B2B Is Hot, Outsourcing… Not

Evans Data Corp, a software development market research firm, is reporting two interesting statistics in its Fall 2003 Enterprise Development Survey:

• B2B Is Alive! Business-to-business e-commerce projects increased a whopping 40% in the last six months, going from 11th place in last year’s survey to first place this year.
• Outsourcing Is “So 2002!” The survey indicates that outsourcing actually decreased in the last year by more than 20%. There were 56% of businesses outsourcing some development, down from 71% in the year prior. Only 7% of companies report that they are outsourcing a majority of projects, compared to 12% in the previous year.

What Does It Mean?
I take the decline in outsourcing as a very positive sign. Companies are finally confident that the recession is past. They are less interested in pursuing cost-savings from outsourcing and more interested in taking control of IT and increasing in-house competencies. Many of my current clients are already reflecting this strategy with a growing list of major projects planned for 2004.

Furthermore, I take the resurgence of B2B as a sign that we are well past the hype-phase of Internet commerce. It also reflects that companies are now getting real payback from connecting electronically to customers and suppliers. Companies are not pursuing E-commerce because it’s cool but have decided this just makes good business sense. The Evans survey points to an increase in projects involving Web services, but my recent involvement with clients indicates this is also happening in traditional and Internet-based EDI.

This mainstream adoption of Internet commerce is also happening from the B2C perspective. This past Thanksgiving weekend had retailers reporting a huge surge in electronic orders, with consumers just saying no to long lines at brick-and-mortar stores. Consumer generated E-commerce is now truly becoming “business as usual.”

December 2003