Belying their image as lumbering dinosaurs, the corporate giants have taken to e-business, evolving their working practices and supply chains to reap substantial benefits.

The internet is no longer the preserve of nimble, sexy and entrepreneurial start-ups - the so-called "new economy".

The considerable influence and presence of traditional companies has transformed the internet revolution into a broader internet evolution.

The advantages held by these established bricks-and-mortar companies over the upstart dotcoms include industry depth, a strong brand identity, and customer trust, according to Simon Daniel at Andersen Consulting in London. Traditional companies have good access to capital, and expertise in managing the legacy of their established businesses. "We are now seeing new models for these companies as their e-businesses accelerate and they improve their efficiencies," Mr Daniel says.

A report by Andersen Consulting illustrates just how quickly companies are waking up to the internet and its business opportunities.

A survey of senior executives (350 in Europe and 60 in the US), conducted first in 1998 and again in 1999, revealed a marked difference in approach to the internet over the course of a year. In the second survey, many more European businesses reported definite plans to exploit the internet and e-business in the near future.

Similarly, a KPMG survey of Europe's largest organisations - those with turnovers greater than £500m - revealed that 350 had a web presence, and 80 were conducting some form of e-commerce activity in 1998. In their latest survey, KPMG found that 75 per cent of European companies surveyed have used e-commerce to launch a new product or promote an existing one, and 83 per cent expect to be using the internet for business transactions within a year or two.

"There is a lot of talk about traditional companies reinventing themselves as e-businesses," says Jeremy Probert, spokesman for Whitbread, the UK leisure group. "The so-called 'bricks-to-clicks' revolution isn't just about putting dotcom on the end of your name. It's about knowing your business, and using the internet to work with and for your business."

"A traditional company that is embarking on a net presence needs to have a clear idea of what it wants to achieve, and must work on its core values," says Manoj Badale, joint managing director of netdecisions, a UK company which has built e-commerce businesses for Marconi, McDonald's (UK) and the Automobile Association.

In the case of McDonald's, the website obviously couldn't deliver hamburgers to hungry internet surfers, so the strategy focused on reinforcing the recreational element of the restaurants. The site invites children to play, join in quizzes and send in pictures.

The journey taken by traditional companies to the web has generally involved two stages. Many established companies were quick to recognise the need to register domain names and establish a web presence of some description. Frequently this was in the form of a non-interactive site with information about the company, some contact names and addresses, a few recent press releases, and that was about it. After finding their electronic feet, they moved on to the second stage - which is where many companies are now. This stage is more complex, involving a thorough examination of how the web side of the business works with - or separately from - the bricks-and-mortar side.

"It's about applying communications and technology to the whole business; a holistic approach to efficiency, cost benefits, supply chain management and planning," says Andrew Kerry-Bedell, a senior strategy adviser at Net-Commerce, which advises companies on internet business.

The critical question

Companies need to take into account branding, operations and the physical structure of the business, Mr Kerry-Bedell says. This must all be done before tackling the critical question: whether to set up a separate dotcom operation - such as Egg, the internet banking arm of Prudential in the UK - or to bolt e-commerce on to the traditional ways of doing business.

Car manufacturers, which already have large existing operations and dealer networks, have been quick to migrate to the internet, initially to display their products in virtual showrooms with impressive 3D graphics. By the end of last year, all the car manufacturers in Europe had their own website.

DaimlerChrysler is flying the flag for the new economy. Jurgen Schrempp, the chief executive, is happy to use his many public appearances to broadcast the group's diverse internet activities, prompting some observers to question whether he is trying to turn the company into DaimlerChrysler.com.

Mr Schrempp - whose sons are active in the dotcom world - is having every part of the group analysed with regard to its e-business viability. DaimlerChrysler's purchasing is being combined with that of General Motors and Ford through the Covisint internet exchange, which will unite 35,000 components makers on a platform with a trading volume of an estimated $250bn (£160bn). DaimlerChrysler's internet strategy also embraces a distribution and after-sales operation. According to a study conducted by Mercer Management Consulting, car companies have only a 25 per cent share of the after-sales business on vehicles they have sold. DaimlerChrysler aims to change this.

