The dotcom phenomenon was a blot on the Internet landscape.
It left many industry commentators and businessmen alike believing
that the savings and increased sales that the Internet can deliver
are nothing but myth. But businesses, small and large, are realising
the true benefit that the Internet can deliver. A recent study
Gartner undertook with Cisco Systems predicts that the Internet
Economy in Europe will grow from $53 billion in 1999 to $1.2
trillion only five years later. Is this hype in itself? Cisco
doesn't think so. This paper examines this maturing of a marketplace
that is coming to accept the value the Internet can bring to
companies. It also suggests a simple five-stage model that maps
the way that businesses, especially small and medium sized businesses,
can best use the Internet to reap its long term gains.
Despite the hype behind the well-documented dotcom boom witnessed
over the past 18 months, the fact is the Internet is here and
is here to stay. When dotcom fever peaked in 1999, the financial
markets were awash with venture capital funding. As the shake-out
took hold, disillusionment spread and now, two years later the
Internet has been branded as yet another fad. This is far from
the truth. We believe this is just a part of the cyclical nature
of business. It is only a matter of time before e-business becomes
integrated into daily business. This will occur when business
fully accepts that the Internet can bring long-term value rather
than overnight gain. Cisco foresees this will take place in less
than five years time.
Lets look at the facts. According to industry analyst, IDC,
the number of Internet users in Europe will grow to 233 million
by the end of 2004, up from 117 million at the end of last year.
Surfing the net aside, European business decision makers are
also starting to acknowledge that the Internet can deliver greater
savings and help streamline processes to be more efficient. A
recent study by Gartner in conjunction with Cisco Systems, revealed
that 75 per cent of European decision-makers believed that 'the
Internet is a fundamental and irreversible change to the way
everyone does business." In this same study, 85 percent
agreed, "e-commerce is a major change to our industry, and
one that we have to follow."
2. The Internet Economy in Europe - a maturing market
This is nothing new for Europe. Gartner's 'The Internet Economy
- Revolution to Evolution " - the first report to measure
the size and shape of the Internet economy in Europe - canvassed
the views of over 800 company executives across Europe. Their
sentiments further illustrated the fact.
Europe is becoming increasingly sophisticated, moving from
the simple use of email to more sophisticated applications. The
study states this noting that Internet Commerce will be the fastest
growing part - at a 123 per cent compounded annual growth rate
(CAGR). This further underscores how the Internet Economy has
moved from just building web sites to developing and utilising
web sites to their full potential. And the potential is quite
sizeable! Gartner estimates that the Internet Economy in Europe,
alone, is set to equal almost 15 per cent of Western Europe's
combined GDP by 2004.
3. Follow the road
Cisco has developed a model - The Internet Business Roadmap
- which details the five
tages that companies need to go through before the Internet is
seamlessly and transparently integrated into all their key business
processes. While it was developed primarily for SMEs, it is relevant
for larger businesses too. Some enterprises may already have
taken some of these steps, but it is in integration, where the
power of the Internet lies.
The simplest of Internet technologies, email is often the
first stage in every company's Internet evolution. Although simple
in setting up and using, its role shouldn't be underestimated.
It opens powerful new opportunities to share information, collaborate
efficiently on documents and work remotely. Written communication
becomes almost instantaneous at a cost that falls far below that
of the Old World alternative methods (post, faxes and courier).
Having a presence on the world-wide web in the form of a website
delivers two powerful benefits. First, from a customer care standpoint,
it allows customers to contact companies and receive up-to-the-minute
status on fulfilment and assistance with their product/service.
Secondly, it opens a company's information up to a world-wide
audience of over 70 million Internet users, every hour of every
Selling and offering sales support over the web allows companies
to reach previously untapped markets, maximising sales and customer
reach. Cisco for example sells 80 percent of its solutions this
way. e-Commerce is not, however, just for big business. Another
example is Jack Scaife Butchers Ltd, a British family business,
which has been running since 1902 has changed from a tradition
of running a single shop to selling solely through mail order
and the Internet. Since implementing e-Commerce in 1997, costs
have been slashed and turnover risen from £200,000 to £750,000.
E-business is seeing the Internet as something more than a
sales and marketing tool. Companies are now embedding the Internet
in the very fabric of their business, in the very nature of their
culture with the use of intranets and extranets. With the introduction
of self service applications, remote access and the adoption
of teleworking, not only can huge administrative savings be made,
but productivity and job satisfaction levels can also be accrued.
The ABB Group worked with Cisco to achieve a number of e-business
goals. These ranged from workforce optimisation by encouraging
flexible working amongst its German workforce by providing unmetered
Internet at home to consolidating the buying power between ABB's
groups and its suppliers by using the Internet as a facilitator.
3.5 The Ecosystem
The Ecosystem is the development of a community of shared
interests, objectives and goals and by bringing all key stakeholders
together - customers, suppliers, employees and shareholders -
into an environment that provides tangible benefit to all. This
enables departments and individuals to focus on their core competencies,
and let the other stakeholders focus on the rest.
For example, Cisco worked with British Airways to bring its
e-strategy to life. When it started redesigning its extranet,
improving the use and deployment of self service applications
and exploiting e-procurement technology across the company's
supply chain, Cisco worked with all the key departments from
HR and training to finance and purchasing. These solutions allowed
BA to save an estimated £380 million per year. But there
were many intangible benefits too; better staff morale and employee
satisfaction which in themselves directly affect customer service
4. Testing your iQ
The biggest barrier to moving down this roadmap is often not
technology but organisational change. Put simply, many businesses
are unable or unwilling to change their organisations to adapt
to e-business either from fear or from a lack of vision. So working
with the correct partner is vital, giving a company the confidence
not only of receiving the most suitable Internet solutions but
also most suitable total solutions such as marketing and sales
Cisco has developed a new web-based business service to help
companies understand what the Internet could do for them. Called
the Internet Quotient or iQ, it offers a variety of resources
and an introduction to Internet business concepts in the areas
of e-commerce, customer care, and supply-chain management and
it outlines customer and Cisco experiences in Internet business.
While some have said, 'no-one is making money out of the Internet'
- this may have been the case for many dotcoms. Cisco's experience,
on the other hand, has shown that there are very significant
savings to be made, customer insight to be gained and efficiency
to be reaped. So while making money on the Internet remains a
challenge, the savings being achieved are undeniably - making
companies more profitable.
For this to happen, however, it is vital that there is board
level acceptance of the Internet's benefits and the strategic
importance of fully embracing it. Unless it is integrated into
every aspect of the business and shared with every individual,
it will not work.
Companies also need to understand that the barrier to entry
into previously impenetrable markets is lowering due to the Internet.
Thus, it has enabled agile new competitors to steal customers
from old incumbents using a vastly lower cost structure. More
than ever before, we are in a globalised marketplace. If European
business's fail to recognise the value the Internet can bring
then the gap between the countries getting it, and those not,
will only widen. Countries slow to adopt the Internet will be
slow to receive the economic benefits that come with it. And
their businesses - whether family butcher shops or large traditional
companies - will see that the Internet was not all about hype