After the Revolution

META Group: Despite dot-com fizzle, companies must keep up with e-business evolution

Tempe, AZ  April 18, 2002  The "e-business revolution" failed to fundamentally revolutionize the way companies do business, but business practices are nevertheless moving steadily onto the Web and companies ignore the consequences of the "e-business evolution" at their own peril, according to a recent report from technology consultancy META Group.

In the report, E-Business: The Revolution That Failed  But the Evolution Continues, META's analysts predict that, through 2005, companies will continue to use extranets and B2B portals to optimize buy- and sell-side processes in their value chains. Companies will also turn to industry-backed Net markets for such vertically oriented, outsourced services as planning, logistics, payment, settlement and analytics, META says.

The authors of the report  including David Yockelson, David Cearley, John Brand, Hollis Bischoff and Dale Kutnick  argued that e-business earned a bad reputation because it got caught up in the dot-com boom and bust of 1999 to 2000. "The perceived failure of the e-business 'revolution,'" META's gurus wrote, "was caused by organizations getting sidetracked by notions of new business models instead of viewing the Internet as a vehicle for providing convenience, reducing communication and process latencies, and increasing distribution capabilities."

In fact, e-business technology implementations have already yielded substantial results at many companies, reducing supply chain costs and improving overall efficiencies. As a result, META wrote, "to dismiss e-business as simply a fad will be more damaging to an organization long term than optimistic over-investment."

Still, the analysts note that the e-business environment has evolved since the heady days of the late 1990s, with companies now taking a more pragmatic approach to new initiatives. The emphasis has shifted from simply reducing supply chain and channel- or partner-related costs to making it easier for partners  including suppliers, customers and channel partners  to do business with the enterprise. Companies are setting up extranets, for example, that let suppliers access a variety of information previously locked behind the four walls  and the firewall  of the enterprise.

In addition, whereas larger, "technically elite" firms such as the Intels and Microsofts of the world previously drove e-business innovation, now many smaller companies are getting on the bandwagon as technology levels the playing field and lowers the cost of entry into e-business, according to META. "Various smaller firms, which were too small to manage the complexities of electronic data interchange (EDI) are leaping directly from faxed paper to digital processes, thereby achieving some of the major changes in business processes that Global 2000 firms realized a decade ago with EDI," the analysts wrote.

e-Business technology has changed, too. Most companies these days, META said, are developing B2B services based on portal technology  that is, solutions for establishing Web-based interfaces that let users access and use data from various backend systems. Often, companies are basing their B2B portals on the technology they used to establish their business-to-employee portals. The proliferation of these B2B portals  along with greater use of the latest extranet technologies and the evolution of companies' internal systems  is letting users share increasingly complex information within and outside their own companies. Further, as Web services (shared services accessed through the Internet) evolve, users will be able to share processes across companies as well, META asserts.

For today, however, META advises that companies look to technology projects to streamline business processes and supply chain relationships, including by using industry-sponsored Net markets in their verticals when possible. In general, the analysts concluded, "Organizations should realize that e-business never really died, and the widespread 'dot-bust' mentality of rejecting all e-business ideas as non-starters is unwise."

For more information about IT spending, read "Back to Basics: e-Business Finally Gets Real" in the April/May issue of iSource Business magazine.