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Breakthrough Analysis

Business-To-Business (B2B)

by William E. Halal
Monday, October 15, 2007


Event | Data Points | Forecast Data Analysis | Trend Analysis | Articles  

Competition to reduce costs and speed operations continues to spur the use of electronic relations between suppliers, host companies, distributors, and other business alliances. Incompatible systems and the difficulty of changing working relationships are hindering wide adoption, but the powerful advantages should drive further growth over the next few years. “There is strong demand to connect the world into a single global market,” said an official in Singapore (BusinessWeek, 5/13/02)TechCast estimates B2B to reach mainstream soon, with online commercial transactions of $ 1 trillion or so.

Event Being Forecast

30% of business-to-business transactions by value is conducted online.


Selected Data Points to Consider

• IDC reported B2B made up roughly 12% of commercial transactions in 2003.

In 2004 Forrester thought B2B sales would reach $2.7 trillion in a few years.

• One forecast put B2B at 25% of commercial transactions in '05 and another said 20% by '06.

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Forecast Data Analysis

    Mean Std Dev N (# Experts)
Most Likely Year 2010 3 67
Market Size ($B) 550 332
Confidence (%) 63 16

In addition, 5 experts predicted that this event would never occur; mean confidence: 55%; std. dev.: 22.9.

Note: "Most Likely Year" is the year when this technology is expected to reach the adoption level stated under "Event Being Forecast" in industrial nations like the US, EU, and Japan. "Confidence" is the confidence our experts place in this forecst. "Market Size" estimates the potential market demand when this rechnology matures; global figures are not available, so this estimate is for the U.S. economy.

Forecast Chart

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Trend Analysis

PROS: Trends Driving this Event

  1. B2B IS EFFICIENT Online transactions save 10-30% of costs by eliminating labor and inventory and the potential savings are estimated at $2 trillion/year. "It’s not practical to do it any other way,” said a VP at Emerson Electric. Forrester Research says 90% of companies are doing B2B of some type and interest spans the globe. (BusinessWeek, 5/13/02)

  2. TECHNOLOGY IS IMPROVING Web-based technologies are being adopted that are far more cost-effective and convenient, conecting firms with different software and hardware. Gartner estimates between 50-85% of large firms used web services in '05. (TechnologyReview, 4/05; Harvard Business Review, Nov-Dec/00). (Also see Wireless and Intelligent Interface)

CONS: Obstacles Opposing this Event

  1. PRESENT LIMITATIONS The National Ass’n of Manufacturers reports 90% of its members can’t process the bulk of their orders online. Half of companies say B2B is not yet workable due to process rigidity, poor acceptance, and a lack of universal standards. (Forrester, 3Q 2003)

  2. COMPANIES SEARCH ONLINE BUT BUY OFFLINE Jupiter Research says 80% of companies search online but most actually buy offline. For instance, 9 out of 10 steel companies use the Internet to search but only half buy online.

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