The E-Commerce Trade and B2B Exchanges Report, March 2002 · 2003-10-22 · March 2002 Welcome to eMarketer Dear Reader: Welcome to the Online Trading and B2B Exchanges ReportTM,

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March 2002

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The E-Commerce Trade and B2B Exchanges Report

Table of Contents 3

Methodology 5

The eMarketer Difference 6

The Benefits of eMarketer’s Aggregation Approach 7

“Benchmarking” and Future-Based Projections 7

I Worldwide and Regional Forecasts 9

A. Introduction 10

B. Worldwide E-Business 12

Global B2B E-Commerce Trade 12

Stage of E-Business Development 16

C. E-Business in North America 20

North American B2B E-Commerce Trade 20


D. E-Business in Europe 31

European B2B E-Commerce Trade 31


E. E-Business in the Asia-Pacific Region 37

Asia-Pacific Region B2B E-Commerce Trade 37


F. E-Business in Latin America 43

Latin American B2B E-Commerce Trade 43

Stage of E-business Development 46

II E-Business Budgeting & Trends 49

A. E-Business Budgeting 50

B. E-Business Trends 55

III Private Exchanges and E-Commerce Initiatives 71

IV Public B2B Exchanges 91

A. EDI Service Providers and Value Added Networks 93

B. Independent and Consortia-Led Exchanges 98

C. E-Commerce Trade and The Development of Exchanges 109

Index of Charts 119

March 2002

Welcome to eMarketer

Dear Reader:

Welcome to the Online Trading and B2B Exchanges ReportTM, the sixth edition of eMarketer’s continuingcoverage of business-to-business e-commerce. This report builds upon past survey data and trends that wereexamined in the July 2001 eCommerce: B2B ReportTM – a report that may serve as a complementaryreference tool for readers of this latest research.

Readers should also note that eMarketer will be expanding its coverage of some sections of this report inour upcoming research. This will include regional e-commerce reports for North America, Europe, Asia andLatin America, as well as the April 2002 E-Business by Industry ReportTM and the July 2002 Online Sellingand CRM ReportTM.

This edition of the Online Trading and B2B Exchanges ReportTM provides readers with a thorough update ofthe major trends that e-business decision makers need to be aware of in 2002, with a focus on how businessesare migrating their business-to-business trade onto internet-based networks. As always, we continue to keepour readers abreast of the latest developments among leading private and public exchanges.

If you have any questions or comments concerning eMarketer or any of the material in this report, pleasecall, fax or e-mail us.

Steve ButlerSenior Analyst

Reuse of information in this document, without prior authorization,is prohibited. If you would like to license this report for yourorganization, please contact David Iankelevich [email protected], or 212.763.6037.

Written by Steve Butler

Also contributing to this report:Yael Marmon, researcherAndrew Raff, researcherTracy Tang, researcherAllison Smith, senior editorDana Hill, production artistJames Ku, data entry


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Steve ButlerSenior Analyst, [email protected]

eMarketer, inc.821 BroadwayNew York, NY 10003T: 212.677.6300F: 212.777.1172

Methodology 5

The eMarketer Difference 6

The Benefits of eMarketer’s Aggregation Approach 7

“Benchmarking” and Future-Based Projections 7

I Worldwide and Regional Forecasts

II E-Business Budgeting & Trends

III Private Exchanges and E-Commerce Initiatives

IV Public B2B Exchanges

Index of Charts


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eMarketer’s approach to market research is founded on a philosophy ofaggregating data from as many different sources as possible. Why? Becausethere is no such thing as a perfect research study and no single researchsource can have all the answers. Moreover, a careful evaluation andweighting of multiple sources will inevitably yield a more accurate picturethan any single source could possibly provide.

The eMarketer DifferenceeMarketer does not conduct primary research. Neither a research firm nor aconsultancy, eMarketer has no testing technique to defend, no research biasand no client contracts to protect.

eMarketer prepares each market report using a four-step process ofaggregating, filtering, organizing and analyzing data from leading researchsources worldwide.

Using the internet and accessing a library of electronically-filed researchreports and studies, the eMarketer research team first aggregates publiclyavailable e-business data from hundreds of global research and consultancyfirms. This comparative source information is then filtered and organizedinto tables, charts and graphs. Finally, eMarketer analysts provide conciseand insightful analysis of the facts and figures along with their ownestimates and projections. As a result, each set of findings reflects thecollected wisdom of numerous research firms and industry analysts.

“I think eMarketer reports are extremely useful andset the highest standards for high quality,objective compilation of often wildly disparatesources of data. I rely on eMarketer’s researchreports as a solid and trusted source.”— Professor Donna L. Hoffman, Co-Director, eLab, Vanderbilt University

www.eMarketer.com©2001 eMarketer, Inc.

Analyze

Aggregate

Filter

Organize


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Methodology

Worldwide and Regional Forecasts

E-Business Budgeting & Trends

Private Exchanges and E-Commerce Initiatives

Public B2B Exchanges

Index of Charts

The Benefits of eMarketer’s AggregationApproachObjective: information is more objective than that provided by any singleresearch sourceComprehensive: gathered from the world’s leading research firms,consultancies and news organizationsAuthoritative: quoted in leading news publications, academic studies andgovernment reportsAll in one place: easy to locate, evaluate and compareReadily accessible: so you can make quick, better-informed businessdecisionsAbove the hype: accurate projections that business people can use withconfidenceTime saving: there’s no faster way to find internet and e-business stats,online or offMoney saving: more information, for less, than any other source in theworld

“Benchmarking” and Future-BasedProjectionsUntil recently, anyone trying to determine which researcher was mostaccurate in predicting the future of any particular aspect of the internet didnot have a definitive source with which to do this. For instance, over 10firms predicted e-commerce revenues for the fourth quarter 1998 onlineholiday shopping season, and yet no single source could be identified afterthe fact as having the “correct” number. In the Spring of 1999, however, theUS Commerce Department finally began measuring e-commerce B2Cactivity so business people and others could have a benchmark with whichthey could compare and evaluate projections.

eMarketer has adapted its methodology to recognize that certaingovernment and other respected, impartial sources are beginning toprovide reliable numbers that can be consistently tracked over time. Mostof these established sources, however, only measure past results; typically,they do not make future-based predictions.


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Methodology





Index of Charts


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Methodology





Index of Charts

Today, eMarketer formulates its Essential E-Business Numbers by firstidentifying the most established, reputable source for a given sector beingmeasured and then adopting that organization’s figures as benchmarks forthe historical/current period. For instance, eMarketer’s US internet userfigures will be based on a combination of the most recent data from the USCensus Bureau (August, 2000 survey) and the InternationalTelecommunication Union (ITU). Using this data as the benchmark for2000, eMarketer will make projections for subsequent years based on thefollowing factors:

■ a comparative analysis of user growth rates compiled from otherresearch firms

■ additional benchmark data from internet rating firms, e.g.,Nielsen//NetRatings and Jupiter Media Metrix, which use panels tomeasure internet user activity on a weekly and monthly basis

■ an analysis of broader economic, cultural and technological trends inthe US

Similarly, US e-commerce revenues are being “benchmarked” usinghistorical data from the US Department of Commerce, and broadbandhousehold and penetration rate forecasts are being built off baseline datafrom the Organization for Economic Cooperation and Development (OECD).

Through this benchmarking process, eMarketer will be holding itself –and our projections – accountable.

“When I need the latest trends and stats on e-business, I turn to eMarketer. eMarketer cutsthrough the hype and turns an overabundance ofdata into concise information that is sound anddependable.”— Mark Selleck, Business Unit Executive, DISU e-business Solutions, IBM

IMethodology

I Worldwide and Regional Forecasts 9

A. Introduction 10

B. Worldwide E-Business 12

C. E-Business in North America 20

D. E-Business in Europe 31

E. E-Business in the Asia-Pacific Region 37

F. E-Business in Latin America 43




Index of Charts


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Index of Charts

A. IntroductionAs independent trading exchanges closed and former high-flying e-business software vendors announced substantial layoffs, severalobservers were tempted to proclaim that business-to-business e-commercehad died in 2001.

More accurately, the year 2001 should be known as the year whenbusiness-to-business e-commerce fell silent. However, it certainly did notgo away.

Throughout most of the year, leading industry-backed exchanges weretight-lipped about their operations, as many used the first part of 2001 toestablish themselves as independent businesses. By the middle of the year,several exchanges were preoccupied with the selection of technologypartners and the pilot phase of their technology offerings, while during theclosing months of 2001, a few leading exchanges began to see significantgrowth in their number of members.

As for other, independent e-business initiatives, the US economicslowdown forced several companies to cut back on their technologybudgets, although e-business projects at many firms have continued tomove forward. But here, too, much of the activity remained behind thescenes, as internal integration work has been a necessary first step forcompanies that want to prepare themselves for external business-to-business integration.

As the majority of enterprises were still readying themselves for e-business, technology leaders were moving forward with theimplementation of customer relationship management (CRM) and supplychain management (SCM) systems, while at the same time makingenhancements to their websites and deploying analytical softwaresolutions.

Even independent exchanges were busy during 2001, as those that hadmanaged to survive were focused upon changing their business models,from relying upon transaction-based revenues to becoming vendors ofindustry-specific technology solutions.

Rather than witnessing the premature death of business-to-business e-commerce, 2001 saw the foundations of e-business being laid. A surveythat was conducted by the Association of Financial Professionals in Fall2001 found that of 1000 corporate CFOs, more than 70% of respondentsbelieved that e-commerce was just as significant, or even more importantto their organization, than it had been one year before.

“It may come as a surprise to many observers that e-commerce is alive and well – and thriving – aroundthe world.” –Tom Pike, Accenture


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During the early weeks of 2002, several online exchanges are makingannouncements that significant volumes of internet-based trade have beenrunning through their networks for quite some time. Others are showingsubstantial growth in the number of suppliers that they are signing up ontheir trading networks. And even B2B stalwart Freemarkets has announcedits first profitable quarter, during the closing months of 2001.

Indeed, many business-to-business exchange operators have set theirsights on 2002 as the year during which they will ramp up their operations.Several have stated that they expect to be profitable by the fourth quarterof this year.

Armed with case studies and successful pilot projects, the leaders amongindustry-backed exchanges have refined their business models andstreamlined the process through which they plan to bring suppliers ontotheir trading networks. At the same time, incumbent electronic datainterchange (EDI) vendors are also helping large businesses connect to theirsmall and mid-size trading partners through their value added networks(VANs). Hosted EDI integration vendors are making a similar pitch as well.

As a result of this focus upon the supplier, by the end of this year we canexpect to see a substantial increase in the number of businesses activelytrading with one another via the internet. There will be a great deal ofpraise for the efficiency gains and supply chain visibility that largeenterprises will likely achieve. On the other hand, as suppliers come onlinein greater numbers, we will also hear more about the need for networkinteroperability.


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B.Worldwide E-Business

Global B2B E-Commerce TradeIn this latest review of eMarketer’s worldwide business-to-business e-commerce forecast, we have made a slight revision to the US portion ofour worldwide B2B e-commerce model.

This revision of our US forecast has been undertaken as a result of theJuly 2001 release of the US Census Bureau’s first-ever survey of e-commerce activity for the manufacturing and wholesale sectors of the USeconomy. Because North American B2B e-commerce accounts for 58.5% ofglobal e-commerce in 2002, this revision has naturally changedeMarketer’s global B2B e-commerce forecast as well.

While the changes to the US B2B e-commerce forecast are explained inthe North America section of this report, it should be noted that thisrevision is primarily attributable to the release of e-commerce data by theUS government, rather than the economic slowdown in the United States.With this, the most comprehensive survey of e-commerce activity to date,eMarketer has been able to form a more accurate benchmark upon which tobuild our business-to-business e-commerce estimates for 2000 and beyond.

As further e-commerce research from other national governmentsbecomes available, eMarketer’s regional forecasts will also be refined, andthey are therefore subject to change. However, we are also confident thatour e-commerce model compares favorably with government data that wehave seen so far. Our relatively conservative forecasts continue to be areliable benchmark for determining the size and potential growth ofbusiness-to-business e-commerce activity over the next several years.

eMarketer projects that worldwide business-to-business e-commerceactivity will grow by almost 74% in 2002 to $823.4 billion by the end ofthe year, up from $474.3 billion in online transactions in 2001. Ourprevious forecast had estimated that internet-based trade would reachalmost $2.8 trillion worldwide by 2004, but we have since reduced thisestimate to approximately $2.3 trillion in global business-to-business e-commerce, as we believe that the migration of e-commerce transactionsconducted via electronic data interchange (EDI) networks will continuethrough the end of this decade.


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Compared to other research firms’ forecasts, eMarketer’s remains one of themost conservative. This is due in part to our tighter definition of e-commerce, which includes only internet-based transactions. While someresearchers include traditional EDI within their forecasts, for example,eMarketer includes only web-EDI. We also exclude the transaction ofbusiness services via the internet from our forecast, while some industryanalysts include business services in theirs.

Revised Worldwide B2B E-Commerce Forecast,2000-2004 (in billions)

2000 $278.19

2001 $474.32

2002 $823.48

2003 $1,408.57

2004 $2,367.47

Source: eMarketer, 2002

036273 ©2002 eMarketer, Inc. www.eMarketer.com

Comparative Estimates: B2B E-Commerce Worldwide,2000-2005 (in billions)

2000 2001 2002 2003 2004 2005

eMarketer $278 $474 $823 $1,409 $2,367 –

AMRResearch

$371 $704 $1,375 $2,261 $3,350 $4,739

ComputerEconomics

$3,068 $5,232 $6,815 $9,907 – –

ForresterResearch

$604 $1,138 $2,061 $3,694 $6,335 –

InternationalData Corporation(IDC)

$282 $516 $917 $1,573 $2,655 $4,329

GartnerGroup

$433 $919 $1,929 $3,632 $5,950 $8,530

MorganStanleyDeanWitter

$200 $721 $1,378 – – –

GoldmanSachs &Co.

$357 $740 $1,304 $2,088 $3,201 –

Ovum $218 $345 $543 $858 $1,400 –

Source: eMarketer, AMR Research, International Data Corporation (IDC),Gartner Group, 2001; various, as noted, 2000



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Index of Charts

Following the Gartner Group’s last revision of its e-commerce forecast inMarch 2001, IDC has extended its worldwide B2B e-commerce estimates inOctober. IDC predicts that global business-to-business e-commerce activitywill reach $4.3 trillion by 2005, increasing by a compound annual growthrate of 73% between 2000 and 2005.

According to IDC, the years 2001 and 2002 will see the strongest growth ine-commerce activity over its forecast period, as online trade is estimated togrow by 78% in 2002, following an increase of 83% in 2001 to $516 billion.

IDC does not include EDI transactions that are conducted through the valueadded networks (VANs) of third-party service providers such as GE GlobalExchange Services, IBM, or Sterling Commerce as part of its e-commerceforecast, which it estimates to have totaled $1.8 trillion worldwide in 2001.Independently of IDC’s EDI forecast, the largest third-party operator of EDInetworks - GE Global Exchange Services – estimates that it processes about$1 trillion in transactions through its systems on an annual basis,worldwide.

However, IDC does include web-EDI as part of its $516 billion e-commerce estimate. When web-based EDI is subtracted from IDC’s e-commerce total – which IDC estimates at 33.3% of e-commerce activity –pure, internet-based e-commerce accounts for an even narrower portion oftotal e-commerce activity, at $344 billion worldwide.

Worldwide B2B E-Commerce Revenue, 2001-2005 (inbillions)

2001 $516.2

2002 $916.5

2003 $1,573.4

2004 $2,654.5

2005 $4,329.0

Source: International Data Corporation (IDC), 2001


Worldwide Electronic Data Interchange (EDI) versusE-Commerce Activity, 2001 (in billions)

EDI conducted via third party service providers $1,800

E-commerce (including internet EDI) $516




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By comparison, AMR Research includes both EDI and internet-basedtransactions in its business-to-business e-commerce forecast, which itestimates will reach $4.7 trillion by 2005. When business services are addedto AMR’s forecast, worldwide business-to-business e-commerce activity isprojected to grow from $2.25 trillion in 2001 to $14.19 trillion in 2005.

According to AMR Research, e-commerce accounted for 2% of totalworldwide business-to-business trade in 2000. After increasing by acompound annual growth rate of 63% between 1999 and 2004, e-commerce will account for 19% of all business-to-business trade in 2005.

As several industry analysts have noted since business-to-business e-commerce became widely discussed in late 1999, EDI is by no meansabout to be displaced by the internet during the near term. While manylarge companies are developing web-based channels for connecting withtheir trading partners, most have made considerable investments in EDInetworks that they expect to continue using over the next several years.

As a means of extending the longevity of these EDI investments, largebusinesses are currently web-enabling their smaller suppliers, so that small andmid-size companies that were formerly shut out of EDI are now able toparticipate in electronic trade with their larger trading partners via the internet.

“Like the 1950s era B-52 bombers that continue toserve the US Air Force, Electronic Data Interchange(EDI) technology remains in service, refitted andupdated.” –Jim Ericson, Line56 Magazine

Indeed, research firm Global Industry Analysts projects that web-based EDItransactions will see an average annual growth rate of more than 135%between 1999 and 2005, compared to 73% growth in the number of valueadded network (VAN) EDI transactions and 57% growth in the number of directEDI transactions. According to Global Industry Analysts, by 2005 EDI networkswill be processing in excess of 20.5 billion EDI documents worldwide.

Worldwide B2B E-Commerce Forecast, IncludingBusiness Services (Internet and EDI Transactions),2001-2005 (in billions)

2001 $2,251

2002 $4,363

2003 $6,581

2004 $9,852

2005 $14,191

Source: AMR Research, 2001



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Index of Charts

But although EDI is not expected to fade from existence for at least another10 to 15 years, there are other electronic trading alternatives that havebegun to slowly chip away at the large EDI networks of old. Whether it isconsortia-led exchanges that are building out hosted e-commercenetworks, or private trading exchanges that are being developed by largebusinesses, internet-based e-commerce networks have better functionalityand are much less expensive to operate than EDI systems.

Third-party EDI VAN operators such as GE Global Exchange Services andIBM will continue to play an important role within business-to-business e-commerce for the foreseeable future, as they connect large companies’smaller trading partners to their established EDI networks. Over the mid- tolong-term, these EDI vendors will also be hoping to have a hand inmigrating their customers’ EDI networks over to internet-based channels.

Stage of E-Business DevelopmentAccording to a survey of 1,009 IT professionals that was conducted by theComputer Sciences Corporation, most large companies were alreadyunderway with their e-business projects by late 2001, with 11.2% reportingthat they had already fully implemented their e-business strategies.Another 35.8% of respondents said that they were still planning their e-business initiatives, while 14.7% of respondents said that they had no e-business strategy at all.

Estimated Worldwide Volume of Electronic DataInterchange (EDI) Transactions, by Channel, 2000-2005(in millions of documents)

2000 2001 2002 2003 2004 2005

Web/internetEDI

2,645 3,212 3,742 4,253 4,687 5,079

Direct EDI 3,810 4,228 4,638 5,057 5,473 5,873

VAN EDI 5,749 6,554 7,328 8,102 8,837 9,567

Total 12,204 13,994 15,708 17,412 18,997 20,519

Source: Global Industry Analysts, 2001



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The vast majority of respondents, at 70% of large companies, indicated thattheir primary focus was upon electronically enabling their externalrelationships, rather than organizing their internal operations.

By contrast, eMarketer has found that, in other e-business surveys,several large companies have prioritized the need to get their internalhouses in order, prior to building out their external e-business connections.In most instances, however, businesses have chosen to pursue both internaland external e-business initiatives simultaneously, with the aim ofintegrating their e-business projects as part of a more holistic, enterprise-wide strategy.

When EDI is included in CSC’s survey of electronic transaction activity,large businesses have indicated that they have continued to see significantincreases in the volume of electronic transactions over the past few years.On average, e-commerce activity is expected to grow from 17.4% ofexternal business transactions in 2000 to 28.4% of all business transactionsby the end of 2002.

No strategy14.7%

Currently planning35.8%

Currentlyimplementing38.3%

Fullyimplemented11.2%

E-Business Strategy Implementation among LeadingGlobal Companies, 2001

Source: Computer Sciences Corporation, 2001


Primary Focus of E-Business Strategies amongLeading Global Companies, 2001

Internal operations 30.0%

External operations 70.0%




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Internet-based transactions still lag behind EDI, as a portion of all e-commerce activity, but they are expected to rise by a healthy 60.4% in2002, to account for about one quarter of all e-commerce transactions,according to CSC’s survey.

CSC’s regional comparison of large enterprises’ e-commerce capabilitieshas found that just one fifth of businesses worldwide are connected withtheir suppliers through the internet. Even fewer companies had the abilityto sell their goods or services via their own websites, with an average 15%of respondents indicating that they were able to do so.

It is interesting to note that while North American companies were morelikely to have website transaction capabilities than their Europeancounterparts, a significant proportion of European firms were apparentlyfinding other ways to connect with their trading partners through the internet.

Percent of External Business Transactions DoneElectronically (Including EDI) by Leading GlobalCompanies, 2000-2002

2000 17.4%

2001 21.6%

2002 28.4%



Percent of External Business Transactions Done viathe Internet by Leading Global Companies, 2000-2002

2000 3.3%

2001 4.8%

2002 7.7%



Percent of Large Companies' Suppliers Linked via theInternet, by Region, 2001

North America 20.3%

Europe 29.0%

Asia-Pacific 17.3%

Global average 21.8%




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And finally, in contrast to other e-business surveys, the CSC study foundthat there was a higher percentage of European companies that wereparticipating in online exchanges, compared to North Americanenterprises. Both regions were ahead of their Asian counterparts however,where a substantial 21.2% of companies were exchange participants.

