Dot-Coms May Have Lost, But Technology Has Won, Study Finds

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70% of Executives Believe Internet Technology is Key to Core Business Success, According to New Survey by DiamondCluster, Context Magazine, and the Wharton School of Business

CHICAGO, June 6, 2001 — The Internet Revolution is dead. Long live the Internet
Revolution. The technology that once promised to change everything is doing just that,
despite the recent failure of the dot-coms. That’s the chief finding of “Digital
Strategies Survey 2001,” a wide-ranging survey of nearly 150 senior executives
co-sponsored by global strategy and technology solutions firm DiamondCluster International
(Nasdaq: DTPI), Context magazine, and the Wharton School of the University of
Pennsylvania. Even as the dot-coms fade, seventy percent of senior executives in the
survey believe Internet technologies have become either “important” or
“essential” to their core business success and that the positive effects are
only now just beginning.

“The message is that Internet technology has
won,” said Chunka Mui, DiamondCluster chief innovation officer. “Take no comfort
from the death of dot-coms. What was once the tool of upstart revolutionaries is now a
weapon in your big competitors’ arsenals. Any company that doesn’t transform itself around
this technology will be left behind.”

According to the survey, companies that have been most
successful in applying these new technologies have tended to start with customer-oriented initiatives.

“The leading companies have used Internet technology
to hold on to their customers and strengthen the relationships they have with them,”
said George Day, the Geoffrey T. Boisi professor of marketing and co-director of the Mack
Center on Managing Technological Innovation at the Wharton School.

Numerous executives reported that while their e-business
initiatives made them more efficient, gains in productivity were often competed away as
their rivals had been busy too. But these executives said that if they had not gone after
those efficiencies, they would have been left further behind. Self-reported e-business
“laggards” said their biggest obstacle to success online was outdated
technology, including their basic infrastructure and customer databases.

Many executives felt that the bar will continue to rise,
predicting that the impact of the Internet will expand significantly over the next 24
months. Of those surveyed, 30% expect e-business initiatives to have a major impact on
reaching new customers and markets. Fully 46% said e-business projects will have a major
impact on customer service, and 48% said it would greatly affect corporate purchasing. On
average, respondents said 12% of sales will come via the Internet in two years, twice what
they said the Internet accounts for today.

“Moore’s Law isn’t going on hiatus,” said Kenton
Morris, DiamondCluster principal and leader of the research study. (Moore’s Law holds that
computing power doubles every year and a half to two years with no increase in cost.)
“There’s a group of executives out there who will take advantage of their
competitors’ caution to pull away from the pack.”

Other Survey Highlights

  • Companies have a long way to go before they make their
    online customers happy. Only 15% of respondents reported being very successful at handling
    customer-service requests electronically, while fewer than 10% said they had been very
    successful selling directly to customers online. The focus of e-business efforts is
    shifting away from customers and toward back-office, supply-chain improvements that may
    generate efficiencies and allow companies to see clear, quick results.
  • Companies are pulling their Internet activities back inside
    their main businesses rather than running them as separate operations. Of those surveyed,
    30% said their e-business initiatives are now mostly or fully integrated with core
    operations. More than 65% of the executives said they intend to reach that level of
    integration in the next 24 months.

“Digital Strategies Survey 2001” is divided into
three segments. In addition to e-business, the survey explores executives’ perspectives on
mobility and innovation. For more information, including a complete download of the survey, visit

About the Methodology

The survey consisted of 20-minute phone interviews with 125
executives at businesses in North America. The executives were all vice presidents or
above and represented all the major business functions. The executives came from companies
with at least $1 billion in annual revenue in a broad range of industries.

The survey also involved 22 face-to-face interviews with
top executives at major businesses in a wide array of industries. These interviews, which
generally lasted an hour to an hour and a half, built upon the results from the phone survey.

“Digital Strategies Survey 2001,” which is a follow-up to a similar research study
conducted in 1997, includes comparisons between the results of the two surveys.

About DiamondCluster International

DiamondCluster International, Inc. (Nasdaq: DTPI) is a
premier business strategy and technology solutions firm, delivering value to clients
worldwide by developing and implementing innovative digital strategies that capitalize on
the opportunities presented by new technologies. Headquartered in Chicago, DiamondCluster
also has offices in Barcelona, Boston, D�sseldorf, Lisbon, London, Madrid, Munich, New
York, Paris, San Francisco and S�o Paulo. Visit for more information.