Stats Watch: Slow pokes clog e-commerce highway

It's a sobering fact for proponents of e-commerce that while 80% of New Zealand organisations have a web presence, few use it as more than a digital billboard for their wares.

It’s a sobering fact for proponents of e-commerce that while 80% of New Zealand organisations have a web presence, few use it as more than a digital billboard for their wares.

Only 10% can accept online payment, reports the latest survey by Fairfax Business Research. But there’s room for optimism: organisations say their online sales, purchases and thus revenues will rise rapidly within three years, moving or expanding bricks-and-mortar transactions online to reach perhaps 25% of total business in that time.

Such results roughly tally with a study by the University of Waikato of 1200-odd businesses — with only 8% able to handle online payments but predicting a 15% growth in online activities within the next year. Trouble is, the uni’s study was released in April 2001. It found then that barely a fifth of corporate websites were capable of secure transactions. Why so cautious an advance?

Ask AT Kearney. The research firm found that only the 8% of 147 businesses worldwide regarded as early adopters in e-procurement had made big savings. How did they do it? The majority aligned online supply management with e-commerce and procurement objectives. They consistently invested more in electronic supply management IT relative to their spending base, right across all segments of expenditure. Most of the companies surveyed engaged in supply chain management, but used it across only about 11% of their spending base. If the watch-and-seers used electronic product sourcing, says AT Kearney, they’d quadruple their savings. The firm estimates spending on IT tools, implementation and change management will deliver savings at a ratio of 13:1 — though economy-of-scale wrinkles are likely to appear at this end of the world.

Fairfax, which surveyed 93 New Zealand IT executives in MIS MarketTrends 2002, says integration with back-office systems is currently even rarer than online payment ability, the number of companies able to track products or access accounts reaching only single-percentage figures. Even though around 30% plan to allow product tracking and over 20% are looking at providing online account information in the next year, Fairfax notes that other priorities often kick in and cost factors are paramount.

So keep a close eye on those engaged in interesting online procurement efforts: the whole-of-government e-procurement pilot; Counties Manukau and Waitemata district health boards’ arrangement with half a dozen medical equipment suppliers, which could result in the formation of a much broader business-to-business exchange; and TVNZ’s rumoured $1 million i2-SAP e-procurement implementation.

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