Manufacturers see UK entry into euro as way to boost e-business

Joint survey reveals businesses feel they are missing out on Europe-wide online trading exchanges

A majority of manufacturing decision-makers believe that if the UK adopts the euro it would help their e-business strategy, according to a new survey.

Support for the single currency as a way of taking full advantage of Europe-wide online trading exchanges emerged from a major Microsoft-sponsored study of the progress of UK business-to-business e-commerce.

Cranfield University School of Management and market research company MORI questioned key executives in large manufacturing, retail, financial and public sector organisations.

More than half the 102 manufacturers agreed the euro would aid e-business, while just over a third disagreed.

Only the financial sector failed to see it as an issue. The report’s authors suggested this was probably because finance companies are more sophisticated at limiting their exposure to currency variations.

The Microsoft/Cranfield survey also suggests manufacturers want the government to play a significant role in regulating the development of business over the internet.

Different benefits

More than a third want the authorities to have a greater involvement than at present, while most of the others want it to at least stay the same.

There were interesting variations between the sectors over what they believe the benefits of e-business will be.

Manufacturers expect to benefit from the ability to respond better to customers more than any of the other three sectors.

They also place a lower value on reduced costs as an key performance indicator for their e-business strategies.

David Grimshaw, lecturer in information systems at Cranfield School of Management, identified the integration of logistics with e-business as a major challenge facing manufacturers. Grimshaw also said the appointment of an e-business director was a crucial step. Currently only a third of manufacturers have someone in place who is specifically responsible for B2B e-commerce. However, he warned that without the necessary integration throughout the organisation, even the most effective e-business director would be banging their head against a brick wall.

‘It’s the processes behind the person you appoint as your e-business champion that are important,’ said Grimshaw.

The report backed up the findings of similar surveys that manufacturing is in the very early stages of e-business adoption. More than a third of the companies questioned said they had made no investment in the area, and 53% admitted to having no organisation-wide e-business strategy. The majority of business-to-business transactions are still paper based, with just 2% conducted over the internet. These dealings tend to be very low value, with only a handful worth more than £5,000.

Increased investment

However, the survey reveals that manufacturers expect to significantly ramp up their investment in e-business over the next two years, and more than half expect to be using online exchanges.

Pauline McGowan of MORI said: ‘Manufacturers are obviously expecting a rapid take-off in e-business from a very low base. The surprising lack of previous investment many be explained by Y2K projects absorbing their IT budgets.’

Obstacles to the adoption of e-business mainly concerned securing the internal funding needed. The decision-makers surveyed indicated they were looking for a fairly quick return on investment to justify signing off an e-business project.

In some cases companies wanted to see a quantifiable benefit to the balance sheet in a matter of months. Analysts present at the report’s launch said some ‘quick wins’ were available, but most businesses prefer to take a longer-term view after they have embarked on their e-business strategy.

The report suggests that, whatever their views in the past, businesses in all sectors are taking e-business increasingly seriously. Most named the future survival of the entire operation as a key driver of their strategy.

Gregory Gorbach, director of e-manufacturing at consultant ARC Advisory Group, said of the survey’s findings: ‘While e-business represents a strategic potential today, one must not lose sight of the fact that it will soon be a tactical necessity.’

Gorbach added: ‘While manufacturing is characterised as under-performing the most, this rightly reflects the difficulties of integrating the plant floor with other audiences.

‘What has been left unsaid, however, is that the eventual pay-off for the manufacturing sector is enormous.’