Percent of Large Companies' Websites withTransaction Capabilities, by Region, 2001

North America 17.1%

Europe 14.1%

Asia-Pacific 13.3%




Percent of Leading Global Companies Participating inOnline Exchanges, by Region, 2001

North America 32.4%

Europe 41.7%

Asia-Pacific 21.2%





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C. E-Business in North America

North American B2B E-Commerce TradeWith the US Census Bureau’s release of its first-ever surveys ofmanufacturing and wholesale sector e-commerce activity, industryanalysts now have a much more comprehensive view of e-commerceactivity within the US economy. Prior to the release of these surveys, mostanalysts, in general, relied upon a mix of proprietary research and theirown informed opinion to arrive at their estimates for the size of e-commerce activity.

The US Census Bureau’s study is by far the largest survey of e-commerceactivity conducted so far, and was sent out to more than 50,000 USmanufacturing plants as a supplement to the 1999 Annual Survey ofManufacturers. A separate survey of 6,900 merchant wholesalers was alsoconducted in 1999. In both cases, e-commerce activity was broadly definedto include EDI, internet-based trade, as well as other forms of electroniccommerce.

In March 2001, preliminary results were released by the US CensusBureau, indicating that e-commerce activity accounted for 12.0% of allbusiness-to-business trade in the manufacturing sector in 1999, worth atotal value of $485 billion. The separate merchant wholesale survey foundthat 5.3% of trade in the wholesale sector was conducted electronically,totaling $134 billion. While the US Census Bureau cautioned that the twoseparate surveys should not be added together to arrive at a total figure forUS business-to-business e-commerce, it noted that they did at least providea rough indication of the size of e-commerce activity in the United States.

At the end of June 2001, the US Census Bureau released further results fromthe manufacturing sector’s e-commerce survey, providing more detailsabout manufacturing plants’ connectivity to the internet, employee use ofthe internet, and manufacturers’ usage of various e-commerce channels. Inthis portion of the survey, the Census Bureau has also broken down e-commerce activity by channel, estimating that about two thirds of e-commerce sales were conducted via EDI networks in 1999, while justover 5.4% of e-commerce sales were transacted through the internet.

US Electronic Commerce (EDI and InternetTransactions) in the Manufacturing and MerchantWholesale Sectors, 1999 (in billions)

Manufacturing sector $485.28

Merchant wholesale trade $134.43

Source: US Census Bureau, 2001



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It is important to note, however, that these early estimates are still rathercrude. To arrive at these results, individual manufacturing plants wereasked to indicate which electronic channel served as their primary networkfor e-commerce activity. The Census Bureau then assigned the entire dollarvalue of that plant’s e-commerce sales to that channel, although in mostcases, manufacturing plants indicated that they were actively usingmultiple channels to conduct e-commerce transactions.

Despite the rough nature of these calculations, this first effort by the USCensus Bureau to measure e-commerce activity in the manufacturingsector serves as the most reliable guide for estimating the size of USbusiness-to-business e-commerce activity to date. The Census Bureau iscurrently in the process of requesting more government funding, so that itmay further develop its e-commerce surveys.

Following the release of these government figures, eMarketer embarkedupon a thorough revision of its forecast model for business-to-business e-commerce in the United States. After examining the US Census Bureau’sestimates for e-commerce activity by industry - within both themanufacturing and wholesale sectors – eMarketer has used the CensusBureau’s figures as its benchmark to forecast the amount of e-commerceactivity for 15 different industries.

In order to arrive at a more accurate estimate for the size of internet-based e-commerce activity within each industry, eMarketer has consideredthe above-mentioned US Census Bureau estimates of e-commerce activityby channel, as well as comparative estimates from other leading researchfirms. Based upon our calculations, we estimate that on average, internet e-commerce accounted for approximately 1.45% of all US business-to-business transactions in 1999.

eMarketer’s forecasts for US e-commerce activity by industry areavailable in the eStatDatabase, and will be published in the April 2002E-Business by Industry Series of Reports, beginning in April.

US Manufacturing Sector E-Commerce Activity, byChannel, 1999 (in billions and as a % of e-commerceactivity)

EDI network $260.04 (66.0%)

Intranet $65.87 (16.7%)

Other $31.86 (8.1%)

Internet $21.09 (5.4%)

Unknown $8.10 (2.1%)

Extranet $6.81 (1.7%)

Source: US Census Bureau, 2001



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Index of Charts

eMarketer predicts that US business-to-business e-commerce will grow to$1.01 trillion in 2004, down from our previous forecast of $1.41 trillion. Wehave also extended our US forecast to 2005, estimating that internet-basedtrade will reach $1.33 trillion by then. While we continue to believe thatinternet e-commerce will see substantial growth over the long term, weexpect that electronic trade via EDI networks will remain strong for alonger period of time than originally estimated.

Compared to eMarketer’s forecast, IDC predicts that US business-to-business e-commerce will increase by a compound annual growth rate of68% between 2001 and 2005, to reach $1.56 trillion. As mentioned above,IDC includes web-based EDI in its e-commerce forecast, but does notinclude regular EDI transactions.

The Giga Information Group’s forecast for US business-to-business e-commerce is even higher, estimating that US internet-based trade was$540 billion in 2000, and will reach $2.49 trillion by 2004. Broken down byelectronic channel, EDI accounted for approximately 84% of all electroniccommerce in 2000 according to the Giga Information Group, but willdecline to about 53% of all e-commerce trade within the next two years, asonline exchanges take a greater share of transaction activity.

Revised US B2B E-Commerce Forecast, 2001-2005 (inbillions)

2001 $306.12

2002 $481.98

2003 $720.97

2004 $1,011.17

2005 $1,333.02

Source: eMarketer, February 2002


B2B E-Commerce Revenue in the US, 2001-2005 (inbillions)

2001 $206.9

2002 $360.9

2003 $621.4

2004 $1,009.7

2005 $1,561.2




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Internet-based e-commerce, excluding EDI, is forecast to increase by acompound annual growth rate of 46.4% between 1999 and 2004. WhenEDI is included in its e-commerce forecast for the United States, the GigaInformation Group estimates that total e-commerce activity will grow from$3.35 trillion in 2000 to $5.23 trillion by 2004.

And finally, when trade in both goods and services is included in itsforecast for all of North America, AMR Research estimates that business-to-business e-commerce for the region will exceed $5.23 trillion by 2005,increasing by a compound annual growth rate of 42% between 2000 and2005. Canada will account for $532.6 billion of that total, while the UnitedStates’ share is estimated to be $4.69 trillion.

US E-Commerce Activity, by Channel, 2000 (in billionsand as a % of e-commerce activity)

Internet/extranet $274.0 (8.2%)

Internet e-marketplaces $48.0 (1.4%)

EDI VANs* $2,392.0 (71.4%)

EDI ETNs** $418.0 (12.5%)

Web EDI $198.0 (5.9%)

EDI direct over web $20.0 (0.6%)

Note: *Value-Added Networks; **Electronic Trading NetworksSource: Giga Information Group, 2001


US E-Commerce Activity, by Channel, 2004 (in billionsand as a % of e-commerce)

Internet/extranet $498.0 (9.5%)

Internet e-marketplaces $1,306.0 (25.0%)

EDI VANs* $1,423.0 (27.2%)

EDI ETNs** $1,313.0 (25.1%)

Web EDI $353.0 (6.8%)

EDI direct over web $334.0 (6.4%)

Note: *Value-Added Networks; **Electronic Trading NetworksSource: Giga Information Group, 2001



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As a percent of total business-to-business trade in the United States, e-commerce activity is estimated to grow from less than 4% in 2000, to20% in 2005.

Broken down by channel, AMR Research includes self-service websites inits forecast, which it sees as already accounting for a significant portion ofe-commerce activity. Between 2000 and 2005, these websites are expectedto grow from handling 31% of all business-to-business e-commerce to takea 52% share.

AMR Research believes that EDI accounts for a much smaller portion ofall e-commerce activity, compared to estimates by both the US CensusBureau and the Giga Information Group. While these latter twoorganizations estimate that EDI accounted for between 66% and 84% of alle-commerce in 1999 and 2000, AMR Research believes that EDI willaccount for no more than 15% of e-commerce trade by 2005.

B2B E-Commerce Forecast (Internet and EDITransactions) for North America, 2001-2005 (inbillions)

2001 $1,429.00

2002 $2,727.00

2003 $3,456.00

2004 $4,287.00

2005 $5,232.00

Note: Includes trade in goods and servicesSource: AMR Research, 2001



Self-service websites $251.64 (31%)

EDI $101.08 (13%)

Private trading exchanges $66.17 (8%)

Public trading exchanges $87.73 (11%)

Other e-commerce $295.32 (37%)




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In the spring of 2001, Statistics Canada released its second annual surveyof Canadian e-commerce activity, finding that internet-based sales for themanufacturing sector had increased from CAD $900.0 million in 1999 toCAD $1.30 billion in 2000. While internet sales for the manufacturingsector grew at a rate of 45%, online sales for the wholesale sector increasedby a much larger 566%, from CAD $156.3 million in 1999 to CAD $1.04billion in 2000.

As a portion of total operating revenue, internet-based sales accountedfor 0.2% of manufacturing sector revenues and 0.3% of wholesale sectorrevenues in 2000.

Unlike the US Census Bureau’s surveys of manufacturing and wholesalesector e-commerce activity, Statistics Canada does not include e-commercesales that are conducted through private or value added EDI networks in itse-commerce survey, although it does include web-enabled EDI. TheCanadian survey focused upon enterprise-wide e-commerce sales ratherthan e-commerce sales by individual manufacturing plants, and thereforedoes not include intra-company e-commerce trade via the internet. As aresult, Statistics Canada’s figures provide a much narrower picture ofinternet-based business-to-business e-commerce activity in Canada thanthose of the US Census Bureau.


Self-service websites $2,452.39 (52%)

EDI $707.81 (15%)

Private trading exchanges $771.81 (16%)

Public trading exchanges $269.58 (6%)

Other e-channels $497.78 (11%)



Canadian Manufacturing and Wholesale SectorE-Commerce Revenues, 1999 & 2000 (in CAD billions)

Manufacturing

$0.90

$1.30

Wholesale

$0.16

$1.04

1999 2000

Source: Statistics Canada, 2001



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Furthermore, Statistics Canada did not publish the amount of e-commerceactivity conducted by individual industry segments within themanufacturing sector, nor did it estimate the amount of e-commerceactivity that is conducted through various economic channels.

As a rough indication of Canadian businesses’ ability to conduct e-commerce by various channels, Statistics Canada has noted that anaverage 10% of all private sector firms in Canada are using non-internetbased EDI networks, while 25% of the 21,000 Canadian enterprisessurveyed had their own websites. It should be noted, however, that not allwebsites had transaction capabilities, and that a significant number werelikely used for marketing purposes only.

Although 10% of Canadian companies said that they used non-internetbased EDI networks, this small portion of businesses accounted for asubstantial 50% of all private sector economic activity. In both themanufacturing and wholesale sectors, 14% of firms said that they used EDInetworks, accounting for 62% and 64% of their sectors’ total economicactivity, respectively.

In light of the recent data from Statistics Canada, prior comparativeestimates for the size of e-commerce in Canada by eMarketer and ForresterResearch appear to have overstated the volume of business-to-business e-commerce in the Canadian economy. However, it should be noted that bothforecasts include estimates of e-commerce activity in the forestry, mining,agriculture, utilities and energy industries, which are not included in theStatistics Canada survey.

E-Commerce Channels Operated by CanadianBusinesses, 2000 (as a % of Canadian businesses)

Website 25%

Intranet 12%

Non-internet EDI network 10%

Extranet 4%

Source: Statistics Canada, April 2001


Comparative Estimates: B2B E-Commerce in Canada, 2000–2004 (in billions)

www.eMarketer.com006651 ©2001 eMarketer, Inc.

2000 2001 2002 2003 2004

eMarketer $18.16 $36.15 $64.34 $110.02 $182.64

Forrester Research $16.00 $35.40 $63.40 $102.20 $149.80

Source: Forrester Research, eMarketer, 2000


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On the other hand, some of the results from the Statistics Canada survey arecontrary to anticipated trends, and may be inaccurate due to respondents’inexperience in reporting e-commerce activity. For example, the percent ofbusinesses selling via the internet reportedly declined from 10% ofbusinesses in 1999 to 6% in 2000, while online sales by the publichealthcare sector were almost entirely eliminated, as they decreased fromCAD $20.1 billion in 1999 to just CAD $100 million in 2000.

Following the release of Statistics Canada’s third e-commerce survey for2001, eMarketer will revise its e-commerce forecast model for Canadianbusiness-to-business e-commerce, and will publish these figures in ourdaily email newsletter and the eStat Database.

Stage of E-Business DevelopmentIn the midst of the recent pullback from the ‘indiscriminate’ IT spendingthat occurred prior to 2001, several businesses have begun to report thatthey have been seeing the benefits of that spending since the middle of lastyear. In a mid-2001 study of North American corporate executives,Accenture found that 57% of respondents believed that their companies’ e-commerce initiatives had been successful, with 45% reporting that they haddelivered real financial benefits.

According to the Computer Sciences Corporation’s survey of NorthAmerican IT professionals, 24.1% of respondents said that the return oninvestment for their companies’ IT projects had delivered ‘medium’ returnsof greater than 10% in 2001. A further 16.5% of respondents said that theirprojects had produced ‘high’ returns, with an ROI that exceeded 15%, whilea significant 46.5% said that their IT ROI was unknown.

Taking a closer look at North American companies’ e-business initiatives,CSC found that 50.1% of IT professionals believed that such projects hadpartially met their expectations, while 29.6% indicated that they weren’tsure about those returns, so far.

Although 71.1% of North American companies reported that their e-business projects were primarily externally facing, the majority of firmshave indicated that their broader IT strategies have placed a priority uponoptimizing their internal IT systems, ahead of the development of externale-business projects. More specifically, many companies have sought tobetter organize and analyze the vast amount of data that they are now ableto gather about both their internal and external operations.

Primary Focus of E-Business Strategies among LargeNorth American Companies, 2001


External relationships 71.1%




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Several IT executives have also placed a greater emphasis upon securityissues, as well as efforts to improve the alignment of their IT projects withbroader, corporate goals. Among the leading e-business goals of NorthAmerican companies, 47.6% named the strengthening of customer loyaltyas their top priority. The second most important goal among 43.4% ofrespondents was to improve productivity, while cost reduction was apriority for 41.8% of businesses.

Compared to 22.3% of their European counterparts, only 5.8% of NorthAmerican companies claimed to have fully implemented their e-businessstrategies by late-2001.

But as CSC notes in its study, e-business initiatives are really part of anongoing business strategy, which is constantly evolving and beingdeveloped over time. In many cases then, North American firms have likelymoved on to what may be considered an advanced stage of e-businessdevelopment – namely the use of the internet as a means of strengtheningties with established customers, or interacting with suppliers – whileEuropean firms are still at an earlier phase of internet use, in which theyprimarily use the internet as a means of reaching new customers.

Indeed, while 60.6% of European firms in 2001 had websites whoseprimary purpose was to provide company or product information, a greaterproportion of North American firms had advanced website features such asinteractive or transaction capabilities. However, despite their head-startover other regions of the world, progress toward further websitefunctionality was slowed in 2001, as just 2.5% of North American firmsreported that they had added transaction capabilities since 2000.

No strategy13.4%



Fullyimplemented5.8%

E-Business Strategy Implementation among LeadingNorth American Companies, 2001




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As for North American companies’ participation in online exchanges,about one third of respondents said that they were participating in anexchange in late-2001, while just 6.7% of businesses said that they werealready implementing an exchange’s technology. The majority ofbusinesses have remained on the sidelines, however, choosing either tokeep an eye on how exchanges in their industry may be developing, or notparticipate in an online exchange at all.

As discussed further in Chapter 4, the majority of internet-based exchangeshave been developed in North America. Of the 1,802 existing exchangesidentified by Booz Allen Hamilton in 2001, 38% were described asprimarily serving North American constituents, while Europe was home to27% of the surveyed marketplaces.

Among the estimated 684 exchanges that Booz Allen Hamilton found tohave North American roots, examples include Dairy.com, ForestExpress,Pantellos, and Procuron in Canada.

2000 2001

Transact14.6%

Interact19.2%

Inform59.6%

Deliver6.6%

Do nothave awebsite0.0%

Do nothave awebsite1.2%Transact

17.1%

Interact19.2% Inform

54.6%

Deliver8.0%

North American Companies' Website OperatingCapabilities, 2000 & 2001 (as a % of respondents)

Source: Computer Sciences Corporation (CSC), 2001


No plans toparticipate33.7%

Implementing6.7%

Investigating27.2%

Participating32.4%

Participation in Online Exchanges among Large NorthAmerican Companies, 2001




30


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For more information about how North American businesses are usingthe internet, please see the April 2002 North America E-Commerce:B2B & B2C Report


31


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D. E-Business in Europe

European B2B E-Commerce TradeCompared to the business environment in the United States, Europeancompanies face the added challenge of selling their goods and services intoa common market that in many ways remains a collection of disparatebusiness customs and local regulations. Despite the smooth introduction ofthe euro over the past three years, regional and national differencescontinue to persist in Europe, often bringing an added level of complexityto the development of e-business initiatives that must cross multipleborders.

“The relatively small size and variety of nations inEurope, combined with recent merger, acquisitionand partnering activity, increases the need forcross-border optimization compared with othercontinents.” –Mike Laphen, Computer Sciences Corporation

In the face of these obstacles, European companies have surprised manyindustry observers in 2001, with what has been described by many as theirunexpected embrace of e-business technologies. Large enterprises in theUnited Kingdom, Germany, Benelux and Scandinavia have reportedly ledthe way, as they have been best prepared to build upon previoustechnology investments and begin to develop external, internet-basedconnections with their trading partners.

Not surprisingly, e-business projects in Europe tend to first be developedwithin national borders, and then gradually rolled out to large enterprises’key trading partners in other parts of the continent. However, e-commercereadiness is not always tied to national markets, as the development of e-business initiatives often depends upon the relative preparedness ofindividual industries.

The Swedish Trade Council, for example, lists the IT,telecommunications, and chemicals industries as being better-equipped toparticipate in cross-border e-commerce ventures than their counterparts inthe restaurant or construction industries. On the other hand, this has notstopped localized e-business exchanges from being developed, and oftenmeeting with some degree of success. Indeed, Europe may lead NorthAmerica when it comes to the development of local e-commerce exchangesthat must also integrate with larger, regional exchanges.


32


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In light of these and other signs of European strength, eMarketer continuesto forecast that business-to-business e-commerce will reach an estimated$797.3 billion in Europe by 2004. Germany will account for the largestportion of online trade, at $230.7 billion in 2004, followed by the UnitedKingdom at $214.0 billion.

By comparison, IDC predicts that business-to-business e-commerce inEurope will increase by a compound annual growth rate of 91% between2001 and 2005, to reach $1.46 trillion, while the Gartner Group predicts thatinternet e-commerce between businesses will grow to $1.64 trillion by 2005.

B2B E-Commerce Revenues in Europe, 2000-2004 (inbillions)

2000 $26.24

2001 $52.42

2002 $132.74

2003 $334.14

2004 $797.29



European B2B E-Commerce Revenues in Europe, 2000& 2005 (in billions)

2000 $57.0

2005 $1,460.0



B2B E-Commerce Revenues in Europe, 2001 & 2005 (inbillions)

2001 $177

2005 $1,641

Source: Gartner Inc., 2001



33


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AMR Research includes EDI as well as internet-based transactions in itsforecast for business-to-business e-commerce in Europe. The research firmpredicts that Western European e-commerce activity will increase by acompound annual growth rate of 89% between 1999 and 2004, to reach$4.29 trillion by 2005.

As a share of global business-to-business e-commerce, AMR Researchestimates that Western Europe will account for 22% of worldwide trade in2005, up from its 14% share in 2000.

AMR Research has also gone on to forecast e-commerce activity forEastern Europe, which it believes will increase by a CAGR of 90%, from $7billion in 2000 to $182 billion by 2005. Eastern Europe, however, will makeup a relatively small portion of global business-to-business e-commerce,accounting for just 1% of electronic trade worldwide by 2005.

Stage of E-Business DevelopmentDespite common misgivings among European businesses that they lag theirAmerican counterparts in terms of technology adoption, a mid-2001 studyby Accenture has found that European companies are in fact closing thetechnology gap with the United States. Although American firms are a littlefarther up the e-business road, Accenture estimates that Europe’s adoptionof e-commerce technology trails the United States by just 12 months.

According to the Computer Sciences Corporation’s survey of European ITprofessionals, businesses in Europe have made the optimization ofenterprise-wide IT systems their number one priority in 2001. In particular,European companies want to use their IT systems more effectively, andthey have also made priorities of updating obsolete technologies andconnecting electronically to their external trading partners, be theycustomers or suppliers.

Not unlike the majority of enterprises in North America, almost 70% ofEuropean companies’ e-business projects are focused upon developingexternal relationships, although businesses in Europe have placed a much

B2B E-Commerce Forecast (Internet and EDITransactions) for Europe, 2001-2005 (in billions)

2001 $372.00

2002 $760.00

2003 $1,479.00

2004 $2,662.00

2005 $4,298.00

Note: includes trade in goods and servicesSource: AMR Research, 2001



34


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Index of Charts

greater emphasis upon reaching new customers, while North Americanfirms have prioritized their need to strengthen existing customerrelationships.

This latter difference may be attributed to the divergent economicclimates between each region during 2001. Because of the economicslowdown in the United States, businesses there have shifted their prioritiesfrom growth to customer retention, whereas European companies have notfelt such economic pressure as intensely, and have therefore continued tofocus upon expanding their businesses.

According to the CSC study, 22.3% of European businesses believe thatthey have fully-implemented their e-business strategies, compared to just5.8% of North American companies. This difference may possibly beattributable to the perceived complexity of e-business strategies, which formany firms becomes increasingly sophisticated as they enter into moreadvanced stages of their implementations.

