Firms formalize e-business strategies

Ten years ago the concept of IS strategy was as foreign to many CEOs of large corporations as the idea of something called the Internet. And the idea of having an e-business strategy was completely non existent.

Not surprisingly, today the situation has changed dramatically. According to a recent survey performed by the London Business School on behalf of Guilford UK-based Compass Ltd., today’s CEOs are not only aware of the need to have formal IS strategies and e-business strategies, they are actively involved in the process. In fact just over 50 per cent of the 200 plus respondents said they have major personal involvement in their company’s e-business strategy.

“Gradually we have seen e-business emerge as a concern,” said Jim Pearse, vice-president of business development at Compass Analysis Canada Ltd. in Mississauga. This is the fifth annual survey and this year Compass decided to focus on e-business strategies (instead of just IS strategies) because there has been a lot of growth in this area, Pearse said.

The survey results showed that more than 65 per cent of CEOs said their company had a formal e-business strategy while over 80 per cent had a formal IS strategy. This compares with about 94 per cent who have a formal business strategy.

Canadian companies fared slightly better with 70 per cent of the CEOs saying they had a formal e-business strategy.

This result raised an eyebrow of Faye West, director of information systems at the Alberta Research Council, Edmonton.

“Based on Canadian companies that I see on the Internet, etc., it doesn’t strike me that Canadians are buying into this,” she said. “Maybe they have a strategy and they just haven’t implemented it,” she added.

Since the results were not tracked according to actual respondents, it is impossible to say whether the results are good or bad for Canadian companies.

“If it was all the bankers (who responded), it is a good thing it was 70 per cent,” she said with a laugh. Other Canadian industries have not embraced e-business to the same extent as Canadian financial institutions have, she said.

“My impression is that the resource companies, particularly the oil companies in Alberta,…are very slow [on] this, they are much more interested in putting their money into the ground than into e-business,” she added.

one strategy but not the other

The number of companies with a business strategy but not an e-business strategy does not surprise Gaylen Duncan, president of ITAC in Mississauga, Ont. Yet he does see a silver lining in the results.

“The number from a year ago…I’ll be it was 50 or 60 per cent that did not have an e-business strategy,” he said. Versus the 30 per cent who don’t have one today.

But Duncan said there is a need to have the e-business strategy become part of the overall business strategy instead of existing as a parallel entity.

This movement is gaining ground, Pearse added.

“Companies are starting to treat their e-business strategies as a component of their overall business strategies,” Pearse said.

Big companies are starting to look into the future to see where e-business can take them, he added.

A pleasant surprise for all those interviewed is the fact companies are looking into e-business as a long-term issue rather than an instant ROI.

The results show (please see charts on this page) that the vast majority of CEOs with an e-business strategy are in it for the long term with more than twice as many committing at least a year to the projects.

“The dot-com implosion has done a number of things,” Pearse said.

“People have been able to sit back and take a breath and not get so caught up at getting things online at any cost…so (it is a) kind of justification for the slow and steady approach for building e-business capabilities.”

Duncan said the fact companies are looking long term is a good thing amount of time committed to e-business strategies is a sign of the times.

“I think the difference is we used to talk about five to ten year plans and now they talk about three to five and that is more realistic,” he said.

West agrees.

“If you are being judged on your bottom line every six months by your board of directors…is [e-business] a risk you want to take?” she queried.

“These things are not going to have a big impact in the short term, you have got to not only build up your presence and reputation in the e-business world, e-commerce world, but the Canadian consumer has to also get used to the idea of doing business online,” she concluded.

The CEOs surveyed represented large corporations from around the world. 86 per cent of the respondents represented companies with revenues in excess of US$100 million, with half of those overseeing companies in the US$1 billion plus range. The largest chunk of respondents came from manufacturing (38 per cent ) and financial services (14 per cent). Fourteen countries were surveyed, with 15 per cent of the results coming from Canada, second only to the U.K.’s 16 per cent.