Organizations interviewed
  Respondents
  Questions
  Calculation methods

How many and what types of organizations were interviewed?

Interviews for this study were completed in September and October of 2001 and were conducted by telephone. A total of 2,699 companies and organizations were interviewed for the study (2,065 in the United States, 634 in the United Kingdom, France, and Germany). The sample in both studies was selected from Dun & Bradstreet's database of global businesses, one of the world's largest and most comprehensive databases of private and public organizations. This database provided both contact and financial information for the organizations contacted in the study.

A probability sampling technique was used to assure that small, medium and large organizations were included in our sample frame. Our sampling technique was designed to strike a balance between the volume of small organizations that make up the bulk of all organizations and the influence of large organizations which are much more likely to have implemented Internet business solutions and have a greater impact on total cost savings.

A stratified sampling methodology was used to allow for comparisons across five vertical industry segments. We chose to focus on the following five industries as well as a "sixth" vertical that accounts for the remaining industries:

• Healthcare (United States only)
• Government (United Kingdom, France, and Germany only-includes healthcare)
• Wholesale and Retail Trade
• Manufacturing (including both durable and non-durable)
• Financial Services (including banking, finance, and insurance)
• Service Providers and Telecommunications
• Other (all remaining industries, including Government in the United States)

Who were the respondents for the study?

The level or title of the target respondent is one of the key drivers for the budget as well as the quality of any research study. We attempted to contact the most senior person available to answer the survey questions, but given the harried nature of the most senior individuals at a company, we were not always able to reach that person. Of greater importance than the level of respondent was their ability to accurately answer questions about Internet business solutions and financial metrics.

To qualify for the study a respondent must have met the following criteria:

• Senior decision-maker whose formal job responsibility includes either the design, purchase or implementation of Internet business solutions for their company
• Survey respondents included CEOs, CFOs, CIO/CTOs, VP or Director-level technology decision-makers as well as managers and other technical staff
• Knowledge of financial metrics used to track performance or impact of Internet business solutions

What questions were asked to calculate the estimates?

It took an average of 25 minutes for a respondent company to complete the Net Impact survey. There is such a great need to understand all aspects of how technology is impacting both the top line and the bottom line of organizations that a significant effort was required to cut back the length of the questionnaire-there were so many things that could have been asked.

Driven by the overall research objectives, our primary focus was to assess the level of adoption of Internet business solutions and to measure their impact on revenues and costs. The general topic areas of the survey and some explanations of how the questions were used are outlined below.