As an indication of the divergent levels of e-business developmentbetween North American and European firms, the former have placed amuch higher priority upon information security than their Europeancounterparts. While North American respondents to the CSC study rankedsecurity as their number two IT priority in late 2001, IT professionals inEurope ranked security as number ten.

Although CSC is careful to note that this greater concern withinformation security among North American business may be tied to aheightened perception of security threats in general, it is also indicative ofthe extent to which large businesses there have opened themselves up tonew vulnerabilities, as they have built out their “extended enterprise”capabilities. As European companies continue along this same path, theywill probably become less likely to consider their e-business projects ashaving been fully implemented.

Primary Focus of E-Business Strategies among LargeEuropean Companies, 2001






35


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Index of Charts

As a means of reaching additional trading partners, the majority ofEuropean businesses use their websites primarily to inform others abouttheir company and products. Since the year 2000, there has been asignificant increase in the percent of European websites that are able tooffer delivery capabilities to their customers, but there has also been asurprising dip in the number of websites that provide interactivecapabilities with a company’s customers.

More than in any other region in the world, European companies view theinternet as a valuable tool for reaching new customers and suppliers. CSChas found that 55.6% of European respondents to its survey believe that theinternet has increased the number of suppliers that their company uses,compared to a global average of 30.4% of respondents.

In a separate survey looking at the e-commerce activities of Europeanbusinesses, IDC found that 38% of European procurement managers wereusing the internet to buy and sell goods or services in 2001, while an

No strategy5.1%


Currently implementing41.8%

Fully implemented22.3%

E-Business Strategy Implementation among LeadingEuropean Companies, 2001



1999 2000

Transact14.1%

Interact26.4%

Inform56.4%

Do nothave awebsite0.0%Deliver

3.2%

European Companies' Website Operating Capabilities,2000 & 2001 (as a % of respondents)



Transact14.1%

Interact15.1%

Inform60.6%

Do nothave awebsite0.4%Deliver

9.9%


36


Methodology





Index of Charts

additional 36% of respondents said that they planned to go online in 2002.Just 9% of procurement managers said that they had no intention of usingthe internet at all.

As with most other regions, internal resistance within Europeancorporations has been the greatest barrier to e-business adoption.According to the IDC study, 27% of respondents cited such difficulties astheir leading challenge.

Compared to companies in other world regions, businesses in Europe arethe most enthusiastic about internet-based trading exchanges. A significant22.3% of IT professionals from the CSC survey said that their company wasin the midst of implementing some kind of exchange technology, versus just6.7% of businesses in North America and 12.6% worldwide.

Booz Allen Hamilton found that 485 of the 1,802 online exchangesidentified as part of its 2001 study had a user base that was primarilywithin the European market. This was second only to North America, whichwas home to 684 exchanges.

Examples of online exchanges that are based in Europe include theshipping industry’s Balticexchange, Goodex, PEFA.com, andCPGMarket.com.

Leading consortia-backed exchanges such as Covisint andGlobalNetXchange have also reported significant transaction activitythrough their European operations, while global chemicals industryexchange ChemConnect has sales offices in Frankfurt, Rotterdam, Milan,Paris and London.

For more information about how European businesses are using theinternet, please see the May 2002 Europe E-Commerce: B2B & B2CReport

No plansto participate

13.7%

Implementing22.3%

Investigating22.3%

Participating41.7%

Participation in Online Exchanges among LargeEuropean Companies, 2001




37


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Index of Charts

E. E-Business in the Asia-Pacific Region

Asia-Pacific Region B2B E-Commerce TradeEncouraged by a strong trading culture that pushes companies to beglobally competitive, several businesses in the Asia-Pacific region see e-commerce as an inevitable part of their futures. Whether it has beenthrough government-supported technology initiatives or demand fromoverseas trading partners, many leading enterprises in Asia have stayedabreast of the latest e-business trends, and have continued to develop theire-commerce networks over the past several years.

On the other hand, because there are wide disparities between economieswithin the region, many countries are pursuing e-business developmentfrom very different starting points. Japan, Australia, New Zealand, HongKong and Singapore are regional leaders when it comes to technologyinvestment, while South Korea and Taiwan are not far behind.

Developing markets such as those of China, India, and even thePhilippines have also grasped the fundamental principles of e-business,and are home to several thriving internet exchanges.

With the narrowing gap between Asian companies’ e-business readiness,compared to that of their counterparts in other parts of the world,eMarketer projects that business-to-business e-commerce will grow toexceed $300 billion in the Asia-Pacific region by 2004, and will shortlythereafter experience accelerated growth.

Comparative estimates from Forrester Research and Goldman Sachsanticipate that the takeoff in e-commerce activity in Asia will occur evensooner, with online business-to-business trade expected to grow as high as$1.5 trillion by 2004.

B2B E-Commerce Revenues in the Asia-Pacific Region,2000-2004 (in billions)

2000 $36.2

2001 $68.6

2002 $120.3

2003 $199.3

2004 $300.6




38


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IDC predicts business-to-business e-commerce will experience a compoundannual growth rate of 109% between 2001 and 2005 in the Asia-Pacificregion, to reach $516 billion by 2005.

In a study that was released in June 2001 by the Japanese Ministry ofEconomy, Trade and Industry (METI), it was estimated that business-to-business e-commerce activity in Japan had totaled approximately $161.6billion in 2000, accounting for about 3.8% of Japan’s entire business-to-business trade. By 2005, it was estimated that this figure would climb to$827.3 billion, or 17.5% of all inter-company trade in Japan.

This forecast was prepared on behalf of METI by Accenture, inpartnership with the E-Commerce Promotion Council of Japan, an industrytrade group consisting of 270 private companies. Despite the fact that METIcommissioned this report, it should be noted that just 155 businessesreplied to this survey.

2000 2001 2002 2003 2004

eMarketer $36.2 $68.6 $120.3 $199.3 $300.6

Computer Economics $758.8 $1,134.9 $1,423.6 $2,095.1 –

Forrester Research $49.9 $108.9 $266.3 $672.8 $1,532.7

Goldman Sachs $8.0 $44.3 $119.7 $242.4 $1,047.2

IDC – $28.4 $61.6 $129.1 $261.4

Source: eMarketer, 2001; various, as noted

Comparative Estimates: B2B E-Commerce Revenues inAsia-Pacific, 2000–2004 (in billions)


B2B E-Commerce Revenues in Asia, 2001-2005 (inbillions)

2001 $28.4

2002 $61.6

2003 $129.1

2004 $261.4

2005 $516.3



B2B E-Commerce Revenues in Japan, 2000 & 2005 (inbillions)

2000 $161.6

2005 $827.3

Source: Accenture, Ministry of Economy, Trade and Industry (METI),Electronic Commerce Promotion Council of Japan (ECOM), 2001



39


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Index of Charts

In another forecast for Japan, IDC estimated that business-to-business e-commerce will grow at a compound annual rate of 48.8% between 2000and 2005, to reach $504 billion.

AMR Research includes EDI and internet-based transactions in its forecastfor business-to-business e-commerce in the Asia-Pacific region, predictingthat electronic trade in Asia will grow to $3.28 trillion by 2005, afterincreasing by a CAGR of 82% between 1999 and 2004.

As a portion of worldwide business-to-business e-commerce activity, theAsia-Pacific region will account for 21% of all trade in 2005, up from 13%in 2000, according to AMR Research.

Stage of E-Business DevelopmentAccording to the Computer Sciences Corporation’s study of ITprofessionals, businesses in the Asia-Pacific region plan to rely heavilyupon investments in information technology as a means of significantlytransforming their businesses and becoming more competitive. WhileNorth American and European companies have prioritized the optimizationof their installed base of technology, the majority of businesses in Asia areacquiring IT infrastructure as a means of catching-up to - and in someinstances, surpassing - their competition.

B2B E-Commerce Revenue in Japan, 2001 & 2005 (inbillions)

2001 $90.9

2005 $504.1



B2B E-Commerce Forecast (Internet and EDITransactions) for the Asia-Pacific Region, 2001-2005(in billions)

2001 $329.00

2002 $638.00

2003 $1,192.00

2004 $2,080.00

2005 $3,283.00




40


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Index of Charts

As for e-business priorities, Asian companies have placed a slightly higheremphasis upon internal operations, compared to businesses in NorthAmerica and in Europe. According to CSC’s survey, 43.6% of companies inAsia have listed productivity improvements as their number one e-businesspriority, followed by 42.9% of respondents who intend to use e-businesstechnology to strengthen customer loyalty and 41.7% of respondents whoplan to use it to reduce costs.

Just 8.3% of businesses in Asia believe that their e-business strategies havebeen fully implemented, while the Asia-Pacific region has by far the largestproportion of IT professionals who believe that their company has no e-business strategy at all, according to 29.1% of respondents. Bycomparison, only 5.1% of European IT managers made this claim, as did13.4% of North American IT professionals.

Fewer companies in Asia have internet-based links to their supplierscompared to other world regions, as Asian businesses connect with anaverage 17.3% of their trading partners. However, Asia is not far behindNorth American firms’ average connectivity rate, at 20.3% of suppliers.Indeed, it is quite possible that as Asian companies become increasinglyweb-enabled, they will be able to close the technology gap betweenthemselves and their competitors in other regions of the world who are alsoonly beginning to deploy next-generation e-commerce networks.

Primary Focus of E-Business Strategies among LargeCompanies in the Asia-Pacific Region, 2001





No strategy29.1%



Fullyimplemented

8.3%

E-Business Strategy Implementation among LeadingCompanies in the Asia-Pacific Region, 2001




41


Methodology





Index of Charts

When it comes to the use of websites, a significant 13.7% of Asian ITprofessionals said that their business did not have a website in 2001. (In theprevious year’s survey, only those companies with websites wereevaluated.) But once again, when it comes to comparing website operatingcapabilities, Asian companies are not always behind their counterpartsfrom other parts of the world.

While 9.1% of companies in the Asia-Pacific region had the ability tomake delivery arrangements through their websites, just 8.0% of NorthAmerican firms could make this claim, as could 9.9% of Europeanbusinesses. Asian businesses were not far behind in the deployment oftransaction capabilities either, as 17.1% of North American firms and14.1% of European companies had the ability to transact with theircustomers online.

In a separate survey conducted by IDC, the research firm found that33.8% of companies in the Asia-Pacific region had implemented onlinecustomer service capabilities of some kind.

According to the Gartner Group, the first wave of e-business developmentin the Asia-Pacific region was originally spurred by Asian companies’overseas trading partners, who had urged their Asian suppliers to becomeweb-enabled. Gartner goes on to predict that the second wave of e-businessdevelopment in Asia will be led by groups of local, industry-leadingenterprises that will build consortia-owned exchanges. It is expected thatthese companies will eventually encourage their regional suppliers tobecome web-enabled, and thereby drive a new round of e-businessadoption in the region.

As of late 2001, one fifth of Asian businesses already claim to beparticipating in some kind of an online exchange, with an additional 11.5%of Asian firms saying that they are in the process of implementing anexchange’s technology.

2000 2001

Transact13.9%

Interact19.2%

Inform60.0%

Do nothave awebsite0.0%Deliver6.9%

Transact13.3%

Interact12.0%

Inform51.9%

Do nothave awebsite13.7%

Deliver9.1%

Asia-Pacific Region Companies' Website OperatingCapabilities, 2000 & 2001




42


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Index of Charts

In its global survey of internet exchanges, Booz Allen Hamilton counted atotal of 173 online exchanges that primarily serve the Asia-Pacific region.According to the Gartner Group, early exchanges in this region have beendeveloped in the electronics, industrial goods, and consumer durablesindustries, while the next wave of business-to-business exchanges will likelybe developed to serve the energy, paper, utilities, and food products industries.

BayanTrade is one example of a successful internet exchange thatoperates in the Asia-Pacific region. Based in the Philippines and foundedby a consortium of six large enterprises, BayanTrade reported in November2001 that it has conducted more than $74 million in transactions, themajority of which were online auctions.

According to ACNielsen, more than 72 business-to-business exchangeswere created in Australia during 2001, through which approximately10,000 companies have been actively buying and selling various goods andservices. But despite this build-out of exchanges, Australia and NewZealand have also experienced the consolidation and closure of severalbusiness-to-business exchanges, similar to what has occurred in other partsof the world.

Other examples of active business-to-business exchanges in the Asia-Pacific region include electronic components exchange TraderFirst.com,Satyamplastics.com, and Daewootrade.com.

For more information about how businesses in the Asia-Pacific regionare using the internet, please see the August 2002 Asia E-Commerce:B2B & B2C Report

No plans toparticipate

40.4%

Imple-menting

11.5%

Investigating26.9%

Participating21.2%

Participation in Online Exchanges among LargeCompanies in the Asia-Pacific Region, 2001




43


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Index of Charts

F. E-Business in Latin America

Latin American B2B E-Commerce TradeMore than any other part of the world, the future of e-business in LatinAmerica lies in the hands of that region’s leading enterprises. Rather thangovernment, it will be the large financial institutions and manufacturers ofBrazil, the leading agribusiness firms in Argentina, and the largetelecommunications firms of Mexico and throughout the region, who willbe responsible for the deployment of much of the infrastructure that isnecessary for e-business.

“The emerging e-procurement leaders haverecognized that only the most elite Latin Americanbusinesses have the technological capability andwillingness to move all of their procurement online.”–Bruce Sinclair, InfoAmericas, Inc.

Small and medium-size businesses in Latin America will have to wait fortheir larger trading partners to develop their e-commerce networks, beforethey themselves may become active participants in e-business. Althoughseveral smaller companies have already demonstrated their interest in e-business, they simply cannot afford the technology that is required tosupport online trade.

But in answer to these needs, large businesses in Latin America haveindeed stepped-up to play a leadership role in bringing e-business to theirregion. Latin American enterprises have in fact kept pace with theiroverseas counterparts, whether it has been through the development ofbusiness-to-business exchanges, or the purchase of e-procurement andsupply chain management software. And just as large businesses in othercountries are learning how to succeed in e-business, so, too, are their LatinAmerican competitors.

Based upon this continuing evolution of e-business in Latin America,eMarketer estimates that business-to-business e-commerce in the regionwill grow from $2.85 billion in 2000 to more than $58.3 billion by 2004. Arapid acceleration of e-commerce growth will occur in the region sometimeafter 2005, once leading telecommunications firms, in partnership withnational governments, make further progress in the development of a morereliable internet infrastructure.


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Comparative estimates for business-to-business e-commerce in the regionrange from $44.3 billion to $175.43 billion by 2004, while PyramidResearch predicts that online trade between businesses in Latin Americawill grow to $107.3 billion by 2005.

As the three largest economies in the region, Brazil, Mexico and Argentinawill naturally make up the greatest share of online trade, togetheraccounting for almost 90% of business-to-business e-commerce in theregion. Venezuela and, in particular, Chile – with the region’s mostliberalized economy and advanced telephone network - have already shownremarkable activity, and may be considered e-commerce leaders as well.

2000

2001

2002

2003

2004

$2.85

$7.87

$17.39

$33.63

$58.39



B2B E-Commerce in Latin America, 2000-2004 (in billions)

Comparative Estimates: B2B eCommerce in LatinAmerica, 2001-2005 (in billions)

2001 2002 2003 2004 2005

eMarketer $7.87 $17.39 $33.63 $58.39 –

Forrester Research $12.40 $27.50 $68.77 $175.43 –

Goldman Sachs $3.50 $14.20 $31.80 $61.10 –

Pyramid Research $1.12 – – – $107.32

Yankee Group $10.90 $17.60 $28.50 $44.30 $63.80

Note: Goldman Sachs figures do not include MexicoSource: eMarketer, Pyramid Research, 2001; Forrester Research, GoldmanSachs, 2000



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Mexico’s NAFTA ties to the United States have given many of thatcountry’s businesses an advantage over their regional counterparts, asseveral companies there are actively being connected to the e-commercenetworks of their American trading partners.

However, it should be noted that this is not entirely a one-wayrelationship. In what may be considered by some to be a reversal of roles,Mexico’s Cemex is in fact bringing much of its home-grown e-businessexpertise to the United States, where it plans to web-enable its cementmanufacturing plants on the American side of the border.

AMR Research includes both EDI and internet-based trade in its broaderdefinition of electronic commerce, estimating that total electronic trade inLatin America will reach $187 billion in 2002.

Between 1999 and 2004, AMR Research predicts that Latin American e-commerce revenues will increase by a compound annual growth rate of85%, and exceed $1.04 trillion by 2005. The research firm estimates thatLatin America will account for 6% of worldwide e-commerce activity in2004, up from 4% in 2000.

B2B E-Commerce in Latin America by Country, 2000 -2004 (in billions)

2000 2001 2002 2003 2004

Argentina $0.27 $0.75 $1.98 $3.48 $5.92

Brazil $1.95 $5.30 $10.48 $20.62 $34.72

Mexico $0.44 $1.26 $3.52 $6.47 $11.84

Rest of Region $0.19 $0.55 $1.41 $3.06 $5.92

Total $2.85 $7.87 $17.39 $33.63 $58.39

Note: Figures may not add up precisely due to rounding.Source: eMarketer, 2001


B2B E-Commerce Forecast (Internet and EDITransactions) for Latin America, 2001-2005 (in billions)

2001 $96.00

2002 $187.00

2003 $355.00

2004 $637.00

2005 $1,048.00




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Stage of E-business DevelopmentAccording to InfoAmericas’ January 2002 report on e-business in LatinAmerica, very few small and medium size companies in the region areprepared to participate in regular, ongoing e-commerce trade.

By InfoAmericas’ calculations, less than 5,000 of the nearly 800,000businesses in Brazil have installed enterprise resource planning (ERP)systems that are able to be linked to e-procurement software. Similarly,fewer than 0.57% of Mexican firms are capable of online procurement,while just over 900, or 0.98%, of companies in Argentina may beconsidered e-business ready.

Despite the fact that several Latin American firms are interested inparticipating in the savings that e-business brings, InfoAmericas notes thatvery few medium size companies can afford the up-front technologyinvestment that is required in order to achieve these savings.

As an alternative to bearing these costs, small and mid-size LatinAmerican businesses have recently been able to turn to the hosted solutionsof consortia-backed exchanges, or participate in online auction events inwhich they can expect an almost-immediate return on investment.InfoAmericas believes that such exchanges that act as application serviceproviders (ASPs) to smaller companies are currently succeeding because ofthe need they fulfill in the region.

For example, ProcuraDigital is a Miami-based exchange that hostsauctions for indirect procurement items such as office furniture andsupplies. Among its users are companies such as Banco Sudameris, CANTV,Johnson & Johnson and Nestle. In 2001, the exchange conductedtransactions totaling $296 million, saving its members in excess of $40million, while in 2002 the exchange aims to process more than $1.5 billionin online auctions.

Number of Latin American Companies that AreE-Business Ready, by Country, 2002Total number ofbusinesses

Brazil Mexico Argentina

Large >250 8,729 3,456 560

Medium <100-249> 18,733 9,494 8,045

Small <5-99> 771,325 290,786 85,679

Number ofbusinesses thatcan integrateERP/E-Procurement

4,576 1,739 923

Source: InfoAmericas, 2002



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Another horizontal procurement exchange based in Mexico, calledEficentrum, has been actively processing transactions for goods thatinclude automobiles, computer equipment, and office supplies. Exchangeparticipants include Telmex, Condumex, IPASA, IBM, and General Motors.Operaciones Transparentes, which is based in Argentina, is a third e-procurement exchange identified by InfoAmericas.

Other examples of Latin American exchanges that serve small andmedium-size businesses include Brazil’s Mercado Electronico andSeNegocia.com, which is based in Chile.

Besides these exchanges, private sector firms such as Mexican cementmanufacturer Cemex are also making good progress in bringing e-businessto Latin America. During the past several years, Cemex has spent in excessof $200 million to develop its internal and external e-business operationsby connecting more than 500 of its plants via a company intranet.

In early 2002, the company is in the process of bringing 135 of its LatinAmerican procurement officers online, and currently has plans to web-enable as many as 120 of its US-based purchasers. On the sales side of itsoperations, Cemex aims to generate 80% of its revenues through theinternet by the end of 2003.

Another example of an e-business leader in Latin America is Techint, aconglomerate with roots in both Argentina and Italy that has developed anexchange called Exiros. Exiros is used by Techint as well as several of itstrading partners, and traded in excess of $1.6 billion in goods and servicesduring 2001. The exchange has a broad portfolio of items that have beentraded through its network, ranging from chemicals and industrial suppliesto logistical and business services.

Exchange Profile: Value of Online Auctions Conductedvia ProcuraDigital, by Country, 2001 (in millions)

Venezuela $101.94

Brazil $96.45

Mexico $90.56

Chile $4.60

Argentina $2.09

US/Puerto Rico $0.66

Source: ProcuraDigital, 2002



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In its worldwide survey of more than 1,800 online business-to-businessexchanges, Booz Allen Hamilton found that 88 were based in LatinAmerica. InfoAmericas has counted 40 consortia-backed online tradingventures that had been launched during the 18 months prior to 2002, whileIDC surveyed 33 Latin American marketplaces as part of its study that wasconducted during the first half of 2001.

In several of the interviews that eMarketer has had with internationalconsortia-led exchanges, many have reported a surprisingly high degree ofinterest in online trade among Latin American firms.

Mining-industry exchange Quadrem, for example, has noted that itsLatin American office has met with considerable success in signing upsmall and medium-size suppliers for its marketplace. And althoughCovisint is still in the process of opening up offices in Brazil, the autoexchange has noted that it has already begun to do integration workbetween Brazilian suppliers and their North American trading partners.

For more information about how Latin American businesses are usingthe internet, please see the August 2002 Latin America Online Report.

