Half Of US Firms Will Sell Products On Net

E-Mail Now A Primary Means Of Communication

Electronic Government Market Projected To Grow By 34%

Enterprise Knowledge Portals Are The Future

A report out this week from the Financial Executives Institute (FEI) and Duke University has concluded that more than half of mainstream companies in the US are likely to sell their products and services across the Internet by the end of next year.

The bottom line to the report, which polled 371 companies across the US, is that a major surge in online sales and purchases will occur over the next few years.

Delving in the results of the survey, which interviewed chief financial officers (CFOs) from the companies concerned, reveals that, although 56 percent of the companies polled plan to use the Web to sell their output, they also predict that this will only account for an average of eight percent of their sales.

That is still quite a jump from 1998 when just 24 percent of firms reported Internet sales, representing an average of about 5 percent of total sales.

John Graham, Duke University's finance professor, however, said that the survey also returned the interesting fact that Internet sales are most important for high technology firms.

"In 1998 Internet sales represented 6.5 percent of all sales for high-tech firms, and this number is expected to increase to 11.1 percent in the year 2000," he said.

According to the survey, the CFOs polled also anticipate that their companies will use the Internet to make more purchases from suppliers. Two-thirds of firms expect to make purchases over the Internet by the year 2000.

Executives in firms using the Internet anticipate making an average of 7.9 percent of all supply purchases next year online.

The survey is conducted quarterly by FEI and Duke University's Fuqua School of Business. Each survey polls a broad cross-section of CFOs from over 3,000 US companies.

The current survey, details of which can be found on the Web at http://www.duke.edu/%7ejgraham, was completed during the week of Narch 15 this year.

FEI's Web site is at http://www.fei.org.

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A report just published by Frost & Sullivan (F&S) has concluded that e-mail has moved right alongside the telephone and fax as a primary means of business communications in the US and Canada. In fact, F&S says, as of the end of last year, thanks to an e-mail server market that is rapidly booming due to price reductions, e-mail was actually surpassing the humble telephone as a tool for business communications.

According to the report, entitled "Internet/Intranet Online," the impact of these business changes is becoming global. F&S also says that the total number of e-mail mailboxes installed worldwide reached approximately 112.4 million in 1998, up from 48.7 million in 1997. The revenues generated by this market, the company says, totaled $1.9 billion in 1998, up 145.5 percent from 1997.

F&S' research suggests that the e-mail server market can now be divided into two major segments: Corporate and Internet service provider (ISP).

According to F&S, in terms of users, the corporate market has been the slightly larger of the two with 68.4 million users, up from 36.7 in 1997. However, the corporate market dwarfs the ISP market in terms of revenues, accounting for 91.8 percent of revenues in 1998.

F&S' Web site is at http://www.frost.com.

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Sales of electronic goods and services to the federal government will grow by 34 percent over the next four years, according to a study released today by the information technology research firm Federal Sources Inc. (FSI).

FSI, which specializes in government marketplace research, also predicts that the government’s investment in high-speed networking equipment such as switches, routers, and bandwidth controllers will increase by 26 percent between 1999 and 2003, to become a $5.6 billion market.

The increased investment in technology is significant not only to the government’s Internet capacity but also to the overall advanced networking market, said Ray Bjorklund, senior principal consultant at FSI and the main author of the report on advanced Internet products.

These are very important numbers, Bjorklund said. "This (investment in high-speed networking) sets the stage for what will eventually become commercialized, and you'll have the government turning around and buying these products."

The boost in advanced technology will enable the government to operate at speeds of 100 to 1,000 times the speed of today's Internet, the report concludes.

The leading government agencies making use of electronic initiatives will be the Department of Defense, the US Army, the Social Security Administration, the IRS, the General Services Administration (GSA), and the US Postal Service, according to FSI.

One area expected to grow substantially is Web-based electronic commerce for government employees. Workers will be able to order and purchase supplies electronically through GSA contracts, for example. "That's becoming much more robust," Bjorklund said of Web-based commerce. "The growth in that area is phenomenal."

