In a study of European senior executives released earlier this month, Andersen Consulting has found that perhaps the greatest barrier to Europe`s success in the emerging electronic economy is a surprising hesitancy among the continent`s business leaders. Unmoved and unhurried by the rapid growth of electronic commerce, European executives are largely standing on the sidelines, the study revealed, jeopardizing the continent`s long-term competitiveness.
While almost all the executives surveyed acknowledge that eCommerce will have a dramatic future impact on their businesses, only 39% are taking steps today to incorporate eCommerce into their current operations and strategies. Furthermore, only 19% of European executives regard eCommerce as a serious competitive threat to their business today.
"In light of the obvious advantages to first-movers in the emerging electronic economy, European business is at a crossroads. We face a stark choice between two very different scenarios," said Rosemary O`Mahony, Andersen Consulting`s Managing Partner-Technology for Europe, Middle East, Africa and India. "We could fulfill the promise of `eEurope,` in which eCommerce fuels an explosion of trade and economic opportunity, or we could reach a `Dead End,` where a wait-and-see attitude allows the rest of the world to extend its lead in eCommerce and Europe finds itself stuck in an economic cul-de-sac."
The Andersen Consulting study suggests several possible reasons for executives` hesitation. One-half of respondents believed a lack of consumer understanding of eCommerce is a problem. A majority of respondents viewed privacy, security, and the lack of a framework for commercial regulation as key barriers. Further, more than 80% of executives cite the need for governments to work together for a common international framework.
The study, however, points out that there are strong grounds for European optimism in eCommerce. A pioneering generation of eCommerce in France - the Minitel system - has enabled citizens to pay bills, shop, and order train tickets on-line. In southern Spain, social security applicants use smart cards to `sign` for their weekly allowances. In Britain, First Direct, Europe`s first and largest virtual bank, adds 12,500 new customers to its current base of 750,000 customers every month.
In addition, the burgeoning worldwide potential for eCommerce is obvious. In the past five years, the Internet has surged from a network of 3 million predominately U.S.-based users to a commercial mass medium with more than 100 million users worldwide, including more than 25 million across Europe.
Worldwide eCommerce is currently estimated at about $10 billion and is expected to soar to $500 billion by 2002.
The survey offers compelling evidence that Europe has the potential to become a strong player in eCommerce. More than 80% of European executives believe their companies will be much more reliant on eCommerce in 5 years, with 50% expressing a strong belief. Sixty-five percent believe eCommerce will offer them a competitive edge in the future and 50% feel it will transform the way they do business.
"Europe is at risk of losing the high-stakes race to determine the winners in the emerging electronic economy," said Vernon Ellis, Andersen Consulting`s managing partner for Europe, Middle East, Africa and India. "But while European executives may have stumbled at the starting blocks, the race is far from over. The foundation of a bright future in European eCommerce can be found in our prosperity, education and technological excellence, as well as larger efforts in the conversion of the Euro."
Andersen Consulting Key Recommendations
Based on its research and its global experience helping clients succeed in the emerging world of eCommerce, Andersen Consulting`s report includes a broad-based agenda for coordinated action by European business and governments.
For businesses, Andersen Consulting believes that top eCommerce priorities should include:
- Addressing the needs of customers on an individual basis - the so-called `market of one`
- Creating or taking advantage of new intermediaries and distribution channels
- Making operational improvements and establishing closer ties with suppliers and business partners
- Making significant up-front and ongoing investments in marketing, technology and knowledge.
For European governments, Andersen Consulting believes they should work with businesses to provide an enabling environment for eCommerce takeoff.
Priorities should include:
- Working with businesses to provide a facilitative regulatory framework for international eCommerce
- Balancing the need for European and international consensus with public pressure for national solutions
- Promoting the development of venture capital markets for high-tech businesses
- Raising business and public awareness as well as helping to move work to where there is skilled labor capacity
- Ensuring adequate training and retraining
- Being a leading user of eCommerce.
Note for editors: The findings are the result of a survey conducted between December 1997 and July 1998 of more than 300 senior executives throughout Europe and a series of interviews with chief executives.
Andersen Consulting is a $6.6 billion global management and technology consulting organization whose mission is to help its clients change to be more successful. The organization works with clients from a wide range of industries to link their people, processes and technologies to their strategies. Andersen Consulting has more than 59,000 people in 46 countries. Its home page address is http://www.ac.com.
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