Exchange Profile: Value of Online Auctions Conductedvia Exiros, by Country, 2002 (in millions)

Venezuela $657.86

Argentina $560.94

Italy $223.65

Mexico $191.91

Source: Exiros, 2002


IIMethodology

I Regional Forecasts

II E-Business Budgeting & Trends 49

A. E-Business Budgeting 50

B. E-Business Trends 55



Index of Charts


49



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A. E-Business BudgetingEstimating the size of e-business spending as a portion of total IT spendinghas been difficult for most industry analysts to do, largely because it is noteasy to determine how technology products are ultimately used by theirbuyers, nor the extent to which they are used exclusively for e-businessapplications.

eMarketer has found that estimates for the amount of spending on e-business technology in 2001 have ranged from $31 billion to $218 billionworldwide.

At the lower end of the range, Strategy Analytics has adopted a ratherstringent definition for dedicated e-business technology to arrive at itsestimate of $31 billion in worldwide e-business spending. The research firmhas gone on to note that it believes e-business spending declined by 12.5%in 2001, after reaching $36 billion in 2000.

Basing its forecast on survey data showing that companies were spendingan average 16.5% of their IT budgets on e-business initiatives in 2001,Line56 Research in partnership with A.T. Kearney has estimated thatworldwide e-business spending was approximately $217.5 billion in 2001,and is projected to grow to 18.2% of worldwide IT spending, or $240.6billion, in 2002.

Other comparative estimates for e-business spending as a portion ofenterprise IT budgets in 2001 have ranged from IDC’s figure of 10.6% to theGartner Group’s estimate of 15.5%. Looking forward to 2002, severalresearch firms have noted that most companies’ e-business spending isexpected to increase at a faster rate than their IT spending, and willtherefore account for a greater share of overall IT budgets.

Worldwide IT Spending on Dedicated E-BusinessTechnology, 2000 & 2001 (in billions)

2000 $36.00

2001 $31.00

Source: Strategy Analytics, 2001


Estimated Worldwide Spending on E-BusinessTechnology & Services, 2001 & 2002 (in billions)

2001 $217.5

2002 $240.6

Source: A. T. Kearney/Line56 Research, November 2001



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For more information about e-business spending as a portion of ITspending, please see eMarketer’s IT Spending Report.

In its late-2001 survey of 1,009 IT professionals, the Computer SciencesCorporation found that European companies had spent the highestproportion of their IT budgets on e-business initiatives in 2001, comparedto companies from other world regions. Although no reason for thisdisparity was given, it is possibly due in part to Europe’s relatively strongereconomic performance, especially during the first half of last year.

Another reason for this difference between European and North Americanfirms’ e-business spending is likely due to American firms’ over-spendingon technology prior to 2001. Several observers have suggested that whileAmerican businesses used 2001 to digest many of their earlier IT purchases,European firms were using the year to catch-up.

Forrester Research found that e-business budgets fell steadily during thecourse of 2001, as the slowing US economy prompted several of the large,global companies that it surveyed to cut back on their e-business budgets.In May of 2001, the average reduction in e-business spending was expectedto be just 0.3%, among 209 of the survey’s respondents. But by October, theaverage spending decline had risen to 6.0%, with the technology andbusiness services industry posting the largest e-business budget reduction.

E-Business Spending as a % of IT Budgets by Region,2001

Europe 33.0%

Asia-Pacific 12.2%

Australia-New Zealand 11.7%

North America 7.9%



Change in E-Business Budgets, by Industry, May &October 2001

May October

Technology and business services -0.3% -12.0%

Financial services 1.5% -1.7%

Distribution -2.5% -3.3%

Manufacturing 0.4% -6.3%

Source: Forrester Research, 2001



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Among the areas expected to be hardest-hit by reduced spending were ITconsulting and implementation services, for which respondents anticipatedbudget cuts would average 18.2%. Headcount reductions withincompanies’ e-business units were also expected to occur, with spending onpersonnel set to decline by an average 8.7% in 2002.

A separate survey conducted by InternetWeek in October of 2001 foundthat 62% of the 100 e-business managers that it surveyed had delayed atleast one e-business project during the course of the year. This was up from27% of respondents who admitted that they had been required to delay aproject in June. Among those initiatives that were most likely to be delayedwere infrastructure upgrades and wireless projects.

By the fall of 2001, 51% of e-business managers were saying thateconomic conditions had forced their company to cut back on e-businessspending, up from 44% in June. However, it appears that e-businessmanagers’ sentiment may have bottomed last fall, as several companieswere optimistic about both the economy in general, and their own e-business spending for 2002 - 54% of respondents expected their e-business budgets would increase in the new year.

Slightly less bullish results were found by a survey of 259 e-businessexecutives that was conducted by Line56 Research and A.T. Kearney inNovember of 2001. The study found that 49% of respondents expected theire-business budgets would increase in 2002, while 24% of respondentsanticipated that their budgets would fall.

Decrease 4%

No change in spending42%

Increase54%

Percent of Companies Expecting an Increase inE-Business Spending, 2002

Note: n=100 IT managersSource: InternetWeek, October 2001



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Index of Charts

A separate study conducted in the third quarter of 2001 by AMR Researchreported that 60% of large businesses planned to increase their e-businessbudgets in 2002, while another 33% expected to maintain e-businessspending at the same level as in 2001. In the fourth quarter, 66% of e-businessmanagers said they planned to increase their e-business spending in 2002,while the percentage of companies expecting to decrease their e-businessbudgets jumped from 6% in the third quarter to 13% in the fourth quarter.

In the Line56 Research survey, it was found that e-business budgetswould outpace the rate of growth for most companies’ overall IT budgets,which were expected to increase by just 4.4%, compared to an average10.6% growth rate for e-business budgets. Another survey that wasconducted by Accenture during the summer of 2001 found that 75% of the800 top-level executives it interviewed expected their spending on e-commerce projects to increase by an average 15% over the followingtwelve months.

A.T. Kearney and Line56 Research went on to find that 83% of respondentsto their survey planned on beginning new e-business projects in 2002,while the remaining 17% did not. Most companies expected to beginbetween 1 and 5 projects, while a further 17% planned on starting as manyas 15 new e-business initiatives.

No change27%

Decrease24%

Increase49%

Anticipated Growth in E-Business Budgets for USCompanies, 2002



Comparison of E-Business and IT Spending Growth,2002

E-Business spending 10.6%

IT spending 4.4%




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Returning to the AMR Research study, 48% of respondents believed thatcustomer-facing initiatives had the largest overall impact upon theirbusiness. The research firm went on to project that e-business spending onCRM applications would grow the most, at 21% in 2002. CRM is followedby SCM technology with a 13% growth forecast for 2002.

Unsure7%

15+5%

6 to 1517%

1 to 571%

Anticipated Number of E-Business Projects to beStarted, 2002



Worldwide E-Business Software Market GrowthRates, 2001 & 2002

Customer relationship management (CRM)

21%

15%

Supply chain management (SCM)

15%

13%

2001 2002




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Index of Charts

B. E-Business TrendsAt the beginning of 2002, customer relationship management (CRM) andsell-side e-commerce projects continue to be at the top of most e-businessmanagers’ priority lists, just as they were in 2001. Many companies are alsocontinuing to optimize their internal IT systems, in preparation for broadere-business initiatives that they plan to begin later in 2002, or in 2003. Atthe same time, several enterprises have been focused upon deployinganalytical applications that will help them to better manage and use theimmense volume of information that they are now generating, about boththeir internal and external operations.

Looking out over the longer term, three other e-business trends have alsoemerged during the closing months of 2001.

First, several companies are moving to next-generation, sell-side e-commerce initiatives, from enhanced customer self-service features ontheir websites to more ambitious demand chain automation projects. Assell-side solutions vendors have pointed out, many large businesses’distribution networks are just as complex and critical as their buy-sidenetworks, but they are often found to be in complete disarray. Industryobservers have gone on to suggest that this coming decade will witness thedeployment of automated sell-side networks, just as the late 1990s beganto see the early-adoption of automated supply chain networks.

Second, vendors of collaborative design software have ramped-up thepromotion of their solutions, as they have begun to actively demonstratethe substantial savings offered by their products. Indeed, internet-basedcollaborative design appears to offer even greater savings than technologybuyers have come to expect from e-procurement and supply chainmanagement systems.

And finally, in regards to web services, eMarketer has found thattechnology developers and industry analysts are still in the process ofarticulating the practical business applications for which these emerging e-business standards will be used. Although web services have begun toreceive a great deal of attention in the e-business media and analystcommunity, there is still very little forecast or survey data projecting howbusinesses will wind up using web services, as part of their regularoperations. At this time, eMarketer is continuing to monitor thedevelopment of the web services story as more analysis and case studiesbecome available.

When it comes to assessing where the general business population is interms of the level of its e-business development, a mid-2001 survey by CapGemini Ernst & Young and Line56 Research found that most largecompanies see themselves as early adopters within the business-to-business space. This is consistent with other surveys, which have found thatlarge enterprises are the primary drivers of e-business adoption, bringing e-business capabilities to their smaller suppliers, and respective industries asa whole.


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Index of Charts

In a later study conducted in November 2001, Line56 Research and A.T.Kearney found that e-business decisions in most enterprises are being madeby a committee of executives, drawn from multiple divisions within acompany. While 42% of businesses agreed that this description fit theiroperations, 38% of respondents said that their company’s e-businessdecisions were taken by a dedicated e-business manager or e-business unit.

Two thirds of companies said that they had a dedicated e-business unitwithin their organization, while 68% of respondents said that the variousoperating divisions within their company had their own e-business units ormanagers.

Just over half of e-business managers in the Line56 Research survey hadbackgrounds in IT, while business development and strategic planning werecommon qualifications for becoming an e-business manager as well.Interestingly, people with sales and marketing backgrounds also figuredprominently among e-business leaders, reflecting the customer-facingemphasis that many companies have placed upon their e-business activities.

Level of E-Business Adoption among LargeCompanies, June 2001 (as a % of respondents)

Pioneering 27.8%

Early adoption 36.1%

Rapid growth 12.2%

Mainstream 23.9%

Source: Cap Gemini Ernst & Young, Line56 Research, 2001



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Index of Charts

Turning to the decisions that these e-business managers are making,InternetWeek’s quarterly survey in October 2001 found that mostcompanies planned to focus upon web site development as their top e-business priority for 2002. Other areas of interest were infrastructureupgrades, the expansion of network bandwidth, and CRM projects.

Business Background of E-Business Managers, 2001

Information technology

51%

Business development

43%

Strategic planning

41%

Marketing

41%

Sales

30%

Operations/manufacturing/production

26%

Customer service

26%

Finance/accounting/legal

23%

Product management

23%

Purchasing

20%

Logistics/distribution

14%

Engineering/design

7%

Source: A. T. Kearney/Line56 Research, 2002



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Index of Charts

As evidence of the continued momentum behind sell-side and CRMimplementations, AMR Research found that 48% of the large enterprises itsurveyed in late 2001 said that customer-facing e-business initiatives werehaving the biggest overall impact upon their businesses.

In a separate Accenture survey of 150 Fortune 1000 companies, theconsulting firm found that 91% of executives said their firms would focusupon improving customer service and building customer loyalty in 2002.CRM technology was listed as the number one e-business priority by 38%of respondents.

CRM and sell-side e-business initiatives were also among the top threespending priorities listed by e-business managers in the November Line56Research / A.T. Kearney survey. The study also found that large enterprisesare increasing their spending on analytical software as well, so that theymay process the rapidly growing volume of data that their companies aregenerating through their e-business operations.

For more information about major issues on the sell-side of e-commerce, please see eMarketer’s June 2002 Online Selling andeCRM Report.

Top E-Business Priorities among IT Managers, 2002 (asa % of respondents)

Website development

76%

Infrastructure upgrades

69%

Expansion of network bandwidth

65%

CRM projects

56%

Web sales initiatives

50%

Web-to-host integration

48%

Online marketplaces

44%

Internet supply chain initiatives

32%

Note: n=100 IT managersSource: InternetWeek, October 2001



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Index of Charts

In another survey of 462 members from B2B Community.com, most e-business managers are placing a priority upon integration and middlewarein 2002, while CRM is a close second. Consistent with the findings of otherstudies, the need to integrate e-business applications with internal systemsis fast-becoming a higher priority, as companies make further progress inthe roll-out of their e-business strategies.

Leading E-Business Projects Targeted for IncreasedSpending, 2002 (as a % of companies planning toincrease spending)

Business intelligence/analytics

54%

Content management/catalog

51%

CRM/sell-side e-business

48%

Electronic payment and settlement

45%

Enterprise application integration

42%

Supply chain management

36%

Private exchanges

33%

Direct procurement

33%

Enterprise Resources Planning (ERP)

27%

Indirect procurement

24%

Public exchanges

23%




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Index of Charts

However, it is worth noting that even some early adopters of e-procurement technology are still doing integration work between their e-business software and back end systems. In a 2001 survey of theInternetWeek 100, for example, 26% of respondents were still manually re-entering information from their e-procurement software into their back-end systems.

Leading IT Priorities among E-Business Managers,2002

B2B integration and middleware

55%

Customer relationship management (CRM)

52%

Web development & server tools or products

49%

Content management

47%

Intranet solutions

43%

Portals

41%

Security (network)

40%

Data warehousing/analytics

38%

Supply chain management (SCM)

31%

Application hosting/thin-client architecture

30%

Buy-side/ procurement e-commerce

30%

Sell-side e-commerce/ catalog management

29%

Enterprise resource planning (ERP)

25%

Managed hosting

15%

Source: CommunityB2B.com, 2001



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Index of Charts

Indeed, at the same time as they are deploying new e-business systems,many companies are busy integrating their own internal informationsystems as well - a study by Forrester Research found that 38% ofmanufacturers did not have complete visibility into every one of their ownplants’ operations.

Not surprisingly, respondents to another Forrester survey said that 68%of their integration costs were being spent on internal systems, while theremaining 32% was going toward business-to-business integration. Of the50 Global 3,500 companies that Forrester surveyed in late 2001, 28% ofrespondents were integrating between one and three different technologysystems, while 20% said that they were integrating more than 15 systems.

Almost half of these projects, 44%, were expected to take between one andthree years, while most others were expected to take less than one year.Respondents indicated that they were spending anywhere between$300,000 to $30 million on integration in 2001, with the medianintegration budget set at $3.5 million. By 2003, average spending wasexpected to grow to $4.8 million.

According to the Gartner Group’s “most likely” scenario for enterprisesoftware sales, application integration and middleware applications areexpected to see stronger growth than other software categories during thenext two years. Supply chain management applications are expected torebound in 2002, but contrary to other researcher firms’ forecasts, sales ofsell-side and buy-side e-commerce applications, along with CRM software,are expected to see little or no growth through the end of 2002.

Number of Technology Systems Being Integrated byGlobal 3,500 Companies, 2001 (as a % of respondents)

1 to 3 28%

4 to 6 12%

7 to 9 8%

10 to 12 15%

13 to 15 4%

>15 20%

Don’t know/can’t say 14%

Note: n=50 managers from Global 3,500 companiesSource: Forrester Research, 2001



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Index of Charts

With cost considerations coming to the fore in 2001, e-business softwarebuyers have focused upon ROI models and customer case studies in order todetermine which vendors’ solutions they should buy. This trend is expectedto continue in 2002, as companies have learned to be more discriminatingin their technology buying.

“Vendors must ensure [that their] offerings andvalue propositions have a rapid return oninvestment and generate new revenue or cut costsfor customers.” –Thomas Topolinski, Gartner Group

Forecast Growth Rates for Enterprise SoftwareMarket Worldwide, 2001-2003

2001 2002 2003

Application integration and middleware 11.9% 13.5% 13.7%

Supply chain management 4.2% 6.0% 12.0%

Customer relationship management -8.0% 0.0% 10.0%

Internet commerce, sell side -30.0% 3.0% 10.0%

Internet commerce, buy side -35.0% 3.0% 15.0%

Enterprise resource planning -26.0% -10.0% 0.0%

Source: Gartner Group, 2001



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Index of Charts

But beyond the ROI focus, customers have also become more wary aboutthe financial viability of their software vendors, and have rated it as theirnumber two concern when evaluating e-business solutions. This hasproven to be particularly problematic for smaller vendors, who arecompeting with larger, more established software firms.

Not surprisingly, budget constraints were cited as the single mostsignificant barrier to e-business adoption in 2001, as cost-conscious timeshave forced many companies to scale back on projects. The technologicalcapability of a company’s trading partners has also remained a problem forseveral enterprises, as small and mid-size suppliers in many industries haveremained ill-equipped for e-business.

This is changing in 2002 however, as large companies are now becomingmore proactive about signing up their smaller suppliers, either throughweb-enabled EDI networks, their own private trading exchanges, orthrough consortia-backed ventures.

Primary Considerations When Evaluating anE-Business Vendor, 2001

Return on investment models 3.82

Financial viability of vendor 3.82

Total cost of ownership (TCO) model 3.71

Side-by-side functional comparison 3.61

Customer recommendations 3.61

Pilot programs 3.54

Side-by-side comparison 3.49

Product demonstrations 3.42

Research reports 2.96

Note: on a scale of 1 to 5, where 1 = least important and 5 = mostimportantSource: A. T. Kearney/Line56 Research, November 2001



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Index of Charts

Although collaborative design software is not new to leading automanufacturers or aerospace firms, online collaborative design solutionsvendors have in late 2001 begun a new push to expand their customer baseinto other manufactured goods industries.

Touting the cost savings from reduced business travel and courier fees,along with the advantages of shorter product development cycles andfaster time-to-market, online collaboration software vendors are making apersuasive case that the greatest e-business savings will, in fact, comethrough their solutions.

As an example of these savings, e2open has published the results of itssuccessful pilot of a hosted collaborative design solution that was used byLG Electronics. According to the case study, the manufacturer saw itsproduct planning team reduce the time to market for a particular moldingproduct from 53 days to 20 days. LG Electronics also reduced the numberof business trips typically required for such a project by 80%.

Using stories like this, collaborative design solutions vendors are makingprogress in getting potential customers’ attention. Most users are especiallyinterested in the promises of faster product development cycles, asForrester Research found in an early-2001 study.

Leading Barriers to E-Business Adoption, 2001

Budget constraints 3.76

Cost of implementation 3.60

Technology capability of trading partners 3.21

Lack of performance metrics 3.06

Need for more e-business knowledge 2.97

Security concerns 2.79

Reliability of technology 2.76

Lack of executive support 2.75

Employee adoption 2.69

Bandwidth limitations 2.49

Note: on a scale of 1 to 5, where 1 = low barrier and 5 = high barrierSource: A. T. Kearney/Line56 Research, November 2001



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Index of Charts

But while internet-based design collaboration is certainly on mostsuppliers’ radar, many still did not consider it a priority in 2001. However,94% of survey respondents to the Forrester Research survey do expect thatdesign collaboration will become either very important or critical to theirfirms by 2003.

Despite their need to juggle multiple e-business priorities, just under onethird of suppliers are already using some kind of collaborative viewingtools, while almost half of suppliers are using internet-based projectmanagement applications. Once again, the expansion of onlinecollaborative design applications is expected over the next two years, asmore than 80% of respondents to Forrester’s survey plan to be using suchtools by 2003.

Suppliers' Anticipated Benefits from OnlineCollaboration, 2001 (as a % of respondents)

Faster time-to-market 74%

Reduced product costs 48%

Increased quality levels 32%

Note: multiple responses acceptedSource: Forrester Research, March 2001


Importance of Design Collaboration to Suppliers, 2001& 2003 (as a % of respondents)

2001

34%

54%

12%

2003

72%

22%

6%

Critical Very important Mildly important




66


Methodology





Index of Charts

Since the fourth quarter of 2000, Forrester Research, in partnership withthe Institute for Supply Management, has been conducting quarterlysurveys of between 360 and 400 American businesses, as a means oftracking the growth of e-commerce activity in the United States.

After one full year of gathering data, the study has found a steadyincrease in the percent of companies that are using the internet to purchaseindirect goods and services, such as office supplies or maintenanceequipment.

In the fourth quarter of 2001, more than three quarters of Americanbusinesses had bought indirect goods or services online, up from 70.9% ofbusinesses at the beginning of the year. As for the amount of purchasingthat individual firms are doing online, American companies are averagingjust under 10% of their overall indirect procurement activity.

Supplier Use of Online Collaborative Tools, 2001 &2003 (as a % of respondents)

Collaborative viewing of design drawings

28%

86%

Project management applications

48%

82%

Instant messaging/web conferencing

30%

82%

Document-sharing applications

40%

76%

2001 2003



Percent of US Companies Buying IndirectGoods/Services via the Internet, Q1-Q4 2001

Q1 2001 70.9%

Q2 2001 72.7%

Q3 2001 75.3%

Q4 2001 77.5%

Source: Institute for Supply Management, Forrester Research, 2001 & 2002



67


Methodology





Index of Charts

Because direct materials procurement is considered to be a strategicallyimportant part of business operations, few companies are yet prepared toshift large volumes of their critical buying to new, internet-based channels.Nonetheless, by the fourth quarter of 2001, 57.2% of American companieswere doing at least some direct procurement online.

Not unexpectedly, volumes have been relatively low, and they have infact declined over the course of the year. As with every other category of e-commerce activity, direct procurement purchasing fell off the mostduring the third quarter, but was able to rebound to account for an average6.2% of business purchasing activity in the fourth quarter of the year.

Average Amount of Indirect Goods/ServicesPurchasing Done via the Internet, Q1-Q4 2001 (as a %of total company purchasing)

Q1 2001 9.3%

Q2 2001 9.7%

Q3 2001 7.1%

Q4 2001 9.5%



Percent of US Companies Buying DirectGoods/Services via the Internet, Q1-Q4 2001

Q1 2001 45.7%

Q2 2001 53.8%

Q3 2001 55.8%

Q4 2001 57.2%



Average Amount of Direct Goods/Services PurchasingDone via the Internet, Q1-Q4 2001 (as a % of totalcompany purchasing)

Q1 2001 11.7%

Q2 2001 9.8%

Q3 2001 5.3%

Q4 2001 6.2%




68


Methodology





Index of Charts

US businesses are using online auctions for both indirect and directprocurement, although it appears that companies are steering a greaterproportion of their direct procurement activity through internet auction events.

