eBusiness Has a Future -- But It's Not Yet a Priority.

A recent Internet search told at I already knew: eBusiness is on the minds of business professionals everywhere. Story after story addressed the potential of eBusiness applications and their eventual impact on how we approach the entire management chain, with seemingly everyone having an opinion about what the new eBusiness world will look like. However, a reality check is in order.

EBusiness is going to affect the entire enterprise, but a recent study by Hackett Benchmarking & Research illustrates that for finance, the current impact is more illusory than real. One theme is consistent: Companies understand that eBusiness will eventually be a priority, but it has yet to reach the forefront. For instance, 93 percent of companies surveyed predict changes in their business strategies. Nearly 70 percent project eBusiness investments to increase significantly within two years, and a similar number see it dramatically altering boundaries between both internal functions and supply-chain participants.

However, the same study shows that actual e-commerce implementation and utilization remain very low, especially within the finance function. Current spending initiatives account for less than 1 percent of revenue and while most companies see that number increasing substantially in the coming years, survey participants don't predict making truly meaningful investments anytime soon.

Mirroring this, the electronic transmission of transaction and sales volumes are expected to rise in the next two years, but not markedly. Only in the electronic transmission of forecasts do we see projected increases that substantiate the current eBusiness hype. About 25 percent of quarterly and annual forecasts are now transmitted electronically, and that figure is expected to rise rapidly.

Companies are also not moving quickly enough to take advantage of the Internet for reporting -- a step that would make internal and external reports available to everybody at the same time. Ninety-five percent of the companies surveyed put less than half of their financial reports on the Internet, and nearly three-fourths post less than 25 percent of their reports online. On top of this, fewer than half send external reports via the Internet, and a paltry 18 percent process tax returns electronically to a significant degree.

EDI Set to Surge

As yet another example, companies expect a dramatic shift to electronic billing methods in the foreseeable future, with electronic data interchange (EDI) usage increasing by 20 percent and Internet use nearly doubling by 2001. Similarly, the Web's role in remittance processing is projected to grow 40 percent or more in the same time frame. However, these increases are taking place from a very low baseline of usage today.

So why hasn't the expected eBusiness boom taken root? For almost 20 percent of the survey participants, eBusiness is simply not yet a corporate priority. For more than 10 percent, initial cost is seen as a major roadblock, as is a perceived lack of existing systems' capability. Other notable reasons include a belief that most external business partners aren't ready to handle e-commerce transactions.

Thus far, even early-adopting companies in the eBusiness arena have generally failed to make it a strategic priority, instead looking at the cost and efficiency benefits. Data show many short-term investments in Web-enabled processes that commit only limited resources to reconfiguring them around commerce models. Few companies see the need to transform their entire organizations around eBusiness.

Even companies that are taking steps to implement eBusiness strategies are failing to integrate their finance systems with other systems (e.g., procurement or human resources) in the enterprise. Just over one-third of the finance organizations surveyed consider integration to be high.

As we've seen before in finance, too much searching is being done for the "silver bullet" that will painlessly deliver competitive advantage in eBusiness, without facing up to the very real changes in organization and process that must transpire. The promise of eBusiness is waiting to be realized, and this early look into what is myth and what is reality suggests that there is still a long way to go.

Richard T. Roth is managing director of Hackett Benchmarking & Research, the best-practices research arm of answerthink.