B2B Gets Better and Better

Business-to-business (B2B) opportunities are red hot and growing hotter. Recent studies by leading analyst houses confirm that B2B implementations are occurring at a rate faster than predicted. One firm is even issuing a stark warning to technology laggards: Companies that do not take an aggressive approach to business-to-business e-commerce and e-marketplaces will lose customers and fail.

In a recent survey of more than 500 corporate leaders, Forrester Research Inc. (www.forrester.com) found that the typical large company hopes sell up to $10 million in goods and services online by the end of 2000. A quarter of respondents indicate that their companies will purchase more than $1 million in goods and services over the Internet in 2000. In addition, B2B exchanges show great potential. A large majority of companies, 71 percent, plan to extend their business processes to e-marketplaces by 2001.

Currently, B2B functions going online include relatively basic functions such as order-taking capabilities and account inquiries, Forrester finds.

Business-to-business e-commerce will be adopted at a more accelerated rate than many companies realize, agrees a recent report from AMR Research Inc. (www.amrresearch.com), which puts the total market at $5.7 trillion by 2004. The firm estimates that industry leaders will move 60 to 100 percent of their transactions to the Internet over the next two years.

AMR Research's projection is based on the US Department of Commerce's measurements, capturing the value of all shipments of companies doing business in the United States.

The firm concludes the B2B e-commerce momentum is being led by online trading exchanges, which expedite B2B commerce adoption, allowing smaller companies to solicit customers, respond to bids, and take orders via the Internet with minimal investment in technology investments.

In addition, cost savings is driving business-to-business. Effective Internet commerce business practices offer tremendous cost savings. AMR Research estimates that cost reductions in goods and services expenses could exceed $50 billion in 2004.

AMR Research expects much of the current electronic data interchange (EDI) volume will gradually move to the Internet as advanced supply chain services and collaborative capabilities become a necessity. EDI standards represent a valuable semantic starting point for exchanging documents within the business community.

AMR Research cautions that beyond mere participation in digital marketplaces, companies must also implement technology and processes to benefit from B2B commerce.

Some analysts do not foresee business-to-business exchanges subsuming all commerce, but rather a new form of hybrid service emerging.

It's likely each industry will have one type of service that combines the elements of an ASP, outsourcer, and e-marketplace, predicts Julie Meringer, research director with Forrester Research. Such service providers "have to understand process integration into back-end systems and cross-company processes," she notes. "This new breed of service provider offers three benefits -- they marry processes and technologies; they bundle connections, content, and constituents; and they offload clients' long-term and transitory relationships."