E-business moves from hype to doldrums

In the wake of the B2B e-commerce hype cycle of recent years, e-business activity in Australia has been in the doldrums with pockets of spending emerging in health and government.

While e-business is now the norm in most enterprises and is simply another way of extending business transactions, what is the e-spending reality today?

According to Meta Group's technology services research vice president, Michael Barnes, companies convinced that e-business has inherent value are stuck in the marketing spiel of the last three years.

He said they fail to realise that e-business investments should only be made in order to integrate an organisation's business processes and get them moving more openly with that of stakeholders.

Whether it's the applications, solutions or initiatives supporting it, e-business is not a unique thing in itself, he said.

The B2B e-commerce hype cycle has ebbed and flowed over the last few years, but now the focus of companies has moved from connecting upstream and downstream with third parties, to becoming more adaptive enterprises.

So improving information delivery and also your customers' and partners' access to information online is the imperative.

Barnes said it is the brand new enterprise application projects that are drying up as companies try to digest their large investments in externally-focused systems over the last two to three years - such as CRM, supply chain management (SCM) and ERP - before determining if they need to extend the capability of those through technologies such as Web services or mobile applications.

This year Barnes is seeing more pockets of e-business activity particularly in Australia's health and government sectors.

The health industry is tapping into what he regards as potentially "revolutionary" ways of integrating with clients, through first-time initiatives like online patient care and record administration systems. Also, more government agencies are developing e-citizen type initiatives to better communicate with and serve the community.

Furthermore, security and privacy risks are better understood by Australian businesses, Barnes claims. "Smart organisations are aware they need [sound] upfront planning and investment in data transformation and data protection processes in order to get real value out their Internet projects," he said.

E-commerce projects disappointing

In an exclusive Computerworld poll of IT executives in August, a resounding 40 per cent of respondents said their organisation's e-commerce investments have been "very disappointing", failing to "bring excellent profits or vastly improve customer or client service."

A further 31 per cent of respondents said their company saw only moderate gains from e-commerce.

Only 20 per cent of people polled said their e-commerce projects had generated significant payback for their business. About 9 per cent were undecided. The survey also found that 51 per cent of respondent organisations spend less than 5 per cent of their annual IT budget on e-business projects.

The highest spenders on e-business - about 16 per cent of organisations - dedicate more than 20 per cent of the IT budget to such initiatives; 7 per cent spend 15 to 20 per cent on e-business, around 16 per cent allocate 5 to 10 per cent while 11 per cent spend between 10 and 15 per cent of the IT budget on e-business. This year organisations in the region are spending around $109 million on application and infrastructure e-business software, according to Gartner. By 2006, the level of e-business software spend is expected to increase to $150 million.

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