The speed at which energy companies embrace the Internet isexpected to accelerate for at least two more years, after whichcompanies that have aggressively invested in eBusiness will moveahead of competitors because of expanded revenue growthopportunities and reduced cost structures. At least that’s what anindustry survey by energy adviser Cap Gemini Ernst & Young U.S.LLC suggests.

CGE&Y’s “Energy Industry eBusiness Predictions” is based onan ongoing quarterly public web site survey of the top energycompanies throughout the world, determining the growth and trendsin Internet use by the industry. Yesterday’s survey reveals thatafter initially losing ground to new participants, which disruptedestablished supply chains and customer relationships, the energy”empire” has struck back with top management involvement and heavyresource commitments.

Thomas Yacko, CGE&Y vice president, said in the next 18months, eProcurement portals will be up and running at most energycompanies. Not all companies will be able to “ramp up” as quicklyas the major oil companies, but the successful ones will useportals 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. “Leaderswill reduce their travel and human resources expenditures, and willmore quickly enable their people and culture to accelerate to thenew eBusiness model,” Yacko said.

Next year, the limited use of “horizontal” portals foreProcurement will surface, that is, company-to-company portals, butmost of the procurement in the industry will occur in vertical,industry-to-customer portals.

Along with these predictions, CGE&Y found that traditionalenergy 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 andaccelerating” to the Internet.

“In the eBusiness world, legacy business models are primetargets for the fast and nimble,” said Yacko. “New entrants areattacking the majors from all directions. Some laggard companiesare dying, but the majors are fighting back and creating newbusiness models. Companies like BP, Shell and Chevron understandthat eBusiness is more than the Internet.”

Nearly all of the energy companies that participated in thesurvey offer a basic web site, listing company information,financial information and products/services information. Severalindustry leaders, including Chevron, Texaco, Citgo, Petro-Canada,ExxonMobil and Shell have begun aggressively moving towarde-commerce, which offers two-way communication and the ability toexecute commerce transactions.

Trends in e-commerce show that credit card transactions are up11%; online prices and quotations are up 8%; and the ability toorder consumer products is up 15%.

“While there is an expansion of functionality on the companies’web sites, most of the eBusiness action has been occurring behindthe firewall,” said the survey “However, during the past fewmonths, almost every area of measure realized an increase incompany focus.”

Yacko said the “vision of the future is straightforward; it isone in which ‘connectivity’ creates better business relationships.Using the Internet significantly reduces the cost of thisconnectivity. The ability to reduce some cost structures by anorder of magnitude gets the attention of every CEO and CFO.However, this connectivity requires investments to prepare theinfrastructure and to change the fundamental business model. Thesuccessful energy company will implement its eBusiness strategy andimplement its portfolio of initiatives to revolutionize itsbusiness model.”

To learn more about the study, contact Yacko at 415-951-3204 oron the Internet at thomas.yacko@us.cgeyc.com.

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