Enterprises in Europe need more creative portals to increase revenue

August 17, 2008 — Leave a comment

According to many researches, like Gartner analyst David Gootzit, Portal technology has a bright future. As far as I have been involved with this technology, I have only read reports that provide very positive forecasts in the demand for portal solutions. But still in the past 2 years it’s mostly marketing and not many concrete results, but hopefully things are changing as some really nice consumer portals have been launched. Of course we all know iGoogle where we can add our own widgets out of hundreds available. Personally I think the BBC Portal is really a good representation of a consumer portal. In the Netherlands the portal of the leading telecom provider KPN is a good example.

Intranet, Extranet and Internet portals
Through personal involvement I have had a chance to take a look at portals in the publishing industry, while working on projects for leading international Publishers. The vision about portals can be very different:

  • intranet portals with a strong emphasis on collaboration & service functionality
  • extranet portals with a strong emphasis on transaction & dashboard functionality
  • internet portals with a strong emphasis on content & service functionality

Typically the intranet & extranet portals have a stronger ‘decreasing costs’ focus while the marketeer of internet portals try to increase revenues by attracting & keeping the attention of internet users.

Full service portal concepts
Portal technology is flexible and offers structural architectures to support mashups at Enterprise level. With full service I mean the combination of different ways to increase the value of a portal:

  • Content – corporate, product, people, …
  • Transactions – e-commerce, damage reports, employee benefits, …
  • Service – self service, FAQ, status requests, …
  • Personalization – information, offers, contacts, …
  • Community – profile, blogs, relations, …

In the long run portals are better off when they can offer so many type of services while at the same time providing the right personalization possibilities. There is a thin line between being a very rich portal and a portal that is to difficult to use.

Europe – smaller markets – high internet usage
Europe has the third highest internet penetration number of the world; 47,7%. Only the North Americas (73,6%) and Australia (59,5%) has higher penetration figures. The average internet penetration all over the world is 20%.

Internet users in the world, 2008/Q2, source Internet World Stats

With a population of about 800 MLN, this means that about 380 MLN people have access to internet in Europe. Although this seems to be a reasonable number to do ecommerce, Europe is split into many countries making the target market for internet users a lot smaller:

Top 10 internet countries in Europe, December 2007, Internet World Stats

Top 10 internet countries in Europe, December 2007, Internet World Stats

Smaller markets, smaller internet wallets
As in Europe the markets are small, communities, customer bases often cover only ten thousands people. Only a few successful communities can get above a million members, the total of these portals in Europe can probably be counted on 2 hands. Besides a smaller market Europeans just buy less online than Americans. I think the trust and usage of creditcards play an important role.

US – bigger market – higher online revenues
With a population of 334 MLN and an internet penetration of 71,4%, there are more than 230 MLN internet users, about 5 times bigger than the biggest markets in Europe. US Enterprises usually think big, simple because they can! With such market figures combined with the American consumption way of life and a single language, US Enterprises are quite sure to have an easier success to implement e-commerce than their European counterparts.

In my latest talks with one of the leading suppliers of e-commerce software, Elastic Path, I’ve found out that their American clients are mainly focused on the big online shopping experience and integrated e-commerce applications. Portals where e-commerce plays a role next to content are not yet common in the Northern Americas.

It makes sense, focus until you are forced to be creative
I guess it makes sense, as pure focus on e-commerce still brings enough online revenues with such market figures. So why bother experimenting with combinations value propositions through 1 portal, while the e-commerce value proposition is so strong? I guess community values like Facebook make any e-commerce marketeer see $ signs.

The same is with any other product development I guess, average European entrepreneurs have smaller markets and therefor shorter product cycles. I guess this is the reason why Europeans can be innovative and creative with relatively lesser budgets. I guess Componence is a good example 🙂

But be aware, Americans usually have more budget to get what it takes to give innovative ideas a longer lifespan.

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