Companies have taken only the easy steps in integrating the Internet and their progress so far would merit a "C-minus" grade, Dell's chairman and chief executive said yesterday. Mr Michael Dell said the Internet was as closely related and equally critical to the bottom line as the financial function.

Executives should thus regard the Web as a means of "systematically and radically" improving all aspects of their business, he said at a customer conference.

The computer company, which employs about 6,000 people in Limerick and Dublin, claims to generate about $50 million daily (#58.42 million) in online sales. "While it was important five years ago to just establish a presence on the Web, it's now critical to integrate the Internet throughout your businesses to achieve sustainable advantages - competitive and financial - in the markets you serve," said Mr Dell.

But companies had a long way to go before fully embracing such systems, he said. "Internet integration to meet operational objectives does lead to improved financial performance. The larger a company is, the more it has to gain by integrating the Internet to meet its objectives."

Whereas companies traditionally used the "return on invested capital" financial measurement, Mr Dell said the "return on infrastructure computing" was an equally valid ratio in the new environment. Maximising performance according to this measure would require companies to use Internet systems across a number of different "objectives".

Such systems should be suitable to the size of individual firms and used in separate management teams and IT networks.

Citing the findings of an "e-census" conducted by a research group at the University of Texas, he said there was a strong relationship between financial performance and Internet functions such as system integration, customer services and supply processes. For example, fewer than one in seven companies had online processes to share production information with suppliers.

"It's clear from the data that the more complex - but potentially more rewarding - the Internet initiative, the less likely companies are to have implemented it."

The study of 1,200 firms in the US and Europe said most companies provided basic product information online, but fewer offered any "online customisation".

Less than half notified customers of their "order status" while fewer could report "real-time" feedback from customers to suppliers.

Choosing not to integrate the Internet would ensure that businesses were left behind by their competitors, he said. Also at the conference, the president and chief executive of the Ford motor company, Mr Jac Nasser, said the division between the "old" and "new" economies was a false one.

Notions of a "battle royale" between the electronic and older industrial structures were simplistic, he said. "Despite a lot of hype to the contrary, it isn't about competing economic models."

Yet Mr Nasser accepted that the development of the Internet meant that distinctions between industries were fading. He cited four rules of change in the new environment.

These were:

customers determine everything;

knowledge assets were more and more valued than physical assets;

the idea of a company or strategy based on a standalone product was over;

technology and how it was integrated would "determine the shape" of business.