Energy Companies Find Expanded Revenue Through eBusiness
The speed at which energy companies embrace the Internet is
expected to accelerate for at least two more years, after which
companies that have aggressively invested in eBusiness will move
ahead of competitors because of expanded revenue growth
opportunities and reduced cost structures. At least that's what an
industry survey by energy adviser Cap Gemini Ernst & Young U.S.
CGE&Y's "Energy Industry eBusiness Predictions" is based on
an ongoing quarterly public web site survey of the top energy
companies throughout the world, determining the growth and trends
in Internet use by the industry. The survey, released last week,
reveals that after initially losing ground to new participants,
which disrupted established supply chains and customer
relationships, the energy "empire" has struck back with top
management involvement and heavy resource commitments.
Thomas Yacko, CGE&Y vice president, said in the next 18
months, eProcurement portals will be up and running at most energy
companies. Not all companies will be able to "ramp up" as quickly
as the major oil companies, but the successful ones will use
portals for up to 75% of their purchasing.
Employee portals, also referred to as employee self service,
will "dramatically increase" in the next 18 months, too. "Leaders
will reduce their travel and human resources expenditures, and will
more quickly enable their people and culture to accelerate to the
new eBusiness model," Yacko said.
Next year, the limited use of "horizontal" portals for
eProcurement will surface, that is, company-to-company portals, but
most of the procurement in the industry will occur in vertical,
Along with these predictions, CGE&Y found that traditional
energy companies are evolving, now focusing on eBusiness and
"gaining pace on start-up dot.coms. Proving that big,
asset-intensive energy companies can be sensitive to their markets,
the majors are being innovative, flexing their muscles and
accelerating" to the Internet.
"In the eBusiness world, legacy business models are prime
targets for the fast and nimble," said Yacko. "New entrants are
attacking the majors from all directions. Some laggard companies
are dying, but the majors are fighting back and creating new
business models. Companies like BP, Shell and Chevron understand
that eBusiness is more than the Internet."
Several industry leaders, including Chevron, Texaco, Citgo,
Petro-Canada, ExxonMobil and Shell have begun aggressively moving
toward e-commerce. Trends in e-commerce show that credit card
transactions are up 11%; online prices and quotations are up 8%;
and the ability to order consumer products is up 15%.
Carolyn Davis, Houston