Reston, VA June 19, 2001 A survey of CEOs of major global corporations across a variety of industries reveals that e-commerce is a priority of chief executives, but that no clear consensus exists on how to integrate e-commerce initiatives into the context of business and IS strategic planning.
The World IT Strategy Census 2001 was conducted earlier this year by London Business School and commissioned by Compass, a global management consulting firm specializing in business and IT performance improvement.
This survey is designed to assess the influence of e-business on strategy formulation, the level of alignment between different strategies and the level of CEO personal involvement in e-business and IS strategy making, says Michael Earl, professor of information management and business strategy at London Business School and author of the report. We can conclude from the results that e-commerce is indeed having a major impact on CEO thinking and activity, but that the process of incorporating e-commerce into business planning is far from complete or uniform across organizations.
Olof Söderblom, chief executive of Compass, comments, This is our fifth annual Compass CEO Census. The challenges and concerns of respondents and our clients have undoubtedly evolved during these five years, as have the services and capabilities we offer to address these as a global consultancy.
According to the survey, 67 percent of respondent companies have a formal e-business strategy. While this indicates that most large businesses recognize the strategic threats and opportunities of e-business, it also suggests a possible disconnection between e-commerce and business strategy whereby e-business becomes an isolated project rather than an integral component of business development.
I would argue that most firms should not have a distinct e-business strategy, says Mr. Earl, but rather should reassess and revise their overall business strategy in the light of e-business.
The survey also found that 52 percent of CEOs report major personal involvement with e-business strategy and 23 percent minor involvement, a result that supports previous findings that e-business is high on CEO issue agendas. Similar levels of involvement were reported with respect to CEO involvement in IS strategy.
Time horizons of business strategy were also examined in the survey. 55 percent of respondents develop plans for one to three years, while 31 percent operate on three-years-plus time frames. In terms of e-business strategy making, over 50 percent of firms adopt time frames of one year or longer, while 21 percent operate on horizons of less than twelve months. IS strategy time frames tend toward the long term, with 57 percent operating on a one- to three-year horizon and 15 percent three years and beyond.
The relatively high proportion of long-term planning is somewhat surprising, says Mr. Earl. Companies either do not perceive the business environment to be hugely turbulent or they have learned to cope with change and uncertainty in the conventional business strategy process.
CEOs also ranked alternative methods of evaluating e-business investments. While all suggested methods rate highly, the more strategic rationales are favored most used is the criterion contribution to business growth/development, followed by fit with business strategy and competitive necessity. Although frequently used, financial criteria rank near the bottom, while operational/revenue performance improvement is applied slightly more frequently.
When asked to cite their major challenges in e-business strategy formulation, 15 percent of respondents say achieving successful return on investment. 14 percent indicate the need to deliver customer benefits while at the same time educating customers to take advantage of e-business offers. 11 percent of respondents say achieving alignment between systems and software, including finding the right partners and suppliers. Other challenges identified are dealing with rapid technological change, implementing a coherent strategy, winning over employees, doing business with small customers with limited capabilities, and prioritizing projects.
The 2001 World IT Strategy Census involved CEOs and senior executives of 201 companies from 11 European countries, the United States, Canada and Australia. Seven industry sectors are represented. In terms of size, 35 percent of companies surveyed report sales revenues of $1 to 10 billion, and 43 percent between $100 million and $1 billion. Seven industry sectors are represented.