(Slow) Growing Pains
Although Forrester Research and Yankee Group have released negative surveys on technology spending, others offer a much more optimistic view. San Jose State University’s ECM (electronic commerce management) program, in conjunction with Meta Group and Survey.com, surveyed companies of all sizes nationwide and found that nearly two-thirds said the Internet is more critical to their company’s success today than it was 12 months ago. More than half said management now devotes more time and attention to E-business, and 37 percent said that E-business revenue has increased during the past 12 months, while only 10 percent reported a drop.
“These results show that E-business is a crucial part of infrastructure spending and is recognized by companies as something they must embrace or they’ll disappear,” says Mitchell Levy, CEO of ECnow.com and author of E-Volve-or-Die.com.
Companies are responding to these mixed signals in different ways. A few have staked their claims at either end of the all-or-nothing spectrum, à la Logitech and Filtronic, but most now find themselves charting a middle course — focusing on one major area of innovation that provides reasonably quick and measurable ROI, and then building on it.
At Toledo, Ohio-based Owens Corning, for example, the emphasis is on driving financial transactions into the electronic realm. “E-procurement is almost synonymous with E-business for us,” says Chuck Dana, the company’s vice president of E-business and global sourcing. Owens processes 600,000 invoices a year, creating an ongoing paper chase that eats up time and money. Moving those transactions from paper-based to Web-based systems has proven so effective that Dana says the current economic outlook won’t slow his company’s efforts. “We’re accelerating our use of E-procurement,” he says, “and plan to send out 75 percent of our payments electronically next year.”
Those efforts will save Owens around $1 million in 2002, which provides a substantial incentive, but Dana says that other factors are also driving the company to approach E-business through a focus on E-procurement. For one, it doesn’t cost much: The company can do most of the work by leveraging its existing ERP software suite and other infrastructure. That’s a common theme at many companies, and analysts say one reason E-business spending isn’t racing ahead is that companies are now attempting to leverage what they’ve already bought.
Another and more important reason is that E-procurement offers Owens valuable lessons in building better relationships. “As we learn how to interact with our vendors electronically,” says Dana, “we see how those relationships get deeper and harder to break. That helps us understand how to best serve our customers in a Web environment.” The company is not quite there yet. As Dana says, “It’s easier when you’re the customer, because you make the rules.”
In the future, the company plans to extend its E-business environment to better serve its own customers, an effort Dana says will entail more than simply moving transactions from paper to wire. “When you turn your attention to customers,” he says, “you need your business processes to be aligned, because you don’t want to disappoint anyone.” Logitech’s Onken agrees, and notes that one challenge to E-business is “staying in line with your suppliers and customers, both in terms of what they can do and what they want to do.”