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Tuesday, December
12, 2000
Opportunities in the Market for eProcurement
Services
The eprocurement services market is starting to make
some noise. By the time 2004 rolls around, it will be roaring,
with worldwide opportunity generated from set-up services,
which are consulting, implementation, and ongoing management
of deployed solutions, close to $13 billion. IDC believes
vendors themselves could play a large part in determining
just how much this market booms.
"Value-added services and vendors' creativity
and flexibility to provide clients with a reasonably priced
end-to-end procurement services solutions will determine
the adoption rate of eprocurement," said Nelly Zaharinov,
a senior analyst with IDC's eProcurement Services research
program.
According to IDC, implementation services with
large companies will provide vendors with the most lucrative
opportunities. Through 2004, revenues from these services
will account for approximately 50% of the eprocurement set-up
services market. Revenues from eprocurement consulting services will
be the fastest growing, increasing at a compound annual growth
rate (CAGR) of 62% from 1999 to 2004, compared with a 55%
CAGR for the entire market.
IDC also expects the proportion of business-to-business
eprocurement outsourcing services to increase substantially through
2004. In 1999, just 5% of B2B eprocurement services spending
was on outsourcing. By 2004, this percentage will increase
tenfold.
"Medium-sized companies, and even some large
ones, prefer not to make an up-front investment to acquire
eprocurement applications and will choose eprocurement outsourcers
instead," Zaharinov said.
IDC believes most of the market's activity
in the near future will be generated by the eprocurement
of indirect goods but expects eprocurement of direct goods
to pick up considerably starting in 2002.
Europe's Firms Must Reassess Their EDI Plans
Europe's firms must reassess their EDI plans in view of new eBusiness network
requirements, according to a recent Report by Forrester Research B.V.
(Nasdaq: FORR). Forrester predicts that market leaders will migrate first
to the open Internet by driving industry-specific XML development and
eMarketplaces, but warns laggards to seek external help to speed their
migration and build their Net DNA.
Forrester expects EDI trade in Europe to peak at €1.5
trillion in 2002, then steadily decline as firms in
sectors like computing, travel, and logistics migrate €400
billion of EDI trade to the Net -- using both eMarketplaces
and extranets -- by 2005.
"Unlike their peers in the US, Europe's managers are
hoping that hybrid Web-EDI solutions will bring them
the best of both closed EDI and the open Web," commented
Andrew Parker, senior analyst at Forrester's European
Headquarters in Amsterdam. "But hybrid systems won't
fare better than closed EDI. Both limited solutions
simply won't compete with eBusiness networks based
on open Net standards and business models.
"Net business trade will move beyond EDI's static,
limited messages to support dynamic, complex business
rules. New technologies such as ebXML and xCBL will
support flexible transactions in eBusiness networks
to deliver multistep trading in real-time processes
like auctions, dynamic pricing, and automated substitution
selling. Partners in eBusiness networks will replace
the limited document exchange of traditional and hybrid
EDI with open collaboration based on sharing not only
data but also business rules."
Significantly, a large group of European firms face
high EDI migration market pressure with low response
capability, and unless they can rush to find help to
build Net DNA, these companies -- in sectors like logistics,
retail, and electronics -- will collect only the scraps
left behind by more aggressive competitors. Another
group -- midsize firms, with a strong specialization
that deflects market pressure -- will continue the
status quo for lack of pressure and lack of alternatives.
But these firms will increasingly be isolated and
ultimately outcast when, for example, organizations
from related markets propose substitution services
on the open Net.
"Aggressive migrators will force less migration-capable
companies to raise their game. By 2005, threatened
companies and those in slow-moving sectors like heavy
engineering will conduct only 1% of trade in eMarkets," Parker
concluded. "Both groups must look to emerging external
technology (exT) providers to advance their migration
progress ahead of this slow-moving trend, and to get
on track, they must seek a strategy infusion from consulting groups.
Firms with low Net DNA must get external help from
eCommerce integrators and ASPs to map out their means
of moving forward."
To investigate the future role of EDI, Forrester spoke
with 40 managers handling EDI activity at large European
businesses.
News Tidbits (appears every day on front
page)
-
According to an article
in the Washington Post, "In
recent weeks, hundreds
of people have lost their
jobs at tech companies...sending
shivers down the spines
of investors and managers
alike." The
article, titled "Tech
Workers Take Job Insecurity
in Stride" says
that many who may be let
go aren't that concerned.
The article states, "a
layoff means a new adventure
to be had, a new place
to gain different skills,
and quite possibly a higher
salary. And a shaky workplace
situation just means it's
time to post that resume."
- According to an article
in USA Today, "Poor business models are
the leading cause of dot-com demise, says George
Stalk of Boston Consulting. He found 34% of
the 109 pure-play dot-com fatalities were because
of business models that didn't bring in enough
revenue or were burdened with too many costs
to have even a chance at survival." The
article, titled "What Detonated the Dot
Bombs" also examined the downfall of companies
like Garden.com in which the founders say that
it wasn't a poor business model that killed
them - it was the lack of faith of the investors. (yeah,
right)
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