Renault of France says the internet has accelerated growth at the group, prompting it to boost its online investment. Between 1997 and 1999, Renault spent FFr500m (£50m) on designing its 36 websites and setting up an intranet to link 18,000 commercial partners. This year, the group will spend a further FFr500m developing its internet activities and extending its online dealer network worldwide, with the aim of becoming the e-commerce leader among European carmakers.

Renault aims to offer an online purchasing system, allowing the customer to order and buy the car of their choice; sun roof, metallic finish and finance included. The group plans to launch its Carevia.com multi-brand second-hand car "supermarket" in France this year, extending it next year to the UK, Germany, Italy and Spain.

Although a few companies like DaimlerChrysler are making a noise about their internet strategies, the internet revolution for traditional companies has generally been quiet in comparison to the rowdy dotcoms.

Well-established companies, in such industries as steel and oil, have been focusing on the business-to-business (B2B) synergies of their internet presence. They are using e-commerce and the internet to service customers and to explore joint ventures and new projects with suppliers from other companies, much as Covisint is doing for the vehicle producers.

One such development took place in June this year when Europe's four biggest steelmakers agreed to join forces, using the internet to sell steel and buy materials and services. Arbed of Luxembourg, Usinor of France, ThyssenKrupp of Germany, and the Anglo-Dutch group Corus will be responsible for roughly half the 160m tonnes of steel to be produced in the European Union this year. The "Big Four" expect to transform the economics of one of the world's most important manufacturing industries.

They propose to set up a pair of independent e-commerce businesses - Steel24-7.com and BuyForMetals.com - which will buy raw materials such as iron ore for the producers' steelworks, and sell steel to customers. The companies have not put a figure on how much steel they intend to sell via the new ventures, which are due to begin operations by the end of the year, but observers believe they may sell 20-40 per cent of their steel in this way. This could result in a reduction of the cost of channelling the material to users of some 10-20 per cent.

Instant access

Usinor, which reported losses of E213m (£127m) in 1999, is spending E50m on its internet projects in 2000-2001. The company is convinced of the benefits Steel24-7 and BuyForMetals will bring. As a buyer, Usinor will have instant access to products and services; as a seller, it will obtain more clients, and save both time and money. Delivery times at Usinor will be sharply reduced.

Being part of a same-sector grouping is not the answer for all companies embarking on their new internet life. Rolls-Royce of the UK is not involved with the aerospace portals established by Lockheed and Boeing of the US, preferring to develop its internet activities as an extension of its aero-engine sales and after-sales maintenance services.

Spokesman Martin Brodie explains that, due to the specialised nature of the business and long-established relationships with airlines, an internet presence is most unlikely to generate any aircraft engine sales.

However, Rolls-Royce has been selling spares online since the 1980s, and today 60 per cent of all customer orders are received this way.

The company has grown enormously over the past few years, selling record numbers of engines each year. It is focusing its online resources on the provision of real-time data recording these engines' performance in flight.

"Where the internet will change how we do things is that the customers can get what they want, when they want it," Mr Brodie says.

"We are developing systems where the information from an engine is captured on the wing and online."

The internet evolution of big business is evident throughout Europe, and across all sectors of the economy.

In Spain, Repsol YPF, the country's largest oil company, recently launched an internet portal to bring together suppliers, consumers and distributors. The cost-benefits of B2B exchanges are being maximised through an online marketplace for the oil industry.

The chemicals sector is served by Chemconnect, a portal which pools the buying power of 34 companies.

Dragados, Spain's second-largest construction company, is preparing to launch a construction portal to channel purchases of goods and services for small and medium-sized companies.

Forrester Research has estimated that more than $1,000bn of the projected $1,300bn of B2B e-commerce by 2003 will be in five industries: computing and electronics ($395bn), motor vehicles ($213bn), petrochemicals ($178bn), utilities ($170bn) and paper and office supplies ($65bn).

Four of these five sectors group companies from the so-called "old economy", although the distinctions between the old and the new are becoming increasingly blurred.

The corporate giants of Europe may not have shaken off their dinosaur image, but they are proving to have very sharp teeth.

Email Annie Counsell at annie.counsell@ft.com