E-Commerce Software Market Blossoms

By the end of 2002, $2.8 billion will have been spent worldwide on e-commerce software, according to the report “Global E-Commerce Software Markets” by Datamonitor.

The report also found that 78 percent of this total will derive from from investment in distribution channel management, online procurement, and supply chain management (business-to-business e-commerce solutions). Business-to-consumer e-commerce, which in 1997 made up 41 percent of e-commerce software revenues, will in 2002 account for just 22 percent.

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According to Datamonitor, the Internet has introduced new ways of dealing with traditional business processes such as procurement and distribution channel management, that did not exist with electronic data interchange, the predecessor to e-commerce. Despite the general disappointment with the use of the Web for revenue generation, companies will continue to invest in the business-to-consumer area, Datamonitor found.

Business-to-business e-commerce focuses not so much on revenue generating as increasing efficiency of business processes, and now smaller and medium-sized enterprises can benefit through increased efficiency and disintermediation of the supply chain. The savings are then realized at an internal level.

According to Datamonitor, the true value of business-to-business e-commerce comes when other businesses adopt such solutions. When suppliers and buyers using e-commerce form relationships, both can reduce their costs.

“If external business processes are to be automated, relationships with business partners will be vital,” said Datamonitor analyst Jonathan Tikochinsky. “Companies will only invest if there are enough other enterprises investing, otherwise the technology will be of no use. This brings a need for ‘trading communities.’ These trading communities link businesses together so they can inter-operate and make e-commerce a reality.”

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