Computer Reseller News
New York - E-business integrators are tolling the death knoll for the old business school standby: return on investment.
Fifty percent of the largest corporations today will be displaced in the next five years by companies better able to leverage the Internet to survive in the digital economy, according to a white paper called Time-to-Value: The New Measurement for E-Success, published by San Francisco-based Web integrator USWeb/CKS.
"We are starting to help major businesses around the world transform themselves to using the Net as a method of actually managing and running their business," said Robert Shaw, chief executive of USWeb/CKS. "It's not just selling stuff. It's how do you use this really to change the way you accomplish work?"
This constant change requires a new measurement, called time-to-value, or the sum of insight, experience and scale, according to USWeb/CKS.
"The need to innovate quickly has become a business imperative in the digital economy," said Stan Lepeak, vice president of electronic business services at The Meta Group Inc., Stamford, Conn. "For many businesses, the mega IT project no longer serves their needs, and ROI no longer provides an accurate measurement of success."
USWeb/CKS rival Scient Corp., also based in San Francisco, agrees that the ROI measurement is nearly obsolete. ROI is a metaphor for classic financial analysis because it presumes steady-state behavior and is not necessarily applicable during major industry transitions, said Stephen Mucchetti, executive vice president and chief operating officer at Scient.
"The new bottom line is a return on relationships, not a return on investment," Mucchetti said. "The metrics the dot.coms look at are velocity, volume and automation."
The problem lies in the fact that consulting giants such as Chicago-based Andersen Consulting have been educating clients on the same measurements for the past 20 years, said Mike Carter, corporate vice president of marketing at US Interactive Inc., King of Prussia, Pa.
"The old cost/benefit analysis was really focused on the denominator, or the cost reduction component," Carter said. "With E-business, it's not just the denominator or the cost-reduction efficiencies that technology provides, it's the new numerator efficiencies and obviously the new revenue channel."
So is ROI dead? Some Web integrators said their peers should think twice before hammering the nail into the coffin. The new wave of integrators run the risk of making the same mistakes as their client/server forefathers did, said Martin Wright, president and chief executive of Portland, Ore.-based Emerald Solutions Inc.
"I don't think ROI is obsolete, and I think that's part of the problem in the [Web integrator] space," Wright said. "There's a lot of fear and uncertainty and doubt being created today, and partners are going in there and [telling companies] to get started on a project right away, because if they don't, it will put them out of business. That, for us, is a very irresponsible attitude."
**Reprinted from Computer Reseller News, October 4, 1999