Study: E-Business to Prosper, ASPs face trouble

End-user companies are fully committed to implementing comprehensive electronic business initiatives in 2001, in contrast to the fear and confusion that marked the e-business market in 2000, according to a study from Boston-based AMR Research Inc.

That promises to make 2001 a year of innovation and excitement in the e-business sector in the U.S., and will start a process that will see total spending on commerce platform software technologies and services, including operating systems, pervasive computing, and data communications, reach more than US$56 billion by 2005, AMR said in its 2001 Outlook study released Tuesday.

But AMR predicts that the ASP (application service provider) market, which has yet to fully take off, will see a wave of failures and consolidation. By 2002, 40 percent of enterprise ASPs and 60 percent of the broader ASP market will fail or be acquired, according to AMP.

Other predictions in the AMR study include the following:

-- one out of every three companies with annual revenue greater than $1 billion will implement a private trading exchange (PTX) by 2005, while consortia trading exchanges (CTXs) are on shaky ground this year. The key to their success lies in their ideal of providing services that individual companies would find prohibitively expensive to offer.

-- technology-infatuated wireless application vendors will end 2001 where they started -- searching for relevance. Nonetheless, wireless and mobile technology will gain modest footholds in niches involving interaction with customers and business associates.

-- integration will be one of the top priorities in 2001 -- making it easier for a company's customers to unify channels, process, and data. Business-to-business (B2B) services will see rapid growth involving market readiness, strategy, and solutions integration.

-- the marketing applications industry will grow 63 percent to $1.6 billion in 2001 from $995 million in 2000.

-- The supply chain management (SCM) market is expected to reach $7.8 billion in 2001 with inventory management, order fulfillment, and supply chain planning (SCP) rounding out the top three applications users will look to implement this year.

-- the retailing applications market will reach $4.4 billion in 2001, a 40 percent rise from last year, as more retailers begin to focus on B2B synchronization, B2B collaboration, and enterprise integration and optimization, which will drive retailers' business priorities. Knowledge management will be increasingly used as a lever to gain retail advantage.

-- enterprise commerce management (ECM) will use vertical-specific business process suites that deliver B2B collaborative processes and external content back to the roles and business processes inside the corporation. Examples include using the Internet to outsource, or make efficient, critical internal business processes.

-- product lifecycle management (PLM) will be one of the hottest areas for application license revenue growth, with growth greater than 50 percent, as manufacturers aggressively seek to reduce time to market for new products.

AMR Research, in Boston, can be contacted at +1-617-574-5217 or at

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