Digital revolution hampered by e-commerce

Peter Mandelson's hopes for a digital revolution may take longer than planned if the latest e-commerce survey is to be believed.
Written by Jane Wakefield, Contributor

Commissioned by software supplier JBA, the survey paints a gloomy picture of digital business in the UK. Of the 1000 UK companies surveyed only 22 percent are currently involved in e-commerce, and analysts agree, the take-up of e-commerce by firms runs at less than 2 percent.

Previous predictions from industry analyst IDC suggest the UK e-commerce market could be worth £3bn by 2001, with estimates for 1998 at £300m. But Stefan Elmer, analyst at IDC admits that current figures for income generated by e-commerce may be misleading. "So far, a lot of the money is coming from a very small number of companies such as Dell and Intel and that's not representative." he said. Last month Intel announced monthly revenue from Internet sales of up to $1 billion while Dell says it makes $2m (£1.2m) per day via the Web in Europe alone.

Jupiter analyst Nick Jones believes the government needs to act as a role model for businesses. The government's stated aim is to conduct 25 percent of its business electronically by the year 2002, but this is far too low according to Jones. "They need to aim a lot higher if they want to get the e-commerce message through," he said.

Jones believes fear of change is responsible for the UK's slow start. "Most (companies) have existing technologies and are loathe to rock the boat. If the Internet is used properly it can lead to radical change and people are afraid of that," he said. Many have the attitude that they will do it when someone else does said Jones. But such tactics could leave UK businesses exposed and vulnerable according to Bloor Research chief executive Robin Bloor who told UK executives last month that the use of the Internet was not an option but "a necessity".

JBA's e-commerce business development manager Steve Larwood remains optimistic: "Some of the responses of business to e-commerce do depress me but the results of this survey are far less gloomy than I thought it would be," he said. He predicts the research figures will double by this time next year and believes Mandelson's intervention, as well as the message in the Queen's speech will raise the profile of e-commerce in the minds of UK companies.

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