Survey: B-to-B E-Commerce Set for Rapid Growth
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The business-to-business electronic commerce marketplace could double in six months according to a snapshot survey conducted by the Information Technology Association of America (ITAA) in conjunction with Ernst & Young.
"This survey suggests a robust growth rate for the business-to-business e- commerce market for products and services," said Jon Englund, vice president of the Arlington, VA-based ITAA.
The ITAA IndustryPulse survey indicated that close to 70% of the vendors of electronic commerce products and services responding to the survey see a possible doubling of the marketplace in the next six months.
"While it is difficult to predict precise growth rates for such a rapidly emerging market, this survey reflects a growing recognition among companies that electronic commerce can help them gain a strategic advantage," Englund said.
- The financial industry, wholesale/retail trade, information technology and manufacturing industries lead the way in adopting electronic commerce solutions, while the health/medical, insurance, and transportation/utilities industries are lagging.
- The revenues of e-commerce vendors are split evenly between software and services.
- The primary channel for selling e-commerce products was through direct sales, cited by 74% of respondents.
Based on the survey results and other research, ITAA believes it is the business-to-business electronic commerce marketplace that is poised for the most significant growth. It will also be the most lucrative market for vendors of e-commerce products and services in coming years.
While there is a wide range of projections on the size of the current marketplace, some analysts predict that the current business-to-business e- commerce market for products and services totals between $2 billion and $3 billion. And according to Piper Jaffray, 90% of electronic commerce transactions are expected to be business-to-business by the year 2001.
Some of the characteristics of the business-to-business e-commerce marketplace include a high services component, reflected in the survey's finding that half of all revenues are derived from services. In addition, to fully leverage e-commerce, companies are integrating e-commerce applications with existing enterprise-wide systems.
Among the top benefits that the survey respondents' customers cite for moving to electronic commerce are decreased overhead costs from interfacing to back- end functions (61%). This response indicates that businesses expect to gain the most advantage by streamlining their processes rather than by simply increasing sales by adding the Internet as a new channel.
The IndustryPulse market snapshot survey was sent to 57 of the leading electronic commerce software and services companies. Of these, 40% responded, representing a majority of the current market for e-commerce products and services.
"We at E&Y are very pleased to partner with ITAA on the sponsorship of this important family of surveys," said Rand Hammond, a partner at Ernst & Young. "Many companies now find themselves challenged with new and unfamiliar competition where speed becomes more and more important. Shortened decision and product development cycles coupled with 24-hour business across interconnected world markets can lead to uncertainty and the need for a new and enhanced level of business trust."
ITAA is an industry group representing the electronic commerce software and services segments of the high-tech industry. It consists of 11,000 direct and affiliate members throughout the U.S. from the software, services, Internet, telecommunications and systems integration segments of the IT industry.