Inside business: Firms look inwards instead of getting connected

IN THESE days of knowledge management and e-commerce, you might assume that huge numbers of companies must already be operating in an interconnected world, writes Roger Trapp.

However, a study published tomorrow indicates that in Europe, at least, this is further off than we may think.

According to a report by the IT research specialist GartnerGroup, users of electronic documents are much more concerned about practical compliance and security than e-commerce and knowledge management. Next in importance are other practical issues, such as document archiving/retrieval and workflow.

The report, commissioned by the Association for Information and Image Management International, finds these views reflected in the fact that 59 per cent of information technology investment in this area is in vertical applications - that is, in claims processing in insurance, new drug applications in pharmaceuticals and call centres generically. And the vast majority of expenditure is on technologies such as workflow, budgeting and planning packages, technology management and imaging.

As a result, organisations are in a position to become more efficient and effective at what they do. But it seems they are less able to make the connections with other organisations that are seen as vital for real improvements - for instance, in the supply chain.

It is little wonder, then, that the Gartner report predicts strong growth in this market within Europe - from $4.1bn (pounds 2.6bn) last year to $11.4bn in 2003; a compound annual growth rate of 23 per cent, compared with 19 per cent in the world as a whole.

But it also appears that growth could be even stronger were it not for the fact that European organisations see the cost of implementing such technologies as higher than it is in the United States.

Not that price is the only obstacle. IT skills shortages and the impossibility of charting a clear return on investment in information projects rank highly, while sellers of IT equipment perceive customers to be ignorant about its benefits.