At least one quarter of American firms have done some buying throughan online auction in 2001.

About one quarter of American firms have also done some of their buyingthrough online exchanges – although it is likely that there is some overlapin this category with that of online auction trade. Online auctions havearguably been the primary e-commerce feature that most companies haveused via an exchange.

Just as with the other segments of the Forrester/ISM procurement survey,US exchange-based trade dipped in the third quarter of 2001, but thenrecovered to post healthy activity in the fourth quarter.

The Computer Sciences Corporation has found that, as a result of theirparticipation in e-business trade of some kind, 30.4% of large businesseshave experienced an increase in the number of suppliers with which theyinteract. On the other hand, the majority of enterprises surveyed by CSCreport no change in the number of suppliers with whom they trade, while10.7% of large firms have seen their number of suppliers decrease.

Percent of US Companies Buying Goods/Services viaan Internet Auction, Q1-Q4 2001

Q1 2001 15.0%

Q2 2001 25.2%

Q3 2001 17.4%

Q4 2001 23.1%



Percent of US Companies Buying Goods/Services viaan Online Exchange, Q1-Q4 2001

Q1 2001 22.7%

Q2 2001 25.2%

Q3 2001 22.8%

Q4 2001 26.4%




69


Methodology





Index of Charts

Indeed, the internet has proven to be a useful sourcing tool in the earlystages of its use as an information-gathering resource for businesses. It istherefore of little surprise that several companies have reported an increasein the number of suppliers with which they interact.

However, as enterprises expand their electronic trading networks overtime, they will be able to obtain a more detailed picture of their suppliercommunity. Eventually, with the help of analytical software applications,large buyers will be able to compare the relative performance of theirtrading partners, and perhaps identify those with which they will prefer todo business.

The end result may therefore be a consolidation of trading partners, asenterprises will find efficiencies by reducing the number of suppliers withwhom they trade. As for the remaining suppliers, their larger tradingpartners will likely find ways to help them become more efficient, as trueextended supply chains take shape.

Number of suppliersremains the same

58.9%

Decreasesthe numberof suppliers10.7%

Increases thenumber of suppliers30.4%

Effect of E-Business upon Leading Global Companies'Supplier Relationships, 2001



IIIMethodology

I Regional Forecasts


III Private Exchanges and E-Commerce Initiatives 71


Index of Charts


71



72


Methodology





Index of Charts

Using the broadest possible definition for electronic commerce, business-to-business e-commerce covers as many as 7 different electronic channelsthrough which businesses may interact, with 6 of those 7 channels makinguse of the internet. These include extranets, private trading exchanges,consortia-led exchanges, web-EDI, EDI conducted through internet-basedtrading networks, and direct online sales via company websites or catalogs.

Within the context of general commercial trade, internet-based trade isgrowing at the expense of two other commercial channels – offline tradethat has traditionally been conducted over the telephone or by fax, andtrade that is conducted through electronic data interchange (EDI) networks.

So far, the largest portion of online trade has grown thanks to themigration of offline trade onto the internet. This has occurred through theincreased use of the internet for indirect procurement, the use of bothforward and reverse online auctions, and the use of web-based catalogs fordirect and indirect purchasing. These varieties of online trade have seensteady growth since their widespread adoption began in late 1999.

Another wave of internet trade is gaining momentum in 2002, as severalsmall and mid-size suppliers are being connected with their larger tradingpartners through a variety of different electronic channels. Whether it isthrough web-enabled EDI, consortia-backed exchanges, or via their ownprivate exchanges, large enterprises have begun the process ofconsolidating their smaller suppliers onto internet-based trading networks,so that they may eliminate the inefficient phone, fax and mailcorrespondence that they maintain with literally hundreds of smallercompanies.

It is worthwhile to note that the above examples of online trade areprimarily contributing to the incremental growth of electronic commerce,as most of the transactions they facilitate have only recently been madefeasible by the acceptance of the internet as a channel for commercialactivity.

In the mid- to long-term however, internet-based trade will increasinglygrow at the expense of EDI. This shift will not occur in the short term,because large enterprises have been successfully running their high-volume transmissions of order-to-invoice documents through EDInetworks for more than 20 years, and most have made substantialinvestments in the technology infrastructure that is required to connectwith their trading partners through these networks.

But although large companies are not about to discard their EDIinvestments overnight, many enterprises are aware that internet-basedalternatives to EDI are considerably less expensive to operate, and alsohave greater functionality.

According to a mid-2001 survey by Forrester Research, most companiesexpect that their purchasing activity will be conducted through a privateexchange by 2003, while a significant 28% plan to still be using EDInetworks in two years’ time. Just 19% of survey respondents expect to beusing public trading exchanges in 2003.


73


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Index of Charts

Faced with these e-commerce alternatives, many companies are still in theprocess of deciding which networks they will use, or prioritizing theimplementation of multiple e-commerce initiatives. A smaller number ofbusinesses have begun to build-out their own private networks, orparticipate in the development of the shared infrastructure of industry-backed exchanges.

This is confirmed by a mid-2001 survey that was conducted by Line56Research and Cap Gemini Ernst & Young, in which almost 35% ofrespondents had plans to initiate the development of a private exchangewithin the following twelve months, while 29.3% of respondents said thattheir company remained unsure of its plans.

Electronic Channels Used for Electronic Purchasing,2001 & 2003 (as a % of respondents)

Private exchange trade

42%

53%

Public exchanges

11%

19%

Electronic data interchange

47%

28%

2001 2003

Source: Forrester Research, July 2001


Unsure29.3%

Will not initiatea private exchange

35.9%

Will initiate aprivate exchange34.8%

Percent of Large Companies Planning to Initiate aPrivate Exchange within 12 Months, June 2001 (as a %of respondents)




74


Methodology





Index of Charts

Regardless of the choices that businesses will make, it is reasonable toexpect that the majority of companies will wind up trading throughmultiple electronic networks, using separate channels for different types oftransactions.

For example, a large manufacturer might continue to use an EDI value-added network (VAN) to exchange documents with its first-tier suppliers,while small and mid-size suppliers will connect to the manufacturerthrough an internet-based EDI network that is operated by a third party, orthrough a consortium-backed exchange. At the same time, the largemanufacturer might also be using a consortium-backed exchange toconduct online auction events, while operating yet another private extranetto link to the leading distributors and channel partners in its demand chain.

It does appear, however, that most businesses have a preference fordeveloping their own privately run e-commerce trading networks, which atthe very least will be used to secure their ties to their most importanttrading partners. According to Line56 Research, respondents to its surveyranked such private networks as their highest priority, despite the fact thatseveral large companies remain as either sponsors or participants inindustry-backed exchanges.

There are, of course, exceptions in some highly consolidated industries.Two examples include Covisint in the automotive industry and Exostar inthe aerospace industry, where both exchanges have positioned themselvesto serve as industry-wide portals for the procurement networks of largemanufacturers. In turn, their backers have stated that they intend toeventually move most of their procurement activity through thesenetworks.

Leading Channels that Large Companies Expect toFocus on as They Become Internet Ready, June 2001to June 2002

Extranets 3.30

Private exchanges 3.24

Enterprise portals 3.14

Point-to-point integration 3.06

Consortium (industry backed) public exchanges 2.87

Independently operated exchanges 2.75

Note: on a scale of 1 to 5, where 1 = low and 5 = highSource: Cap Gemini Ernst & Young, Line56 Research, 2001



75


Methodology





Index of Charts

But it is anticipated that individual manufacturers will, in effect, developtheir own private trading networks within the shared infrastructure that isto be operated by both of these exchanges. It is also expected that largemanufacturers such as Ford and Boeing will continue to operate direct EDIlinks with their key trading partners, at least over the short- to mid-term.

When it comes to determining the kind of private trading networks thatmost large businesses plan to build, it is interesting to see that both buy-side and sell-side networks figure prominently among their priorities.Besides direct business-to-business transaction capabilities, private tradingexchanges are also expected to offer order fulfillment and logisticscapabilities, as well as customer service features on the sales side.

More complex functionality such as supply chain planning and channelpartner management do not appear to be a part of private exchangebuilders’ first priorities, but it is likely that such features will be added oncethe foundation of basic transaction capabilities has been developed.

While much of the early attention surrounding the development of privateexchanges was focused upon the buy-side networks of large enterprises,companies are now beginning to show greater interest in the developmentof private exchanges that manage the sell-side of their operations as well.Indeed, several businesses’ demand chains are just as complex andstrategically important as their supply chains.

Expected Value Chain Focus among Private ExchangeBuilders, June 2001 (as a % of respondents)

Direct procurement 81.0%

Fulfillment and logistics 79.4%

Sales 77.8%

Customer service 74.6%

Supply chain planning 68.3%

Marketing 63.5%

Indirect procurement 57.1%

Strategic planning 55.6%

Channel partner management 52.4%

New product development 39.7%

Manufacturing 22.2%

Treasury and finance 15.9%




76


Methodology





Index of Charts

“What we’re seeing is that the internet isparticularly suited to companies whose mainbusiness is distribution.” –Lisa Williams, Yankee Groupi

Whether it is a central website that is used to communicate sales andmarketing information throughout a company’s demand chain, or a privateexchange that links channel partners to inventory data and warrantyinformation, the internet is a cost-effective means for large businesses toorganize their distribution networks and gain valuable insight into theirdemand chains.

Although about one third of businesses appeared committed to buildinga private trading exchange of some kind in early 2001, the deployment ofprivate exchanges was expected to take some time. In the second quarter of2001, AMR Research found that of the 433 companies that it surveyed, 47%of respondents did not expect to be participating in a private exchange forat least another year, while 46% said that they had no plans to participatein a private exchange of any kind.

Wholesale and retail companies were more eager than their counterpartsin the manufacturing industry to participate in an exchange, with 30% ofwholesalers/retailers saying that they expected to participate in a privatetrading network within less than 2 years. By contrast, 32% ofmanufacturers said that it would be more than 2 years before they wouldparticipate in a private exchange, while 48% had no plans to participate inone at all.

Anticipated Use of Private Trading Exchanges amongPotential Users, 2001

Will participate within 6 months

1%

Will participate within 6 to 12 months

6%

Will participate within 12 to 24 months

24%

Will participate within 24+ months

23%

Will never participate

46%




77


Methodology





Index of Charts

Almost one fifth of the companies surveyed by AMR Research had alreadydeployed a fully-operational private exchange by the middle of 2001, whilean additional 21% were in the midst of implementing a private exchange.

A late-2001 study by Forrester Research posted comparable results, findingthat approximately 18% of companies have successfully used web-basedsystems to integrate the majority of their trading partners with theirinternal systems.

As for the development of private exchange features, Forrester estimatesthat it takes about 6 months to develop an exchange with order trackingcapabilities, while a much more complex exchange capable of facilitatingorder management and optimization will take over two years to developand implement.

From the experience acquired through the development of its ownconsortium-backed trading network, as well as its careful analysis ofseveral technology solutions, electronics industry exchange Converge haspublished estimates for the cost of building three different sizes of privatetrading exchange.

For a small enterprise with less than $10 billion in revenues, Convergeestimates that the three-year total cost of ownership (TCO) for such anexchange would be $62.3 million. For an exchange that would be built fora mid-size enterprise, the TCO is estimated at more than $100 million, whilea large enterprise would be expected to spend more than $185 million tobuild and operate its own private exchange over a three-year period.

Stage of Deployment among Potential Private TradingExchange Builders, 2001

Fully operational 19%

Being implemented 21%

Being evaluated 19%

Not considering at all 41%



Timeline for the Development of Private ExchangeFeaturesOrder monitoring (tracking) 6 months

Order management 12 months

Order optimization 26 months




78


Methodology





Index of Charts

These exchanges are described as using EDI VANs as the primary means ofconnecting the enterprise-owner with between 20 and 100 of its tier onetrading partners. It is estimated that the up-front costs associated withsupporting the EDI-based private exchanges for the small, medium andlarge enterprises would be $4.2 million, $5.9 million and $7.7 million,respectively.

Supplier integration costs, which are typically paid for by the supplier,are estimated by Converge to range from between $300,000 and $400,000for tier one suppliers’ EDI-based connections, to between $100 and $250for an internet-based connection that may be used by a smaller supplier.

The initial cost to build a private exchange for a small enterprise is about$13.2 million, according to Converge, while the three-year operating costsare estimated to add up to about $49.1 million.

Among the expenses that Converge believes are typically underestimatedfor building such an exchange, the presentation layer, or user interface, isestimated to cost approximately $800,000, while the middleware for EDIdata transformation and enterprise application integration (EAI) isestimated to cost about $1 million.

Specifications for this small enterprise exchange include the deploymentof 4 software applications – auctions, planning, order management andcontent – that can be used to process as many as 20,000 planningtransactions per day and 5,000 order management transactions per day(POs, advance shipping notices, invoices). Two terabytes of storage arerequired for the exchange, along with one DS1 connection.

The exchange would be able to be accessed by 500 internal users and 20integrated tier one suppliers, as well as 1,000 browser-based suppliers. It isassumed that tier one suppliers would pay for “sender” VAN charges, but notransaction or subscription fees.

Estimated 3-Year Total Cost of Ownership for PrivateExchange Operators, 2001Small enterprise (<$10 billion in revenues) $62.3 million

Mid-size enterprise ($10 billion-$30 billion in revenues) $101.8 million

Large enterprise (>$30 billion in revenues) $185.3 million

Source: Converge, Inc., September 2001



79


Methodology





Index of Charts

The initial build costs for a private exchange that would be operated by amid-size enterprise are expected to run $18.7 million, with the additionalthree-year operating costs totaling about $83.1 million.

The same applications would be used in this exchange as those used inthe small-enterprise exchange, although it would be able to process asmany as 40,000 planning transactions per day, and 10,000 ordermanagement transactions. The exchange would be accessible to 1,500internal users and 5,000 browser-based supplier participants, and includeup to 60 integrated tier one suppliers. Two terabytes of storage capacitywould be required, along with one DS3 connection.

The presentation layer for this mid-size exchange is estimated to cost$1.6 million, while the middleware is expected to cost another $1.6 million.

And finally, the initial cost of building the large enterprise privateexchange is estimated to be $31.7 million, while the three-year operatingcost is expected to total $153.5 million.

Breakdown of the Total Cost of Ownership for a SmallEnterprise Private Exchange, 2001 (in millions)

Year 1 Year 2 Year 3 Total

Hardware $3.5 $2.7 $2.4 $8.6

Software $5.6 $4.3 $3.8 $13.7

Services (R&D) $12.3 $8.5 $7.1 $27.9

Services (training/customer support) $0.8 $1.4 $1.8 $4.0

Other (consulting/ASP charges) $3.4 $2.5 $2.2 $8.1

Total $25.6 $19.4 $17.3 $62.3



Breakdown of the Total Cost of Ownership for aMid-Size Enterprise Private Exchange, 2001 (inmillions)

Hardware

Software

Services (R&D)

Services (training/customersupport)

Other (consulting/ASP charges)

Total

Year 1

$5.8

$7.1

$19.9

$1.1

$6.6

$40.5

Year 2

$4.6

$5.6

$14.6

$1.9

$5.1

$31.8

Year 3

$4.3

$5.2

$13.3

$2.0

$4.7

$29.5

Total

$14.7

$17.9

$47.8

$5.0

$16.4

$101.8




80


Methodology





Index of Charts

This exchange is expected to be capable of supporting 80,000 planningtransactions per day and 20,000 order management transactions. As manyas 10,000 internal users would have access to the exchange, and it wouldbe integrated with 100 tier one suppliers. Internet-browser access to theexchange for smaller trading partners would be unlimited.

Converge estimates that the user interface for this exchange, which couldsupport eight other languages in addition to English, would cost $3 million,while middleware would cost an additional $3.1 million. Three terabytes ofstorage capacity would be required, as well as 2 DS3 connections.

Forrester Research has done a separate analysis of private exchanges, orprivate hubs, as Forrester calls them, that breaks down the cost of buildingout three key exchange features – order monitoring, order management,and order optimization.

By Forrester’s definition of a private exchange, a private hub is “anonline venue, controlled by a single firm, that supports integration andcollaboration with selected partners.” Forrester recommends that privatehubs be built to connect large enterprises with their high-volume directmaterials suppliers, so that they may use the information generatedthrough their transaction activity to reduce costs and improvecollaboration.

As per Forrester’s analysis, internet-based hubs have much lowertransaction costs, and have much less complicated communicationprotocols compared to EDI networks. Private exchanges are also morescaleable than extranets, which have been built using highly-customizedsoftware that is difficult to change, or expand in order to reach additionalsuppliers.

In developing its forecast for the cost of building-out these privateexchange features, Forrester has used as its model a hypothetical enterprisewith $7.5 billion in annual revenues and a staff of 260 purchasingemployees who are responsible for $3.0 billion in annual procurement. It isassumed that the enterprise will connect to a total of 125 suppliers, whileongoing operating costs are calculated for a five-year period.

Breakdown of the Total Cost of Ownership for a LargeEnterprise Private Exchange, 2001 (in millions)

Year 1 Year 2 Year 3 Total

Hardware $10.7 $8.5 $8.0 $27.2

Software $12.4 $9.9 $9.4 $31.7

Services (R&D) $34.5 $26.6 $25.1 $86.2

Services (training/customer support $2.1 $2.4 $2.5 $7.0

Other (consulting/ASP charges $13.1 $10.3 $9.8 $33.2

Total $72.8 $57.7 $54.8 $185.3




81


Methodology





Index of Charts

The most basic private trading exchange envisioned by Forrester Researchis one that can be used for monitoring and processing orders betweentrading partners. Software for this exchange includes an order trackingapplication and middleware.

Forrester estimates that such a hub can be built within six months forabout $6.8 million. The implementation phase is expected to account for58% of the total cost to build this exchange, while the operating cost,which consists of just $398,000 in software maintenance fees, makes up12% of the entire cost of the exchange.

Among the benefits of building this type of private exchange, theexchange operator would gain the ability to reduce delivery delays andimprove order accuracy, while increasing the large buyer’s visibility intothe performance of its various suppliers.

Estimated Cost of Building and Operating a PrivateExchange, 2001 (in thousands)

Ordermonitoring

features

Ordermanagement

features

Orderoptimization

features

Preparation phase $2,045 $7,585 $24,922

Implementationphase

$3,963 $9,462 $21,607

Operation phase $825 $2,704 $6,431

Total cost $6,833 $19,751 $52,960




82


Methodology





Index of Charts

For businesses that want to build upon their basic order monitoringcapabilities and engage in closer collaboration with their key suppliers, anorder management hub is estimated to cost $19.7 million. Forresterestimates that it will take about 12 months, or an additional 6 months and$12.9 million after the construction of a monitor hub, to build amanagement hub.

Order management features used in this exchange require procurementand demand forecasting software. A great deal of preparation work isrequired before deployment of this phase may begin, as the enterprise-operator must be capable of pulling transaction data from multiple softwareapplications, so that it may share this information with key suppliers.

Breakdown of Costs to Build Order MonitoringFeatures for a Private Exchange, 2001 (in thousands)Maincostactivity

Labor Software Consulting Fees Total

Assessment $45 - $100 - $145

Internalpreparation

$500 - $1,400 - $1,900

Totalpreparationphase

$545 - $1,500 - $2,045

E-commercesoftware

$42 $500 $150 - $692

Integration withsuppliers

$628 - $2,502 - $3,130

Training $30 - $112 - $142

Totalimplemen-tationphase

$700 $500 $2,764 - $3,964

Ongoingprojectmanagement

$89 - - - $89

Systemadministration

$298 - - - $298

Suppliersupport

$40 - - - $40

Softwaremaintenancefees

- - - $398 $398

Totaloperationphase

$427 - - $398 $825

Total cost $1,672 $500 $4,264 $398 $6,834

Note: numbers have been roundedSource: Forrester Research, July 2001



83


Methodology





Index of Charts

Forrester estimates that 38% of the cost of developing such features willcome from the preparation work, while an additional 48% will be spent toimplement the software and integrate it with the enterprise softwaresystems of key suppliers.

According to Forrester Research, the estimated cost of building a privateexchange with order optimization features such as sourcing andcollaborative product design applications is approximately $52.9 million,and will take a total of 26 months to complete. In addition to the cost ofbuilding order monitoring and management capabilities, this exchange willrequire an additional $33.2 million to develop, and 14 months to complete.

Because of the deeper level of coordination that is required betweentrading partners, Forrester estimates that integration spending for anexchange of this type will double. Consulting fees for building such anexchange will account for 56% of the total cost, followed by labor at 19%of the cost, and software at 15%, by Forrester’s estimate.

The benefits of an order optimization hub are expected to be faster time-to-market for the exchange operator’s products, as well as real-timeresource allocation between trading network partners – in effect, thisexchange would realize the vision of the extended enterprise.

Breakdown of Costs to Build Order ManagementFeatures for a Private Exchange, 2001 (in thousands)Main cost activity

Assessment

Internal preparation

Total preparationphase

E-commerce software


Training

Total implemen-tation phase

Ongoing projectmanagement

System administration

Supplier support

Software maintenancefees

Total operationphase

Total cost

Labor

$108

$1,838

$1,946

$96

$1,248

$64

$1,408

$179

$477

$60

-

$716

$4,070

Software

-

-

-

$2,500

-

-

$2,500

-

-

-

-

-

$2,500

Consulting

$240

$5,400

$5,640

$340

$4,978

$236

$5,554

-

-

-

-

-

$11,194

Fees

-

-

-

-

-

-

-

-

-

-

$1,988

$1,988

$398

Total

$348

$7,238

$7,586

$2,936

$6,226

$300

$9,462

$179

$477

$60

$1,988

$2,704

$19,752




84


Methodology





Index of Charts

Forrester Research has gone on to do multiple five-year return oninvestment calculations that a private exchange operator might expect toachieve, depending upon the type of exchange that the enterprise decidesto use. Potential returns range from between $5.6 million for an ordermonitoring hub to $142.6 million for an exchange with order optimizationcapabilities.

