RealTime IT News

Survey: B-to-B E-Commerce Set for Rapid Growth

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.

Other survey findings include:

  • 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.

Users can access more detailed analysis of the survey results online, in addition to the complete survey text.