'Brick' Versus 'Click': Large Organizations Take the Lead in E-Business

Large, traditional organizations are learning how to expand and evolve by successfully embracing the Internet and e-business, according to findings of The Web 2000 Top 100 Growth Report announced by Novell today.

Independently researched by the London School of Economics (LSE) and E-Audits, a UK based Internet research company, the report surveyed the world's100 fastest growing companies as defined by Deloitte Consulting/Braxton Associates, and analyzed their e-commerce and e-business offerings through their Web sites.

The results show that size matters. The world's largest, best-established 'brick and mortar' organizations have proved themselves to be better performers than smaller, emerging companies in applying themselves to e-business. Many high-flying dot.com companies have failed to pass the starting point.

"No doubt these findings reflect the superior resources of large businesses, as well as the perennial winners' knack for staying up to date on the latest technologies," states Eric Schmidt, Novell Chairman and CEO. "But the implications of this survey are clear. Even the largest and most established companies are re-learning how to grow. Those who wait too long to embrace the Internet will be replaced not just by upstart dot com companies, but by the most forward-thinking of their traditional rivals."

Within a global e-commerce market worth $180 billion in 1999 and a predicted value $1.65 trillion in 2004?, findings expose the emergence of unexpected leaders and market trends:

• Large companies (with over $10 billion in sales) have more sophisticated and innovative e-business capabilities than smaller ones (under $1 billion). Within the core e-commerce criteria of online ordering and payment, large companies scored 5 times higher than small companies. This is linked to the greater human and financial resources that many large companies now invest in their Web sites.



• Researchers found no direct link between corporate growth and Internet investment, suggesting that companies, which invest in Web technology without integrating these investments into their overall business strategy, may simply be wasting their money.



• Regionally, the US dominates in terms of company growth and Internet prowess, with 75 of the fastest growing companies based in the US. American firms also fill seven of the top ten Web rankings and 23 of the top 30. The top seven in order of appearance include AOL (2nd), Disney (3rd), Rite Aid (5th), Federated Department Stores (6th), Network Associates, Inc.(8th), Budget Rent A Car Corporation (9th), and Microsoft (10th). However, European companies are building on the US e-business experience and in some cases surpassing it; scoring better in the design and ease of use of their sites than their American counterparts and UK based supermarket chain Tesco prevailed as the overall survey winner.



• UK companies score second highest behind the USA for e-business prowess, with 4 firms making it into the top 30. Other European players include Nokia (Finland) and SAP (Germany), though there was little Southern European presence.



• IT and telecoms are the leaders of the pack. Of the 6 sectors identified in the survey, including Retail, Utilities and Finance, Information Technology companies are most adept at e-commerce, followed by telecoms. The survey reveals a possible link between the growth of IT companies and their use of advertising and product promotions on the Web.



• Consumer organizations rank consistently higher than those mainly working in a business to business basis.

Steve Smithson, author of the report and head of LSE Information Systems Department, affirms that the Internet has led to a change in the traditional business characteristics and procedures. "Technical progress has increased the variety of possible Web-based business activities, from the provision of information or advertising to sophisticated transaction processing and after-sales support functions."

Smithson continues, "As some [companies] have found, opportunity walks hand in hand with risk. Valued customers and staff can be lost through needless changes to stable business processes, and a sloppy Web site can destroy a company's image."

Richard Evans, managing director of E-Audits, goes further; "Many companies still do not get it and are not giving any potential customers any real reason to log on", he explains. "The ones that have figured out how to leverage the Web realise that huge sums of money can be generated by presenting consumers with real added value."

For Tesco, concentration on developing its Internet business is certainly reaping its dividends. "It is a phenomenal market", explains Gary Sargeant, head of Tesco Direct, the company's online shopping service. "Online shopping is already accounting for around 2% of our business in the stores where it is active."

LSE examined the world's top 100 fastest growing companies to explore the relationship between corporate growth and business practice on the Web. Web rankings are based on a specially devised E-Audit Methodology to demonstrate which companies and industries have been able to capitalize most on the Internet's potential for doing business. The audit mimicked all the stages of real online business transactions from the seeking of the price and product information, through order and settlement and culminating in after-sales service.

About Novell

Novell, Inc. (NASDAQ:NOVL) is the broadest supplier of Net infrastructure software used to integrate and manage the diverse information resources of private business networks and the Internet. Novell's worldwide channel, consulting, developer, education and technical support programs are the most extensive in the network computing industry.

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