Intelligent Enterprise

The B2B Market 2 B

Research firms forecast trillion-dollar growth through 2004

The outlook for worldwide B2B e-commerce is A-OK.

Just ask any major research firm. Right now they're putting the global market in the trillions of dollars through 2004. Growth will come as businesses increasingly realize that e-commerce technologies offer enormous potential for streamlining purchasing, sales and other transactions.

A sampling of what their crystal balls show:

• IDC pegs B2B activity at $2.23 trillion worldwide.
• eMarketer is more optimistic at $2.7 trillion worldwide.
• Forrester, even more expansive, looks for $6.3 trillion worldwide.
• Gartner Group forges ahead to a whopping $7.9 trillion.

Two other firms only look at the U.S. market. Jupiter predicts B2B activity here at $6.3 trillion by 2005, and Giga Information Group puts the it at $5.2 trillion by 2004.

Why the differences?

eMarketer Senior Business Analyst Steve Butler explains that most research firms use an underlying economic model, usually based on U.S. economic census data from 1997, the most up-to-date statistics. Analysts forecast forward, using different assumptions about the growth rates in the overall economy.

"Most research firms look at aggregate spending within the economy, rather than GDP forecasts, as they build their e-commerce estimates," says Butler. "To arrive at final B2B numbers, Internet analysts consider survey data along with several other complex variables to estimate the proportion of e-commerce activity that will go online."

The deluge of e-commerce forecasts was begun began in earnest during 1999 when Forrester predicted that B2B activity would surpass worldwide B2C spending. Some firms have since revised their estimates upwards; none has lowered its numbers.

"We haven't been through a full economic cycle," Butler observes. But since economic conditions are major factors in all the underlying models, if the economy slows, then forecasts may decline. Similarly, if CEOs, initially enthusiastic about e-commerce, extend their timeframes for adopting online technology, the growth rate will slow. According to Merrill Lynch, only about 10 percent of Global 5000 companies had implemented procurement software by the end of 2000.

Still, these stratospheric B2B forecasts serve a purpose.

"These forecasts convey to the wider business community that significant opportunities exist with e-commerce technology," says Butler. "But I recommend that individual companies look at the proportion of online commercial activity within their industries or among their competitors, not the actual dollar figures."

-The Editors

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