Retailers play e-business catchup

While Australia's retailers see e-tailing as the wave of the future, more than one third admit they still do not have an e-business strategy in place. Retail Meter 2000, a joint initiative between PricewaterhouseCoopers and the Australian Centre for Retail Studies, surveyed more than 100 retailers and found that although 69 per cent say they can't afford to ignore e-tailing, only 39 per cent have developed an e-business strategy. Retailers without a strategy said other issues were of more immediate importance, such as Y2K and GST compliance, and had diverted their investment focus away from e-business in 1999.

With those challenges out of the way, the gap looks set to close, with 60 per cent of those without a plan intending to have one within 12 months and a further 39 per cent expecting to beyond 12 months.

Australia's retailers realise that an e-business strategy has become indistinguishable from a business strategy. said PricewaterhouseCoopers. Most believe Internet applications will improve customer service levels, aid in communicating with suppliers, and reduce supply chain costs. In the business to consumer arena, retailers are looking to introduce other electronic distribution channels such as store kiosks as they move towards multi-channel retailing.

Strategic development investments vary widely, the survey found. Four per cent of retailers expected to commit more than $A1 million to e-business in the next 12 months, while at the other end of the spectrum, around half plan to spend under $A50,000. About a quarter expect to spend between $A100,000 and $A1 million.

Most companies trip over new accounting

E-commerce is requiring companies to redesign their corporate finance functions to enable-e-business transformation, according to a new global survey published by Andersen Consulting in cooperation with the Economist Intelligence Unit. The survey, which claims to be the first of its kind to focus on the impact of e-commerce on corporate finance, indicates that many CFOs doubt the ability of traditional metrics to evaluate key elements of operating in the new economy.

The survey confirms that most companies are aligning their e-business strategies with those of their traditional-economy businesses. However, many CFOs say that if e-business and legacy-business strategies are aligned, it is because traditional-economy relationships and performance are being viewed through the prism of e-business. The aim, they believe, is to use e-business initiatives to elevate the total value proposition, not to tie down new initiatives to the existing processes.

Elite lift IT spending

Gartner Group has found that worldwide enterprises considered to be leading-edge adopters of technology spend an average of 11 per cent of revenue on IT, which is works out at about $US17,500 per employee. Mainstream adopters of technology spend an average of five per cent of revenue on IT, an average of $US21,000 per employee. Conservative adopters of technology spend an average of three per cent of revenue on IT for an average of $US11,000 per employee.

In 2001, enterprises plan to allocate an average of 3.61 per cent of revenue for IT budgets. That figure, coupled with 1.67 per cent of revenue devoted to capital for IT, yields an IT spending index of 5.27 per cent. That level of spending eclipses the 2.9 per cent level reported from a similar Gartner survey undertaken in 1998. That dramatic change corroborates Gartner's analysis and forecast that by 2005, the typical North American enterprise will spend 10 per cent of revenue on IT and the typical large European enterprise will spend 7.5 per cent of revenue on IT.

If an enterprise is a conservative adopter of technology but its strategy is to become a mainstream adopter, it must increase IT spending by at least 160 per cent. Furthermore, if an enterprise plans to move from being a mainstream adopter of technology to a leading-edge adopter, it will have to spend 220 per cent more on IT.

Asia/Pacific users ramp up Net use

The number of Internet users in the Asia/Pacific region (excluding Japan) will reach 40 million by the end of this year, 55.7 per cent more than the 25.7 million users at the beginning of 2000, according to figures released by International Data Corporation (IDC). The survey indicates that opportunities for vendors of online services are increasing rapidly as the region's users are expected to spend $US7.3 billion on electronic commerce purchases this year, IDC said. But vendors will need to be aware of the shift in Internet usage patterns towards currently less-developed economies, the firm said in its latest Internet Commerce Market Model report.

Over the next five years, the Internet user base in Asia-Pacific will grow at an annual rate of 40.6 per cent, bringing the number of Net users to 141 million by 2004. The value of e-commerce transactions will grow at an annual rate of 128 per cent over the same period IDC estimated.

Reasons for the rapid Net growth include falling Internet access tariffs, the emergence of the free Internet service provider trend in the region and an increasing interest in Internet-related initiatives among the successful old-economy companies in the region.

Data access drives cellular handset growthWireless terminals have quietly slipped into the dominant hardware role for the new millennium, according to Cahners In-Stat Group. The high-tech market research firm believes that while low margins have been a problem up until now, data capability will tend to minimise the market for low-end handsets, and will, in turn, contribute to an increase in revenue.

Messaging and the promise of e-commerce are transforming the "nice to have" wireless phone into a "must have" information appliance. As a result, an increase in replacement sales will contribute greatly to handset revenue. In much of the world, Bluetooth and the now universal SIM card will facilitate mobile commerce (m-commerce) and, while GPRS disrupts the normal replacement cycle in Europe, the Americas will soon discover that the addition of the SIM will open up another huge replacement opportunity. In addition, as virtually every non-US GSM service provider moves to GPRS, new handsets will be required and E-911 and 112 location services will facilitate m-commerce while prompting the safety-conscious user to desire a new handset.

Servers set to continue strong growth

While shipments of standard Intel architecture servers (SIAS) in the overall US market declined two per cent from 4Q99 to 1Q00, the rack-optimised segment of the market experienced stellar growth of 55.2 per cent, according to IDC. This growth was felt to be even more remarkable because he first quarter of a calendar year is historically weaker than the fourth.

Just how strong is growth in this segment? IDC expects US rack-optimised SIAS shipments to increase from fewer than 94,000 in 1999 to more than 701,000 in 2004.

Server vendors are paying close attention the market's growth - and might even be triggering some of it. All major vendors have recently announced or will soon announce additions to their rack-optimised product lineups. However, to increase their share in this segment of the market, they will have to offer more than typical price and performance comparisons, IDC noted.

Consumers behind Wireless Web evolution

Although demand for the wireless Web in North America is currently minimal, it will evolve as marketers grow to understand consumer behaviour, according to a report that was recently released by Forrester Research. Even though consumers are unable to articulate an interest in the wireless Web, there is strong evidence pointing to the emergence of a successful market, Forrester analysts found.

Consumers don't think they want the wireless Web yet, but they will. They have adopted an Internet lifestyle, and the wireless Web will simply be the next step, a Forrester spokesman explained. In addition, the market will succeed as competition undermines prices for voice minutes - forcing operators to roll out wireless data. Furthermore, the wild adoption of wireless technology in Japan and Europe will provide North American developers with confidence that their turn is just around the corner.

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