NZ e-business firms sharply focused on cost

By ROB O'NEILL*

Trying to get a handle on what drives and what inhibits online development across the Asia-Pacific region is not an easy task.

This is a fast-changing area and the objectives and challenges of the key executive decision-makers also changes over time.

However, one thing has remained remarkably consistent in our surveys of New Zealand's online and IT challenges: Kiwi business is extraordinarily cost sensitive.

This tendency came through strongly last year in a number of measures when we surveyed the country's IT directors.

We don't expect that to change this year.

And in our survey of the e-business development intentions of chief executives, the same concern has emerged.

Where Australian CEOs are most challenged by the re-engineering issues e-business inevitably creates, and Asian CEOs are challenged by getting their customers to use online systems, NZ is firmly focused on cost - both in the implementation and running the e-business.

The scale of the local market is making the creation of a business case for e-business spending very hard.

Unless you can either reach out to international markets or point to iron-clad productivity and efficiency benefits, such business cases are often highly speculative.

It is in this second case that the argument for e-business is easiest to construct. Developing e-procurement systems has been the route to online business transformation for a number of e-business pioneers.

That list includes networking giant giant Cisco, its current troubles notwithstanding.

The strategy is simple: savings on procurement are easier to quantify than online sales forecasts.

There are also now many examples of success that can be used to shore up the proposal.

The fact such initiatives have a higher success rate than other online development also provides an early win for the advocates of e-business in the organisation.

That buys the trust of the executive team to move on to more ambitious sell-side activity.

But the Australasian region still has a long way to go online.

This was starkly displayed in the Australian leg of our CEO e-business survey, which received 188 responses.

We have recently been ranking these according to their online capabilities and only four made the top cut, those with sophisticated back-end integration, e-procurement and online sales with online payment.

And guess what? They were all multinational organisations.

*Rob O'Neill, a research analyst with Strategic Research, can be contacted by e-mail at robo@fairfaxbm.com