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B-to-B-ing optimistic

B-to-B-ing optimistic

"We've already factored in the slowing momentum out there," says Albert Pang, research manager at International Data Corp. "I'm not saying that growth will be as rosy as we thought last year, but we're not hitting the brick wall yet."

IDC predicts that sales of e-procurement software - applications that power b-to-b online buying - will hit $US9.7 billion in 2004, up from $US2.1 billion in 2000. According to Pang, sales at major vendors will continue to grow, but not as fast as they did in 2000. And lots of new software vendors are emerging, which will add to the market's growth.

Once a corporation installs an e-procurement system and begins buying online, it's easy for it to automate more and more of its purchasing. Gartner says this will ratchet up the Net's b-to-b sales total, which will double this year to $919 billion. (Gartner defines b-to-b e-commerce as the value of all goods and services exchanged between businesses as a result of orders made via the Internet.) Despite its bullishness, Gartner's new long-term forecast is a retreat in dollar value from last year's. In 2000, Gartner predicted 2004 b-to-b Net sales would account for 7 per cent of global trade, or $US7.3 trillion. Now Gartner says 2004 b-to-b e-commerce trade will reach only $US5.9 trillion.

But that's a function of an overall slowdown in the economy. Gartner's forecast relies on macroeconomic data from respected think tank Wharton Econometric Forecasting Associates, which estimates the current downturn will result in a 16 percent drop in 2005 sales.

"The whole pool of b-to-b transactions shrunk," says Lauren Shu, Gartner's research director. But since companies will increasingly automate their purchasing, e-commerce will account for a healthy 6.7 per cent of global sales.

Gartner says it spent more than 1,000 hours on its new forecast, incorporating surveys of corporate buyers and vendors, as well as analysing technology adoption in 22 industries. But Gartner's research was finished way back in February - and the economy looks worse with each passing week. "If the economic downturn is deeper or lasts longer than WEFA had forecasted, it would definitely affect our forecasts," says Shu.


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