E-biz: Here for Good

Have you been subject to jargon that vaguely resembles terms like B2C, B2B,

C2C or any other variants? Over the past one-and-a-half years, these

terminologies have nearly vanished from the IT thesaurus, to be replaced by

e-business and related terms. But there still exists confusion about what

exactly e-business connotes. Does the definition of e-business include paying

bills over the Net or using the Internet to source information and then

purchasing in the physical space? For this survey, Dataquest defined e-business

as the "process of conducting transactions using the Internet".

This moves beyond mere buying and selling on the Internet and includes the

extended extranet being used by the likes of Tech Pacific, Cisco Systems India

and Intel–to include distributors, resellers and customers to form part of the

ebusiness. To check the status of e-business readiness in Indian corporates,

Dataquest conducted a survey in the four metros (see Methodology).

The results were clear–the banking, financial services and insurance (BFSI)

segment led the pack on the e-biz front. The other finding was glaring–that

strategizing and rolling out of e-business initiatives still falls under the

domain of IT heads or CIOs, and is yet to find a place in the corporate

boardroom.

Less than a year back, DATAQUEST had opined that unless top management got

involved in the taking of IT decisions, the real e-business goal of India would

remain far from being realized. A report by QNB Intelligence second this dictum–"The

ultimate e-biz goal must be vision-driven enterprise transformation. E-business

transformation shoudl be driven directly from the corporate vision, and only

this will deliver rewards and benefits of a different order of magnitude."

Less than 20% of the companies surveyed had top management driving e-biz

strategies. An interesting find was the expansion of e-business to incorporate

B2B activity. Of a total of 78 companies which had e-business initiatives, 54

(about 70%), indicated that SCM would be part of their plans. SCM continues to

attract new project investments: 88% of potential users plan further investments

in SCM, against 89% in CRM solutions.

One finding was unanimous–e-business is here to stay...

Do

you have any e-biz initiatives in place?



This straight question elicited answers along expected lines. In all, 35% of

the sampled companies had e-business initiatives in place, while others had just

kickstarted the process–with actual rollout expected in the next 6-24 months.

As expected, the BFSI segment led the pack in terms of implemented e-business

initiatives, with 71% respondents from this space already having moved ahead.

Most FMCG respondents said they had started the process, but rollout was

expected only in the next 6-12 months. It was manufacturing which was the

eye-opener, having steamrolled into the e-business arena. By the year-end, over

80% of the sampled companies from this space would have rolled out their

e-business initiatives.

If

not, why haven’t you embraced e-biz?



Price points and infrastructure issues were the two primary reasons

thwarting quick deployment of e-business initiatives in corporate India. A

miniscule 6% (only three of the sample) of the companies not into e-business

cited "No Industry Relevance" as the cause for not implementing any

initiatives. The swing on this front, from an identical survey two years back,

was palpable–at that time, there were hordes of companies that cited absence

of relevance as the reason for not implementing e-biz initiatives. Today, with

cost and efficiency pressures dominating, most have taken to e-business in order

to stay in the running.

Who

heads your e-business initiatives?



E-biz initiatives continue to fall under the domain of the IT head. In all,

67% of respondents said the CIO was King. However, this trend is a bit of a

letdown, underscoring as it does the fact that while IT has established itself

as an essential part of any business strategy, it is yet to enter the boardroom.

Dataquest had opined a year back that the sooner top management got involved in

IT decisions the better, but that trend hasn’t happened just yet.

Did

you rethink your e-business initiative after the slowdown?



Bless or blame the slowdown? Due to the slowdown, a majority of the

companies did a rethink on their business plans and included IT initatives as an

added element to their overall gameplan. A few slowed down initiatives too.

Overall, 70% of the respondents admitted that they changed their IT plans during

the course of the year due to the slowdown. Around 80% of companies with e-biz

initiatives already in place said they revisited their plans, while of those

companies that were still rolling out their initiatives, 64% said they had

rethought their initiatives due to the impact of the slowdown.

What

benefits do you expect your e-business initiative to bring you?



While e-business proponents would claim many reasons and advantages for a

shift, we checked with the IT managers on what their expectations were. ‘Improved

sales’ bagged a majority of the votes at 94%, followed by ‘improvement in

the supply chain’. Remember, these two are related. By getting the supply

chain in the ‘e-loop’, companies can reduce overheads associated with

administration and paperwork by eliminating repetition, leading to better

planning of inventories and delivery.

Interestingly, the reason why e-business got global acceptance or wide

geographic coverage did not figure very high on the list of expectations.

Companies have realized that merely Net-enabling businesses does not ensure

opportunities from new markets. The marketing philosophy does not change and

e-business is just another channel–and that’s the current state of affairs

across the globe. A pan-European survey carried out by QNB Intelligence for EDS

said the drivers which underpin business strategies tend to be "defensive

and operational", rather than "market- and customer-centric". 55%

rated ‘operational efficiency’ as a crucial driver, whilst just 26% rated

‘increasing marketshare’ as a key factor. Only 20% rated ‘increasing

shareholder value’ as important.

What

are the key hurdles/barriers to e-business?



While the preceived high price point of e-business solutions is a key

deterrant to companies embarking into this space, legal issues emerged as a

bigger hurdle. Another important issue was the absence of concert between the

e-biz initiative and the overall business plan. The survey also threw up a clear

trend–e-business is not form of most companies’ core business strategy. This

is also corroborated by the low involvement at the CEO/MD level in IT decisions

in general and e-business decisions in particular.

Why

are you adopting e-business?



Who drives decisions on a company going the e-biz way? Customers, vendors

and suppliers would be safe to place bets on. Remember that we are not talking

about the typical amazon.com kind of retail business model, with consumers at

the business end. We are looking at the business-to-business side of e-business.

While big companies are embracing e-biz due to the sheer efficiencies it brings

in (even a 1% improvement in efficiencies translates into a crore of increments

in net profit), second-tier companies are being forced onto the e-biz bandwagon

by customers, vendors and suppliers. For example, Intel and Cisco do not deal

with companies which are not e-biz ready. The same holds good for giants like

Maruti Udyog, IndianOil and Reliance Industries. Interestingly, e-business is

not driven by the fear psychosis of the "competition is doing it, we have

to do it too" syndrome.

Has

your e-biz initiative had an impact?



This is where everyone agrees, and the resounding answer–YES! As many as

26 of 28 companies which had e-biz initatives in place said it had changing the

way they did business and increased efficiencies manifold. The only two who didn’t

say ‘Yes’ to the question were certain on one aspect–the impact would come

in next year.

YOGRAJ VARMA

Methodology

The objective behind conducting the Dataquest ebusiness-survey was two-fold–first,

to find the level of e-biz activity in the corporate segment, and second, to

find the maturity level in this area. We picked a sample size of 80 companies

spanning across various verticals in the four metros. The manufacturing segment,

followed by the BFSI segment, represented the largest vertical of the lot. To

ensure that our sample represents a wide breadth, we included companies from the

energy, publishing, telecom and pharmaceuticals sectors, among others. The

sample breakup: