Despite the recent slowdown in the economy, the worldwide B2B
internet commerce market is on pace to total $8.5 trillion in 2005,
according to US research group Gartner. While B2B internet commerce
is poised for strong growth, the company believes the long-term
forecast has been impacted by the economic downturn, especially in
the US, which is projected to be the most heavily effected.
"The economic downturn can be viewed as a reprieve for
enterprises that weren't able to keep up with the e-business
leaders," said Lauren Shu, research director for Gartner's
e-Business group. "This is not a time to retrench, but rather an
opportunity to get your house in order, work on internal adoption
of e-business and associated change management and prepare to take
advantage of and profit from the massive changes that will play out
by 2005."
In 2000, the value of worldwide B2B internet commerce sales
transactions surpassed $433 billion, a 189% increase over 1999
sales transactions. Worldwide B2B internet commerce is projected to
reach $919 billion in 2001, followed by $1.9 trillion in 2002. In
2003, the market will increase to $3.6 trillion, and at the end of
2004, worldwide B2B internet sales transactions are forecast to
reach $6 trillion.
According to US-based WEFA (formerly Wharton Econometric
Forecasting Associates), whose sales transaction data Gartner uses
as the basis of its forecast, the current economic downturn will
result in a 16% reduction in the nominal value of worldwide sales
transactions by 2005. Gartner lowered its forecast accordingly, but
not as aggressively as WEFA because in this tough economic climate,
enterprises will turn to cost-saving measures, such as
e-procurement, and hosted software solutions, such as
e-marketplaces, rather than in-house solutions.
Gartner says the economic situation will cause enterprises to be
more deliberating and judicious about new IT investments, focussing
on where they can get the greatest impact for the lowest cost.
Thus, Gartner anticipates that some enterprises will continue to
rely on legacy EDI systems (EDI, or Electronic Data Interchange, is
a standard format for exchanging business data) and delay replacing
them.
"B2B commerce over the internet is in the very early adopter
stage, but companies have been doing business electronically for
years using proprietary EDI," said Ms. Shu. "These systems work
today, have served companies well enough for years and are deeply
embedded in the B2B processes of many industries. With the downturn
in the economy, the migration away from proprietary EDI to internet
technologies will be slower than earlier anticipated."
One of the more hyped areas within B2B has been e-marketplaces,
but Gartner analysts said it's important to understand
e-marketplaces' true impact on the overall B2B industry.
E-marketplaces, which faced some difficulties in 2000, are a new
phenomenon and are just ramping up. Few had substantial revenue in
2000. They accounted for only a small fraction of total Internet
commerce in 2000 and are not representative of all B2B internet
commerce, which grew substantially in 2000.
"We are seeing the emergence of private e-marketplace builders;
third-party intermediaries, which are building private
e-marketplaces and usually hosting them. Over the long run, these
market intermediaries will significantly increase marketplace
participation and drive greater supply chain integration
efficiencies," said Gale Daikoku, senior industry analyst for
Gartner's e-Business group. "However, in the short term, their
supply chain integration solutions take longer to build and thus
will be later to drive significant sales transactions than public
e-marketplaces. Thus, their impact on Internet commerce won't be
significant until 2003."
Gartner defines B2B internet commerce as the sales of goods and
services for which the order-taking process was completed via the
internet. This includes purchases via internet EDI, e-marketplaces,
extranets and other sell-side initiatives, but excludes activity
over proprietary networks. Gartner's forecast is based on the value
of B2B non-financial goods and services sold, resold and brokered
over the Internet through establishments every time they are turned
over. This is significantly higher than forecasts based on
worldwide GDP, which includes only the value-added that
establishments put into goods and services as they are sold and
resold through supply chains.
