Digital Economy Diminishes Usage of Management Tools; Bain & Company's Annual 'Tools & Techniques' Survey Shows Management Tool Usage Has Declined.

Business Editors

BOSTON--(BUSINESS WIRE)--May 3, 2000

Speed of Digital Economy has left

Managers Sticking to Tried and Tested Tools

Bain & Company, a global management consulting firm, today released the results of its 1999 "Tools & Techniques" survey, profiling the usage and effectiveness of management tools among 475 companies around the world. The study, based on an analysis of 25 management tools, found that the overall usage has declined with an average of 10.9 tools used by each company compared to 13.4 in 1998. In North America, the Internet was cited as the key reason for the decline in the usage of tools.

"It appears that the growth and speed of the digital economy has caused firms to believe that they do not have the time to experiment with tools," said Darrell Rigby, a Director at Bain & Company, who headed the survey. "Furthermore, the overall growth of the economy together with the onset of Internet commerce has meant that companies face an increase in business with a shortage of skilled staff. This has left them with limited resources to experiment with new tools. Instead, they remain focused on the tried and tested."

Confidence has risen in the growth of the economy. The percentage of executives concerned with an economic slowdown fell from 55% in 1998 to only 10% in 1999. In South America and Asia, where countries are emerging from the economic crisis, the usage of tools is significantly higher than in Europe and North America. This implies that companies there now feel more comfortable about survival and are looking for new ways to thrive.

Knowledge Management, a tool that is broadly perceived as indispensable in today's knowledge-driven economy, consistently receives low satisfaction scores and high abandonment rates. Nevertheless, a large number of firms who have not used Knowledge Management in the past say they will begin to do so in the year 2000. Survey results suggest these firms may need a better understanding of how the tool is implemented and gain the buy-in of their employees before implementation.

"Knowledge Management requires enormous time and financial commitments, while the payback is proving frustratingly slow," commented Mr. Rigby. "In addition, employees don't have the time or motivation to share their knowledge. Special knowledge can be the path to fame and fortune in today's economy. This hampers employees' readiness to share valuable information."

Other newer tools that are applicable to the Internet have not yet experienced widespread usage and levels of satisfaction with them differ greatly. Users are very positive towards One-to-One Marketing, moderately positive towards Supply Chain Integration, and negative towards Virtual Teams. North America, which is at the leading edge of the new economy, has a higher usage for tools related to growth in e-commerce.

1999 Survey Highlights:

-- Executives in North America, which enjoys the strongest economic state and
is leading the new economy, are using tools that help keep them focused
(Strategic Planning and Mission and Vision Statements); help them grow (Growth
Strategies and Merger Integration Teams); and allow them to speed up their
business processes (Cycle Time Reduction and Supply Chain Integration).

-- North American firms are more skeptical about tools. They feel that
"management tools promise more than they deliver" and "most management tools
we've used have not been very successful." In South America, where the usage of
tools is highest, a high percentage of executives believe that "companies that
use the right tools are more likely to succeed than those that don't."

-- Renewed confidence in the economy is leading fewer executives to plan for
layoffs or hiring freezes in the upcoming year.

-- E-commerce continues to grow worldwide with 64% of companies saying they
will be aggressively expanding e-commerce capabilities.

-- The tried and tested tools -- Strategic Planning, Mission and Vision
Statements, Benchmarking and Customer Satisfaction Measurement -- remain the
most popular.

-- Business Reengineering, a "hot" tool of the early 90s, continues its decline
in usage, dropping completely out of the top 10 tools used by North American
executives.

-- North American firms are particularly dissatisfied with Real Options
Analysis. Forty-six percent of the managers who have used Real Options Analysis
have subsequently abandoned the tool.

About Bain & Company, Inc.

Bain & Company is one of the world's leading global management consulting firms, serving clients across six continents. With headquarters in Boston and offices in all major cities throughout the world, Bain has worked with over 1,500 major multinational and other corporations from every economic sector, in every region of the world. As a complement to its strategy consulting practice, Bain has established bainlab, an active incubator of Internet companies, which brings Bain's intellectual property, execution capability and network of contacts to identifying and building Internet businesses. For more information visit www.Bain.com and www.bainlab.com.