Only five percent of surveyed companies` spending is currently with on-line suppliers, despite the e-procurement market`s massive potential, which is set to double by the end of 2001. By then, 62 percent of all companies are expected to be conducting as much as 30 percent of their spending with suppliers electronically.
Concerns over security and the trustworthiness of trading partners are the biggest obstacles to the expected growth in business-to-business (B2B) e-procurement over the Internet, according to a survey of business leaders in four European countries commissioned by PricewaterhouseCoopers (PwC).
Chris Potter, PwC`s partner responsible for e-business risk management and security services said, "It is clear from our survey that trust will both dictate and limit the growth in e-procurement. Trust in the virtual world is more important than ever but it cannot be built at `e-speed`; it has to be built on relationships, brand and physical presence."
Over a third of the 400 European business leaders polled (more than a quarter of these from the UK), cited issues surrounding online security as undermining the trust between their companies and their trading partners, thereby holding them back from doing more business online.
Potter said, "On the face of it, this is good news for the bricks and mortar companies and bad news for the dot.coms. In the virtual, online world, trust will have to be redefined and the physical world aspects replaced by the use of digital certificates, web seals and risk management processes to secure the electronic relationship."
Two-thirds of the businessmen said it was vital to build up a trusted business relationship with their suppliers before dealing with them over the Internet. The same proportion preferred to do business with companies that had a physical presence and not just exist in cyberspace.
Companies were using e-business to communicate better with the suppliers they already trusted. The survey revealed that suppliers who have established trusting relationships are well placed in the e-business world, provided their technology and processes can meet the speed, flexibility and efficiency demands of their customers.
Fears over security were just as significant among businesses that already had substantial experience of e-procurement. In fact, it appears that the more companies know about e-procurement, the more scared they are about security. A remarkably high nine percent of advanced e-procurement operations admitted to having had security problems with suppliers on-line.
Potter said, "The concerns about security are not surprising given the current methods companies are using to secure e-procurement transactions. Our survey showed that 64 percent of the companies rely on password controls when dealing with their suppliers over the Internet, yet passwords alone are unlikely to be sufficiently secure. Only 27 percent have yet adopted digital certificates to secure e-procurement transactions. Over the next year, we are likely to see increased adoption of digital certificates, such as those issued by the PricewaterhouseCoopers beTRUSTed service, to address these vital security concerns."
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PricewaterhouseCoopers
During May 2000, PricewaterhouseCoopers commissioned arnold+bolingbroke to conduct independent research into the attitudes shaping trust in e-procurement among European businesses. Some 415 decision-makers in European companies were surveyed.
Approximately 100 quantitative interviews were conducted in each of the UK, France, Germany and Netherlands. Respondents divided equally between those at the operational and supervisory level and those with managerial and board responsibility. Follow-up qualitative interviews were also undertaken with respondents in each territory.
Four vertical markets were surveyed - finance, telecoms, technology and transport.
The spread of companies surveyed ranged from those with lb10 million turnover to those with lb500 million-plus turnover.
The survey established the current status of e-procurement in respondent companies` attitudes towards dealing over the Internet with suppliers and the extent to which trust and security are issues in the development of this market.
Copies of the survey report Trust.....not built at `e-speed`: Trust issues in European b2b e-procurement are available free of charge from PricewaterhouseCoopers publication department in London telephone 0207 804 42117.
Global Risk Management Solutions (GRMS), part of PricewaterhouseCoopers, has over 5,000 professionals worldwide who offer a comprehensive enterprise-wide risk management service. Many of these professionals are specialist with in-depth knowledge and experience in particular industries. Strategic, financial or operational in nature our specialists work to identify and manage complex risks to protect and enhance shareholder value. By addressing the changing needs of today`s business leaders, GRMS assists senior management across their whole organisation. Risk professionals are trained to take an enterprise-wide view of risk, helping clients to develop risk management solutions that minimise hazard, resolve uncertainty and maximise opportunity.
PricewaterhouseCoopers (www.pwcglobal.com) is the world`s largest professional services organisation. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.
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