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Julie MeringerGroup DirectorForrester Research Ltd.
eCommerce Next Wave: Productivity and Innovation
Theme
Leading organizations must use the Net to boost productivity
and drive innovation
Agenda
What is the state of eCommerce worldwide?
How will productivity play a role in eCommerce?
What new innovations will drive economic growth through 2010?
Average increase:
17%
Average decrease:
20%
European firms slow IT spending in 2002
0% 10% 20% 30% 40%
No change
Decreased
Increased
“Has your IT budget changed compared to last year?“
Source: Forrester Q1 2002 European survey of 212 technology leaders
Why? Economic malaise“If your budget decreased, how important were these
factors?“
Better efficiency with fewer resources
Completion of last year’s projects
Centralization of IT
Merger and acquisition activity
Not at allimportan
t
Veryimportan
t
Source: Forrester Q1 2002 European survey of 212 technology leaders
Economic downturnWeak company financial
performance
Decreased importance of eBusiness
Increased use of outsourcing
Economic downturnWeak company financial
performance
Decreased importance of eBusiness
Increased use of outsourcing
Companies expect spending to recharge . . .
0% 20% 40% 60% 80%
No change
Decrease
Increase
BudgetHeadcount
“How will your technology budget and headcount change in 2005?“
Source: Forrester Q1 2002 European survey of 212 technology leaders
2002 vs 2001 Tech Spending
2002 2001
<$1BOverall
Percent of
revenues
spent on
eBusiness
IT executives
Business executives
G3,500
3.5%3.1% 3.0%
3.4%
2.5%
3.5%
3.5%
3.6%
G3,500
IT executives
Business executives
Percent of
revenues
spent on IT
7.2%5.4% 4.8%
5.0%
4.7%
Base: executives at North American companies
% of revenues on technology initiatives
2002 IT2002 eBusiness
Financial
Distribution
Manufacturing
Other
Technology and
business services
13.9%3.9%
6.4%3.4%
5.4%4.5%
4.1%1.6%
9.4%6.1%
Base: executives at less-than-$1 billion companies
% of revenue from eCommerce
Base: executives at G3,500 companies
0% 5% 10% 15% 20% 25% 30%
Total
Electricity, gas,and sanitation
Insurance
Finished goods mfg.
Retail
Financial(noninsurance)
Primary productionand supply
Distribution
Services
Chemicals andpetroleum
Technologyand telecom
2002In 5 years
Forecast: Worldwide Online Trade Growth, 2002 To 2006
Rest of worldWestern EuropeAsia-PacificNorth America
2002
Total: $2,293.5(US$ billions)
$1,677.3
$341.6
$246.3$28.2
2006
$7,469.0$2,458.6
$2,645.6
$264.1
Total: $12,837.3(US$ billions)
2002 20042003 2005 2006
% of totalsales in
2006
North America
United States
Canada
Mexico
Total (US$ billions)
Rest of world
Western Europe
Germany
United Kingdom
France
Italy
Spain
All other
Asia-Pacific
Japan
Australia
Korea, Republic of
Taiwan
All other
Hong Kong
$1,610.4
$55.1
$11.8
$1,677.3
$2,293.5
$28.2
$246.3
$60.5
$51.7
$36.7
$28.9
$6.2
$62.3
$341.6
$200.5
$47.8
$29.4
$29.0
$19.3
$15.6
$2,527.6
$91.3
$23.3
$2,642.2
$3,878.8
$53.0
$560.8
$137.6
$113.1
$85.2
$68.4
$16.3
$140.2
$622.8
$359.2
$87.7
$55.2
$56.1
$35.7
$28.8
$3,759.7
$136.2
$43.9
$3,939.8
$6,201.1
$96.7
$1,076.7
$262.2
$210.1
$165.0
$135.9
$38.5
$264.9
$1,087.9
$625.4
$151.1
$97.1
$101.8
$62.5
$50.0
$5,296.9
$188.6
$78.3
$5,563.8
$9,240.6
$163.1
$1,747.5
$419.3
$330.6
$269.5
$226.7
$76.1
$425.2
$1,766.3
$1,056.8
$224.1
$156.8
$158.3
$96.4
$73.8
$7,091.6
$245.6
$131.8
$7,469.0
$12,837.3
$264.1
$2,458.6
$580.9
$454.6
$381.8
$322.6
$125.5
$593.3
