E-marketplaces fizzle: IDC

The current status of e-marketplace and e-procurement use among medium- and large-sized Canadian companies is not very encouraging, according to a recent study by Toronto-based IT research firm IDC Canada Ltd.

IDC Canada’s quarterly ePanel and iPanel reports highlight the results of polls of

senior IT execs in 100 medium and 100 large organizations.

The latest findings show that only eight per cent of medium-sized and 18 per cent of large organizations are currently using an e-procurement solution. On the e-marketplace front, the findings are similar – only 12 per cent of medium-sized companies and 15 per cent of larger companies reported using an e-marketplace.

Once touted as the shining path to e-commerce, Joe Greene, study author and analyst for Toronto-based IDC Canada, said e-marketplaces are floundering in Canada. It’s not that companies don’t understand the potential benefits of e-procurement/e-marketplaces – cost-savings, process efficiencies, employee productivity and lower operating costs – rather, end-users simply have different priorities.

Specifically, Canadian companies are more interested in improving customer relations and IT infrastructure. The Q1 2002 iPanel found that 40 per cent large and half of medium companies said over the next three months the biggest priority would be boosting productivity by improving their IT infrastructure. Only three per cent of medium and three per cent of large organizations reported that e-procurement/e-supply chain investment was a priority. IT investment dollars are tight and end-users are ensuring their infrastructures are up to speed, Greene said, adding that this usually means LAN and WAN improvements.

Business problems and IT investment priorities, Greene explained, are much broader issues than e-business goals. Currently, nearly one quarter of large organizations and 15 per cent of medium sized firms indicated e-procurement was a central application to an e-business strategy.

Ultimately, Greene noted that over the next several years, as companies align current priorities with implemented solutions, e-procurement and e-marketplaces will take on more significance. E-procurement vendors and e-marketplace suppliers that continue to extol the benefits of the offering will and positioned to take advantage, Greene said.

E-marketplace adoption and utilization has been “vastly disappointing,” agreed Michel Lozeau, senior vice-president of e-commerce at Montreal-based National Bank. “It’s not the Klondike that people thought it would be.”

National Bank recently tweaked its e-commerce strategy, which included a name change – from ClicCommerce to National Bank eCommerce – and enhanced the offering to include: Private B2B Marketplaces (which caters to medium-sized to large companies by integrating purchasing, billing and payment operations), Public B2B Marketplace (offering SMEs the ability to buy office supplies, computer hardware and software online), and Web Solutions (Web exposure for SMEs selling goods and services directly to customers).

The new changes reinforce the National Bank’s commitment to this “promising sector,” Lozeau said. “Clients will be hooked after a few purchases… to make people adopt it you have to lead them to it. If you don’t proactively help companies make that change, they won’t bother.”

Lozeau noted customers that have registered to date have not materialized with any volume or procurement on the platform.