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THE IMPACT OF THE e-ECONOMY ON CHEMICAL INDUSTRY
STRUCTURES, PRODUCTIVITY & BUSINESS MODELS
Presentation to EU Seminar on‘The e-Economy in Europe: its
potential impact on EU enterprises’
Paul Hodges, Chairman
‘One way of distinguishing form from function is to substitute a verb for a noun. Banking is essential,
banks are not.’ Richard Kovacevich, CEO Wells Fargo
What Impact?
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800
Electronics (non-defense)
Consumer Products (B2B)
Food/Beverage/Tobacco
Medical Equipment/Transport
Financial Services
Construction and Real Estate
Pharmaceutical
Transportation/Freight
Motor Vehicles and Parts
Information Services
Aerospace/Defense Electronics
Paper
Agriculture
Energy: Oil/Gas/Mining
Industrial Equipment
Hardware/SW/Networking
Chemicals
B2B Revenues (Millions $US)
Industry B2B Revenues in 2004Industry B2B Revenues in 2004Industry B2B Revenues in 2004Industry B2B Revenues in 2004
Chemicals will lead in B2B as today’s fragmented structure is networked
Source: Accenture
OLD: INTEGRATED
NEW: NETWORKED
Feed-stocks
Commercial
Finance
Logistics
Production
Company B focuses on Commercial/LogisticsCompany A focuses on
Feedstocks/Production
Production Commercial Finance LogisticsFeedstocks
Business structures will become networked…
Service ProvidersLowest cost ‘utility’ suppliers
Margin is squeezed out of many quasi speciality and intermediates
Growth driven
companies
ROCE driven
companies
…whilst its underlying structure also changes
ServiceSpecialitiesIntermediatesBasic ChemicalsTODAY
FUTURE
Source: Deutsche Bank
Networks are powerful tools
Source: Forrester
1) Links are free
3) Assets live on the network
2) Information
diffuses instantly
eBusinessnetworks
Productivity will improve due to increased operational transparency...
Process focus
Industry priority
Data strategy
Inter-company links
Decision making
Intra company
Focus/consolidation
Own & hide
Relationship based
Computer assisted
Integrated Networked
Inter company
Specialisation
Share & exploit
Performance
based
Human assisted
…as Operating Models are redefined
Technologyfocus
Internal External
Market/product developmentProduction led Customer led
Partner relationships
Opaque Transparent
Outsourcing Limited Ubiquitous
Financialreporting
Historical Real-time
Today Future
eBusiness adoption is now set to accelerate
0%
25%
50%
75%
100%
1997 1998 1999 2000 2001 2002 2003
Telephone/FaxEDI/EXTRANETE-mailERP to ERPBranded websitesSpot ExchangesContract Auctions
Source: BP
ISSUES
Ensuring Europe stays ahead – creating a common framework Catching up with the US on internet adoption – broadband accessAllowing information to flow – defining competition concerns upfrontEncouraging personal IT literacy – schools and local communitiesRepeat success of GSM standard – adapt for mCommerce