You know that moving your purchasing operations online will produce tremendous efficiencies. Yet for some businesses, moving B2B transactions online is proving to be a slow, involved process.

As Eric Levin, vice president of marketing for "strategic sourcing" software provider Frictionless, puts it, "Let's face it: 80 percent of the Fortune 1000 still don't [have an e-procurement system]." And it's not looking much brighter for the little guys: According to global investment banking firm Goldman Sachs, less than 15 percent of the 7 million U.S. small and mid-sized enterprises (SMEs) participate in e-commerce.

Most B2B buyers will eventually move online, even though purchasing agents are planning to conduct just 20 percent of their transactions via the Internet by 2002. According to a new Jupiter business-to-business report, 60 percent of purchasing agents say the chief barrier to buying online is that their preferred suppliers do not transact via the Internet.

Other factors contributing to the holdup include lack of education and security concerns. According to a Jupiter Executive Survey, 55 percent of purchasing agents say lack of knowledge about Internet markets is keeping them from moving online. The next most common reason reported for the slow growth of online B2B transactions is lack of trust (45 percent).

However, Jupiter analysts report that buyers understand the advantages of doing business online; 71 percent of the buying agents surveyed cited lower product costs as a primary benefit of transacting online, while 56 percent cite faster product finds.

Jim Frome, vice president of marketing for SPS Commerce (which helps companies integrate small and mid-sized businesses into their automated supply chain), elaborates in his article "Don't Ignore Your Small and Mid-Sized Suppliers" in the May 2001 issure of e-Business Advisor magazine. "Because a large percentage of corporate budgets are spent on direct materials, automating direct goods procurement within the supply chain promises big benefits. Such benefits include reduced labor and inventory costs, improved customer satisfaction, and increased value of future investments."

More purchasers will make the transition once suppliers meet their product needs and educate them on how to use their systems. In the meantime, says Jupiter, look for two markets to evolve. One will involve buyers dealing with existing suppliers, and the other will consist of buyers looking for new vendors, a practice that will become more common as search capabilities improve.

What can you do for now? In his article, Frome offers the following advice for getting SME partners to join in your supply chain automation initiative:

• There must be no upfront investments for the SME for software, hardware, or additional staffing, as most SMEs don't have a formal IT staff or a large technology budget.
• If you're encouraging your partner to go with a hosted solution, make sure the fees for the Internet-based supply chain service are low, predictable, and based on usage.
• The transition from the existing way of doing business to the new electronic format can't be disruptive or expensive, which means minimal (if any) formal training to use the service.
• Make clear the benefits for switching to an e-commerce system; make sure your partner knows that ditching the fax machine can reduce errors and lower penalties from big buyers.

• Have a plan for dealing with logistics and education. Buyers who want to go online view them as two essential parts of the transition.
• Understand that most buyers prefer to continue doing business with their current suppliers and won't transact online significantly without them. Smart sellers will leverage existing relationships before looking for new ones.