A B2B silver lining in recent economic news
It now seems I'sll be 100 (if the stress doesn'st kill me), before I can afford to stop pecking away at this laptop for a living. And it all leaves me wondering about two things: (1) how to break it to my two young daughters that their college education funds may contain enough to subscribe to a good correspondence school in a foreign country by the time they'sre ready to use them; and (2) is there any good economic news out there?
Well, in fact, there is. According to Gartner, despite the recent slowdown in the economy, the worldwide B2B Internet commerce market is still on pace to total $8.5 trillion in 2005 and current conditions are creating opportunities to regroup and rethink without loosing ground.
"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."
That's actually great news for pharma. It gives the industry a chance to play a little catch-up on the e-business implementation curve and position itself well for the future.
WEFA (formerly Wharton Econometric Forecasting Associates), whose sales transaction data Gartner uses as the basis of its forecast, predicts the current economic downturn will result in a 16% reduction in the nominal value of worldwide sales transactions by 2005. Gartner lowered its forecast accordingly, but not as aggressively as WEFA because it believes in this tough economic climate, enterprises will turn to cost-saving measures, including e-procurement and hosted software solutions, such as e-marketplaces, rather than in-house solutions.
But Gartner analysts emphasize it's important to understand the true impact of e-marketplaces on the overall B2B industry. Although many e-marketplaces faced difficulties in 2000, most are just ramping up and few had substantial revenue in 2000. They accounted for only a small fraction of total Internet commerce in 2000 and, according to Gartner, are not representative of all B2B e-commerce, which grew substantially in 2000.
"With the proliferation of e-marketplaces that had poorly thought-out business plans and inappropriate revenue models, it should not have been surprising that the cards came tumbling down this soon," Shu said. "A return to the sanity of fundamental, sound business principles, and the resetting of realistic expectations means that going forward, the market can expand in a more rational way with e-marketplace business plans and participation decisions both more highly scrutinized, and thus more viable and more strategic."
It's a fine example of Darwin's evolutionary survival of the fittest theory, and, again, good news for pharma. It's eliminated many of the opportunities for poor business decisions, and validated the industry's slowly-but-surely approach to e-business adoption.
So there is good news you just have to know where to look and at least for now, it's in B2B e-commerce.