$2,645.6
$1,650.2
$301.7
$231.9
$223.8
$139.2
$98.8
26.0%
26.0%
20.0%
10.0%
18.4%
4.0%
19.3%
21.0%
21.0%
20.0%
19.0%
15.0%
19.7%
11.9%
14.6%
22.4%
17.5%
19.6%
2.1%
22.1%
(numbers have been rounded)
B2B and B2C Trade As A Percentage Of Total Trade In 2006
Manufacturing Distribution Households
B2B B2C
Raw materials
(US$ billions)(numbers have been rounded)
Onlinetrade %
Total B2B
North America
Asia-Pacific
Latin America
Western Europe
Africa andMiddle East
Eastern Europe
$12,275.5
$2,460.4
$83.9
$68.6
$93.1
$2,320.3
$7,249.2
20.0%
59.1%
18.9%
0.8%
0.7%
0.6%
100%
Onlinetrade %
Total B2C
North America
Asia-Pacific
Latin America
Western Europe
Africa andMiddle East
Eastern Europe
$185.2
$6.3
$5.2
$7.0
$138.3
$219.8
$561.8
33.0%
39.1%
24.6%
1.3%
1.1%
0.9%
100%
Agenda
What is the state of eCommerce worldwide?
How will productivity play a role in eCommerce?
What new innovations will drive economic growth through 2010?
IT spending growth in percent
IT spending growth in millions of euros
Three phases of Net investment
1995 2010
Growth ininvestment
Experimentation1995-2000
• Web as separate business• Building presence• Ad hoc budgeting
2000 2005
• Net as integrated channel• Control costs• ROI-focused spending
Rationalization2000-2003
• Intercompany collaboration• Gain advantage• Measured innovation
Renewed innovation2002-2010
A new wave of productivity
2000 2012
IT productivity wave:
eBusiness productivity wave:Externally focused investments in technologies like supply chain and CRMyield efficiency gains in three key areas:
1. Lower transaction costs2. Improved market information3. Intensified new competition
1990
Productivity:(% change in
output perunit of
labor input)
Internally focusedoperational efficienciesfrom hardware, services,and ERP investments
eBusiness adds 15% productivity by 2012
0
4
8
12
16
2002 2004 2006 2008 2010 2012
Foundation Expansion Normalization
0.8% 1.7% 1.2%
Design: 9%
Produce 45%
Serve 46%
TotaleBusiness
productivitygain
Agenda
What is the state of eCommerce worldwide?
How will productivity play a role in eCommerce?
What new innovations will drive economic growth through 2010?
The X Internet refers to two “Xs”
An executable Internet that supplants today’s Web
An extended Internet that connects to the real world
Executable Internet builds conversations
Server
Endpoints
The Web only provides answers
Account summary
The Web
How much is in my account?
The executableInternet
The executable Net creates a conversation
What should I do with my account?
Financial services tools (executables)
Two-way conversation about my account
BUY IT NOW
Extendedendpoints
Extended Internet -- an Internet of things
Server
Endpoints
The X Internet connects digital to physical
Internetcomputers DigitalInternetusers
Physical
Vehicles
Telephones
Buildings
Temp: 52° F Fuel: 1/2 tank Door:
Closed
• Tag is integrated with door, fuel, and temperature sensors
• Sensor data is transmitted every few minutes
WhereNet devices simplify supply logistics
WhereNet devices simplify supply logistics
Yard inventory is conveyed to users through maps and reports
Colors indicate trailer status and alert conditions
Real-time alignment of supply and demand
GPS-enabled truck fleet
20-minute delivery window
Savings: $100 million
Summary
Leading firms must harness technology to drive productivity
Productivity via technology is eCommerce’s next wave
As productivity takes hold, innovation will reignite around the X Internet