Industry Trends and Directions Scenario: Transforming the Enterprise Through E-Business

Don't hesitate to comment below if you have any questions or additional phrases Industry Trends and Directions Scenario:Transforming the Enterprise Through E-Business September 18, 2000 Financial Executives Institute Forum on Finance & Technology Las Vegas, Nevada William S. McNee Gartner Fellow 1-203-227-7612 bill.mcnee@saugatech.com ,Key Issues 1. What are the key eBusiness trends that will drive new IT investments during the next five years? 2. How will technology advances and changes impact IT and eBusiness deployment decisions? 3. How can organizations harness and exploit eBusiness despite ever-increasing complexity and volatility? Business Driving IT E-Business IT Driving Business ,1 - 2% 88 - 93% 6 - 10% Pure Play Brick & Mortar Hybrid Global 2000 Business Model Distribution -- 2003 Key Issue What are the key eBusiness trends that will drive new IT investments? The $64 Trillion Question: Who is Right? -- Global 10 CEO -- Leading Venture Capitalist “Dot Com Companies yield … Completely new industries with new cost structures Radical restructuring of industries Real growth never seen before” “Dot Com Companies have … HR departments who hire without regard for real skills Marketing people who spend millions to give away products Executives who have never run a real business” ,Key Issue Analysis E-Business: Drivers and Responses Key Business Challenges: Agility and speed Focus on core competencies and processes Customer centricity Mass customization Geographic scalability Flexible IT architectures Interoperability of infrastructure Business Drivers of the New Economy Global financial interdependencies Deregulation Unrestricted capital flows Global workforce sourcing Digitization Global communication and transportation systems New geopolitical realities New Business Models and Structures: Aggregators Portals Info-mediaries E-tailers Hybrids Virtually integrated Mega-mergers E-Business Integration ,Myth Truth B2B E-Commerce Forecast ($B) $8,000 $ 7,297 YE02 7,000 6,000 5,000 $3,950 E-Marketplace EC 4,000 Extranet/sell side/ Net EDI 3,000 $2,188 2,000 $953 1,000 $403 $145 $45 - 1998 1999 2000 2001 2002 2003 2004 YE02 YE02 YE02 YE02 Non-financial goods and services worldwide YE02 YE02 Opportunity/Threat Model YE99 YE99 YE99 YE99 YE99 YE99 YE99 Indep. Travel Agency Retail Groceries Retail Brokerage Music Very Low Extremely High Strategic Planning Assumption (s) By 2004, B2B e-commerce will reach $7.3 trillion, representing 6.9 percent of the total global economy (0.7 probability). By 2005, 70 percent of all product and service-based industries will be dominated by virtually integrated enterprises (0.7 probability). Pure Dot-Com Business Models Dominate 1st Mover Advantage Critical for Success Brand Is King Internet Levels the Playing Field Portals Dominate Share Beats Profit Advertising as Primary Revenue Driver Digital Products/Services Business Value (and difficulty of “Webification”) Attend Online University Physical Products Vote Online Order Prescription Drugs Conduct Financial Transactions Local Services Process Healthcare Claims Schedule Surgery Order Grocery Delivery Media Transmittal Schedule Auto Maintenance Order Books Download Music Renew Driver’s License Schedule Haircut Book Travel (e-tickets) Degree of Possible “Webification” ,50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 05 90 95 00 10 Strategic Planning Assumption (s) By 2005, investments in e-business applications and infrastructure will drive average IT spending (in North America) beyond 10 percent of revenue (0.8 probability). By 2003, the central IS budget will represent only 40 percent of total IT spending for large enterprises in North America, and only 50 percent in Europe (0.7 probability). By 2010, at least 50 percent of the corporate capital budget will be devoted to IT for large enterprises (0.8 probability). Total IT Spending as a Percent of Revenue(Central IS Budget plus Business Unit