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Friday, 30 March, 2001, 14:34 GMT 15:34 UK
Taking the web to work
747s lined up on the tarmac
BA has saved millions thanks to e-commerce
By BBC News Online technology correspondent Mark Ward

Dot-coms may have had billions wiped off their share values recently, but the e-commerce revolution is steadily rolling on.

Many companies are pushing on with large scale electronic commerce projects that are changing the way they do business with partners and competitors.

Many commentators believe that greater use of e-commerce will produce nimbler companies that have better control and understanding of the way their business runs.

But not all the changes brought about by an electronic economy will be welcome. Some think that economic life as a whole will become harsher. Some say that businesses are going to have to get used to a bumpy ride because e-commerce will exaggerate the natural swings of national economies.

Taking stock

Given the plummetting stock market values of technology companies, you could be forgiven for thinking that the business world has fallen out of love with all things internet.

Certainly many consultancies are revising their estimates of just how much the e-commerce market is going to be worth over the next few years. In March last year the Gartner Group consultancy estimated that the business-to-business e-commerce market, which involves companies trading electronically with each other, would be worth over $7 trillion by 2004. This month Forrester Research published a report which suggested it would be closer to $1.5 trillion.

"But even revising the estimates down to that level leaves a huge market," said David Oates, European vice president for Moai, a maker of auction software used in electronic marketplaces.

Barclays cash machine
The web is helping Barclays change the way its branches work
Mr Oates said that many large companies are pushing through projects that swap paper or person-based ways of doing business for an electronic equivalent. The result should be an organisation that has a vastly improved understanding of the way it works and how and where cost savings can be made.

Before now much of this electronic streamlining has focus

ed on cutting the cost of buying indirect goods such as stationery and office furniture. But, said Mr Oates, these things are relatively cheap and cutting the cost of buying them has a minimal impact on a company's profits.

Now he said many companies are extending these electronic links to industry marketplaces and start using them to find and buy raw materials for production.

"If you make savings in your basic business process that has a quick impact on the bottom line," he said.

In one of the biggest projects of this type British Airways has cut its number of UK suppliers from 14,000 to 2,000 and saved over 210 million in the process.

Many large companies are signing up to the industry marketplaces such as GoCargo, CPGMarkets and others in a bid to cut costs, bring products to market quicker and ensure they get the best deal from suppliers.

Speed bumps

As electronic commerce takes hold it will bring in its wake changes that may not be quite so welcome. The pace of business is likely to get faster and less forgiving.

Mark de Simone, european vice president at Storm Telecommunications, said the virtualisation of companies that connect with suppliers via the wires will mean that business deals and partnerships can be set up, and severed, instantly.

As high bandwidth optical networks become ubiquitous the speed of the deal, and competition from all corners of the globe, is only going to increase. "Light eliminates distance and time," he said, "as a result products and businesses get created, and potentially destroyed, much quicker."

In an economy electronic commerce becomes ever more important. Strong competition puts pressure on the prices businesses can charge and forces them to make savings in other ways - such as using net-based technologies to cut the cost of procurement, or radically changing the way their business is organised.

Work the web

Some companies are now finding that the lessons they learned to make things work on the net can feed back into the larger business and effect change there.

Currently around 20% of Barclays UK current account customers manage their money online. Peter Duffy, director of the bank's online activities, said the bank has worked hard to make its web-banking system easy to use and realised that this work could be used inside its branches. Now it is looking to see just how much of its web experience can be applied in branches to boost productivity.

A greater reliance on networks also makes it possible to try out new forms of business. Typically in times of economic downturn one of the first things to get cut is the training budget.

But many companies are realising that the increased competition that net-based business brings means that staff have to be kept up to date, particularly because in an electronic economy new products and services reach the market far faster than before and often big changes in business strategy have to be executed quickly.

Tom Murphy of electronic learning company Digital Think said many companies are turning to the web to educate staff about the changes coursing through their business. In one of the biggest projects KPMG used web-based training systems to re-skill 22,000 staff who had been specialists in Y2K and large computer installation projects. The reskilling project took only 12 weeks and would have taken far longer without the web.

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See also:

22 Nov 00 | Business
UK e-commerce 'ailing'
12 Feb 01 | Entertainment
UK broadband 'lagging behind'
28 Mar 01 | Business
Call for tech training tax credits
02 Feb 01 | Sci/Tech
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