Was it really only a few years ago that the hype surrounding e-business was so deafening that even accountants couldn’t hear all the money being flushed down the toilet on ill-conceived business plans?

Way back then — in 1999 and 2000 — analysts and tech industry leaders alike claimed that software and services for handling transactions via the Web would transform the way companies do business practically overnight. And it did, for a couple of magically intoxicating years.

Then came the crash; suddenly things got quiet fast.

One of the platitudes of the technology industry is that people, in the short term, overestimate the speed at which new technologies are adopted. Conversely, they underestimate their long-term impact. That old saw may well turn out to be true when it comes to business-to-business e-commerce.

“Over the next 5 to 10 years, American industry and industry all over the world will migrate and be highly connected all the way along the supply chain, from the customer back to mother earth,” David Nelson, vice president of global purchasing for Delphi Corp, the $27 billion-a-year auto-parts manufacturer that was spun off by General Motors in 1999, told BusinessWeek.

“But,” Nelson predicts, “it will be a slower process than people expected.”
Patience, as my mother used to remind me, is a virtue. Such is the case with doing business on the Web. All the things that made e-business so attractive in its early days still apply. By replacing phone calls, faxes, and FedEx deliveries with Web connections, your business can save time and money — all while driving down prices.

The problem is, many of the hurdles remain. Everyone found it difficult to change the habits of their customers and to get them to do business online. What’s more, the costs of linking up technologies were sometimes prohibitive. It could take as long as four months and cost as much as $50,000 to get an electronic catalog plugged into a marketplace website.

A lot of that is changing now, ever so gradually. And some of the change is being done by not-too-subtle forces.

Take Wal-Mart, for example. The retailing giant has asked its 30,000 suppliers to start using Internet standards created for the retail industry to describe their products. That way, computers can match orders, inventories and forecasts without human intervention. It’s the first step toward having the entire Wal-Mart ecosystem doing business online. Wal-Mart’s “request” forced suppliers to get involved or risk losing their most important account.

Meanwhile, analysts are putting out bullish forecasts again. Tech market researcher IDC says the worldwide value of goods and services purchased by businesses through some sort of e-commerce will reach $5.8 trillion by 2006, up from $870 billion this year.

A recent report from Open Network for Commerce Exchange, an industry association, showed that all 18 of its e-marketplace members are increasing transaction volumes — with a weighted average of 75 percent for the first half of the year — and most aim to break even next year.

“B2B isn’t dead. Anybody who thinks there isn’t a new business model is still in the cave, sleeping” says Harold R. Kutner, former head of worldwide purchasing for General Motors.

Survey after survey has shown that businesses are interested in the Web but averse to the risk. While many companies see this technology as potentially helpful, they’re not going to rush into rapid adoption. Most, just like you, are focused on performance this quarter and the next quarter and having a profitable year in a tough, competitive economy. Many don’t think that the Web will have a major impact in that time frame.

But look out in 5 to 10 years, or even less. Things are happening. Slowly.

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POSTED ON: 6/1/2003