Rapid Adoption

Chemical industry rapidly adopting e-business, CSC survey says

EL SEGUNDO, CA -- February 6, 2001 -- PRNewswire -- Technology executives in the chemicals industry are embracing the value of e-business and adopting new technologies to electronically enable their organizations, according to a study by Computer Sciences Corporation (CSC).

According to CSC's 13th Annual Critical Issues of Information Systems Study, the top concerns of chemical industry information technology (IT) executives center on e-business and the technologies that will enable e-business.

"In the 1999 Critical Issues Survey, we predicted that the chemical industry would rapidly adopt e-business and emerging technologies and continue to make up for seemingly lost time," said Russ Owen, president of CSC's Chemical Group.  "In this year's study, we've seen this trend borne out  and then some."

Numbers from Internet-based marketplace CheMatch seem to support the study.  In a report released yesterday the marketplace set a new monthly volume record.  Since inception, more than 1.8 million MT of product have been transacted on the CheMatch system, representing a cumulative notional value greater than half a billion dollars in the chemicals, plastics, feedstocks and fuel products industries.

According to the CSC study, the top three concerns for chemical industry technology executives were connecting to customers, suppliers and/or partners electronically; creating an e-business strategy; and optimizing organizational effectiveness, a new issue that surfaced in this year's survey.

"All of these responses indicate a maturity on the part of industry respondents and their understanding of where they can actually derive value from the application of their IT dollars," said Owen.

As was the trend in the other vertical industries surveyed by CSC, the feedback from IT executives in the United States demonstrated that companies here, followed closely by those in Europe, are well underway towards using e-business technologies to improve their operations.  The pattern of responses from Asia, on the other hand, showed some delay in capitalizing on e-business.

"There is no doubt that the chemical industry in Asia will catch up," stated Owen.  "The intent is there."

Overall, 64 percent of the chemical industry technology executives reported that they are involved in e-business, while 25 percent noted that they are considering it.  Ninety two percent of those industry executives who responded said that their priority audiences for their e-business initiatives are suppliers and customers, which is in line with the industry's traditional focus on productivity, costs and customer service.

Another indication of the chemical industry's adoption of powerful e-technologies is the executives' strong support of Net markets as a part of their business model.  More than half of the respondents from the chemical industry indicated that they are currently participating in one or more Net markets.  (Net markets are neutral online marketplaces that allow for transactions among sellers, buyers and distributors of different products.) Of those who are not yet participating, nearly 82 percent plan to do so next year or are investigating the potential of doing so.  Chemical industry technology executives overwhelmingly agreed that the purpose of participating in Net markets is to drive down transaction costs.

Yet respondents to the CSC survey also voiced some concerns about the barriers to e-business success.  In the U.S., for example, executives in the chemical industry noted unclear return on investment and the difficulty and expense of integrating existing systems.  In Europe, the biggest challenges are the difficulty in aligning the organization on a course of action and the difficulty of enacting the required organizational change.  In Asia, however, respondents face a lack of user interest.

"These responses are to be expected from entities who have recently embarked on their e-journey," Owen pointed out.  "Yet there is a pattern evolving, at least in the U.S. and Europe, that suggests an underlying level of confidence in e-business technology and a belief that it will continue to evolve."

In what Owen noted may be the most telling finding, better than 61 percent of survey respondents expect their IT budgets to increase next year while another 20 percent expect their budgets to remain the same.

CSC has queried IT executives on critical technology issues since 1988.  The 822 respondents to this year's survey include chief information officers and vice presidents and directors of technology departments representing organizations in more than 18 different areas such as financial services, healthcare, consumer goods, aerospace and government.  Of the total respondents, 26 percent represent North American organizations, 27 percent were from European companies, 15 percent were from Australia and New Zealand organizations and 32 percent represented companies from Asia.