Privacy issues have caused some concern in the government's expansion of its Internet capacity. The Social Security Administration, for example, stopped making earnings and benefits statements available online after privacy issues were raised, Bjorklund said.

Despite some glitches, citizens' electronic access to the federal government

will continue to rise and become more interactive, FSI predicts. "There are going to be a lot more personalized relationships" between the government and the Internet user, Bjorklund said..

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A recent report from International Data Corp. (IDC) suggests that that the Web portal market, already going through a boom period, will soon evolve beyond the enterprise information portals (EIPs) which it says are prominent today.

According to the report, entitled "Sourcebook for Knowledge Superconductivity," Web portals are the ideal medium for knowledge management and concludes that EIPs -- in their present form -- are not sufficient for the business world.

Because of this, the report says, there will soon be a rapid development of collaborative portals in the business market, which will, in turn, lead to the creation of enterprise knowledge portals (EKPs) that connect people, information, and processing capabilities in the same environment.

According to Murray, this will have a fundamental impact on how IT (information technology) systems are implemented, the way customers spend their money on hardware, software, and services, and the very structure of the IT industry itself.

IDC's report identifies four points of evolution for corporate portals: enterprise information portals (EIP), which provide personalized information to users on a subscription and query basis; enterprise collaborative portals (ECP), which provide virtual places for people to work together; enterprise expertise portals (EEP), which provide connections between people based on their abilities; and, enterprise knowledge portals (EKP), which provide all of the above and proactively deliver links to content and people that are relevant to what users are working on in real time.

According to the report, the first three portals are being developed today, with EIP being the most active segment. Collaboration portals are developing rapidly, and the expertise portals are just now beginning to get the attention they deserve from developers.

While they are not available today, IDC expects EKPs to be a market reality later in 1999.

According to Marianne Hedin, program manager for IDC's Consulting Services, and a researcher and contributor to the report, knowledge management (KM) is fast becoming a hot topic. "Management consultancies have been the strongest advocates of KM to date, and while their offerings are comprehensive, they are largely undifferentiated," she said.

"Technology vendors, on the other hand, are highly differentiated but lack the resources to effectively penetrate the market. As a result, there will be substantial consolidation in the KM market," she added.

IDC's Web site is at http://www.idc.com.

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Call Centers Still In Vogue -

A report by Ovum's various international offices around the world suggests that call centers will remain in vogue, despite the "self-service" nature of the Web.

However, the report says that a new type of call center, the Web-enabled call center, is now starting to arrive in the marketplace. As a result, the information technology (IT) research organization warns that user firms must be clear on their call center strategy.

The report, entitled "Next Generation Call Centers: CTI, Voice and the Web," cites two reasons for the continued importance of the call center: existing market presence and their proactive nature.

According to David Bradshaw, Ovum's senior analyst in customer facing systems and a co-author of the report, call centers are where businesses talk directly to their customers, discovering their requirements, persuading them to do business, and ensuring their demands are satisfied.

"Call centers also have a crucial advantage over self-service media -- they allow businesses to be proactive in ways that would be rejected or ignored if self-service media were used," he said.

Bradshaw cautions that users must decide whether they are Web-enabling their call centers or call center-enabling their Web sites.

"The end result may appear the same, but the two are different. The differences are in what rules the call center applies to initiating interactions, how the business case is constructed, and how `success' is measured," he said.

According to the 1,495 pounds ($2,600) report, the Web enabled call center is a strong catalyst for e-commerce strategy.

In the report, Ovum found that linking online strategy with the call center has two direct effects on e-commerce: firstly, a Web enabled call center makes the online process more effective, since it augments the e-commerce process with live agent support; and, secondly, it makes e-commerce strategies more effective at tapping into the online revenue stream, by introducing a proactive element.

Bradshaw notes that there is a disparity between the financial returns promised by e-commerce hype and the on-line profits that are currently being realized.

"Web enabled call centers allow businesses to overcome this profit inertia and realize their latent e-commerce revenue, by acting as the catalyst that turns online spin into financial substance," he said.

Ovum's Web site is at http://www.ovum.com.

(Contact: Laura Parker, Ovum Europe +44-171-312-7238; Ovum US press office 781-272-6414)

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