E-marketplaces score in long-term strategies

Popular perception may have it that e-marketplaces are a still a mystery to companies, however a new study into e-business adoption trends worldwide dispels this "myth", revealing that most IT executives intend to use them to boost long-term revenues.

IDC's 2001 eWorld Survey which canvassed 15,000 CIOs, IT managers and Internet executives from all regions on e-business adoption levels, showed that despite the pessimism that the April 2000 tech-wreck cast across big business, companies plan to increase their e-business spend by 20 to 30 per cent this year.

Moreover, organisations are ambitious that they will grow their online revenue by more than 50 per cent and are building intranets and external Web sites at an "unprecedented rate", the survey found.

IDC believes that while the fallout in the IT sector from the dotcom crash and a cooling global economy have encouraged market perception that "e-business is dead", the reality is that traditional companies were not hit as hard by the news of the dotcom crash, and thus have "high expectations" for Internet-based initiatives.

Specifically, survey respondents said that from 2000 to 2001 they expect online revenue to increase from 5 to 8 per cent of their total sales, and spending on Web projects to grow to 24 per cent - from 15 to 17 per cent of IT budgets.

In Australia alone, e-marketplace activity in both enteprise and government circles has been "budding" over the last 18 months, as big businesses are generally earlier to adopt new technology compared to SMEs; are better-resourced and will gain the most benefits from e-trading exchanges, said IDC senior analyst for Internet and e-commerce Lisa Shishido.

More than 60 per cent of Australian executives canvassed had heard of an e-marketplace. However, of those managers, only 6 per cent had actually participated in one as a buyer. Another 19 per cent of those respondents said their company intended to become a customer in the next year.

Some 17 per cent of Australian respondents had already joined e-marketplaces as sellers, with 8 per cent planning to do so in the next year.

For almost half of the respondents with no interest in participating in e-marketplaces, most were deterred by the market's relative "immaturity", the survey said.

These executives lacked interest due to factors like limited product offerings; paying little thought to the e-marketplace value proposition (ie. cost savings, productivity gains, new revenue channels, competitiveness), having no applicable market-place to play in, and the general immaturity of models in the marketplace. The remaining half of respondents disinterested in e-marketplaces cited other reasons like "the exchanges they were aware of were not suited to their business," or their own "business processes did not suit the e-marketplace model".

With e-hubs typically operating as "little more than an online brokerage", Shishido said that larger enterprises have been the main driver of activity so far - demanding services to match and support their complex operations and thus allowing integration into their existing infrastructure and systems.

A Citibank Australia e-commerce and corporate banking spokesman said that participating as a buyer in an e-marketplace offers more benefits than operating as a seller.

While the bank has not yet ventured into the e-marketplace space, he said it may get involved in 18 months time as a "protective" business strategy.

"We don't just stick our head in the sand and try anything - because of competitive reasons. We'd be looking for a [hub] that provides complimentary banking services to us. And if, like us, you're considering streamlining your procurement, we wouldn't shy away from new e-commerce initiatives like an [e-marketplace] project," he said.

He added that a company's success as a buyer depends on factors like the quality of existing business relationships or partnerships, which if good he said could increase buyers' purchasing power and competitive edge.

Other key findings in the survey were:

* The Internet access "explosion" has only just begun. The e-business landscape is still infant with companies only starting to build IT infrastructures and networks.

* An e-business buildout will occur over the next few years, driven by companies' past and continuing investments in Web projects and e-commerce, lower costs of entry, more Internet-enabled devices and easier integration between back and front-end systems. Around 25 million businesses will haveWeb sites by 2005, compared to 10 million businesses in 2000.

* There is a gap between what businesses expect of their e-business investments and what their existing e-business infrastructure is capable of.

IDC's 2001 eWorld Survey canvassed executives from the Asia Pacific (Australia, China, Korea, Japan), the Americas, Western and Eastern Europe and South Africa in the first half of the year.

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