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November 29, 1998

EUROPEAN SYSTEMS INTEGRATORS BEHIND IN E-COMMERCE?

By CBR Staff Writer

Europe’s top 300 systems integrators are being beaten in the race to win local e-commerce contracts by US companies, according to a new report by Passant Publishing. Corporations use services companies to help them decide how e-commerce will affect its current businesses, how to effectively sell to a customer on a one-to-one basis and how to link the web front end to the back office functions. And it’s set to become big business, according to Forrester Research Inc, which estimates that the market for e-commerce software and services is currently worth $5.6bn and will grow to $35bn by 2002. European SI firms, however, are not finding their 22% average annual growth figures — from $59.5bn to $72.6bn — in e-commerce, according to the report. Apart from exceptions such as CMG and Logica, European national systems integrators have concentrated on Y2K and Euro work rather than building experience and expertise in e-commerce support, said a Passant spokesman. This has allowed US e-commerce specialists, such as USWeb and agency.com, US SI firms, such as Cambridge Technology Partners, and multinationals, who can afford to develop expertise and products in both areas, such as IBM, PwC, Andersen Consulting and EDS, to set up in Europe and win most of the multinational accounts, according to the report. The US companies have an advantage due to America’s faster acceptance of e-commerce work, which has provided the SI firms with technology and experience to bring to Europe, as well as contracts with the European subsidiaries of US multinationals. The European branch offices of multinational companies are estimated by Passant’s researchers to provide US e-commerce integrators with up to a third of their revenues. But all is not necessarily lost for the European systems integrators who appear to be missing the pieces of the e-commerce puzzle. The large SI companies will catch up through the acquisition of smaller players, typically with revenues up to $10m, who have expertise in niche e-commerce areas. Of the existing 300 largest European SI firms 30% will have either been bought out or gone under within five years, according to Passant. And European systems integrators still maintain advantages when setting out to win e-commerce contracts; the firms are closer to the local market and do not regard the EU as a homogeneous market, where one strategy works for all.

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