Tuesday, April 17, 2001

Report on E-Business

The National Association of Purchasing Management (NAPM) and Forrester Research, Inc. announced the release of the second NAPM/Forrester Research Report On eBusiness, a report that tracks online activity for both manufacturing and nonmanufacturing organizations. The report shows that 71% of organizations use the Internet for indirect purchases -- a sharp increase from 61% reported last quarter. On average, these online buyers bought 9% of their total purchases over the Net. While purchasers increasingly buy online, more than half of the respondents believe that they are in the earliest stages of adopting online buying.

"More usage of the Net is not surprising, as organizations have begun understanding the full potential of managing their supply chains via the Internet," explained Edith Kelly-Green, vice president, sourcing and procurement, FedEx. "The increase in online purchases of indirect goods and services is indicative of how companies make the initial and early moves into the world of eCommerce. Increases in use were noted in spite of economic concerns and difficulties in internal and external integration."

The survey also indicates that manufacturers are often concerned with their suppliers' online capabilities and that they report significantly lower levels of online collaboration with their suppliers.

"Organizations are following different online buying paths. Manufacturers appear to be having a problem with their suppliers -- as the percentage of manufacturing companies using the Internet to collaborate with suppliers dropped to 40% from 54% last quarter," said Bruce D. Temkin, group director at Forrester. "While larger buyers show the most momentum across many activities, a higher percentage of smaller buyers use the Internet for purchasing direct materials and finding new suppliers."

The Report On eBusiness also revealed that 88% of organizations see the Internet as important to their buying plans, a slight increase over 87% from January. Only 26.1% of organizations reported a cost savings from their Internet activities -- a slight decrease from 26.6% last quarter.

For the Report On eBusiness, NAPM and Forrester Research received survey replies from purchasing executives from both manufacturing and nonmanufacturing organizations. To understand the difference in online behaviors of these organizations, the report analyzes three areas: the results of all organizations; the comparison of manufacturing and nonmanufacturing organizations; and the comparison of organizations that procure more than $100 million per year and those that purchase less than $100 million per year.

Latin America: Long Road to Bridge the Digital Divide
The digital divide is widening in Latin America in terms of access to both basic telephone services as well as to the more sophisticated services such as those provided over the worldwide Internet, according to Dataquest Inc., a unit of Gartner, Inc.

There are a number of indicators that show just how extensive this digital divide is in Latin America. Table 1 demonstrates that both the teledensity and the broadband connections for the major countries in the region trail the United States by a large margin. In the United States, 80 people out of a hundred have phone connections, while Chile, which leads Latin America, has only 25 people out of 100 with phone connections. Consumer broadband connections are only beginning to be added and not in every country. This gap is widening over time.

Gartner Dataquest defines the digital divide as the gap between technologically advanced cultures and those that have been left behind. It encompasses the degree of teledensity, the state of networks and the access to technology by the lowest socioeconomic levels of society within a given country or intraregionally.

"Governments within Latin America need to put in place incentives for carriers to serve unserved and underserved areas as well as to upgrade existing networks. It is time to decouple regulatory services from local dial tone," said Ron Cowles, principal analyst for Gartner Dataquest's worldwide Telecommunications and Networking group. "We feel the appropriate measure is to frame the future as a competitive expanding information service economy, and then define public policy constructs to get there.

"It must be based on innovative new network constructs that are encouraged at local, city, county, state and national levels, and are surrounded by an economic framework that motivates the service providers to seize the opportunities inherent in this model. Incentives can and should be used to put in place new and more powerful networks, not only in areas attractive to competitors but also in underserved areas."

Latin America needs to move toward the "infocosm," a term we use to define the connected world of people, and an increasing array of services and devices for individuals and businesses, large and small. It describes a surging new economy based partly on the merging of IT and telecommunications.

"A well-founded universal service policy must be expanded to include not only public telephones, but also Internet access via public infocosm centers where there is access to a computer somewhere within the reach of consumers. The latter could be construed as universal Internet access for everyone," said David Rendall, group vice president for Gartner Consulting. "A well-founded universal service policy cannot discriminate among suppliers and technologies, and must be allowed to evolve. This concept must include broadband connectivity, which is fundamentally necessary to enable e-commerce."

Additional information on this market is available in the Gartner Dataquest Perspective "What Will It Take To Bridge the Digital Divide in Latin America?" This Perspective explores how deep the digital divide is in the major markets of Latin America. It is also devoted to developing realistic potential solutions that address the unique cultural, social, political and business characteristics of the region.