Lack of faith in the security of Internet trading systems is holding back the growth of e-procurement, a survey published this week revealed.
In spite of the increasing attention focused on e-procurement, research carried out by PricewaterhouseCoopers showed that more than one third of the 400 European business leaders surveyed considered that security issues between companies were holding them back from conducting more business online.
Though the whole area of business-to-business (B2B) e-procurement is still in its infancy, analysts see the sector more than doubling by the end of 2001. By that time, 62% of respondents said they expected to be using 30% of their spend with online suppliers, up from 5%.
But Chris Potter, responsible for e-business risk management at PricewaterhouseCoopers and author of the report, said the growth of the B2B market would be limited unless the key issues of trust and security were resolved.
"If you're jumping into bed with someone, you've got to know you can trust them."
Two-thirds of the respondents said building a trusted relationship with suppliers was critical before dealing with them over the Internet, and 60% said they preferred to deal with bricks-and-mortar companies rather than Internet-only traders.
But concerns about security were well founded. The study showed that very few companies had implemented the latest technology to secure business transactions. Nearly two-thirds of companies said they relied solely on password protection.
According to Potter, confidence in online transactions would be dramatically increased by the use of public key infrastructure and encryption technology to secure and authenticate messages.
"The use of digital certificate technology will be the white knight coming to help. But you need a trusted third party to do that and the key question is who is going to issue them [the certificates]," Potter said.