Oz e-comm providers losing ground

The cost and complexity of creating e-business applications is soaring and Australian e-commerce solution providers are losing ground to US competitors.

One reason for the high costs is the vendor market for e-business solutions remains highly fragmented and - in Asia Pacific at least - lacking in expertise, according to Gartner Group senior vice president of Asia Pacific operations, Bob Hayward.

Hayward was speaking at the group's annual Asia Pacific symposium yesterday.

Impressive proficiency in enterprise-capable solutions is being displayed by a number of young US companies such as Scient, Viant, US Web, Proxicom and Razorfish, Hayward said in his keynote speech that kicked off the three-day conference in Brisbane.

However, none of those vendors have yet established a presence in Australia, he told about 1700 conference delegates.

In terms of competing for e-commerce contracts, Australian suppliers were like "the local store trying to compete with Wal-Mart," he said.

About 80 per cent of Australian spending on e-business currently goes to US Websites and solution providers. Adding to the problem, Hayward said, Australian business managers have lagged behind their US counterparts in understanding the potential of e-business and local venture capitalists have not seized opportunities as vigorously as US capital providers.

At the same time, deploying applications to support e-business will prove at least twice as complex as implementing ERP environments, according to Gartner.

Costs are also rising as corporations enter later phases of Web-enabling their businesses.

The information or billboard sites that made up phase one typically cost $5000 to $50,000. That rose tenfold for phase two sites (intranet applications such as procurement and human resources) and will rise another ten-fold for phase three sites (integration of e-commerce features with legacy processes and systems), according to Gartner.

Phase four, an optimised e-business model requiring extensive business process revamping and ushering in advanced personalisation features for customers, could carry a price tag of $50 million to $150 million.

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