Controlling Internet Technologies in B2b Relationships

CONTROLLING INTERNET TECHNOLOGIES IN

B2B RELATIONSHIPS

In the years 1999 and 2000, the prospects for B2B e-commerce were very rosy. For

example, in June 2000, Jupiter Communications' forecast called for more than $6 trillion in

online B2B, representing 42% of total US B2B non-service spending (Pastore 2000). Their

forecast was based on an expectation that online volume would grow 20-fold between 2000 and 2005, opening the doors for new business models such as Internet markets and exchanges.

Indeed, at the beginning of 2000, there were 587 B2B exchanges on the Internet which

mushroomed to nearly 1700 exchanges by April 2001.

However, when the dot-com bubble burst, these B2B exchanges were among the hardest hit. Nearly 120 have been shut down or acquired, according to the research group at Deloitte Consulting. Similarly, predictions for B2B e-commerce have been tempered. The total value of goods and services purchased by businesses through e-commerce solutions is now predicted to increase from a solid $282 in 2000 to $4.3 trillion by 2005, according to the November 2001 projections by International Data Corporation (CyberAtlas 2001).

Why has the B2B sector changed its tune? For one thing, companies have discovered that establishing successful B2B on-line strategies can be tough and complicated. Creating

ecommerce activities that adds value to all participants, attracts suppliers, avoids gray markets, and decreases customer search and selection costs has proven to be difficult, if not downright impossible. Customers are inexperienced, solutions are disjointed, technologies are unproven or inefficient. Implementation can be long, and scalability issues are complicated. In some cases, corporations have underestimated the value of the middleman, only to find that by cutting out the

middleman, a significant amount of money has been lost. These firms find themselves spending the bulk of their time identifying and managing channel conflicts and assessing the sales

gained/lost as a result. So, it appears that buying the technology is easy; rethinking and

redesigning work processes and activities to capitalize on these technologies is not.

Despite these challenges, the B2B sector remains optimistic. More recent estimates

indicate companies still expect to conduct the bulk of their direct and indirect materials spending through exchanges with 3 years (CyberAtlas 2001). Indeed, Treasury