Gartner says e-biz future means integration

Electronic business as we know it now will end, evolving into the era of “Net Liberated Organizations” where electronic business is embedded into the company core, according to market researcher Gartner Group Inc.

Gartner analysts have predicted not only a new era, but also have coined yet another new IT acronym (one can never have too many of those, after all) with forecasts regarding NLOs.

Successful NLOs can expect to reduce their operating costs by 15 per cent to 40 per cent and increase their earnings per share by 30 per cent to 80 per cent in the year 2006, according to the analysts in attendance at the recent Gartner Europe Spring Symposium/ITxpo 2001 in Florence, Italy.

Gartner’s NLO model demands a full redesign of a business’s organizational structure. A focus on the company’s core competencies is key, with other functions handled by third parties. The model calls for no basic outsourcing, but extensive collaboration with the partners, which Gartner has dubbed “strategic sourcing.”

“This (the NLO) will be the true blending of both traditional and Internet business models. It is not the pure dot-com model that will be the winning formula,” said Gartner’s President Bill McDermott.

“It means: Get real, it’s business,” said Petra Gartzen, research director at Gartner.

Change isn’t easy

“It’s a challenge for boardrooms worldwide. Companies have to look at what they have now and decide what they need to take with them,” said Alexander Drobik, vice president at Gartner EMEA (Europe, Middle East and Africa) in an interview. This could include the divesting of company assets and cutting jobs, he said.

“Businesses have to investigate how they work with customers, suppliers, service providers and even competitors. Then look at the business processes and determine how those can be made more efficient, how to get more value out of the company and how to keep the customers. Get away from the old paradigm of just sending a piece of paper,” Drobik said.

NLOs will be heavy users of IT. The companies will be liberated by Internet technologies, rather than being liberated from it.

Digital communications has been driving the change and as the number of NLOs grows, so will the demand for services offered by service providers, said Drobik.

“The technology to power NLOs is just about coming on the street. Some vendors will tell you they can do it now,” said Drobik, declining to give specific information.

“Think of extended ERP with collaborative functions. IT won’t be internally focused anymore, but facilitate external contacts” he said.

Before the stage of NLO is reached, electronic business will pass through “a slope of enlightenment” predicted to occur from 2004 until 2006, according to Gartner. Business is now in a phase described by the research firm as the “trough of disillusionment,” which will last until about 2003

– IDG News Service