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Petroleum Companies Lag Majority of Industries in Embracing The
Internet According to an Ernst & Young Public Website Study
NEW YORK, N.Y. ; Ernst & Young Consulting, a worldwide advisor to the energy industry, conducted an analysis of public websites of the top global petroleum companies to determine the robustness and functionality of their public websites. The eCommerce tidal wave has been rolling through many industries within the past year but the petroleum industry is under siege. That's the bad news. The good news is that the petroleum industry is beginning to drill deeper to mine the vast Internet reservoirs of opportunity. Ernst & Young defines the robustness of Internet adoption by a company in four business waves. The most basic wave is labeled eInformation. Companies in this wave focus on publishing static information on their web page. While this is important, there is only a modest amount of "stickiness" to these websites. The next wave of maturity is eCommerce. Ernst & Young noted that petroleum companies are beginning to conduct two-way transactions using Internet technologies in this wave. The introduction of .xml technologies and customer interaction are prominent in this wave. The final two waves of maturity are substantially more complex. Companies that truly operate as an eCompany are in the third wave. Generally, these are start-ups and new entrants that are not hindered by legacy infrastructures and systems. However, some companies have made an admirable transformation to become eCompanies such as Dell Computer where nearly everything within the company is conducted around the Net. Finally, Ernst & Young predicts that the middle of the first decade of the twenty-first century will see the emergence of eConomies, in other words, markets whose sole foundation of operation will be the Internet. The travel industry is most likely to be the first industry to be defined in this manner. Thomas Yacko, an eCommerce Partner in Ernst & Young Consulting's Petroleum industry, stated that "the petroleum industry has lagged other industries such as travel, financial services, capital markets, consumer products, and retail due to the their focus on business-to-consumer commerce." In the petroleum industry, over 90% of transactions are conducted by businesses, suppliers, and corporate customers. Few transactions are conducted with the actual consumer. The lone exception is credit card processing applications. These market leaders have demonstrated that the adoption of the Internet as a transaction platform provides an opportunity to reduce transaction costs, and open up new, competitive markets. The global mega-mergers combined with oil price volatility have prompted petroleum companies to examine the potential of the Internet. Ernst & Young Consulting has centered its entire consulting practice in serving eBusinesses. Its focus is on serving global vertical markets and it has been conducting periodic surveys of industry websites to assess the impact of the Internet on market capitalization, shareholder return, and overall functionality. In their most recent public website survey in September, 1999, Ernst & Young found that every major petroleum company has a good handle on eInformation capabilities. According to Yacko, "all have a public website that provides financial, product, service, and community service information. The websites are visually appeasing and contain informative content. Examples are Mobil, Chevron, Exxon, BP/Amoco and Texaco." The study revealed that these websites offer other interesting information snippets such as Frequently Asked Questions (FAQ's), email capabilities to communicate to the company, job opportunities, community/environmental information, and news clippings. Ernst & Young Consulting noted that 88% of the websites offered an email capability, 73% of the sites offered job opportunities and community/environmental information, and 63% offered relevant news clippings regarding the company. Overall, the petroleum industry has done a good job to be informative to the web community. Ernst & Young Consulting's study revealed that the petroleum industry is not as accomplished in the eCommerce space. Most of the majors still rely heavily on EDI over private, point-to-point networks to handled business transactions. Aggressive petroleum companies such as Chevron, Mobil and BP/Amoco are moving into Internet eCommerce to pare costs and provide expanded opportunities for new supplier markets. Ernst & Young found that a minority of petroleum companies offered some eCommerce capabilities. For example, one in four companies offer price quotes for their products on the Internet. This is the most frequent eCommerce attribute that is offered. Credit card applications, eInvoicing, and eBill Presentment are offered by less than one in seven petroleum companies. In contrast, nearly every consumer electronics company offers extensive eCommerce capabilities. While petroleum companies are beginning to address these capabilities, speed will be critical according to Ernst & Young. Failure to recognize and adapt to the speed of the Internet by the petroleum industry will provide opportunities for disintermediation by new entrants into their highly controlled economic market. During the past year, Chemdex, Chemconnect, and other commerce providers have entered the sanctuary of the major petroleum companies causing value chain disruption and limited market share loss. The phase "speed kills" applies for those companies that do not have the vision and courage to launch aggressive eCommerce initiatives within the petroleum industry. Failure to rapidly adapt to the Internet will create road kill along the proverbial information highway. For more information, contact: Thomas H. Yacko, Ernst & Young, |