Tuesday, February 27, 2001

eCompanies Must Adopt External Technology

As Canada enters eCommerce hypergrowth this year, companies will face a plethora of technology challenges. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), to support the imminent transformation to eBusiness, Canadian firms must adopt an external technology (exT) strategy -- leveraging information technology that is owned and operated by third parties and made available to firms on a pay-per-use basis.

"As Canada's business community moves beyond tentative forays into eBusiness and accepts the online environment as critical to its future, old own-it-and-control-it approaches to IT will not be effective," according to Jordan Kendall, an analyst based in Forrester's Toronto Research Centre. "Clear-thinking companies will embrace and implement exT as a fundamental element of their eBusiness strategies."

Over the next five years, Canadian firms will see enormous growth in their online activity -- but only if they prepare now. The US, Canada's largest trading partner, has already hit eCommerce hypergrowth, and Canada's economy is poised to reach this milestone by the end of 2001. This market shift means Canadian firms must ramp up their eBusiness plans now.

To support these plans, firms must build and maintain nonstop IT systems that can quickly scale to meet market demand. But these endeavors are cost-prohibitive, even for the largest Canadian firms. Operating eBusiness technology requires sophisticated technical skills, and few companies -- in Canada or anywhere else -- can absorb new technology at the rate it is created. By adopting an exT strategy, firms will be free to focus on the core eBusiness value proposition they offer to their customers -- and not get distracted by myriad technical issues.

By 2006, exT will be widely accepted as the proven best practice to support a company's infrastructure. exT leaders will exhibit impressive corporate agility, while exT laggards will be unable to make a clean break from their IT pasts, offering mediocre products and services.

"As a result of the move to exT, IT groups will lose mass -- but gain value. exT will become an integral part of the corporate fabric as companies deconstruct and specialize," added Kendall. "In a world where operations and technology exist as one, IT executives will be well-positioned to migrate to operations roles where they will oversee and manage the critical relationships between firms and their exT partners."

For the Report "Canada's Adoption Of exT," Forrester spoke with IT professionals at 50 Canadian companies about their views on exT. Our interviewees agree that they will be relying more heavily on exT over the next two years -- 58% say their use of exT will increase at least somewhat, but only 16% of these firms have crystal-clear transformation strategies. The leading concerns keeping companies from adopting exT are the high costs and the perceived low quality of exT services.

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