Security fears hold back spread of online business

20 September 2000
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21 September 2000 | Cathy Hayward

A lack of faith in online security is holding back e-procurement, according to a survey from consultancy firm Pricewaterhouse-Coopers (PwC).

More than a third of the 400 businesses surveyed said that they were reluctant to trade because of transactional and security fears. And more than two-thirds claimed they would deal online only with a firm with which they had a "bricks and mortar" relationship.

These concerns were well-founded. Nine per cent of advanced users of e-procurement had encountered fundamental problems with online suppliers, including orders being altered by a third party.

Chris Potter, PwC partner responsible for e-business risk management and security and the report's author, believes firms need to beef up their security. Almost two-thirds still relied on passwords that are easy to guess or capture, he said.

To generate confidence, Potter recommended using digital certificates, encryption technology and web seals. "Trust has to be built on relationships, brand and physical presence," he said.

Ian Hunter, e-marketplace director at computer services company ICL, said uncertainty over online terminology was an issue. The terms trading communities, third-party marketplaces, online markets and portals are all used, but mean much the same thing, he said.

Uncertainty about e-procurement's use also makes firms nervous. "One marketplace supplier thought his competitors would be able to see his price," said Chris Phillips, director of marketing at e-commerce software company Commerce One.

The e-procurement market is still in its infancy, with companies putting just 5 per cent of their annual spend with online suppliers, according to PwC.

SMsep2000

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