By Siobhan Kennedy in Orlando
Transforming IT systems for business-to-business e-commerce is the singular most important issue for enterprises moving forward, and those companies that ignore e-business will get left behind as industries begin to consolidate into a small number of key players. That was the key message from the Gartner Group’s CEO Michael Fleisher as he addressed the audience on day one of the group’s Symposium ITxpo in Orlando. Moreover, Fleisher said the successful integration of web applications into core mission critical systems will determine who succeeds and who fails in the e-business transformation process.
Traditionally, Fleisher said, Gartner opens the conference by highlighting three key issues which it believes will dominate the IT agenda for the coming year. As I began to think about the key issues for 2000 and beyond, it quickly became obvious that there was no need to bother with such a long list, he told the audience of 5,000 plus delegates. This year, there aren’t three key issues, there aren’t even two. There is just one, and you know what it is. Fleisher said that e-business has come to dominate the IT agenda to an extraordinary degree. But what was more surprising, he said, was the degree to which it’s also started to dominate the business agenda as well.
But he pointed out that e-business will impact different industries in different ways. We believe some industries, like groceries, will remain largely brick and mortar business for the foreseeable future, he said. Other industries, like music and travel agencies, are quickly evolving into something close to a pure net model. But the added: The vast bulk of companies will find their future somewhere firmly in the middle. The difficulty for those companies will be to decide the right balance of bricks and clicks they need to thrive, he said.
In some cases, Fleisher said, a company’s biggest competition could be the dot com that’s leading the field but in other cases, it might be the traditional brick and mortar competitor. Stop worrying about being Amazoned, he said, and start worry about being Schwabed.
Looking forward, Gartner predicts the dot com revenue model will collapse, with each market segment undergoing huge consolidation until there are just a handful of key players. Right now there are 132 on-line brokers, said Gartner’s VP and research director Al Lill. That’s about 125 too many. Over the next six to 12 months over 95% of the pure net plays will either be acquired by the big guys like Merrill or Schwab, or they’ll go out of business. Some, like eTrade, may survive. And the same thing will happen in every industry, said Lill. That’s why companies have to act now or they risk getting left behind altogether. They can’t ignore it, they must do e-business.
Fleisher said that although the likes of e-bay and Amazon.com were attracting all the press, they are not the real story of e- business transformation. In fact, he said, Amazon & Co represent a tiny minority of companies that are building their business and applications from ground up for the internet. Among today’s Global 2000 companies, mission critical applications based solely on the internet are very much the exception, he said, in fact, less than 1% of their mission critical applications are purely internet based…over 80% of those systems are totally isolated from the Net. But over the next three years, he said the sheer momentum behind e-business will force the Global 2000 companies to convert their businesses. So that, by 2002, 80% of Global 2000 mission critical applications will be completely interwoven with the net either through extending legacy applications to the net, or creating totally new net-based applications that tie back into core legacy systems, he said.
