About 47% of the firms surveyed reported that they are in the earliest stages of adopting the Internet. Large-dollar purchasers and nonmanufacturers report the most progress. The biggest obstacles to Internet activities were cited as the efforts required to integrate online buying with internal systems and the lack of clear, visible benefits.
"The Internet continues to expand as a buying channel but it's no longer a panacea," said Bruce D. Temkin, group director at Forrester. "Buyers realize that e-procurement takes more than surfing on supplier Web sites. That's why we're seeing a growing number of organizations changing their procurement practices - and running into difficulties of integrating their purchasing systems."
The report also revealed that the use of online auctions significantly expanded; more than 20% of organizations bought products or services via an online auction. Large-volume buyers used online auctions more than twice as often as small-volume buyers did (28.6% vs. 13.9%), and manufacturers used such auctions significantly more than nonmanufacturers (25.1% vs. 14.3%).
Participation in online marketplaces also increased; 25.2% of organizations bought goods or services via online marketplaces compared to 22.7% in the previous quarter. Again, large-volume buyers used these marketplaces significantly more than small-volume buyers did - 30.5% vs. 21.2%.
In addition, the number of large-volume-buying firms reporting online collaboration with suppliers dropped to 46% from last quarter's 56%. At the same time, small-volume buyers increased the same activity to 41% from nearly 35% last quarter.