It is easy to lose sight of the real internet story through the stream of headlines chronicling the mood swings in the international markets.
For IFAs, the fundamental drivers behind the internet are as attractive as ever. At its heart is the promise of new business, reduced costs, increased competitiveness and, above all, improved client service.
But many IFAs feel the net has promised much and delivered little. There is a real disappointment that is hindering development of the internet.
But there is an explosion in information being carried by the internet, not least among providers of financial services. The volume of data is growing at 75 per cent a year. Govern-ment figures show that more than 81 per cent of businesses in the UK have internet access and 66 per cent have a website. Yet a recent survey by Exchange FS estimated that while nearly 70 per cent of IFAs saw the principal motivation for using the internet as improving client service, around half rarely or never used it in client work.
Where are the new levels of productivity powered by improved
communications with financial services providers, secure remote access to company intranets for itinerant IFAs and the more efficient management of customers?
Use of the web for most IFAs has been limited. Apart from email, their web presence is passive. Most sites are simply online brochures. IFAs have seen the internet as a threat, a means for financial services providers to bypass them to sell products direct to clients rather than embracing the opportunity them to manage clients better.
Productive use of the internet by IFAs is being held back by three main problems – the cost of implementation, the IT skills shortage and an immature internet industry.
The issue of reliability for business is central to the future of the internet. Any conversation about the internet quickly turns to complaints about slow response times and of websites that crash, adding up to a substantial drain on management time.
This frustration is compounded by the shortage of IT professionals and the costs of recruiting them to work in house. Research house IDC estimates there will be a shortfall of around 300,000 skilled IT workers in the UK by 2003, with the result that an IT manager can command an average salary of over £70,000. For companies with their own in house email or
web-hosting solution, the challenge of running a watertight internet strategy becomes daunting.
Finally, the internet industry has failed to help itself. It has not communicated with companies in the business language they understand.
Companies do not want to know about routers, Pops and swit-ching but about investment returns and profit.
These issues mean that businesses are missing out on the full potential of the web. But there is an alternative in outsourcing.
Outsourcing avoids the prohibitive cost of building an in-house solution.
The economics are compelling. Research published by Morgan Stanley has shown a typical company can save £67,000 a year by outsourcing its web-hosting needs.
These basic economics are driving a European market growing at 57 per cent a year.
The internet service providers which will succeed in this market are those that invest in skills to build quality services and in customer support to give business-responsive and relevant advice.
The real economy is still relying on the internet to deliver on its promises, whatever the volatility of the international markets. The issues of cost, skill shortages and IT technobabble have been a brake on realising the full benefits but as the internet industry begins to mature, business-friendly solutions are increasingly emerging.