InformationWeek
Defining The Business Value Of Technology
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June 11, 2001 |
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Behind The Numbers:
E-Business Revolution:
The Battle Rages On
uccess will always be in the eye of the beholder. Take equities, for example: A company may do well to earn 10 cents per share in pretax profits, but it's considered a failure when The Street is looking for a penny or two more.
Consider how inflated expectations are having a similar impact on the business world's perception of the E-business revolution. Some critics contend that the entire set of business-to-business and business-to-consumer initiatives is a failure because of the recent dot-com collapse. No doubt the stock bubble was waiting to burst.
Yet new IT market research suggests that the E-business revolution isn't just marketing hype. The E-business revolution is better seen as an unfinished success, at least for established companies with a range of offerings. The best evidence is the rising impact of revenue received via electronic channels. Two years ago, InformationWeek Research's semiannual E-Business Agenda study reported that the average company received 10% of its revenue electronically. A year ago, that figure was 14%; this year, it's 17%.
In Wave 5 of InformationWeek Research's E-Business Agenda Study, electronically received revenue is up year over year in four out of five sectors tracked in the study. Despite the poor economy, IT vendors have seen the electronic portion of their total revenue increase by 43% compared with a year ago. It's not surprising that IT vendors would move aggressively to shift revenue to efficient electronic means such as supply chains, E-commerce direct sales, and marketplaces. Meanwhile, other industry sectors, such as financial services, that were keeping pace with the IT vendors a year ago, are now seeing E-revenue growth remain flat or increase only slightly.
Has E-business lost momentum? Don't count on it. The cycle of growth appears to be slowing down, but other data in the E-Business Agenda Study suggests that corporate investment and expectations are undiminished.
Is the E-business revolution still raging in your company? Let's discuss this in InformationWeek's new Listening Post at informationweek.com/LP/.
Rusty Weston
Editor, InformationWeek Research
rweston@cmp.com
The Big Grow Faster
E-business sales continue to rise, even through market instability and a slowing economy. According to the fifth wave of InformationWeek Research's E-Business Agenda study, about three in five sites have measured an increase in revenue by a growth in E-business sales. Companies with more than $1 billion in annual sales are more likely to see growth compared with smaller firms with less than $100 million in annual revenue. Also, some vertical markets have had more success deriving E-business revenue. Key sectors that are adding to top-line revenue with E-business sales include IT, financial services, and retail and travel. Companies reporting a decline are in the minority. Of the 375 managers surveyed, only one in 20 report that their company's E-business sales have dropped in the past 12 months. |
Paring Costs
Businesses continue to search for innovative methods of trimming costs and streamlining inventory procedures. For many, supply-chain management via E-business technologies is a necessity. While IT companies have been on the leading edge of Web-based supply-chain management, several retail and manufacturing models have long practiced accurate inventory management to pare expenses to a minimum. Web technologies enable precise supply-chain management. By automating the production process from resources to final product to customer, businesses are able to anticipate demand shifts and plan production or service levels accordingly. |
E-Marketplace Challenge
Striking the right balance between various E-business applications continues to be a challenge for many companies. About one-third of sites surveyed are using E-marketplaces for buying or selling products and services, while the remaining two-thirds are taking a wait-and-see approach to this type of E-business integration. E-marketplaces are still risky and costly. Several companies are achieving success by creating new revenue streams and finding new customers, but others are experiencing market-positioning and competitive difficulties. |
No Substantial Growth
Mobile and wireless E-commerce applications aren't bringing substantial growth to E-business revenue. The importance of mobile or wireless E-commerce dropped slightly in the last six months from 18% of sites seeing a major contribution to their E-business revenue in December 2000, compared with 13% in June 2001, according to the E-Business Agenda Study. Companies with revenue of more than $1 billion find that mobile commerce apps have a more-significant impact on revenue. While the promise of wireless applications is appealing, the actual apps available are limited. Only two in five sites offer Internet access and Web sites. |
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