Worldwide B2B commerce nudges half a trillion dollars

Despite the recent slowdown in the economy, the worldwide B2B Internet commerce market is on pace to total $US8500 trillion in 2005, according to Gartner Group. While B2B Internet commerce is poised for strong growth, the long-term forecast has been impacted by the economic downturn, especially in the United States, which is projected to be most heavily affected.

In 2000, the value of worldwide B2B Internet commerce sales transactions surpassed $US433 billion a 189 per cent increase over 1999 sales transactions. Worldwide B2B Internet commerce is projected to reach $US919 billion in 2001, followed by $US1.9 trillion in 2002. In 2003, the market will increase to $US3.6 trillion, and at the end of 2004, worldwide B2B Internet sales transactions are forecast to reach $US6 trillion.

A Gartner analyst noted that the economic downturn can be viewed as a reprieve for enterprises that weren't able to keep up with the e-business leaders. "This is not a time to retrench, but rather an opportunity to get your house in order, work on internal adoption of e-business and associated change management and prepare to take advantage of and profit from the massive changes that will play out by 2005," the analyst added.

The current economic downturn will result in a 16 per cent reduction in the nominal value of worldwide sales transactions by 2005, according to WEFA (formerly Wharton Econometric Forecasting Associates), whose sales transaction data Garter uses as the basis of its forecast. Gartner lowered its forecast accordingly, but not as aggressively as WEFA because in this tough economic climate, enterprises will turn to cost-saving measures, such as e-procurement, and hosted software solutions, such as e-marketplaces, rather than in-house solutions.

The economic situation will cause enterprises to be more deliberate and judicious about new IT investments, focusing on areas where they can derive the greatest impact for the lowest cost. Thus, Gartner anticipates that some enterprises will continue to rely on legacy EDI systems and delay replacing them.

B2B commerce over the Internet is in the very early adopter stage, but companies have been doing business electronically for years using proprietary EDI. These systems work today, have served companies well enough for years and are deeply embedded in the B2B processes of many industries, Gartner noted. With the downturn in the economy, the migration away from proprietary EDI to Internet technologies will be slower than earlier anticipated.

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