SME technophobia blamed for BarclaysB2B's collapse

19 June 2002
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20 June 2002 | Robin Parker

Technophobic and conservative attitudes among smaller firms have been blamed for the collapse of Barclays' e-business services arm.

The bank wound up BarclaysB2B at the end of May, blaming slow take-up of the service.

It will deal with its existing customer base until September, when co-founder Accenture will take over the business.

The unit was set up two years ago to help small and medium-sized enterprises (SMEs) automate their procurement-to-payment cycles.

The service provided a personalised portal linking users to online catalogues, e-procurement tools and other trading communities, alongside consultancy.

The bank is now to set up its own sourcing department to make use of the consultancy work BarclaysB2B conducted on behalf of more than 50 clients and to help meet internal savings targets.

Alison Hutchinson, chief executive of BarclaysB2B, said the bank axed the unit to meet its own target of £1 billion cost savings by the end of 2003.

"Customers found that in today's economic climate, even spending money to save money is a difficult call," she said.

"The number of customers was not growing apace with our targets, and we decided to make a commercial decision now to meet this goal."

But Andy Kyte, research director of analysts Gartner's business management group, said that in attributing a slow market for the unit's closure, the bank was "blaming the pitch for the result".

He told SM: "Barclays believed it would be a natural add-on for SMEs already doing their business banking with it.

"But it would never have achieved critical mass, as the SME market it aimed at is very conservative, habitual in its processes and largely technophobic," he said.

Kyte added that Barclays' "almost non-existent" marketing of the service was also to blame.

SMjun2002

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