Adapt to e-business or fall behind, Insead study warns

A report by international business school Insead has found that only businesses that adapt to the digital age and develop a greater understanding of e-business will remain competitive in the marketplace of the future.

The report entitled 'Measuring the Competitive Fitness of Global Firms 2001' says that there is a huge variance in the e-business capability of many of the world's largest firms, citing Oracle, IBM and Compaq as the leaders in the current e-field. 'Those behind them,' it says 'are struggling to create and implement successful strategies.'

Author of the report is Jean-Claude Larréché, Chairman of Marketing at Insead, who has used a series of twelve fundamental capabilities that influence the effectiveness of a firm in its markets as well as a firm's e-business capability to achieve the report's findings. In order to measure these capabilities, he utilised indicators covering a broad range of topics pertaining to e-business, from the availability of employees' access and training on the use of the Internet to the integration of the firm's Internet strategy with its other core business functions.

In general, only firms in North America and in the Computers & Electronics sector scored well on their capability to effectively harness the benefits of e-business, the report found.

The highest rated factors in this section were those relating to the internal aspects of e-business such as employees' access to the Internet, the impact of e-technology on internal communication and project teams effectiveness through e-technologies. However, the report warned that 'companies utilising the e-business capability must have the willingness and desire to let technology improve every aspect of its business processes,' adding that 'a successful e-business uses a global network and global database to integrate all aspects of the business.'

The report found that of the 67 firms it studied achieving the overall rating of being 'world class', only 27 per cent of that number managed to achieve this rating in the 'e-business capability' department. Oracle led the field in terms of e-business capability with a score of 89 per cent, and IBM and Compaq followed, both achieving scores of 87 per cent.

Benefits of embracing 'e-business' technology, the report found, include: cost savings (Oracle announced the move would save them $1 billion), revenue growth and customer satisfaction.

The Report illustrates a direct correlation between those with higher revenue growth rates and those who have successfully adopted e-business.

The lowest rated 'reasons to become an e-business' were those relating to using the technology to increase customer loyalty and adapting e-business strategies to different groups of customers. Citing this factor, the report states that 'A good customer relationship is key to recruiting and maintaining customers. E-business can be used to create such a positive and effective relationship - the goal of which is to create a synergy among sales, marketing and customer service activities within an organisation.'

The 2001 Report concluded that 'if a firm is to become an e-business market leader and sustain such a position it needs to ensure that it is utilising an e-business strategy that does not have a clearly defined beginning or end but is part of an ongoing and evolving process which seeks to maximise opportunities brought about by new technology.'

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Richard Powell, UKTECH