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07/26/2001

IDC Maps the Use of Internet in the Procurement Process: Buying Online is Fast, Safe and Simple

AMSTERDAM – JULY 26, 2001 – According to a recent IDC survey, not even half of the European companies questioned have purchased goods and services over the Internet. However, European procurement managers are becoming more and more mindful of the benefits of Internet purchasing.

 

IDC’s latest research found 38% of the respondents had purchased goods and services over the Internet. This adoption of Internet purchasing follows the general pattern of ebusiness maturity – countries such as Sweden lead the way, while France is the most reluctant to purchase over the Internet with the financial and public sectors as well as manufacturing being the fastest adopters of Internet purchasing. Of the companies that are not yet purchasing via the Internet, 10% expect to start doing so this year and only 15% of the surveyed companies say that they will never purchase goods and services over the Internet. This is a very positive message to emarketplaces and companies that wish to start selling online.

"The most popular online products are the indirect material – this includes MRO (maintenance, repairs and operating) articles that do not enter the supply chain – i.e. they are not used in the production process. IT products, such as hardware and software are just as popular online items as other MRO articles. The banking/financial sector in particular is a frequent buyer of IT articles online. IT products are very popular in eprocurement, probably because many eprocurement solutions are initially rolled out in the IT department. Travel is another popular Internet product, but travel as such accounts for a limited part of corporate procurement budgets," said Mikael Arnbjerg, program manager for IDC’s European eMarketplaces research.

IDC also analysed the take-up of more specific types of B2B ecommerce, such as eprocurement and electronic marketplaces. Although these technologies are not yet very widespread, a good number of corporate Internet buyers have started using eprocurement and emarketplaces. "The interesting thing about emarketplaces," said Arnbjerg, "is that they look very promising in relation to direct procurement. eMarketplaces may potentially play a large role in the online sourcing of production material".

Drivers and Inhibitors of Internet Purchasing

The most frequently mentioned driver for Internet purchasing is faster speed of fulfilment and delivery. Also companies that are not currently buying online view this as the primary benefit of ecommerce. The second most frequently mentioned benefit of purchasing online was cost reductions in form of fewer administrative costs and lower prices.

Inhibitors to online purchasing included the lack of suppliers. Also, several buyers claim that they are not ready for ecommerce. "It may seem surprising in 2001 that there are companies that are still not ready to buy online, because they do not allow the corporate buyers to access the Internet," said Rogier Mol, research analyst for IDC’s eMarketplaces. "However, the issue of readiness is more complex. Some buyers are simply not ready for ecommerce, because they require a level of backend integration from the purchasing function that they have not yet identified," Mol concluded.

European Procurement Manager Survey 2001: A Study of B2B Internet Commerce (IDC# WBM01H) examines B2B ecommerce from the buying organization’s perspective. The report is based on IDC’s Procurement Manager Survey, 2001. The survey comprised over 500 interviews with procurement managers in the following six European countries: France, Germany, Italy, the Netherlands, Sweden, and the United Kingdom. Only companies with more than 100 employees were interviewed for the survey. The overall issue explored in this report is adoption of the Internet as a tool for purchasing by European companies. Unlike previous market research, this report takes the perspective of the buying organization and examines the Internet as a purchasing tool, not as a sales tool. This report is available to purchase from your local IDC office.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at emea.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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