Study Finds e-Commerce Changing Business Models

Joanna Doyle

A new report from the Economist Intelligence Unit (EIU, London) finds companies are not just using the Internet to increase profits; more and more the Web is becoming the basis of a whole new business model.

"Companies seem to understand that the Web is about more than just immediate return," says Chuck Rieger, principal of IBM's e-business Innovation Institute at IBM Global Services. "E-business is about changing business models, improving customer service, and improving your business --not just about short-term financial gain."

Written in conjunction with IBM, the study surveyed more than 350 executives from companies such as General Electric, General Motors, DLJDirect and Intel. Eighty percent of those polled said they are using the Internet to penetrate whole new markets for their products and services. Over half said they expect the Internet to fundamentally change how their organization operates, and a third anticipate the need for their companies to undergo drastic reorganization to adapt to the changing business model.

The study also found that the obstacles to e-business development are more often the result of poor management and personnel support, not a lack of up-to-date technology.

"It seems that the top level management is saying, 'We get it, but we're not sure middle-level managers do,’" Rieger says. "Not only is there a need to find IT talent, but there's a real need for people who have e-business marketing and strategic skills as well."

The study is the second collaboration between IBM Global Services and EIU, which is a division of the Economist Group. The full report can be ordered through EIU's New York or London offices or via the organization's Web site (new window).