2. Julie Meringer Group Director Forrester Research Ltd. eCommerce Next Wave: Productivity and Innovation

3. Theme Leading organizations must use the Net to boost productivity and drive innovation

4. Agenda  What is the state of eCommerce worldwide?  How will productivity play a role in eCommerce?  What new innovations will drive economic growth through 2010?

5. Average increase: 17% Average decrease: 20% European firms slow IT spending in 2002 “Has your IT budget changed compared to last year?“ Source: Forrester Q1 2002 European survey of 212 technology leaders

6. Why? Economic malaise “If your budget decreased, how important were these factors?“ Better efficiency with fewer resources Completion of last year’s projects Centralization of IT Merger and acquisition activity Not at all important Very important Source: Forrester Q1 2002 European survey of 212 technology leaders Economic downturn Weak company financial performance Decreased importance of eBusiness Increased use of outsourcing Economic downturn Weak company financial performance Decreased importance of eBusiness Increased use of outsourcing

7. Companies expect spending to recharge... “How will your technology budget and headcount change in 2005?“ Source: Forrester Q1 2002 European survey of 212 technology leaders

8. 2002 vs 2001 Tech Spending 20022001 <$1BOverall Percent of revenues spent on eBusiness IT executives Business executives G3,500 3.5%3.1%3.0% 3.4% 2.5% 3.5% 3.6% G3,500 IT executives Business executives Percent of revenues spent on IT 7.2%5.4%4.8% 5.0% 4.7% Base: executives at North American companies

9. % of revenues on technology initiatives 2002 IT 2002 eBusiness Financial Distribution Manufacturing Other Technology and business services 13.9% 3.9% 6.4% 3.4% 5.4% 4.5% 4.1% 1.6% 9.4% 6.1% Base: executives at less-than-$1 billion companies

10. % of revenue from eCommerce Base: executives at G3,500 companies 0%5%10%15%20%25%30% Total Electricity, gas, and sanitation Insurance Finished goods mfg. Retail Financial (noninsurance) Primary production and supply Distribution Services Chemicals and petroleum Technology and telecom 2002 In 5 years

11. Forecast: Worldwide Online Trade Growth, 2002 To 2006 Rest of world Western Europe Asia-Pacific North America 2002 Total: $2,293.5 (US$ billions) $1,677.3 $341.6 $246.3 $28.2 2006 $7,469.0 $2,458.6 $2,645.6 $264.1 Total: $12,837.3 (US$ billions)

12. 20022004200320052006 % of total sales in 2006 North America United States Canada Mexico Total(US$ billions) Rest of world Western Europe Germany United Kingdom France Italy Spain All other Asia-Pacific Japan Australia Korea, Republic of Taiwan All other Hong Kong $1,610.4 $55.1 $11.8 $1,677.3 $2,293.5 $28.2 $246.3 $60.5 $51.7 $36.7 $28.9 $6.2 $62.3 $341.6 $200.5 $47.8 $29.4 $29.0 $19.3 $15.6 $2,527.6 $91.3 $23.3 $2,642.2 $3,878.8 $53.0 $560.8 $137.6 $113.1 $85.2 $68.4 $16.3 $140.2 $622.8 $359.2 $87.7 $55.2 $56.1 $35.7 $28.8 $3,759.7 $136.2 $43.9 $3,939.8 $6,201.1 $96.7 $1,076.7 $262.2 $210.1 $165.0 $135.9 $38.5 $264.9 $1,087.9 $625.4 $151.1 $97.1 $101.8 $62.5 $50.0 $5,296.9 $188.6 $78.3 $5,563.8 $9,240.6 $163.1 $1,747.5 $419.3 $330.6 $269.5 $226.7 $76.1 $425.2 $1,766.3 $1,056.8 $224.1 $156.8 $158.3 $96.4 $73.8 $7,091.6 $245.6 $131.8 $7,469.0 $12,837.3 $264.1 $2,458.6 $580.9 $454.6 $381.8 $322.6 $125.5 $593.3 $2,645.6 $1,650.2 $301.7 $231.9 $223.8 $139.2 $98.8 26.0% 20.0% 10.0% 18.4% 4.0% 19.3% 21.0% 20.0% 19.0% 15.0% 19.7% 11.9% 14.6% 22.4% 17.5% 19.6% 2.1% 22.1% (numbers have been rounded)

13. B2B and B2C Trade As A Percentage Of Total Trade In 2006 ManufacturingDistribution Households B2BB2C Raw materials (US$ billions) (numbers have been rounded) Online trade% Total B2B North America Asia-Pacific Latin America Western Europe Africa and Middle East Eastern Europe $12,275.5 $2,460.4 $83.9 $68.6 $93.1 $2,320.3 $7,249.2 20.0% 59.1% 18.9% 0.8% 0.7% 0.6% 100% Online trade% Total B2C North America Asia-Pacific Latin America Western Europe Africa and Middle East Eastern Europe $185.2 $6.3 $5.2 $7.0 $138.3 $219.8 $561.8 33.0% 39.1% 24.6% 1.3% 1.1% 0.9% 100%

14. Agenda  What is the state of eCommerce worldwide?  How will productivity play a role in eCommerce?  What new innovations will drive economic growth through 2010?

15. IT spending growth in percent

16. IT spending growth in millions of euros

17. Three phases of Net investment 19952010 Growth in investment Experimentation 1995-2000 Web as separate business Building presence Ad hoc budgeting 20002005 Net as integrated channel Control costs ROI-focused spending Rationalization 2000-2003 Intercompany collaboration Gain advantage Measured innovation Renewed innovation 2002-2010

18. A new wave of productivity 20002012 IT productivity wave: eBusiness productivity wave: Externally focused investments in technologies like supply chain and CRM yield efficiency gains in three key areas: 1. Lower transaction costs 2. Improved market information 3. Intensified new competition 1990 Productivity: (% change in output per unit of labor input) Internally focused operational efficiencies from hardware, services, and ERP investments

19. eBusiness adds 15% productivity by 2012 0 4 8 12 16 200220042006200820102012 FoundationExpansionNormalization 0.8% 1.7% 1.2% Design: 9% Produce 45% Serve 46% Total eBusiness productivity gain

20. Agenda  What is the state of eCommerce worldwide?  How will productivity play a role in eCommerce?  What new innovations will drive economic growth through 2010?

21. The X Internet refers to two “Xs” An executable Internet that supplants today’s Web An extended Internet that connects to the real world

22. Executable Internet builds conversations Server Endpoints

23. The Web only provides answers Account summary The Web How much is in my account?

24. The executable Internet The executable Net creates a conversation What should I do with my account? Financial services tools (executables) Two-way conversation about my account

25. Extended endpoints Extended Internet -- an Internet of things Server Endpoints

26. The X Internet connects digital to physical Internet computers Digital Internet users Physical Vehicles Telephones Buildings

27. Temp:52° F Fuel:1/2 tank Door:Closed Tag is integrated with door, fuel, and temperature sensors Sensor data is transmitted every few minutes WhereNet devices simplify supply logistics

28. Yard inventory is conveyed to users through maps and reports Colors indicate trailer status and alert conditions

29. Real-time alignment of supply and demand  GPS-enabled truck fleet  20-minute delivery window  Savings: $100 million

30. Summary  Leading firms must harness technology to drive productivity  Productivity via technology is eCommerce’s next wave  As productivity takes hold, innovation will reignite around the X Internet

31. Julie Meringer +44 (0) 20 7323 7690 jmeringer@forrester.co.uk www.forrester.com Thank you