Late comers to technology, electric & gas industry recognize E-business as critical for future growth
Cap Gemini Ernst & Young and University of Maryland Release Results of In-depth Industry Survey that Identifies Trends and Future Issues in e-Business
22 June 2000
Cap Gemini Ernst & Young, a worldwide advisor to the energy industry and one of the leading e-business strategy consultants, together with Professor Venkatesh (Venky) Shankar of the R.H.Smith School of Business at the University of Maryland, release their top-line findings from a recent in-depth study, targeting a select group of electric and gas companies in the U.S., including key industry leaders. The study has found that overall, the electric and gas industry is lagging behind others, despite the fact that the industry as a whole views e-business as being of paramount importance and fundamental to future growth - potentially changing business models.Study participants also believe that end-to-end, Web-based integration of business processes is vital, and they view security as a key issue in the
implementation of e-business initiatives. “The findings from the study show that electric and gas companies all agree that e-business is critical in order to compete in today’s marketplace; however, they are still uncertain as to the dollar value that e-business will bring to their operations,” said Tom Brunetto of Cap Gemini Ernst & Young. “It’s a question of efficiency and cost-cutting versus increasing demand and growth of serviceable accounts.”
Despite this remarkably consistent view of the importance of e-business, most electric and gas companies feel that e-business has brought only a
minor change to their business models. In most cases, the companies interviewed said that they have spent less on e-business than expected. They also perceive their e-business capability to be less than adequate, and generally they are not satisfied with their progress with e-business initiatives. A fraction of total IT budget, the amount spent on e-business initiatives is less than expected (average of 15 percent). However, companies do vary significantly on the e-business spending - the most aggressive spending about 30 percent of their IT budgets, while the most passive as low as three percent. A few companies appear to be ahead of the pack in their e-business capabilities. Clear leaders, such as Enron, Williams and Reliant, are also incorporating telecommunication capabilities into their business models.
There
are a small number of companies that have also been identified as
leading the way on the retail side of e-business. Websites belonging
to
companies, such as Detroit Edison, Florida Power & Light, Sempra,
PEPECO and Southern California Edison, are currently focusing their
online efforts on customer service initiatives. However, the majority
of companies interviewed in the study still need to develop strong
e-business growth
initiatives. Some firms are in the process of, or have joined together
to form a business-to-business (B2B) exchange or the alternative,
a hub.
“All of these findings point in one direction - there is a huge potential
for transforming companies in this industry into strong e-business
capable
companies,” said Shankar.
Similarly, European utilities operating in deregulated markets recognize that they must embrace e-business as a strategic business tool, according to a pan-European study conducted by Cap Gemini Ernst &Young.
On the
positive side, 67 percent of the major European energy companies surveyed
agreed that e-business will provide opportunities for cost savings,
as well as increase the likelihood of new entrants into the sector.
In addition, 62 percent said that e-business would enable middlemen
to be by-passed, bringing about a greater awareness of core competencies
within utilities. The European survey included senior executives from
24 major energy companies that serve more than 130 million customers.
About Cap Gemini Ernst & Young
Cap Gemini Ernst & Young is one of the largest management and
IT consulting firms in the world. The company offers management and
IT consulting services, systems integration, and technology development,
design and outsourcing capabilities on a global scale to help traditional
businesses and “dot companies” continue to explore growth strategies
in the new economy. The newly formed organization employs more than
57,000 people worldwide and reports global revenues of 7.7 billion
euros (1999 pro forma).
world’s largest players of this industry.
For more information: www.capgemini.com/utilities
Contacts:
Florence Mairal
Cap Gemini Ernst & Young
Corporate press office
+33 1 47 54 50 91
fmairal@capgemini.fr
Thomas Brunetto
Cap Gemini Ernst & Young
+1.202.327.6327
thomas.brunetto@us.cgeyc.com
Yumi Sera / Lynne Anderson
Blattel Associates
+1.415.397.4811
yumi@blattel.com
