INDUSTRY VIEWPOINT - Keeping up with the West Coast

Mike Portlock, an independent consultant focusing on IT and management issues, says UK firms must consider e-business.

The uptake of e-business in the US continues at a staggering rate and the pace of change in companies based on the West Coast in particular is ringing alarm bells for many UK and European organisations.

To some, Silicon Valley is a reality distortion zone, but the benefits being achieved through the exploitation of the internet by vendors such as Cisco must challenge the thinking of even the most successful firms all over the world.

Cisco, with daily internet sales in excess of $23 million, claims tangible benefits in excess of $550 million as a result of its online business initiatives. These have resulted in productivity and performance far ahead of its rivals in the vital infrastructure environment.

While most of the hype focuses on the business-to-consumer area, the real action is in the business-to-business environment. Most companies are now deploying intranets and are linking these into extranets to facilitate supply chain integration. Virtual value chains are emerging with the final producer or consumer calling the shots and squeezing prices through improved efficiencies. To date, these are not necessarily being passed on to the ultimate consumers, but margins within the supply chain are lower and organisations are competing for a larger share of a smaller cake.

This is being fuelled, in part, by the recognition that firms can gain more in the short term by exploiting buyside driven e-business strategies, than by trying to sell to a mass market that is still limited by both access and understanding.

But a number of factors are emerging that will contribute to the development of the business-to-consumer market. Improved access brought about by digital TV, intelligent home devices and voice recognition will facilitate internet use by the masses. Self-service is an emerging concept not only in areas such as financial services, books and music, but across a wide range of business and consumer areas.

Another trend is towards the outsourcing of e-business processes as companies recognise the need to move at pace, as well as their internal lack of skills. Personalised portals are very much in vogue and companies are recognising the huge potential value of personalised customer contact.

Security is becoming less of an issue, although privacy and exploitation of personal data is a concern. The impact of this in Europe and the UK may be inhibiting the deployment of e-business. This is a serious issue as the globalisation of certain parts of the market is inevitable and the gap between what is happening in the US and what is happening in the UK must be of concern to British businesses.

E-business is essential to the majority of organisations in the UK, but until senior management raise their awareness and understanding, the UK will continue to lag behind its US counterparts.