UK managers failing to grasp consequences of e-business

Senior managers of UK manufacturing companies are failing to understand the impact new e-business technology will have on their businesses, a report published this week warns.

The report, commissioned by Oracle and Cisco Systems and endorsed by the Institute of Directors, shows that over 60% of managers in the sector realise the internet will be important to their business, but most do not understand how it will affect them. This is largely a result of their unwillingness to have technology briefings, according to Guiseppe Rossi, Oracle’s director of manufacturing.

And the UK is trailing behind its competitors on some measures. Around 33% of UK manufacturing managers have never had a briefing to learn the impact technology will have on their business, compared with around 18% in the rest of Europe. More worryingly, said Rossi, a `woeful’ 43% claim they would never have such a briefing, compared with 16% in Europe.

`Many manufacturers feel empowered to make business decisions without a knowledge of the impact technology will have on their company,’ he said.

But the situation is improving, thanks to pressure both from the government and from within the market itself. The UK manufacturing sector is now behind only Germany and Sweden in adopting e-business. And some British firms, in particular high-tech manufacturers, are among the best in Europe, Rossi said.

However, there is still a great deal of disparity between those managers who take the impact of technology seriously, such as the 25% of company heads who have had a briefing within the last month, and those that do not, said James Norton, head of e-commerce awareness at the IoD.

Manufacturing ought to have an advantage in e-commerce, he said, because of its background in using electronic data interchange, which it has exploited very well.

`The danger is in not moving quickly enough into the new tools of e-business, building on EDI, and in particular in not recognising that the new trading exchanges can shift the balance of power in the industry,’ Norton added.

These exchanges, for example the global car industry venture recently developed by Ford, General Motors and DaimlerChrysler, give the owners of the exchange, in this case car manufacturers, tremendous power over smaller suppliers.

Manufacturers need to be aware of this and take steps to protect themselves. `In Pennsylvania in the US, the state had to intervene to save its small metals businesses by setting up a sales co-operative to give them enough clout to deal with the likes of Ford and GM,’ Norton said.

The report, Countdown to a Connected World, was compiled from the survey responses of directors of 2,500 businesses in 10 European countries. Of these businesses, 250 were in the manufacturing sector. A benchmarking index has been set up using data from the report to enable companies to assess their progress against the best of the companies surveyed.

For further information contact Nicola Taylor of Oracle UK on: 020 8741 1123