As a percentage return on the initial cost to build an exchange, the ordermanagement hub provides the best return, while on the basis of a totaldollar-value return over five years, the order optimization hub has beencalculated as delivering the greatest return.

Breakdown of Costs to Build Order OptimizationFeatures for a Private Exchange, 2001 (in thousands)Main cost activity

Assessment

Internal preparation

Total preparationphase

E-commerce software


Training

Total implemen-tation phase

Ongoing projectmanagement

System administration

Supplier support

Software maintenancefees

Total operationphase

Total cost

Labor

$212

$6,250

$6,462

$180

$2,497

$123

$2,800

$328

$656

$80

-

$1,064

$10,326

-

-

-

-

-

-

-

-

-

-

Software

$7,750

$7,750

$7,750

Consulting

$460

$18,000

$18,460

$640

$9,957

$461

$11,058

-

-

-

-

-

$29,518

Fees

-

-

-

-

-

-

-

-

-

-

$5,367

$5,367

$5,367

Total

$672

$24,250

$24,922

$8,570

$12,454

$584

$21,608

$328

$656

$80

$5,367

$6,431

$52,961




85


Methodology





Index of Charts

Among those firms that have already begun to implement their own privateexchanges, AMR Research has found that several companies are receiving afaster payback on their investments than they had originally expected. Thiswas especially true for those projects that were expected to deliver a rapidROI within six months, while longer-term exchange projects appear to bedelivering at a slower rate than originally anticipated.

AMR Research noted that 60% of respondents to its survey said that theirprivate trading exchange initiatives had undergone an ROI analysis, priorto being given a go-ahead. This compared to just 21% of public exchangeprojects that were able to make the same claim.

Most private exchange builders, at 41% of respondents, expected thatthey would achieve an ROI of between 10% and 20%, while an additional21% of respondents expected to see returns of greater than 20%. Just overone third, at 37% of private exchange builders, expected to see an ROI of10% or less.

Estimated ROI from Operating a Private Exchange,2001 (in thousands)

Ordermonitoring

features

Ordermanagement

features

Orderoptimization

features

Procurement $2,963 $29,743 $55,962

Supply chainmanagement

$1,260 $27,233 $60,506

Research anddevelopment

$1,359 $8,485 $26,146

Totalbenefits

$5,582 $65,461 $142,614

ROI (over 5years)

289% 1415% 893%




86


Methodology





Index of Charts

When it comes to identifying e-business leaders, Interactive Weekmagazine has for the past three years compiled an annual list of 500companies that it estimates are conducting the most e-commerce trade. Forthis latest survey, the magazine’s researchers have examined companyrevenues for the four quarters ending June 30th 2001, and then obtained anestimate of e-commerce revenues from company records, or estimated theamount of e-commerce revenues that each firm has generated over thesame period.

It should be noted that, in many instances, Interactive Week’s e-commerce estimates provide only a rough indication of a company’s e-commerce activity, and that they include electronic trade through EDInetworks. Furthermore, the magazine’s rankings have grouped togetheronline retailers, financial services firms, software vendors and business-to-business firms on a single list.

eMarketer has selected the top 20 business-to-business firms by e-commerce revenues, according to Interactive Week’s list. We have, however,excluded Enron, which was ranked number one with $97.4 billion in onlinerevenues. Enron was not included on our list because the company’s e-commerce revenue figure was derived from the notional value offinancial contracts that were traded through its online network, rather thanreal revenues received by the company.

eMarketer has also excluded from our business-to-business list mediaand telecommunications services vendors such as AOL Time Warner andQwest Communications, as well as airlines and financial services firms suchas Southwest Airlines and E*Trade Group.

Expected and Actual Investment Payback Periods forUsers of Private Trading Exchanges, 2001

035687 ©2002 eMarketer, Inc.


www.eMarketer.com

Expected Actual

6 to 12months17%

18 monthsor more

50% 12 to 18months26%

Fewer than 6 months7%

6 to 12months

13%

18 monthsor more

30%

12 to 18 months39%

Fewerthan6 months17%


87


Methodology





Index of Charts

Number one on the business-to-business list is IBM, which took in anestimated $26 billion in e-commerce revenues during the year-ended June30th, 2001. IBM was followed by Intel, which had previously ranked first in2000. UPS, Cisco Systems and Compaq Computer round out the top five e-commerce leaders, with a combined $114.7 billion in electronic revenues.

Taking a closer look at the e-commerce experience of Arrow Electronics,the electronic components distributor first established a direct EDI link toone of its customers in 1979. In early 2000, Arrow and Intel were the firsttrading partners to transact with one another using RosettaNet standards.

Arrow Electronics went on to spend a significant part of 2000 expandingits internet-based customer service capabilities, by giving its customersaccess to its database of technology information along with furtherinformation about product pricing and availability. According to companyrecords, Arrow Electronics had 127,000 registered users accessing itswebsite, arrow.com, by the end of the year, and was experiencing 655,000inventory searches on a monthly basis.

Top 20 B2B E-Business Leaders, by E-CommerceRevenues, June 2000-June 2001 (in billions)IBM $26.0

Intel $25.9

United Parcel Service $22.4

Cisco Systems $20.7

Compaq Computer $19.7

Dell Computer $16.3

General Electric $11.0

General Motors $7.5

Ingram Micro $7.5

Fedex $7.0

Burlington Northern Santa Fe $5.6

Tech Data $5.0

Nortel Networks $4.1

Lucent Technologies $3.3

Micron $3.0

Arrow Electronics $2.6

Sun Microsystems $2.7

Apple Computer $1.9

Office Depot $1.7

Yellow Freight Systems $1.6

National Semiconductor $1.5

Total $197.0

Note: E-commerce revenues include EDISource: Interactive Week, 2001



88


Methodology





Index of Charts

Arrow Electronics saw its electronic commerce trade grow significantly aswell, increasing by almost 64% in 2000 to reach $1.8 billion.

Among the top 35 businesses on the Interactive Week 500 are twotransportation companies, Burlington Northern Santa Fe and YellowFreight. Both companies have self-service websites that permit theircustomers to track shipments in real time.

The 20,000 suppliers who sign on to Burlington Northern’s website arealso able to make internet payments and resolve billing disputes with therailroad online – a time-consuming process that Burlington Northernestimates has been reduced from between 30 and 60 days to just 2. YellowFreight boasts 60,000 registered users on its website and electronic sales of$1.6 billion, or about 60% of company revenues.

As a vendor of indirect procurement goods, Boise Cascade has seen its e-commerce sales almost triple from 6% of company revenues in 1998 to16% of revenues by 2000. By the end of that year, Boise Cascade wasprocessing 15,000 internet-based orders per day, and was on pace to see$800 million in revenues through its online operations by the end of 2001.

The office products vendor initially deployed an internet-based catalogin 1997, which replaced its EDI VAN connection for a cost savings ofapproximately $120,000 per year. Like many self-service websites, Boise Cascade’s catalog permits clients to customize purchasing rulesaccording to their own procurement needs, and is available to its customersat their convenience.

E-Business Profile: Arrow Electronics' E-CommerceRevenues, 1998-2000 (in billions)

1998 $0.95

1999 $1.10

2000 $1.80

Source: eMarketer, company reports, 2002


E-Business Profile: Boise Cascade's US E-CommerceSales, 1998-2000 (as a % of total sales)

1998 6%

1999 12%

2000 16%

Source: eMarketer, company reports, 2002



89


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Index of Charts

Dow Chemical is an example of a large manufacturer that is developingmultiple e-commerce trading channels simultaneously. On the buy-side ofits operations, Dow is a founding member of three industry-backedexchanges – Omnexus, Elemica and TradeRanger – while on the sell-side,Dow operates a website for direct customer sales at Dow.com. It also has acustomer self-service portal at [email protected], which permits Dowclients to make billing inquiries or request product information.

In mid-2001, there were an estimated 7,000 users making purchases viaDow.com, with transaction activity increasing by a rate of 10%, month over month.

And finally, Procter & Gamble has been consolidating its enterprise-wideindirect procurement activity on a web-based platform since 1999. BecauseProcter & Gamble was already an SAP R/3 customer, the consumerpackaged goods giant decided to use an SAPMarkets procurement solution to organize the combined purchasing activity of 25,000 of itsemployees worldwide.

According to Line56 magazine, Procter & Gamble decided to consolidate40,000 catalog items from 170 vendors on an internally run system, whileat the same time providing its employees access to 5 catalogs hosted byoutside vendors. By early 2002, the indirect procurement solution wasavailable to 4,500 Procter & Gamble employees in 17 different countries.

At present, Procter & Gamble is focused upon expanding the use of its newprocurement system within the company, while at the same time it isgathering data about the purchasing activity of its organization as a whole.Over time, this data will likely be used to consolidate the number ofsuppliers with which Procter & Gamble deals, and to negotiate better termson contracts with suppliers that perform well. Once the system is fullyoperational, Procter & Gamble expects to save as much 10% to 15% of itsglobal purchasing budget.

For continuing updates of eMarketer E-Business Profiles, subscribe toeMarketer’s free daily eStat, at www.emarketer.com/newsletters

E-Business Profile: Deployment of Procter & Gamble'sIndirect Procurement Solution, January 2002

Number ofvendors

Number ofcatalog items

Internally-managed catalogs

170 40,000

Externally-hosted catalogs

5 4 million

Source: Line56 Magazine, 2002


IVMethodology




IV Public B2B Exchanges 91

A. EDI Service Providers and Value Added Networks 93

B. Independent and Consortia-Led Exchanges 98

C. E-Commerce Trade and Development of Exchanges 109

Index of Charts


91



92


Methodology





Index of Charts

Public business-to-business exchanges were originally so-named because,in contrast to private exchanges that are operated by a single, largeenterprise, public exchanges have open trading networks that enable manybusinesses to trade with one another as part of an integrated community.Included in this description are EDI value added networks (VANs) andinternet-EDI service providers, as well as independent trading exchangesand consortia-led exchanges.

eMarketer has expanded its coverage of public exchanges to include EDIalternatives because of the substantial volume of direct procurement e-commerce activity that flows through these networks.

During the short term, these EDI networks and exchanges will continueto operate complementary electronic trading channels. But over the mid- tolong term, EDI VAN operators and third-party internet-EDI translationservice providers, along with the hosted e-business networks of consortia-led exchanges will become increasingly competitive with one another.

At present, all three groups are sharing in the incremental growth ofelectronic commerce, which is increasing at the expense of offlinebusiness-to-business trade as large enterprises are connecting with theirsmall and mid-size suppliers through the internet. In the future, however,some of these e-commerce networks will be competing with one anotherfor the high-volume electronic trade that takes place between mostenterprises and their largest trading partners.


93


Methodology





Index of Charts

A. EDI Service Providers and Value AddedNetworksAs mentioned in the previous chapter, it appears that EDI networks will bewith us for at least another 10 to 15 years, and perhaps longer. In fact,according to GE Global Exchange Services, its EDI networks experienced5% growth in transaction volume during 2001, and it anticipates that EDIrevenues along with transaction volume will grow in the 5% to 10% rangein 2002.

In 2000, Giga Information Group estimated that GE GXS was the largestEDI value added network operator, with approximately 100,000 tradingpartners that had to access its community. It was followed by IBM GlobalServices and Sterling Commerce (owned by SBC Communications), whichhad approximately 50,000 trading partners each. Depending on thedefinition used, there are an estimated 30 to 50 EDI VANs operating in theUnited States alone.

For established VAN service providers such as GE GXS and IBM, pastcompetition has come from two areas – other VANs, and the deployment ofprivate, direct EDI connections between two trading partners. The valueproposition that has made VAN operators competitive to direct EDI,however, has been their ability to provide EDI connections at aconsiderably reduced price, thanks to their shared network infrastructure.

The internet, of course, has brought to life several new competitors, asoperators of internet-based electronic trading networks are now offeringconsiderably less expensive document exchange services through theirtranslation services. Individual companies are also now able to build direct,internet-based links to their trading partners at considerably lower coststhan direct EDI.

Leading Global EDI Value Added Networks, by Numberof Trading Partners, 2000

GE Global eXchange Services

100,000

IBM

50,000

Sterling Commerce

50,000

Peregrine Systems (Harbinger)

40,000

TranSettlements

25,000

Source: Giga Information Group, 2000



94


Methodology





Index of Charts

As a result of these less expensive alternatives, EDI VAN customers areincreasingly demanding lower access prices, although they are at the sametime reluctant to abandon their investment in EDI technologies, or rapidlymigrate their most mission-critical data exchange onto new, unprovennetworks. Indeed, rather than abandoning their EDI VANs, many users areinstead in the midst of using internet-based EDI/XML translation servicesto provide their small and mid-size trading partners with a means ofexchanging documents with them electronically.

This process of supplier enablement is in turn expanding the number ofVAN trading partners by the hundreds. GE GXS estimates that its TradeWebplatform, which provides web-based document translation services forsmall suppliers, has gone from adding about 100 new suppliers to itsnetwork on a monthly basis at the beginning of 2001, to adding 400 to 500new suppliers on a monthly basis by the end of the year.

But once large enterprises are no longer preoccupied with the expansionof their EDI trading networks, many will inevitably want to switch tointernet-based networks as their primary means of connecting to theirtrading partners. It is anticipated that most large companies will developstrategies for their transition to internet-based networks over the mid- tolong-term, although there are already several examples of large companiesthat have abandoned their use of VANs altogether. GE Global ExchangeServices believes that efforts to replace VANs will start to grow in anothersix to eighteen months.

Not unlike incumbent ERP vendors such as Oracle and SAP who camelate to the B2B game, established EDI VAN operators have also been forcedto play catch-up to more nimble internet-based network operators.However, incumbents such as GE GXS, IBM Global Services, PeregrineSystems and Sterling Commerce are in the most advantageous position tofacilitate the transition to internet-based trading networks, as they alreadyhave the business and trust of their established trading partners.

EDI VAN operators have therefore begun to become increasinglycompetitive in the business of web-enabling the small and mid-size tradingpartners of their largest customers. For example, Albertson’s Inc. has askedGE GXS to connect the remaining 1,500 of its 3,500 total suppliers throughelectronic channels, while Walgreens has sought the help of GXS to makeinternet-ready 100% of its 3,000 suppliers.

After a company gives GE GXS the go-ahead to sign up its smallertrading partners, these suppliers are typically approached by GXS’sInterchange Services division and signed up in prioritized groups of about200 to 300 at a time. According to GXS, aggressive adopters are able to getall of their targeted suppliers signed up within three to six months.


95


Methodology





Index of Charts

Through its marketplace group, GE GXS is also building private exchangesolutions for its clients. Among the 30 to 40 marketplaces that it claims tohave helped build, GE GXS has recently announced that it has connectedapproximately 5,000 of DaimlerChrysler’s suppliers through its own hosted,internet-based trading solutions.

Alternative internet-EDI services providers, such as Advanced DataExchange, SPS Commerce, and ICC.net are also well positioned to facilitatethis shift to internet-based trading networks, as they have been providingEDI document translation and access services to many large VAN users’smaller trading partners for some time.

In addition to EDI document translation services, ICC.net, for example,has been offering the use of its internet-based VAN services as a direct,lower-cost alternative to EDI VANs. Among its customers that have decidedto shift from the use of EDI networks to ICC.net’s services are BethlehemSteel, Pier 1 Imports and Agrilink Foods.

Rather than going head-to-head with established EDI VANs, AdvancedData Exchange (ADX) is focused upon helping VAN customers sign up theirsmaller trading partners by offering translation services from fax, web-browser, and applications-based document transmission into EDI-formatted documents, which are in turn sent to the larger trading partner.ADX works in partnership with its large enterprise customers to encouragesmaller companies to sign up for electronic trade, but handles all thenecessary hook-up and customer assistance that is required to bringsupplier communities online.

ADX counts among its enterprise customers 200 of the Fortune 1000,including 60 of the leading grocery industry companies in the UnitedStates. Although suppliers are responsible for a fixed monthly fee that canrange from $45 to $300, depending upon their transaction activity, theyalso benefit by being able to connect with any other trading partner that isa member of the ADX network.

ADX estimates that its network users have gone from connecting with anaverage 1.3 trading partners through its community during 2000, to anaverage 3.4 trading partners by the end of 2001. Month over month growth inthe number of suppliers joining its network was at 24.2% as of January 2002.

Private Electronic Trading Networks to be Enabled byGE Global Exchange ServicesAlbertson’s Inc. 3500 suppliers

Walgreens 3000 suppliers

Source: GE Global Exchange Services, 2001



96


Methodology





Index of Charts

In a case study that was conducted by ADX customer Newark Electronics, itwas found that the total cost of setting up an internet-EDI basedconnection to 81 of its smaller suppliers was approximately $27,550. ADXhandled most of the set-up activity, from making the initial contacts withNewark’s suppliers to installing their software and training their staff onhow to use its application.

Similar full-service installation and maintenance assistance are offeredby ADX competitors such as ICC.net and through GE GXS’s InterchangeServices division.

As part of the cost savings that were calculated by Newark, the companyfound that it had substantially reduced the number of e-mails and suppliercalls that its sales representatives had previously been required to make fororder tracking when Newark’s suppliers were not electronically connectedto its system.

It also increased the percentage of acknowledged purchase orders from33% to 94%, by consolidating its paper-based document exchange onto anelectronic system. In total, Newark Electronics estimates that it will saveapproximately $1.2 million over the next three years.

As for the timing of the project, within one year Newark Electronics wasable to increase the number of EDI-connected suppliers from 75 in 2000 to235 by mid-2001. During the sign-up process, the company also discoveredthat several of its suppliers were already using internet-based EDI withother trading partners.

Initial Set-Up Costs for Connecting NewarkElectronics and its Suppliers via the ADX Network,2001Mapping and initial master set-up fees $3,000

Newark internal IT coordination for initial program set-up andmapping discussions (approx. 10 hours)

$250

Supplier set-up fees (81 suppliers x $200 ea.) $16,200

Newark internal IT coordination for supplier set-up(4 hours/supplier)

$8,100

Total $27,550

Source: Newark Electronics and ADX, 2001


Three-Year Return on Investment Calculation forNewark Electronics' Use of ADX Network, 2001Initial expenditures for ADX solution $27,550

Recurring costs for using ADX network $0

Estimated annual sales force cost savings $1,154,685

Estimated annual clerical staff cost savings $65,187

Three-year ROI 4,428%

Source: Newark Electronics and ADX, 2001



97


Methodology





Index of Charts

When it comes to suppliers’ interest in signing-on to these networks, itseems that in early 2002 many large buyers have begun to insist that theirsuppliers begin trading with them through electronic networks of somekind — or face financial penalties, in the form of service charges, in thenear future.

ADX has noted that after first enduring the uncertainty of Y2Kpreparations, and then the excitement and confusion surrounding thedeployment of business-to-business exchanges, interest in internet-basedEDI networks has finally gathered momentum. As confirmation of thismomentum, ADX says that it brought more trading partners onto itsnetwork during the first six weeks of 2002 than it had in all of 2001.


98


Methodology





Index of Charts

B. Independent and Consortia-LedExchangesDuring the course of 2001, the Giga Information Group and Booz AllenHamilton conducted a study of business-to-business exchanges in whichthey identified 2,233 internet-based marketplaces worldwide. Althoughseveral exchanges closed down while the survey was in progress, or shortlyafter it was completed, the researchers were able to gather enoughinformation to profile 1,802 internet-based exchanges.

Broken down by geography, North America was served by the largestproportion of exchanges, accounting for 38% of the total. Europe had thesecond highest percentage of regional marketplaces, while 20% of theprofiled exchanges claimed to be serving a global membership.

A substantial 92% of the surveyed marketplaces were developed byindependent owners, while consortia-backed exchanges accounted for just5% of the total. The remaining 3% were determined to be private exchanges.

Latin America5%Asia-Pacific

& Japan10%

Global20%

Europe27%

North America38%

Breakdown of Public Exchanges, by PrimaryGeographic Region Served, 2001

Source: Booz Allen Hamilton, Giga Information Group, 2001


Private tradingexchanges3%

Consortia-ledexchanges

5%

Independent trading exchanges92%

Breakdown of B2B Exchange Ownership, 2001




99


Methodology





Index of Charts

The study went on to find that the number of exchanges variedsignificantly by industry, with the transportation and logistics industry, forexample, being home to 106 marketplaces, while the automotive industryhad just 17. Other industries with more than 100 exchanges included healthcare, food and beverage, electronics, and industrial goods. Thetelecommunications and hospitalities industries had fewer than 25marketplaces.

Booz Allen Hamilton and the Giga Information Group also counted 170generalist exchanges, which attempted to provide online trading services tomultiple industries. Many used online catalogs to sell indirect procurementgoods, or operated auction services for the disposal of excess inventory items.

As might be expected, independent trading exchanges tended to providea narrower range of core services, compared to those of industry-backedexchanges. Independent exchanges were often developed with less than$20 million in venture funding, while consortia-led exchanges such asTransora were initiated with more than $200 million in investment support.

Among the core features that were offered by exchanges, the researchersfound that online information exchange, digital catalogs, and onlineauctions were the most common features. After these three basic services,internet exchange functionality quickly falls off, as fewer independentswere able to develop logistics services or advanced features such as supplychain planning or design collaboration.

Indeed, although they account for just 5% of the surveyed exchanges,consortia-led groups offered a disproportionate amount of advanced features.

