Global Companies Lead B2B Charge

Despite anecdotal evidence of increased involvement in e-commerce, nearly half of all businesses use “traditional” methods, including hard copies, floppy disks and faxes, to communicate with customers and suppliers, according to research findings from the Computing Technology Industry Association (CompTIA) E-Commerce Standards Board (ECSB).

The study was conducted among more than 185 information services managers, directors and executives from both U.S. and European companies to survey usage of business-to-business transaction methodologies within the computing and electronic components industry. While the findings may be construed as evidence that B2B Internet adoption isn’t all it’s been cracked up to be, CompTIA found some silver lining.

“The continuing extensive use of traditional methods for B2B transaction exchange, even in large companies, means that the industry has even more opportunities for cost savings through e-commerce than commonly thought,” said David Sommer, CompTIA’s director of e-commerce.

The security and reliability of data transmissions are closely tied to the adoption and success of B2B e-commerce, and technologies such as XML [definition] and electronic data interchanges (EDI) [definition] are expected to play a big role in helping keep transactions secure.

According to the survey, less than half of all companies surveyed are using XML at this time and less than 12 percent of all transactions are being transported using XML. In addition, 65 percent of EDI volume in the United States and Europe is not transferred on value added networks (VANs), which can protect companies from errors in data transmission. U.S. companies are significantly more likely than European companies to use EDI and XML technologies for electronic transactions; European companies are more likely to use non-EDI/XML systems and email.

Only 20 percent of companies currently participate in trading communities, such as CommerceOne, Ariba and mySAP, the survey found. An additional 23 percent of companies surveyed expect to participate in these trading communities within the next year, dramatically increasing the number of companies involved in online trading communities.

“These results show that reliable technologies and transport protocols, like ebXML messaging, transport and routing, need to be applied to ensure reliable data transmissions,” Sommer said. “Failure to adopt more modern transport mechanisms could make companies more susceptible to data errors and mistakes in invoices and purchasing transactions, possibly affecting the bottom line.”

According to the eCommerce: B2B Report from eMarketer, the economic slowdown in the United States has slowed technology spending, but many businesses have begun to substantially increase their online trading activity. Direct purchasing via supplier Web sites is leading the way, while consortia-led exchanges and private marketplaces are still under development.

North America presently accounts for 71 percent of online trade, and eMarketer estimates that worldwide B2B e-commerce will reach $2.7 trillion by 2004. Other regions of the world are expected to rapidly catch up to North America, with online B2B e-commerce expected to surpass $797 billion in Europe and $300 billion in Asia within the next three years.

“Several companies are now announcing the results of their early e-business efforts,” said Steve Butler, senior analyst at eMarketer. “For example, IBM has done more than $43 billion in electronic procurement during 2000, while Boeing is now processing more than 20,000 daily transactions via its Web site.”

According to eMarketer, global companies such as Ford, General Electric and Eastman Chemical have begun to drive e-commerce adoption in several countries in which they do business. Private and public exchange initiatives such as GE’s SupplyNet or the auto industry’s Covisint will see increased activity in the coming months, as companies build upon their e-business foundations.

“Although the bubble has burst for many independent B2B exchanges,” Butler said, “the majority of large enterprises continue to see e-business as a long-term strategy, and they are already moving into the next-generation of their e-business implementations.”

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