Study: B2B to reach US$6 trillion by 2004

AMR Research Inc. in Boston earlier this month released a bold forecast setting on-line business-to-business sales at US$5.7 trillion by 2004, up from an estimated US$215 billion in 1999.

The firm believes that Fortune 2,000 companies have the proper information technology infrastructure in place and are ready to cause an explosion in the on-line B-to-B market. AMR believes that B-to-B e-commerce will top US$1 trillion in 2002 and continue to grow exponentially from there.

The report runs counter to other published reports, which suggest that the B-to-B e-commerce explosion has been less robust than many had hoped and that electronic date interchange (EDI) transactions continue to dominate the B-to-B world despite the looming threat of XML-based Web interchanges.

John Bermudez, AMR’s vice-president of research operations, said his company set its US$5.7 trillion figure assuming only a 29 per cent market penetration for e-commerce, which he characterized as conservative.

“We agree people should rub their eyes at these figures if they don’t believe this is coming, but I think a lot of those people are in denial,” he said. “If they can get industry leaders to own up to how aggressive they’re being, see if (those leaders) think a 29 per cent adoption rate is too much.”

Bermudez said corporate giants such as General Electric have seen the success of Dell Computers Corp. and Cisco Systems Inc. in the on-line sphere and they will look to follow that model.

“If these big guys go, the others will have little choice,” Bermudez said. “If they want to do business, they have to follow that lead.”

Bermudez said he believes that EDI operations will be converted to Web operations over time and that electronics, service and manufacturing companies will all plug into an Internet B-to-B platform. Some 80 per cent of the dollar value of all electronic transactions among the Fortune 500 companies is currently conducted via EDI, the report estimated.

“We could see a wealth redistribution,” he said. “A lot of companies won’t take this seriously until it’s way too late, and they’ll be left behind.”