E-business realities are kicking in

According to the latest Confederation of British Industry (CBI) research report that was commissioned by KPMG Consulting, 87% of UK companies are now using e-business technologies to improve efficiency.

The report, called Reality Bites, surveyed 812 organisations and indicated that firms are currently moving away from customer-facing e-business initiatives - favouring projects that impact on suppliers and employees. Intranets, followed by electronic payment systems, are now two of the most commonly cited applications of Internet technology.

"In the past, traditional `old economy` companies followed dot-coms by expecting the Internet to expand markets and to create commercial opportunities. Today, companies are faced with increasing competitor pressures and are turning to e-business technology to help achieve efficiency improvements," said Keith Fairhurst, systems integration partner at KPMG Consulting.

Encouragingly, many survey respondents expected e-business technology to transform companies and markets within the next two to three years. While only 15% indicated that they currently gain substantial financial benefits from e-business initiatives, more than 40% expected to reap reward in the future. In addition, 90% of companies surveyed believed e-business will eventually reduce costs by 10% or more. The report also indicated that percentage of companies making more than 5% of purchases online is expected to triple by 2005 from 20% to 60%.

Commenting on the status of e-business in South Africa, Fairhurst adds: "The honeymoon is over. We have seen that high profile e-business initiatives, mostly business to consumer (b2c), have not delivered amazing returns and shareholders are starting to demand more results. The consequence of this is that organisations are beginning to focus on leveraging value out of existing investments.

"In a recent procurement transformation project with a large SA enterprise, KPMG Consulting delivered in excess of R70 million worth of savings utilising existing technology. In excess of a further R150 million per annum has been identified to be realised through enhanced technology. This can only be achieved through aligning the strategy, process and people with technology enablement," said Fairhurst.

The survey further indicated that the biggest e-business benefits are likely to be experienced by customers. Some 83% of firms believed e-business initiatives will improve the quality of customer service by 2005. Moreover, the number of companies expecting revenue per customer to increase is four times greater than the number of those expecting it to drop.

Commenting on the survey CBI Director-General, Digby Jones, said: "This is clearly the year when reality bites for e-business. Business is pragmatic and is using the technology to help achieve new efficiencies and bottom line benefits. But it is reassuring that plans to expand markets and create new commercial opportunities through e-business have only been put on hold. It`s very likely that as investment capital becomes available companies will move swiftly to create new commercial advantage."

Fairhurst added: "Business leaders are knuckling down to learn the lessons of e-business in a diverse range of circumstances. That is why they are consciously prioritising and pursuing a variety of discrete, relatively low-risk and measurable e-business projects. Through a process of rational experimentation, they are weighing fast payback against business impact, ease of implementation against innovation. And they are consistently applying what they have learned to every business unit, function and process so that they can move quickly when the economic upturn comes."

It was also noticeable that in 64% of companies corporate boards and heads of business operations were now accountable for e-business initiatives, compared with just 16% where the IT director remains in charge. Only 16% of firms now have standalone e-business operations, compared with 38% of companies in 2001.