They're plugging into its potential. But India Inc. hasn't logged into the Net for business--yet. BT presents the first-ever KPMG Survey Of e-Commerce in India.

On India Inc.'s digital frontiers, there is a paucity of pioneers. Even as the world's biggest corporations extend their businesses at warp speed from the bricks-and-mortar marketplace to the binaries-and-bytes marketspace, the migration across the e-border has only just begun in this country. For corporate India, e-commerce--and its fastest-growing component, Net-based business--is still largely uncharted territory. But why is the rate of homesteading so low? How long will it take the pathbreakers to storm the e-channels? From a more prosaic perspective, just how deep, wide, and strategic is corporate India's use of e-commerce, and the Net, for business?

The answers to these questions have been captured--for the first time ever in this economy--by the KPMG e-Commerce Survey Of Corporate India, and presented exclusively by BT. Covering a sample of 116 companies operating in the country--more than two-thirds of which have a turnover of over Rs 100 crore--the survey evaluates the perceptions, status, and triggers of the use of e-commerce in Indian companies.

Conceptually, India Inc. is plugged into the digital future. At more than half the 116 companies surveyed, e-commerce constitutes a substantial part of, or is crucial to, corporate strategy compared to the microscopic 4 per cent where it is of no importance yet. In fact, all corporates are willing to make the necessary investments in technology so long as they are confident of earning satisfactory returns on their investment. The implication: e-commerce is, increasingly, being seen as a strategic tool to gain competitive advantage.

In generic terms, the benefits are of 3 kinds: opening up new markets, improving productivity, and automating supply chains. The first, of course, is the primary advantage that e-commerce should be offering companies as they extend their operations into the virtual marketspace. But, both in terms of expectations and actual gains, the benefits appear to be focused more on operations than on e-commerce. Specifically, the 2 most important pay-offs that corporate India expects e-business to yield are improved customer-service and productivity. The actual benefits that they are reaping are slightly different, though: improved productivity and product quality are No. 1 and No. 2, with improved customer-service taking third place.

The technologies being used for e-commerce are common, and obvious: the Net and Net-based e-mail, setting up of Websites, and ensuring Net access for employees. While internal e-mail is used by all companies, less ubiquitous are the technologies on the next rung: intranets, extranets, and the use of electronic data interchange and smart cards. These are part of the e-plan for the next 2 years, irrespective of whether the company belongs to the manufacturing, marketing, services, or convergence businesses.

The most popular, by a long margin, is the Net, with close to half the responding companies using it for accessing and exchanging information. However, numbering under a third of the universe, the proportion of companies using the Net and other e-channels for marketing and customer communication is far lower. And less than a tenth use the Net for accepting customer-orders. Unfortunately, still wetting its feet in the Web-waters, corporate India has not yet conducted sufficient business on the Net for its members to quantify precisely either the volume or the value of their e-transactions.

Thus, less than half can put a rupee figure to the quantum of e-commerce deals--and almost 50 per cent of them report that figure as zero. The mean value, for the quarter of the respondent-set of companies that do track their trades through the Net: Rs 12.30 crore per annum. Amounting to a microscopic 0.025 per cent of their average turnover, that represents an amazingly small proportion of sales, judged even by the low conversion levels to e-business that corporate India has achieved so far.

A crucial validation of the strategic seriousness of e-commerce comes from the width of the commitment it has secured in the company. By that yardstick, the conversion-level is low: at more than half the companies, it is the infotech department that champions the cause of e-commerce. At more than 2 companies out of 3, the infotech department is the one that develops and maintains e-commerce projects, revealing a telling lack of participation from the marketing function--which gets into the act at only 3 per cent of all companies.

If e-commerce is such an integral part of corporate strategy, why are the pay-offs piling up in areas of operational efficiency alone? The answer lies in the identification of barriers, the Top Two being the lack of a standard payments infrastructure, and the trading partner's technology. Both are stark symptoms of the uneven pace of conversion to the Net for business in corporate India. First, the security of on-line payment--involving encrypted transmission of credit-card numbers--has not yet improved enough for customers as well as companies to be comfortable about its usage. And second, the fact that suppliers and channels are, often, not Net-enabled--or even networked--is preventing companies from extending their e-commerce links to span the entire supply chain.

Even so, corporate India is clearly challenging the perception that e-commerce is only a pad. Although e-trading may take longer to enter due to the trading barriers on the Net, the shift will come, soon or later. In fact, e-business is forcing companies to rethink the way they are organised and do business. And, most important, it is raising crucial strategic issues and accelerating developments in areas like globalisation, the branding of customer-services, and the supply chain. Indeed, the application of e-commerce is being extended to all aspects of the supply chain. That's why the CEOs who took the initiative to introduce e-commerce to their organisations must also be the ones to prepare a compelling business case for it. The rewards, both for the company as well as the individual, will be worth the effort. After all, the prize is the e-mpire of e-nterprise.

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