The current gap between levels of electronic business-to-business (B2B) trading activity in the US and Europe will close rapidly between now and 2004, according to AMR Research.
The analyst company predicts that the percentage of European commerce conducted online will grow from 0.2 per cent last year to 21.5 per cent by 2004, amounting to $4.3tn in revenues. This compares with 1.4 per cent and 29.5 per cent respectively in the US.
But different industry sectors will adopt ecommerce at different rates, with the European manufacturing sector generating 18.4 per cent of its sales over the internet by 2004 compared with 35.5 per cent in the US. In Europe, mining and construction companies are expected to make 12.7 per cent of their total sales online within four years, however, compared to 14.6 per cent on the other side of the pond.
Currently, one of the most frequently cited barriers to the adoption of new technology in Europe, particularly collaborative-based systems, is the cultural differences between nations.
But Nigel Montgomery, AMR's European research director, believes that the trust developed by organisations as a result of long-term business relationships should help to ease fears about developing initiatives based on such collaborative work models.
"The very tight nature of business relationships plays well for those building collaborative exchange capabilities," he claimed. But he admitted that the exchange market was still in its early stages, and that it was difficult to obtain reliable information about what was really happening. "We called 40 European exchanges to get some idea of volume throughput. We received four replies," he said.
But European enterprises such as Nestle and Eli Lilly, for example, acknowledge that their ecommerce projects are still in the early development stages, although they both expect such activities to expand rapidly.
Caroline Serfass, supply chain director at Eli Lilly in France, said that the firm's e-procurement systems initially enabled users to buy low risk stationery items, but have now been extended to include inventory. "We had tremendous efficiency gains in logistics, where lead times were reduced from weeks to days," she said.
Nestle, on the other hand, is a member of CPGMarkets.com, a partnership between itself, SAP, Danone and Henkel. Joanne Levien, Nestle's manager of group purchasing development, said the supplier had adopted a 'do-learn-do' approach. "We are working very much in small steps. CPGMarkets has planned 12 events before the end of this year, mostly auctions. At the moment, these are simple transactions," she explained.
But AMR has identified a number of non-cultural issues that have adversely affected the take up of exchanges in Europe. These include the high level of investment required to get the show on the road, the need for an organisation to implement a solid infrastructure, functional product weaknesses and a lack of real standards to enable different systems to work together.
European enterprises, in particular, appear to want more than simple auction sites and demand high levels of functionality from such offerings before they get involved. "Europeans are much more critical when assessing new ventures," said John Fontanella, AMR's service director of B2B ecommerce.
But Tony Friscia, AMR's chief executive, acknowledged that users should view such ventures critically because they do not necessarily provide any real value. "Very often, these are little more than switching channels in things that would have been done anyway," he said.
Other big hurdles to adoption are cost and a confusion over standards. AMR believes that enterprises entering the B2B ecommerce space should expect to spend four times as much on software as they currently do to support and maintain private or consortia exchanges.
Bruce Richardson, AMR's senior vice president, said: "Many operators fail to work out how much they need to stay in the game," adding that necessary investment levels could be anything between $100m and $500m.
And as if all this were not enough to make decision makers blanch, Richardson warned that technology standards such as XML, RosettaNet and UDDI are still in the very early stages of development and should not be seen as a solution for integrating each and every business application. "Don't be fooled - XML is really duck tape. There is no way to simplify integration so it's a godsend to the big five consulting groups," he said.
Bernard Teiling, assistant vice president of business process integration at Nestle, confirmed that integrating back-office systems remains a key requirement for success. "There has to be an infrastructure that supports a process view of the enterprise. It is complex and needs to operate at many levels," he explained.
Passing the buck
But while it may prove impossible for enterprises to solve their integration problems by simply applying the equivalent of a technology sticking plaster, many balk at the costs involved to do a proper job.
And to make matters worse, no-one is willing to take on this financial responsibility because it is often unclear which department within an organisation will see any direct benefits from such work.
Mark Lane, European vice president of marketing at Ventro, an independent exchange builder, said: "The reality is that no-one wants to pay for it, especially if they think it might be something that would diminish a perceived competitive position."
But while integrating new and existing systems remains a significant issue, nothing can be achieved if a solid transaction-based infrastructure is not in place. This is something that B2B technology vendors generally fail to emphasise, concentrating instead on the business benefits that customers can derive from implementing systems such as e-procurement.
Roddy Martin, AMR's service director for the food and consumer packaged goods sector, noted, for example, that handling inventory issues using B2B technology was not always the right thing to do. "If you're going to do B2B, then you'd better make sure there is operational excellence in manufacturing," he warned.
He believes that traditional manufacturing systems still have an important role to play because research shows that costs can fluctuate by between 35 and 45 per cent as a result of inconsistencies in the manufacturing process.
But despite these issues, AMR is adamant that much can be achieved when technology choices are made with care. GE, for example, has set up GE Exchange Services, a collaborative exchange that, at the lowest level, enables companies with a small IT budget to sign up for as little as $300 a year.
As a result, Friscia concludes: "It has shown that you don't have to spend a lot of money to succeed."
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago