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Energy Companies Find Expanded Revenue Through eBusiness

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. LLC suggests.

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, industry-to-customer portals.

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

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