1.	Qualification and screening questions
	Responsibility for decisions related to Internet business solutions Knowledge of financial metrics and impact of Internet business solutions
2.	Areas to which businesses are applying Internet business solutions The focus was on broad business areas as well as keying in on specific Internet business solutions such as Supply Chain Management or Procurement
	Customer Development & E-Marketing Customer Service & Support E-Commerce (including B2B) Finance & Accounting Human Resources Manufacturing Procurement & MRO Research & Development Retail & Wholesale Operations Sales Force Automation Supply Chain Management
3.	Year company first began implementing IBS - single year estimate This question provides the beginning point for estimating the total cost savings related to Internet business solutions
4.	Current completion level of Internet business solutions - in percent complete Understanding the completion level of all Internet business solutions allows for the calculation of current impact versus future impact on businesses and the economy
5.	Planned completion date for all Internet business solutions - single year estimate This question provides the future endpoint of Internet business solutions implementation for estimating the total time frame for realizing all cost savings and revenue gains
6.	Planned areas of Internet business solutions implementation - same list as current implementation Knowing what applications are planned will allow for more precise estimates of future cost savings or revenue increases
7.	IT Spending The goal was not to replicate existing estimates of current and future IT spending, rather, our goal was to explore the relationship between IT budgets and IT infrastructure, and the level of cost savings or revenue increases
	Most recent annual IT budget in dollar terms Market value of technology infrastructure Distribution of IT budget among the following areas:   Communications and networking hardware purchases Communications services Computing hardware purchases Total software spending (including Internet software solutions - Customer Relationship Management, Supply Chain Management, etc., packaged software, application development, application maintenance) Other personnel and consulting
8.	Current financial impact of Internet business solutions - all Internet business solutions considered together. The questions asked in this section depended upon the type of company interviewed. For example, financial services organizations do not report Cost of Goods Sold (COGS) or Sales, General and Administrative expenses (SG&A), but report operating expenses. Government agencies were also treated differently with respect to revenues and operating expenses.
	Increasing revenues? Decreased costs of good sold (COGS)? Decreased sales, general and administrative expenses (SG&A) or operating expenses (OPEX)?
9.	Future or expected financial impact of all Internet business solutions
	Increasing revenues? Decreased costs of good sold? Decreased SG&A or OPEX?
10.	Current and future changes in revenues and costs directly related to Internet business solutions
	Revenues? COGS and SG&A derived through estimates of gross and net margin from operations? Percent increase in revenues? Percentage point decrease in COGS? Percentage point decrease in SG&A or OPEX?
11.	Ways in which Internet business solutions impacted costs and revenues These responses were asked based on their relationship to revenues, COGS and SG&A or OPEX
	a.  Revenues   Improved customer loyalty? Improved customer satisfaction? Increased customer attraction? Increased customer retention? Existing customers buy more frequently? Existing customers buy in greater volume? Existing customers buy more expensive products or services? Attracting new customers? b.  COGS   Increased workforce efficiencies? Reduced materials costs? Reduced production costs? Reduced distribution or shipping costs? Improved inventory management? c.  SG&A or OPEX   Reduced accounting or finance costs? Reduced human resources (HR) costs? Reduced sales & marketing costs? Reduced R&D costs? Reduced customer support costs?
12.	Metrics for tracking return on investment (ROI) from Internet Business Solutions This question was a non-read list of responses with the goal of finding out what types of metrics businesses were using to track their investments
	Workforce efficiency Employee satisfaction Customer satisfaction Revenue per customer Inventory turnover Revenue per employee Product to market time Customer acquisition cost Customer retention cost
13.	Barriers to adoption of Internet business solutions For businesses that are adopting, what are the challenges that their organizations are facing with respect to implementing these solutions
	Dollar cost of projects Time to implement projects Cost of new infrastructure Support from upper management Worker training Organizational inertia Uncertain return on investment Can't hire people with necessary technical skills Bad experiences in the past Inadequate planning Regulatory barriers
14.	Cultural attitudes toward the use of IT
	Self-directed work groups Other attitudinal differences in the use of IT (see questionnaire)
15.	Network connectivity of organization to
	Customers? Partners? Suppliers?
16.	Firmographics/demographics

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How were the estimates for cost savings and productivity calculated?

We used the information provided directly by senior influencers at each organization to determine the impact of Internet business solutions. Each respondent provided estimates of current and future revenue growth and gross cost savings directly attributable to Internet business solutions, which included the following measures:

• Annual revenue: provided by the respondent, supplemented with Dun & Bradstreet or financial records where possible
• Gross margin: provided by the respondent, supplemented with financial records where possible
• Net margin: provided by the respondent, supplemented with financial records where possible
• Current /future percent revenue increases due to Internet business solutions: provided by the respondent
• Current /future percent cost of goods savings due to Internet business solutions: provided by the respondent
• Current /future percent sales, general and administrative cost savings due to Internet business solutions: provided by the respondent

The revenue and cost savings estimates were applied to the company's overall financial metrics to determine their impact as a percent of overall revenues. Revenue increases were applied directly to revenue estimates, while cost savings were applied to the cost structure backed into using the gross and net margins provided. Organizations that did not have any Internet business solutions installed, or did not claim any specific benefits from them were given a value of zero for their revenue increases or cost savings.

Once calculated as a percent of overall revenues, these estimates were applied within each vertical. Each company's results were weighted according to their probability of selection within the study, which reflects their distribution within the Dun & Bradstreet database.
The overall average for each increase and savings estimate (expressed as a percentage of revenues) was then applied to a total revenue estimate for each vertical. These estimates were derived from the Economic Census, which profiles the U.S. economy every five years.¹ Since the most recent Economic Census is based on 1997 data, we applied value-added output growth estimates to simulate revenue growth by vertical through to 2001.² These were supplemented by government figures for on-budget outlays as the basis for estimating revenue and cost implications in the public sector as part of the "catch-all" sixth vertical.

U.K., France, and Germany
Revenue and savings estimates were calculated in the same manner for the United Kingdom, France, and Germany. Revenue estimates for each company were obtained from DRI-WEFA. Gross Domestic Product estimates were obtained from the Organization for Economic Co-Operation and Development (OECD) and grown based on predictions made by the national offices of each country.

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Footnotes
¹ U.S. Census Bureau. "Comparative Statistics for United States 1987 SIC Basis" Economic Census. Washington, D.C.: U.S. Census Bureau Online 2000.
² U.S. Census Bureau. "Sales, Shipments, Receipts, Revenue, or Business Done" Economic Census. Washington, D.C.: U.S. Census Bureau Online 2000.

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