Survey: Economy hits companies’ e-commerce plans

While one in two business owners saw a bright future for e-commerce in July 2000, that optimism has noticeably declined as the IT industry and other economic sectors try to weather the current economic slowdown.

A new study released Monday suggests that now, just one in four businesspeople are “very optimistic” about the future of e-commerce. Even Internet companies have seen a decline in enthusiasm to 59 per cent compared to 89 per cent in July 2000, according to a new study by Grant Thornton LLP, an accounting, tax and management-consulting firm.

The days of companies and executives expressing a great sense of urgency for developing an e-commerce strategy and throwing large sums of money at such efforts are over, said Andre Schnabl, a Grant Thornton partner in Atlanta.

“Eighteen months ago, there was an absolute feeding frenzy … almost a panic (for companies to develop an e-commerce strategy),” Schnabl said. “The mood has changed drastically. It’s a more sobering mood. It’s far more rational.”

The need to be a “first mover” was a classic cliche in the development of an e-commerce strategy a year ago, Schnabl said. There were some companies that were quick out of the gate and succeeded with an online strategy, but there were many that were dismal failures, he said. Now, the development of an e-commerce strategy is much more disciplined and conservative, Schnabl said.

In addition to its impact on e-commerce, the economy also has put a damper on business owners’ and executives’ outlook on growth prospects. Thirty-four per cent of all business owners and executives surveyed said they were optimistic about the growth prospects of their companies, according to the survey taken during February and March. This is down from 48 per cent in July 2000. Internet companies showed the most noticeable change, dipping to 54 per cent from a bullish enthusiasm level of 85 per cent in July 2000.

Another trend on the decline may be corporate acquisitions and strategic alliances. Forty-eight percent of the companies surveyed foresee an alliance during the next three years, down from 60 per cent in mid-2000. Similarly, 43 per cent of the companies surveyed are planning an acquisition compared to 52 per cent in July 2000. The number of companies that do not have plans to grow globally rose from 37 per cent to 45 per cent.

Many companies are taking a less aggressive stance toward merger and acquisitions during the downturn, Schnabl said. But despite these conservative attitudes, Schnabl suggests that this is a prime opportunity to acquire discounted properties and technologies.

As far as alliances go, Schnabl suggests that some companies, such as Sun Microsystems Inc. and Oracle Corp., are dealing with internal issues and must get their own houses in order before they look to make alliances outside their own organizations.

For its survey, Chicago-based Grant Thornton conducted 417 Internet and telephone interviews with a mix of different types of owner-managed companies with annual sales from US$5 million to $500 million.

Grant Thornton, in Chicago, can be reached at