CGE&Y and University of Maryland release results of e-business study

Cap Gemini Ernst & Young (CGE&Y), a world-wide 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 US, 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, vice president of CGE&Y. "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 %). However, companies do vary significantly on the e-business spending -- the most aggressive spending about 30 % of their IT budgets, while the most passive as low as 3 %.
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 (B2 b) 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 recognise that they must embrace e-business as a strategic business tool, according to a pan-European study conducted by Cap Gemini Ernst &Young Corp. On the positive side, 67 % 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 % said that e-business would enable middlemen to be bypassed, 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 mm customers.

Ernst & Young Consulting Services, recently acquired by the Paris-based firm of Cap Gemini from Ernst & Young, had been rated as second in an overall "grading" of eBusiness strategy providers. Ernst & Young's Consulting Services is categorised among those best prepared to offer strategy to "Experimenters," companies that need a jump-start for eBusiness.

Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world and is publicly traded on the Paris Bourse. The company offers management and IT consulting services, systems integration, technology development, design and outsourcing capabilities on a global scale to help traditional businesses and "dot coms" continue to explore growth strategies in the new economy.
The newly formed organisation employs more than 57,000 people world-wide and reports global revenues of 7.7 bn euros (1999). With more than 5,000 dedicated consultants engaged in Energy and Utilities projects across Europe, North America and Asia Pacific and combined pro-forma sales of 800 mm euros (1999), the Group's Global Sector Unit - Cap Gemini Ernst & Young Energy & Utilities - serves the business consulting and information technology needs of many of the world's largest players of this industry.