Core Service Offerings of Online Exchanges, 2001

Information exchange

65%

Digital catalogs

63%

Online auctions

55%

Logistics services

21%

Supply chain planning

8%

Design collaboration

4%

Other value-added services (e.g., financing, offline brokering)

45%




100


Methodology





Index of Charts

AMR Research conducted a separate study of 60 public exchanges duringthe first half of 2001, and found that the majority of respondents haddeveloped their exchange technology in-house.

The three most important features for public exchange operators wereproduct search capabilities, back-end integration services for buyers andsuppliers, and order status and tracking capabilities. The least-importantfeature among the operators was collaborative planning, forecasting andreplenishment (CPFR) software.

Almost three quarters of the exchanges surveyed by AMR Research hadalready developed basic product and vendor search capabilities, along withproduct or service listings. More complex transaction features were lesslikely to have been developed by the first half of 2001, although half ofexchanges expected to offer some kind of financial billing or paymentcapabilities by the middle of 2002.

It is interesting to note that auction services were not expected to bedeveloped by almost one third of exchanges, while 88% of exchangesplanned to have back-end integration capabilities by the first half of 2003.Interoperability with other exchanges was also a priority, with 84% ofrespondents planning to develop such capabilities.

Boughtexchangeplatform

24%

Built exchange platform76%

Technology Foundation Used by Exchange Operators,2001




101


Methodology





Index of Charts

AMR Research went on to find that 46% of the exchanges in its survey hadeither used or were continuing to use a third-party systems integrator tohelp in the development of their exchange.

At 45% of respondents, almost half of the interviewed exchanges wereusing the hosting services of an application service provider (ASP) tosupport their infrastructure. Software was the greatest expense for themajority of exchange builders, followed by hardware and IT services.

Timeline of Availability of Public ExchangeCapabilities, 2001 (as a % of exchange respondents)

Currentlyavailable

Within1 year

1 to 2years

2+years

Notplanned

Product searchcapability

88% 6% 0% 0% 6%

Product/Servicepostings

84% 4% 0% 0% 12%

Vendor searchcapability

73% 14% 0% 0% 12%

Supplier/Buyerdirectory

61% 14% 2% 0% 22%

General industryinformation &news

60% 10% 4% 0% 26%

Negotiation 58% 14% 0% 4% 24%

Order status andtracking

56% 30% 2% 0% 12%

Forward auction(excess inventory& equipment)

50% 16% 0% 4% 30%

Reverse auction(RFP, RFQ)

50% 20% 2% 0% 28%

Supplier/Buyerback-endintegration

48% 30% 10% 0% 12%

Discussion forumsand online experts

36% 16% 6% 0% 42%

Integration withother exchanges

33% 41% 10% 0% 16%

Financial services- billing andadministration

32% 44% 2% 0% 22%

Financial services- payment andcredit

28% 50% 4% 2% 16%

Financial services- post sales

22% 38% 8% 0% 32%




102


Methodology





Index of Charts

Through the first half of 2001, most public exchanges continued to relyheavily upon transaction or subscription fees for their revenues. eMarketerhas found that through the latter part of the year and into 2002, severalexchanges have also begun to expand various implementation and trainingservices that they provide their members, as a means of diversifying theirrevenue stream.

Turning to the users’ perspective of business-to-business exchanges,Line56 Research and Cap Gemini Ernst & Young found that most e-business managers had a favorable opinion of public exchanges. More thanthree quarters of the respondents to their survey believed that exchangeswere either strategically important, or a source of competitive advantagefor their company.

Other25%

Services21% Hardware

21%

Software33%

Breakdown of Exchange Operators' IT Budgets, 2001



Otherrevenue

13%

Advertising7%

Services11%

Subscription fees21%

Transaction fees48%

Breakdown of Average Exchange Revenue Stream,2001




103


Methodology





Index of Charts

Similar results were found by InternetWeek magazine in a separate surveyof 100 e-business leaders, as 78% of respondents said in mid-2001 thattheir company was either a participant in an online exchange, or in theprocess of founding one. Only 9% of respondents indicated that they didnot participate in a public exchange.

Line56 Research went on to discover that 40.0% of businesses plan toparticipate in one or two internet exchanges, while an additional 43.4% ofcompanies plan to participate in more than two exchanges. Fortunately formost users, as the consolidation of public exchanges has continuedthroughout 2001, it less likely that businesses will have to participate in asmany exchanges as they originally planned.

Primary Drivers of Online Exchange Adoption amongLarge Companies, June 2001 (as a % of respondents)

Strategically important 46.6%

Source of competitive advantage 30.3%

Made necessary by trading partners 14.0%

Exchanges are not important 9.0%

Source: Cap Gemini Ernst & Young, 2001


We are now, or arebecoming, a founderof an industrymarketplace43%

We participate35%

There is amarketplace,

but we do notparticipate

9%

There is nomarketplacein ourindustry13%

Percent of US Companies Participating in an OnlineExchange, 2001

Note: Base: Internetweek 100 companiesSource: InternetWeek, 2001



104


Methodology





Index of Charts

Trade in high volume or commodity goods, along with the ability to reachnew trading partners, are the two leading features that would bring mostbusinesses to use a public exchange instead of a private exchange. Thereduced cost of shared infrastructure was also an enticement for 17% ofrespondents, while others wanted to see public exchanges become furtherdeveloped before they would join.

Throughout 2001, most large enterprises were still considering their use ofpublic exchanges, as exchanges invited them to conduct pilot events. Thesetypically involved reverse auction events or limited indirect procurementactivity. In some industries where successful commodity markets have beenestablished, many large businesses have been trading online for a few years,and are in the process of ramping-up their online transaction activity.

Number of Online Exchanges in Which LargeCompanies Expect to Participate, June 2001 to June2002 (as a % of respondents)

>5 17.8%

2 to 5 25.6%

1 to 2 40.0%

None 16.7%



Criteria for Using a Public Exchange over a PrivateExchange among Large Companies, June 2001 (as a %of respondents)

For high volume/commodity goods

31%

To reach new buyers/sellers

20%

Lower cost for using public exchanges

17%

If partners/customers demand it

14%

If public exchanges become better developed

9%

As a connection mechanism to trading partners

9%




105


Methodology





Index of Charts

According to the InternetWeek survey, about half of American companiesare still conducting less than 10% of their purchasing and sales activitythrough public exchanges. Almost one fifth of respondents to the surveysaid that they were conducting between 11% and 40% of their buying andselling through online exchanges. It should be noted, however, that thesecompanies represent advanced technology users, having been identified byInternetWeek as e-business leaders.

In a Booz Allen Hamilton/Giga Information Group survey of approximately57 public exchange users that was conducted during the summer of 2001,half of respondents had a rather negative opinion of online exchanges.

Exactly half of exchange users said that they were not satisfied with theirexperience to date, while just 10% indicated that they were pleased. Afurther 40% of respondents gave a lukewarm response, saying that theywere only partially satisfied with the internet exchanges they had used.

When it comes to finding out what users expect from a public exchange,AMR Research found that most want self-service capabilities such asproduct search features, order status and tracking, and product or servicelistings. Interestingly, these findings underscore the fact that mostcompanies place a higher value on the internet as an information andcommunications tool, rather than as a transaction-based medium.

Sales orders Purchase orders

21%to 40%10%

21%to 40%11%

11% to 20%19%

11% to 20%18%

<10%55%

<10%47%

>60%13%

>60%15%

41% to 60%3%

41% to 60%9%

Amount of US Companies' Sales and Purchase OrdersConducted via an Online Exchange, 2001

Note: Base: Internetweek 100 companiesSource: InternetWeek, 2001



106


Methodology





Index of Charts

There is no clear consensus among exchange users as to the level of ROI thatthey expect to achieve through their participation in public exchanges. Anequal number of respondents to the AMR Research survey expect to see areturn of less than 10%, as those who expect to see returns that exceed 10%.

Top 10 Exchange Capabilities Expected by ExchangeUsers, 2001

Product search capability 8.6

Order status and tracking 8.6

Product/service postings 8.3

Vendor search capability 8.1

Supplier/back-end integration 7.6

Reverse auction (RFP, RFQ) 7.4

Collaborative supply, demand, and fulfillment 7.3

Transportation management 6.8

Supplier/Buyer directory 6.5

Joint planning & scheduling 6.3

Note: on a scale of 1 to 10, 10 = high importanceSource: AMR Research, 2001



107


Methodology





Index of Charts

A full 75% of public exchange users said that they had already achievedtheir ROI goals through their participation in a public exchange.Respondents also indicated that their payback arrived early, with 25% ofusers indicating that they had achieved their ROI goals within six months.

This is due in part to the fact that exchanges have been smart to roll outfeatures that offer their members a rapid payback, as a means of bringingon more customers. Over time, more complex features will be added, whichwill serve to strengthen exchanges’ ties to their customers. It is alsoexpected that these value-added features will enable exchanges to increasethe service fees that they are able to charge their customers.

The Aberdeen Group has published the results of its survey of 40 publicexchanges, in which it found that, by the autumn of 2001, most exchangeswere averaging 36% growth in the number of monthly transactionsconducted via their platforms. The exchanges reported an average 160transactions per day, with the majority of those transactions being eitherforward or reverse auctions.

Expected Actual

6 to 12months40%

18 monthsor more

20%

12 to 18months30%


6 to 12months33%

18 monthsor more

17%

12 to 18months25%


Expected and Actual Investment Payback Periods forUsers of Public Trading Exchanges, 2001



Users' Expected ROI through Participation in PublicTrading Exchanges, 2001

<5% 13%

5% to 10% 25%

10% to 15% 13%

15% to 20% 25%

Don’t know/refused 25%




108


Methodology





Index of Charts

Approximately 60% of the 40 exchange operators surveyed by theAberdeen Group were also experiencing an acceleration of individualparticipants’ trading activity during the course of 2001, with nine of the topten exchanges confirming that their members’ activity was increasing.Among the ten most liquid exchange operators identified by the AberdeenGroup are Covisint, Pantellos, and TradeMC.

In order for an exchange to be said to have achieved liquidity, theAberdeen Group has set as its standard a closure rate of 80% to 85% of alltransactions that are initiated on its platform.

Of these ten exchange operators that were highlighted in the study, theAberdeen Group found that two were already EBITDA positive during theclosing months of 2001, while all ten expected to be profitable in 2002.

Top 10 Online Exchange Operators with StrongLiquidity, 2001Convisint

CheMatch

FreeMarkets

Financial Oxygen

Logistics.com

Neoforma

Pantellos

Pure Markets

TradeMC

Transora

Source: Aberdeen Group, 2001



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C.E-Commerce Trade and The Developmentof ExchangesCompared to the familiar EDI networks that have been trusted by largecompanies for more than 20 years, business-to-business exchanges arerelatively new entities that remain in the early stage of their development.Most large companies are either still piloting or gradually increasing theiruse of exchange-based trading networks.

So far, the vast majority of independent and consortia-led exchangeshave not positioned themselves to compete for the business of high-volumedocument exchange services. Rather, most have fallen into one of twocategories: dynamic trading exchanges or e-business integrators.

The first classification applies to those exchanges that primarily facilitateonline trading activity, such as the spot market trade of commodityproducts or catalog-based procurement transactions. Examples includeChemConnect in the chemicals industry and Converge in the electroniccomponents industry.

By contrast, e-business integrators have as their main focus thedevelopment of a shared technology infrastructure that permits companiesto develop internet-based connections with their trading partners. Theseexchanges are typically owned by consortia, and in many instances arepositioning themselves to either serve as application service providers(ASPs) for e-business software solutions, or as full-service developers andhosts of the internet exchange activities of their members. Examples includeCovisint in the automotive industry and Exostar in the aerospace industry.

It should be noted that there are several trading networks that combinefeatures of both exchanges. In those industries where there are emergingleaders that fit into one category or the other, there is typically somespeculation that these complementary exchanges will eventually merge, orat the very least develop interoperability agreements. Examples includeChemConnect and Elemica in the chemicals industry and Converge ande2open in the electronic components industry.

Since the publication of eMarketer’s July 2001 eCommerce: B2B ReportTM,several independent trading exchanges have either closed down orsignificantly transformed their business models. Among five leadingindependent exchanges that eMarketer began to track at the beginning of2001, just one was closed down, while the remaining four no longerreferred to themselves as exchanges by the end of the year.


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While Altra Market Place, SciQuest, and eMerge Interactive continue to seesignificant volumes of internet-based trade passing through their networks,all three have begun to receive the greater part of their revenues throughthe sale of industry-specific software solutions. By the middle of 2001,Altra Market Place was reportedly earning about 60% of its revenuesthrough service fees, while 80% of SciQuest’s third quarter revenues werefrom sales of software licenses and service fees.

Citadon has largely focused upon selling its hosted online collaborativesoftware to companies in the engineering and commercial constructionindustry. And although steel-trading exchange MetalSite ceased operationsin June 2001, it was later resurrected by Management Sciences Associatesas part of that firm’s broader steel-industry technology offering.

Due in part to slow customer-adoption rates and a difficult economicclimate, two of the consortia-led exchanges that were profiled ineMarketer’s last report have scaled back their product offerings.

In October 2001, electronic components industry exchange Convergeannounced that it was eliminating three of its hosted software solutions,including its order management, collaborative planning, and logisticsmodules. The industry-sponsored exchange has decided to focus on itsinternet trading platform instead, as well as its market-making trade inhard-to-find electronic components. Much of the trade that passes throughConverge continues to be offline, as its online transaction activity hasremained at about 10% of its overall transaction volume.

By comparison, industry rival e2open has been much more successful atrolling out its internet-based collaborative solutions. Starting with acollaborative design solution that was successfully piloted by LGElectronics in 2001, e2open has gone on to win more than 30 contracts forthe deployment of other hosted applications.

One of e2open’s largest wins has been an internet-based product datamanagement system for disk drive manufacturer, Seagate. Over a three-year period, e2open will roll out a centrally-managed network that willcoordinate the communication and storage of Seagate’s product design,marketing, and manufacturing information. The network will be accessibleto 10,000 of Seagate’s employees throughout the world, and will alsoprovide 2,000 seats for its key trading partners.

Benchmark Independent Exchanges, 2001Altra Market Place

Citadon

eMerge Interactive

MetalSite

SciQuest

Source: eMarketer, January 2002



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Not unlike Converge, Transora has experienced difficulties in getting itsonline collaborative planning, forecasting and replenishment (CPFR)solution off the ground as well. As for the consumer packaged goodsindustry as a whole, many manufacturers and retailers remain unpreparedfor real-time, internet-based collaboration, while the presence ofcompeting CPFR offerings by the WorldWideRetail exchange andGlobalNetXchange have complicated the decision-making process formany potential customers.

In a 2001 survey of 200 CPG and retail industry executives, the GroceryManufacturers of America and Roland Berger found that 68% of CPGmanufacturers were open to the idea of using a public exchange, comparedto 51% of retailers. But while 81% of manufacturers indicated that theywould consider using Transora for connecting to their trading partners, noretailers said they would use the CPG-industry exchange. Instead, 42% ofretail industry executives said they would consider using theGlobalNetXchange or the WorldWideRetail Exchange, while 58% woulduse another third-party solution.

Despite the slow roll out of its collaborative solutions, Transora estimatesthat 45% of its members are using its procurement and supplier-facingCPFR solution for their buy-side activity. The exchange has continued tosee strong interest in the use of its group-buying and indirect procurementauction features.

In early 2002, the WorldWide Retail Exchange claimed that 80% of itsmembers are using at least one of its product offerings, and has set a goalto have 33% of its members using at least two of its technology solutionsby the end of the year. Approximately $2 billion in goods were traded viathe WWRE in 2001, with members saving a reported $270 million.

CPG Manufacturers' Interest in Using Public InternetExchanges, 2001

Transora 81%

GNX or WWRE 63%

Third-party exchange 34%

Source: Grocery Manufacturers of America (GMA), Roland Berger, 2001



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Of the three consortia-led exchanges that aim to serve the CPG and retailindustries, GlobalNetXchange is beginning 2002 in the strongest position.GNX claims to have transacted $2.1 billion via its online auctions during2001, and has seen its overall customer base grow from seven to thirtypaying users.

GNX goes on to note that 100% of its members are actively using itsservices, and that it has successfully piloted several CPFR implementations.Thanks to these case studies, GlobalNetXchange has developed actionabletemplates for rolling out further installations, and has set the goal ofincreasing its customers’ use of its solutions by 150% in 2002.

GNX found that because they control critical customer-facing data, retailerstypically have the final decision when it comes to selecting a CPFR solutionvendor as well as the timing of its roll out. GlobalNetXchange has gone on tonote that there are three predominant CPFR solutions used in the retailindustry, with Manugistics’ solution being offered through its exchange.

After spending much of its time building its business in 2000, auto-industry exchange Covisint began to generate revenues during the firstquarter of 2001. By the end of the year, Covisint had conducted $51 billionin online auctions through 1,400 hosted events. It also closed $100 billionworth of electronic RFQs between original equipment manufacturers(OEMs) and tier one suppliers via its quote management application.

Exchange Profile: Quarterly Online Auction ActivityConducted via GlobalNetXchange, 2001

Number of Auctions Estimated value(in millions)

Q1 2001 425 $315

Q2 2001 514 $360

Q3 2001 580 $500

Q4 2001 1150 $925

Total 2,625 $2,100

Source: GlobalNetXchange, 2002


Exchange Profile: Covisint Transaction Activity andE-Business Operations, 2001Number of online auction events 1,400

Value of auction transactions $51 billion

Value of eRFQ transactions $100 billion

Number of online catalogs 200

Number of individual SKUs 2.5 million

Number of catalog transactions 95,000

Source: Convisint, 2002



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Roughly 70% to 75% of Covisint’s transaction activity was based in theAmericas during 2001, as OEMs used the exchange to connect withsuppliers throughout North and South America. European operationsaccounted for about 20% of transaction activity, while Covisint’s Asianoperations were still in the process of being rolled out in Japan. Covisintplans to be profitable by the fourth quarter of 2002.

In addition to the online auction, catalog, and supply chain solutionsthat are hosted by Covisint, the exchange is also in the process of rollingout an online collaborative design application, which is targeted at secondand third tier suppliers who have in the past not been able to afford real-time collaborative design solutions. The hosted solution is expected tocomplement the legacy collaborative design software used by OEMs andtheir tier one suppliers, thereby bringing smaller auto parts manufacturersinto the design process.

Although Covisint continues to be criticized for the lack of second- andthird-tier supplier participation in its exchange, it does boast 5,000registered users and more than 1,500 companies using its supply chainmanagement network. As of the first quarter of 2001, Covisint was in theprocess of developing its supplier enablement strategy, which it expects tomove forward with during the second and third quarters of this year.Second-, third- and fourth-tier suppliers will be targeted by this campaign.

Aerospace-industry exchange Exostar appears to be ahead of Covisint byabout six months when it comes to its readiness to begin bringing smallsuppliers onto its network. Exostar has described 2001 as a developmentalyear, during which it experimented and refined its procurement offerings,while it expects 2002 to be the year when it significantly scales itsoperations. Like Covisint, Exostar plans to be profitable by the fourthquarter of 2002.

With about 20,000 daily transactions being conducted through itsnetwork by the end of 2001, and approximately 7,500 suppliersparticipating in its exchange, Exostar has developed a clear strategy thatwill bring as many as 30,000 suppliers onto its network by the end of 2002,thereby increasing its revenues by 700%.

Exchange Profile: Number of Aerospace IndustrySuppliers Connected via Exostar, 2001 & 20022001 approx. 7,400 -7,500

2002 30,000+

Source: Exostar, 2002



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In partnership with its five leading members– BAE systems, Boeing,Lockheed Martin, Raytheon, and Rolls-Royce – Exostar has carefullycoordinated its membership drive by first prioritizing those suppliers withwhom its major buyers want to connect. Next, individual suppliers are tobe contacted by both Exostar and their trading partner, and in most casesby the actual procurement division with which they are most familiar.

As evidence of the success of this strategy, Rolls-Royce announced thatin the three months prior to February 2002, it had already establishedelectronic trading connections with 180 of its suppliers through Exostar.An additional 150 suppliers were expected to be signed up in the month ofFebruary alone.

Exostar has recently adjusted its fee structure by changing from asubscription-based model to a hybrid model that charges users a monthlyfee per seat, as well as a variable rate based upon transaction activity. Theexchange has also arranged the fee structure so that costs are minimal tosuppliers, as it believes that it is the buyers who will see the greatestefficiency gains through their use of Exostar.

Exostar has begun to facilitate interoperability between its own platformand those of other exchanges as well. In particular, Exostar has forged linksto other exchanges through its membership in the Global Trading WebAssociation, and it has also integrated its own platform and with the sell-side channels of major suppliers such as Boise Cascade.

Because it sees itself as an operator of trading network infrastructurerather than an exchange, Exostar is not interested in tracking the dollarvalue of transaction activity that passes through its network. Rather, theexchange monitors the number of users in its community, along with thenumber of transactions that are conducted through its network.

Quadrem is another member of the Global Trading Web Association thathas also developed a successful supplier-enablement program for 2002.

While commodity-metals exchanges such as aluminum.com andcopper.com struggled and then closed in 2001, Quadrem serves the metalsand mining industry by facilitating the procurement of mining equipment,chemicals, and other mining-industry specific materials. The exchangespent most of 2001 building itself as a business, and deploying thetechnology infrastructure that it would eventually use to serve its clients.

Exchange Profile: Number of Rolls-Royce SuppliersConnected via Exostar, 2002

Number of suppliers by end-January

180

Number of suppliers by end-February

330

Source: Exostar, 2002



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In the fourth quarter of 2001, Quadrem was in the process of implementingits trading system with 497 different trading partners - 384 of which werefor hosted sellers’ catalogs, in addition to 20 integrated sellers’ catalogs. Afurther 29 integrated buyers were also using its exchange, along with 64hosted buyers.

