Firms launching

Business leaders say there’s a lot to be gained from e-commerce, but a report released Wednesday also found many are rushing to the Web, leaving themselves vulnerable to mistakes.

The report, authored by Toronto-based market research firm IDC Canada, found the e-commerce market is set to grow from $21 billion last year to $242 billion by 2005. Business-to-business activity as opposed to consumer purchasing dominates the Canadian Web scene, a trend that isn’t expected to change, said Phil Cohen, program manager of IDC’s Canadian Internet economy practice.

“In spite or recent losses, IDC sees e-business as alive and well and growing strongly,” he said. The report found all companies plan to increase their e-commerce budgets, some by as much as 40 per cent.

Connectivity levels among large businesses is virtually at 100 per cent, while levels among medium-sized businesses are set to hit 90 per cent by the end of the year, Cohen added.

Strangely, only half of the companies surveyed said they’re counting on e-business to increase their revenue or drive down costs, said Joe Greene, vice-president of Internet and telecom at IDC. Ignoring one of the most fundamental business rules means companies aren’t planning properly, he added.

“We believe there are a still a significant number of companies that are adopting e-business because that’s what they perceive the market wants,” Greene said. “We think a lot of these companies are going to make mistakes.”

As well, few companies reported having a clear definition of e-business (defined by many as simply meeting project deadlines). According to IDC, that points to the relative youthfulness of e-commerce.

Outside of improving customer service – a priority across the board – what motivates companies to start e-commerce projects in the first place varies according its size, IDC found.

“Medium-size firms use e-business to improve customer communication, to serve existing markets better,” Cohen said. Large companies, however, tend to see e-commerce more as a means to cut operating costs and increase efficiency, he added.

The report also found a growing divide between large and medium-sized businesses in terms of Web smarts, with the latter showing more speed and savvy, said Cohen. For instance, smaller firms are quicker to get their solutions to market despite lacking the resources found at larger companies.

Also, when they identify problems in their e-business strategy, medium-sized firms tend to fix them within six months. Just under half of large companies reported lag times of more than six months, with some waiting as long as 24 months, said Cohen.

The report, entitled “Using the Internet to Explore and Improve Business Opportunities”, contained the results of a poll conducted earlier this year by IDC.

IDC Canada in Toronto is at