Growth Spurt Forecast for B2B.

• Position: Business to business internet commerce - Brief Article - Statistical Data Included

Despite the slowing economy, worldwide B2B Internet commerce is on pace to total $8.5 trillion in 2005, says Gartner Inc., the worldwide technology research and services firm. In fact, while B2B Inter net commerce is poised for strong growth, the long-term forecast has been impacted by the economic downturn, especially in the United States.

"The economic downturn can be viewed as a reprieve for enterprises that weren't able to keep up with the e-business leaders," said Lauren Shu, research director for Gartner's e-Business group. "This is not a time to retrench, but rather an opportunity to get your house in order, work on internal adoption of e-business and associated change management and prepare to take advantage of and profit from the massive changes that will play out by 2005."

WEFA (formerly Wharton Econo metric Forecasting Associates), whose sales transaction data Gartner uses as the basis of its forecast, expects the current economic downturn will result in a 16 percent reduction in the nominal value of worldwide sales transactions by 2005. Gartner lowered its forecast accordingly, but not as aggressively as WEFA, because in this tough economic climate, Gartner expects enterprises will turn to cost saving measures, such as e-procurement, and hosted software solutions, such as e-marketplaces, rather than in-house solutions.

(Gartner defines B2B Internet commerce as the sales of goods and services for which the order-taking process was completed via the Internet. This includes purchases via Internet EDI, e-marketplaces, extranets and other sell-side initiatives, but excludes activity over proprietary networks. Gartner's forecast is based on the value of B2B non-financial goods and services sold, resold and brokered over the Internet through establishments every time they are turned over.)

The economic situation will cause enterprises to be more deliberate and judicious about new IT investments, focusing on where they can get the greatest impact for the lowest cost. Thus, Gartner anticipates that some enterprises will continue to rely on legacy electronic data interchange (EDI) systems and delay replacing them.

"B2B commerce over the Internet is in the very early adopter stage, but companies have been doing business electronically for years using proprietary EDI," says Shu. "These systems work today, have served companies well enough for...