Quadrem had originally aimed to sign up 350 suppliers on its network bythe end of the year, but instead it was able to bring 725 suppliers online. In2002, its goal is to have between 2,000 and 3,000 suppliers on its network,while bringing about 150 buying locations online. As of January 2002,transaction activity on Quadrem was reportedly doubling every two weeks,running at an annualized rate of about $200 million.

As in the case of Exostar, the success behind Quadrem’s supplier-enablement program has come in part through its coordinated effort withmajor buyers to encourage suppliers to sign on to its network. Followingthe development of a strategic supplier-enablement program, bringingsuppliers online has rapidly picked up pace.

One surprise for Quadrem was the amount of interest in its hostednetwork solutions among suppliers in Latin America, most notably in Chile.The exchange estimates that as many as 25% of its suppliers are based inLatin America.

In what has been described by AMR Research as the biggest story to hitthe business-to-business exchange community since the birth of exchangesitself, ChemConnect announced its plans to acquire CheMatch in January2002. Last year, both companies were already operating the two largestcommodity-based trading exchanges in the chemicals industry, withChemConnect trading $3 billion worth of chemical products via itsnetwork, compared with $1 billion traded via CheMatch.

By consolidating their operations, the two companies have not onlymanaged to make internet-based trading for their users much moreconvenient, they have also set an example that other industry tradingexchanges may soon choose to follow.

Exchange Profile: Quadrem's Early TradingCapabilities, November 2001Number of trading partners with user agreements 500

Number of transaction-ready sellers 126

Number of catalogs in progress 404

Number of implementation projects underway 497

Source: Quadrem, 2002



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ChemConnect’s acquisition of CheMatch was its second within one year, asit had previously acquired Envera during the first half of 2001.ChemConnect believes that the lessons learned from its Envera acquisitionwill help speed the integration of its network with that of CheMatch duringthe first half of 2002.

Following the merger, ChemConnect is continuing to operate twoseparate trading platforms – an exchange floor through which buyers andsellers may conduct automated bidding and negotiation activities, and acommodity trading floor through which anonymous buyers and sellersmay conduct spot market transactions.

Fees for the latter service are levied on individual transactions, while theautomated RFQ and bidding system of ChemConnect’s exchange floor isaccessible to members based upon the size of their revenues, at an annualsubscription rate.

Transaction Activity through ChemConnect andCheMatch Commodity Exchanges, 2001Dollar-value of transaction activity

ChemConnect $3 billion

CheMatch $1 billion

Commodity volume by weight

ChemConnect 6 million MT

CheMatch 4 million MT

Source: ChemConnect, 2001


Subscription Prices for Access to ChemConnect'sExchange Floor, 2001Unlimited buy/sell access, by company revenue

>$1 billion $100,000

$100 million to $1 billion $30,000

<$100 million $5,000

Unlimited selling access, by company revenue

>$1 billion $15,000

$100 million to $1 billion $5,000

<$100 million $1,000

Source: ChemConnect, 2001



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While ChemConnect’s strength lies in its online trading capabilities, it alsoprovides companies with the ability to exchange transaction data with theirtrading partners through its Envera solution. Consortia-backed Elemica isanother exchange that facilitates data exchange between enterprises in thechemicals industry, and is a likely candidate for either an eventual mergeror interoperability agreement with ChemConnect.

To stay on top of the latest exchange transaction activity, sign up forthe eStatDatabase and search on “Exchange Profile”.

Finally, two online trading networks that integrate companies throughinteroperable exchange networks are worth mentioning.

As one of the former high-flying business-to-business software vendorsfrom early 2000, PurchasePro has built up its trading network from itsroots as an online purchasing exchange for the hospitality industry.Following a substantial restructuring, as well as the acquisition of internetauction solutions vendor BayBuilder in 2001, PurchasePro appears to havebegun to turn itself around.

While the greater part of its revenues now come from licensing sales ofits eSource online auction software, PurchasePro is continuing to operate agrowing internet-based trading community called Commerce Network. Themajority of participants on this network continue to be hospitality industryfirms, such as Hilton Hotels and MGM Mirage, but the network is also hometo buyers at healthcare services providers, prisons, and colleges, along withcompanies in several other manufactured goods industries.

Large buyers agree to adopt PurchasePro’s procurement technology fortheir own internet-based purchasing, and then request their suppliers tosign up and post their catalogs on the Commerce Network. Suppliers arerequired to pay a monthly hosting fee of between $49 and $69 to bemembers of the trading community.

In total, PurchasePro’s Commerce Network processed 250,920 purchaseorders in 2001, running between $30 million and $35 million intransactions across its platform every month.

Number of Purchase Orders Submitted viaPurchasePro's Commerce Network, August-December2001

Number of purchaseorders

Approximatevalue

(millions)

August 32,216 $35

September 22,000 $22

October 29,000 $33

November 27,000 $33

December 25,000 $31

Source: PurchasePro, 2001



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Rather than having to go through the process of signing up suppliersthrough their own private trading exchange, hospitality industry buyersthat have joined PurchasePro’s network have found that they are instantlyconnected to hundreds of their suppliers, who in many cases were alreadymembers of the Commerce Network as part of another firm’s supply chain.

Indeed, this network effect has led to a substantial amount of inter-community trade through PurchasePro’s platform, as 68% of alltransactions during 2001 were between trading partners that belonged toseparate supply chains.

Originally founded by Commerce One as a standards body to facilitate e-commerce trade between businesses, the Global Trading Web Association(GTWA) has in 2001 evolved into a vendor-neutral standards body, as itcontinues to pursue its mission of developing technology standards that maybe used to facilitate internet-based trade between all e-commerce networks.

Members of the Global Trading Web Association announced inNovember of 2001 that through the first half of last year, they hadcollectively process 884,166 transactions – an increase of 733% over thesame period in 2000. The dollar value of these transactions increased bymore than 3,000% to $3.7 billion, while an estimated $6.2 billion intransactions were forecast to have been processed by year-end.

In its efforts to develop common e-commerce standards, the Global TradingWeb Association has avoided trust problems by developing best-practicecase studies among its trading exchange partners. In order to speedprogress, two smaller, non-competing groups have been encouraged todevelop common standards, which are then shared with the larger group.

In early 2002, it appears that the GTWA is continuing to move forwardwith some positive momentum. Mining-industry exchange Quadremrecently announced its plans to connect with chemicals industry exchangeElemica in an effort to bring together both networks’ trading partners, whoshare common purchasing interests in the chemicals industry.

Eventually, the vision is to achieve a global internet-based tradingnetwork that connects any one business with the trading partners of allexchange communities.

Online Transaction Volume through the Global TradingWeb Association, January-June 2001Number of transactions 884,166

Dollar value of transactions $3.7 billion

Source: Global Trading Web Association, 2001


Methodology





Index of Charts 119


119



120


Index of Charts Revised Worldwide B2B E-Commerce Forecast, 2000-2004 (in billions) 13

Comparative Estimates: B2B E-Commerce Worldwide, 2000-2005 (in billions) 13

Worldwide B2B E-Commerce Revenue, 2001-2005 (in billions) 14

Worldwide Electronic Data Interchange (EDI) versus E-Commerce Activity,2001 (in billions) 14

Worldwide B2B E-Commerce Forecast, Including Business Services (Internetand EDI Transactions), 2001-2005 (in billions) 15

Estimated Worldwide Volume of Electronic Data Interchange (EDI)Transactions, by Channel, 2000-2005 (in millions of documents) 16

E-Business Strategy Implementation among Leading Global Companies,2001 17

Primary Focus of E-Business Strategies among Leading Global Companies,2001 17

Percent of External Business Transactions Done Electronically (Including EDI)by Leading Global Companies, 2000-2002 18

Percent of External Business Transactions Done via the Internet by LeadingGlobal Companies, 2000-2002 18

Percent of Large Companies' Suppliers Linked via the Internet, by Region,2001 18

Percent of Large Companies' Websites with Transaction Capabilities, byRegion, 2001 19

Percent of Leading Global Companies Participating in Online Exchanges, byRegion, 2001 19

US Electronic Commerce (EDI and Internet Transactions) in the Manufacturingand Merchant Wholesale Sectors, 1999 (in billions) 20

US Manufacturing Sector E-Commerce Activity, by Channel, 1999 (in billionsand as a % of e-commerce activity) 21

Revised US B2B E-Commerce Forecast, 2001-2005 (in billions) 22

B2B E-Commerce Revenue in the US, 2001-2005 (in billions) 22

US E-Commerce Activity, by Channel, 2000 (in billions and as a % of e-commerce activity) 23

US E-Commerce Activity, by Channel, 2004 (in billions and as a % of e-commerce) 23

B2B E-Commerce Forecast (Internet and EDI Transactions) for North America,2001-2005 (in billions) 24



Canadian Manufacturing and Wholesale Sector E-Commerce Revenues, 1999& 2000 (in billions of CAD$) 25

E-Commerce Channels Operated by Canadian Businesses, 2000 (as a % ofCanadian businesses) 26

Comparative Estimates: B2B eCommerce in Canada, 2000–2004 (in billionsUSD) 26

Primary Focus of E-Business Strategies among Large North AmericanCompanies, 2001 27


121


Index of Charts E-Business Strategy Implementation among Leading North AmericanCompanies, 2001 28

North American Companies' Website Operating Capabilities, 2000 & 2001 (as a% of respondents) 29

Participation in Online Exchanges among Large North American Companies,2001 29

B2B E-Commerce Revenues in Europe, 2000-2004 (in billions) 32

European B2B eCommerce Revenues, 2000 & 2005 (in billions) 32

B2B E-Commerce Revenues in Europe, 2001 & 2005 (in billions) 32

B2B E-Commerce Forecast (Internet and EDI Transactions) for Europe, 2001-2005 (in billions) 33

Primary Focus of E-Business Strategies among Large European Companies,2001 34

E-Business Strategy Implementation among Leading European Companies,2001 35

European Companies' Website Operating Capabilities, 2000 & 2001 (as a % ofrespondents) 35

Participation in Online Exchanges among Large European Companies,2001 36

B2B E-Commerce Revenues in the Asia-Pacific Region, 2000-2004 (in billions) 37

Comparative Estimates: B2B E-Commerce Revenues in the Asia-PacificRegion, 2000-2004 (in billions) 38

B2B E-Commerce Revenues in Asia, 2001-2005 (in billions) 38

Total B2B eCommerce Revenues in Japan, 2000 & 2005 (in billions) 38

B2B E-Commerce Revenue in Japan, 2001 & 2005 (in billions) 39

B2B E-Commerce Forecast (Internet and EDI Transactions) for the Asia-PacificRegion, 2001-2005 (in billions) 39

Primary Focus of E-Business Strategies among Large Companies in the Asia-Pacific Region, 2001 40

E-Business Strategy Implementation among Leading Companies in the Asia-Pacific Region, 2001 40

Asia-Pacific Region Companies' Website Operating Capabilities, 2000 & 2001 41

Participation in Online Exchanges among Large Companies in the Asia-PacificRegion , 2001 42

B2B eCommerce in Latin America, 2000 - 2004 (in billions and as a % of totalLatin American e-commerce) 44

Comparative Estimates: B2B eCommerce in Latin America, 2001-2005 (inbillions) 44

B2B eCommerce in Latin America, 2000–2004 (in billions) 45

B2B E-Commerce Forecast (Internet and EDI Transactions) for Latin America,2001-2005 (in billions) 45

Number of Latin American Companies that Are E-Business Ready, by Country,2002 46

Exchange Profile: Value of Online Auctions Conducted via ProcuraDigital, byCountry, 2001 (in millions) 47

Exchange Profile: Value of Online Auctions Conducted via Exiros, by Country,2002 (in millions) 48


122


Index of Charts Worldwide IT Spending on Dedicated E-Business Technology, 2000 & 2001 (inbillions) 50

Estimated Worldwide Spending on E-Business Technology & Services, 2001 &2002 (in billions) 50

E-Business Spending, by Region, 2001 (as a % of IT Budgets) 51

Change in E-Business Budgets, by Industry, May & October 2001 51

Percent of Companies Expecting an Increase in E-Business Spending,2002 52

Anticipated Growth in E-Business Budgets for US Companies, 2002 53

Comparison of E-Business and IT Spending Growth, 2002 53

Anticipated Number of E-Business Projects to be Started, 2002 54

Worldwide E-Business Software Market Growth Rates, 2001 & 2002 54

Level of E-Business Adoption among Large Companies, June 2001 (as a % ofrespondents) 56

Business Background of E-Business Managers, 2001 57

Top E-Business Priorities among IT Managers, 2002 (as a % of respondents) 58

Leading E-Business Projects Targeted for Increased Spending, 2002 (as a % ofcompanies planning to increase spending) 59

Leading IT Priorities among E-Business Managers for 2002, 2001 60

Number of Technology Systems Being Integrated by Global 3,500 Companies,2001 (as a % of respondents) 61

Forecast Growth Rates for Enterprise Software Market Worldwide,2001-2003 62

Primary Considerations When Evaluating an E-Business Vendor, 2001 63

Leading Barriers to E-Business Adoption, 2001 64

Suppliers' Anticipated Benefits from Online Collaboration, 2001 (as a % ofrespondents) 65

Importance of Design Collaboration to Suppliers, 2001 & 2003 (as a % ofrespondents) 65

Supplier Use of Online Collaborative Tools, 2001 & 2003 (as a % ofrespondents) 66

Percent of US Companies Buying Indirect Goods/Services via the Internet, Q1-Q4 2001 66

Average Amount of Indirect Goods/Services Purchasing Done via the Internet,Q1-Q4 2001 67

Percent of US Companies Buying Direct Goods/Services via the Internet, Q1-Q4 2001 67

Average Amount of Direct Goods/Services Purchasing Done via the Internet,Q1-Q4 2001 67

Percent of US Companies Buying Goods/Services via an Internet Auction, Q1-Q4 2001 68

Percent of US Companies Buying Goods/Services via an Online Exchange, Q1-Q4 2001 68

Effect of E-Business upon Leading Global Companies' Supplier Relationships,2001 69

Electronic Channels Used for Electronic Purchasing, 2001 & 2003 (as a % ofrespondents) 73


123


Index of Charts Percent of Large Companies Planning to Initiate a Private Exchange within 12Months, June 2001 (as a % of respondents) 73

Leading Channels that Large Companies Expect to Focus on as They BecomeInternet Ready, June 2001 to June 2002 74

Expected Value Chain Focus among Private Exchange Builders, June 2001 (as a% of respondents) 75

Anticipated Use of Private Trading Exchanges among Potential Users,2001 76

Stage of Deployment among Potential Private Trading Exchange Builders,2001 77

Timeline for the Development of Private Exchange Features 77

Estimated 3-Year Total Cost of Ownership for Private Exchange Operators,2001 78

Breakdown of the Total Cost of Ownership for a Small Enterprise PrivateExchange, 2001 (in millions) 79

Breakdown of the Total Cost of Ownership for a Mid-Size Enterprise PrivateExchange, 2001 (in millions) 79

Breakdown of the Total Cost of Ownership for a Large Enterprise PrivateExchange, 2001 (in millions) 80

Estimated Cost of Building and Operating a Private Exchange, 2001 81

Breakdown of Costs to Build Order Monitoring Features for a PrivateExchange, 2001 (in thousands) 82

Breakdown of Costs to Build Order Management Features for a PrivateExchange, 2001 (in thousands) 83

Breakdown of Costs to Build Order Optimization Features for a PrivateExchange, 2001 (in thousands) 84

Estimated ROI from Operating a Private Exchange, 2001 (in thousands) 85

Expected and Actual Investment Payback Periods for Users of Private TradingExchanges, 2001 86

Top 20 B2B E-Business Leaders, by E-Commerce Revenues, June 2000-June2001 (in billions) 87

E-Business Profile: Arrow Electronics' E-Commerce Revenues, 1998-2000 (inbillions) 88

E-Business Profile: Boise Cascade's US E-Commerce Sales, 1998-2000 (as a %of total sales) 88

E-Business Profile: Deployment of Procter & Gamble's Indirect ProcurementSolution, January 2002 89

Leading Global EDI Value Added Networks, by Number of Trading Partners,2000 93

Private Electronic Trading Networks to be Enabled by GE Global ExchangeServices 95

Initial Set-Up Costs for Connecting Newark Electronics and its Suppliers viathe ADX Network, 2001 96

Three-Year Return on Investment Calculation for Newark Electronics' Use ofADX Network, 2001 96

Breakdown of Public Exchanges, by Primary Geographic Region Served, 2001 98

Breakdown of B2B Exchange Ownership, 2001 98

Core Service Offerings of Online Exchanges, 2001 99


124


Index of Charts Technology Foundation Used by Exchange Operators, 2001 100

Timeline of Availability of Public Exchange Capabilities, 2001 (as a % ofexchange respondents) 101

Breakdown of Exchange Operators' IT Budgets, 2001 102

Breakdown of Average Exchange Revenue Stream, 2001 102

Primary Drivers of Online Exchange Adoption among Large Companies, June2001 (as a % of respondents) 103

Percent of US Companies Participating in an Online Exchange, 2001 103

Number of Online Exchanges in Which Large Companies Expect to Participate,June 2001 to June 2002 (as a % of respondents) 104

Criteria for Using a Public Exchange over a Private Exchange among LargeCompanies, June 2001 (as a % of respondents) 104

Amount of US Companies' Sales and Purchase Orders Conducted via anOnline Exchange, 2001 105

Top 10 Exchange Capabilities Expected by Exchange Users, 2001 106

Expected and Actual Investment Payback Periods for Users of Public TradingExchanges, 2001 107

Users' Expected ROI through Participation in Public Trading Exchanges,2001 107

Top 10 Online Exchange Operators with Strong Liquidity, 2001 108

Benchmark Independent Exchanges, 2001 110

CPG Manufacturers' Interest in Using Public Internet Exchanges, 2001 111

Exchange Profile: Quarterly Online Auction Activity Conducted viaGlobalNetXchange, 2001 112

Exchange Profile: Covisint Transaction Activity and E-Business Operations,2001 112

Exchange Profile: Number of Aerospace Industry Suppliers Connectedthrough Exostar, 2001 & 2002 113

Exchange Profile: Number of Rolls-Royce Suppliers Connected via Exostar,2002 114

Exchange Profile: Quadrem's Early Trading Capabilities, November 2001 115

Transaction Activity through ChemConnect and CheMatch CommodityExchanges, 2001 116

Subscription Prices for Access to ChemConnect's Exchange Floor,2001 116

Number of Purchase Orders Submitted via PurchasePro's CommerceNetwork, August-December 2001 117

Online Transaction Volume through the Global Trading Web Association,January-June 2001 118


125


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Asia Online: Demographics, Infrastructure, Usage Patterns andeCommerce Trends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, E-Finance & E-Advertising■ Country profiles

ASPs■ Market size & growth■ Industry leaders■ Usage patterns■ Customer satisfaction

Brazil Online: Demographics, Usage Patterns and E-CommerceTrends

■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising

Broadband■ Users by access method (dial-up, fiber, DSL, cable, satellite,

wireless)■ Residential and business usage■ Access revenues■ User demographics■ Country profiles

CRM

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eBanking■ Online banking around the world (US, Europe, Asia)■ Mobile banking■ Electronic bill presentment and payment

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eCommerce: B2B■ E-Commerce: B2B revenues around the world, country by

country■ E-Commerce: B2B by industry■ Internet penetration among businesses■ Online marketplaces, auctions and exchanges

eCommerce: B2C■ E-Commerce: B2C revenues worldwide■ Top B2C categories■ Online shoppers, buying frequency and size of transactions■ E-Consumer attitudes and behaviors


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eDemographics■ User demographics worldwide■ Age, gender and race■ Income, education and occupation■ Usage patterns

eGlobal■ Internet infrastructure, by region■ Users and usage, by region■ E-Demographics, by region■ E-Commerce, by region

eHealth■ Consumer demographics and attitudes■ Healthcare personnel, demographics and usage■ B2C spending■ B2B spending

eInvesting■ Online brokerages■ Online mutual funds■ Online asset management■ Online investment advice

eMail Marketing■ E-Mail marketing revenues worldwide■ E-Mail users and user demographics■ Permission, opt-in and opt-out■ E-Mail marketing techniques and strategies

ePoland


ePrivacy & Security■ Consumer attitudes & behavior toward online privacy■ Online fraud■ Credit card security■ Corporate security (hacking and denial-of-service attacks)■ Virus attacks

Europe Online■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising■ Country profiles

eWireless■ Mobile internet use around the world, country by country■ M-Commerce■ M-Finance■ M-Advertising


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Interactive Television■ User forecast■ Revenue forecast■ Business attitudes & behavior■ User attitudes & behavior

Japan Online: Demographics, Usage Patterns and E-CommerceTrends


Latin America Online: Demographics, Infrastructure, UsagePatterns and E-Commerce Trends

■ Economy & infrastructure■ Internet users & demographics■ E-Commerce, E-Finance & E-Advertising■ Country profiles

Marketing Online to Kids & Teens

■ Demographics■ Advertising & marketing■ E-Commerce■ Special considerations

Online Advertising: Statistics, Strategies, Tools and Trends■ eAdvertising revenues worldwide■ Spending by ad format (banner ads, sponsorships, e-mail, etc.)■ Spending by industry category■ Measurements and standards (click-through rates, CPMs, ROI)

Online Marketing■ Viral marketing■ Direct marketing vs. Branding■ Search engine optimization■ Affiliate programs■ Classifieds■ Coupons

For more information, or to order a copy, contact eMarketer at:

Phone: 212.677.6300 Fax: 212.777.1172

eMail: [email protected] Web: www.emarketer.com

For media inquiries:Terry Chabrowe, [email protected]

For inquiries about this report or other eMarketer reports:Nick Fainelli, New Business Development, [email protected]


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The E-Commerce Trade and B2B Exchanges Report, March 2002 · 2003-10-22 · March 2002 Welcome to eMarketer Dear Reader: Welcome to the Online Trading and B2B Exchanges ReportTM,

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