Saturday, July 28, 2001

UK Online Business Trade Will Reach £300 Billion

UK online business trade will hit £300 billion in 2005, but firms lack B2B capabilities to seize this opportunity, according to a new Report from Forrester Research. To jump across the B2B capability gap, firms must determine their B2B personas, respond to market pressure for online trade and tap eMarketplace resources, advises Forrester.

"In 2005, UK online business trade will pass £300 billion and eMarketplaces will facilitate 41% of these online transactions, but many firms will move too slowly to capture the benefits of online trade," said Forrester Analyst David Metcalfe.

Forrester projects the UK's modest £13 billion of online trade in 2001 will skyrocket, increasing almost tenfold over four years. This growth will be driven by industry giants in petrochemicals and motor vehicles. Online trade in petrochemicals will hit a whopping £70 billion or 24% of industry trade in 2005, for instance. Replenishment will pull food, beverages and consumer goods to the Net and in less than four years, online trade in consumer goods will leap from 3% to 27% of industry trade while innovation and standards will get electronics and telecoms online.

"Despite the prospects for dramatic B2B growth, UK firms lack the capabilities to capture the benefits because they are mired with siloed ERP systems, clunky processes and outdated connections," Metcalfe added. "With B2B organizational, technical and ROI disputes resolved, firms believe they will realize the benefits of online trade projected for their industry. But they won't -- the capability gap remains. To fix their B2B inadequacies, firms should self-assess current capabilities and market pressure to move online."

According to the Forrester Capability Gap Worksheet, four distinct B2B personas emerge. Trailblazers are FTSE 100 firms in sectors with high online-trade potential, with the cash to invest in heavy-duty online trade capabilities and the need to extend online capabilities outside the UK. Pioneers are firms with turnover of more than £500 million with medium or low pressure to trade online. Slow-Movers are midmarket companies and conservative market leaders operating in sectors with low pressure for online trade. Slackers are the bulk of UK firms in verticals with medium to high market pressure for online trade and global trading partners.

"As UK online trade booms from 2002, a Trailblazer or Pioneer should consolidate market leadership by defining the rules of online trade while Slow-Movers and Slackers must execute low-cost B2B strategies," Metcalfe concluded. "With UK firms developing strategies to overcome their B2B capability gaps, they will turn to eMarketplaces to fill in their international B2B holes. eMarketplaces will offer firms the potential to source globally, penetrate foreign markets and leverage aggregated integration."

For the Report "Bridging The B2B Capability Gap," Forrester spoke with senior eBusiness executives from 50 UK-based firms with mean annual turnover of £800 million. Interviewees invested an average of £2.5 million in B2B projects in 2000, and 60% of those responding expect this spend to increase by 2002.