Concerns over security of trading partners are the biggest obstacles to the expected growth in business-to-business (b2b) e-procurement over the internet, according to a survey of business leaders in four European countries commissioned by PriceWaterhouseCoopers.

Although still in its early days (only about five per cent of companies' spending is currently with on-line suppliers), the e-procurement market has massive potential and is set to double by the end of 2001. By then, 62% of all companies expect to be conducting up to 30% of their spending with suppliers electronically.

Over a third of the 400 European business leaders polled (including more than a quarter from the UK), said issues surrounding online security could undermine the trust between their companies and their trading partners, holding them back from doing more online business.

Chris Potter, PriceWaterhouseCoopers partner responsible for e-business risk management and security services in the UK, commented: "It is clear from our survey that trust will both dictate and limit the growth in e-procurement. Trust in the virtual world is more important than ever but it cannot be built at 'e-speed'; it has to be built on relationships, brand and physical presence."

Two-thirds of the businessmen questioned for the survey said it was vital to build up a trusted business relationship with their suppliers before dealing with them over the internet. The same proportion preferred to do business with companies that had a physical presence and did not just exist in cyberspace.

Fears over security were just as significant among businesses which already had substantial experience of e-procurement. In fact, it appears that the more companies know about e-procurement, the more scared they are about security. A remarkable 9% of advanced e-procurement operations admitted to having had security problems with suppliers on-line.

"The concerns about security are not surprising given the current methods companies are using to secure e-procurement transactions. Our survey showed that 64% of the companies rely on password controls when dealing with their suppliers over the internet, yet passwords alone are unlikely to be sufficiently secure", continued Chris Potter and concluded: "Only 27% have yet adopted digital certificates to secure e-procurement transactions. Over the next year, we are likely to see increased adoption of digital certificates to address these vital security concerns."

Anna Lagerkvist