultural differences, too. "Online shopping hasn't been hyped as much in the United Kingdom as in the United States," Cohen says.

When it comes to operating overseas subsidiaries, each of the world's regions presents its own unique challenges, says Peter Petrinovic, manager of the IS division at American Greetings Corp. in Cleveland. The greeting-card company has subsidiaries in countries as far-flung as Australia, Mexico, New Zealand, South Africa, and the United Kingdom. Subsidiaries handle their own IT and communications systems, so Petrinovic's biggest challenge is maintaining consistency and eliminating duplicate IT efforts. "That means synchronizing business practices and ensuring that we can get data [mainly card designs] sent back and forth in a consistent fashion," he says. The main office provides guidelines on hardware and software and encourages subsidiaries "to think more corporately rather than locally in terms of IT processes and infrastructure."

American Greetings is trying to avoid organizational barriers that could impede information sharing. That's a top concern for many InformationWeek survey respondents; 26% cite organizational barriers as a significant challenge to achieving business and IT goals this year. That number is nearly equal to other challenges, such as poor leadership, government regulations, and a weakening global economy.

Finding qualified IT workers is tough. Overall, 34% of the survey respondents say a lack of IT talent poses a threat to attaining business and IT goals. Hiring local support people at a foreign location may seem like the best solution, but it also brings its own headaches. It can be difficult to keep close tabs on contractors so far away, says Tim Everrit, business development manager at Data Marine Systems Ltd., a Scottish communications provider to offshore oil and gas companies around the world.

To get the global support it needs, PMI Group tries to stick with major vendors such as AT&T, Compaq, IBM, UUnet, and WorldCom when it can. It also prefers to strike nationwide deals with its vendors in countries where it operates so it gets uniform support wherever it does business, Roberts says. PMI Group has about 180 people on its full-time professional IT staff, and about 35 contract workers. It outsources functions such as Web development and technical support at its overseas outposts.

Some of the most rigorous challenges in doing business outside home borders lie in networking. "They've got huge issues surrounding support, provisioning of [data communications] lines, and where they get their services," says Jennifer Pigg, an executive VP at the Yankee Group.