It's a question that every e-commerce wannabe faces: how much can I trust the deluge of predictions on how fast Internet commerce will grow? Shred all the electronic commerce forecasts made so far. Now sprinkle them over the planet and watch them cover it to a depth of one meter. Among the visionary-for-hire brigade producing these forecasts, that figure will be attacked as a vicious exaggeration.
Okay, make it half a meter .
The precise depth is irrelevant. What's important is that e-commerce predictions actually may be more useful as global mulch than as guides to corporate action.
"Meaningless" is the word most heard these days about the prognostications pumped out several years ago as the curtain was rising on e-business mania. There's evidence to suggest such an assessment is as valid for 2001 as it was for 1995. Forecasts by different market research groups over the same time frame have varied by half a trillion dollars. For example, a Gartner forecast issued last year predicted Asia Pacific e-business transactions in 2004 will reach US$1 trillion. By Forrester Research calculations, the value of the same transactions zooms to $1.6 trillion.
Nor do you have to journey four years into the future to strike serious contradictions. A recent Cisco-commissioned study by The Allen Consulting Group cited "Internet economy revenues" of A$28 billion (US$14 billion) in Australia for 2000-01, International Data Corp. (IDC) estimates Australian "e-commerce transactions" of A$4.6 billion in the same period, while the National Office for the Information Economy (NOIE) prefers the figure of A$1.3 billion for "Internet-based commerce" in 2001. To add a little variety, the Australian Bureau of Statistics put "Internet e-commerce sales" at A$5.1 billion in Australia as of June last year.
With that kind of spread, it looks like you pays your money and you takes your pick. So why can't the prophecy-meisters get their crystal balls vibrating on the same wavelengths? Partly it is due to the greenfield effect. Infotech forecasters IDC and Gartner do superb work predicting hardware and operating system futures where they can lean on 30 years of experience and past trends. When Internet commerce burst on the scene in the early 1990s, however, the pundits lacked any historical reference points to extrapolate from.
Facing data deprivation, our brains have a tricky little habit. They prefer to invent phantoms rather than accept blank space. Sit in a dark room with your eyes open and your brain will try to convince you there are shapes and patterns swimming in the blackness. Something identical happened in the mid-1990s when market researchers were pressed for numeric predictions on how the Internet business frenzy would play out. Staring into the techno-equivalent of a dark room, they produced a set of phantoms called e-commerce forecasts.
In the wake of the dotcom fiasco, any link between these forecasts and reality proved entirely coincidental and did considerable damage to reputations. "I think every one of them (the forecasting specialists) got caught," says Accenture Asia-Pacific managing partner, supply chain practice, John Gattorna. "Just about everyone who tried to forecast numbers must look back and say: 'We got it wrong'."
Marc Phillips, CEO of online research company APT Strategies, has two words of advice for consumers of predictive reports about e-commerce: caveat emptor. APT Strategies conducts e-commerce surveys to produce real-time snapshots of the state of the play and Phillips knows the numbers game inside out. In the late 1990s, he was in a short-lived joint venture with U.S. firm research firm Jupiter Communications (now Jupiter Media Metrix). The experience gave him a ringside view of the process of "religiously spitting out vertical sector forecasts for three to five years out."
Phillips says a lot of statistics are crunched in accordance with established methodologies to produce forecasts. The technique takes many factors into account and generates figures, which have their place. However, their apparent solidity is an illusion, he says, because they are often based on assumptions that flow from the thought processes of "one or two people" in any research firm.
Phillips suggests that forecasting technology business futures is a farce in which the apparent victims are willing accomplices. Companies looking for material to support a business case put pressure on the research companies to supply future outlooks. "First people scream at you to produce forecasts, then they scream at you if the forecasts are wrong." When the figures fail to come true, "it is hard to know who is more guilty", says Phillips, the forecasters for pretensions of infallibility or their customers for being too credulous.