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ISM/Forrester Research Announce Results Of Latest Report on eBusiness

Online Purchasing Remained Flat In Q3

FOR IMMEDIATE RELEASE


CONTACTS:

Kristen Kioa Mariko Zapf
ISM Forrester Research, Inc.
+1 800/888-6276, extension 3015 +1 617/613-6225
kkioa@ism.ws press@forrester.com

TEMPE, Ariz., and CAMBRIDGE, Mass., October 15, 2002 . . . The Institute for Supply Management™ (ISM) and Forrester Research, Inc. (Nasdaq: FORR) announce the release of the eighth ISM/Forrester Research Report on eBusiness, a first-of-its-kind report that tracks online activity for both manufacturing and non-manufacturing organizations. The primary finding in the latest Report is that while overall adoption of the Internet for purchasing was essentially flat from the second quarter, specific behavior varied. Eighty-two percent of companies purchased indirect materials online -- down from 84 percent last quarter -- while the fraction of total indirect purchases placed online rose from 8.7 percent to 9 percent. In addition, while use of the Internet for auctions decreased from 22.4 percent to 18.8 percent since the second quarter, the use of electronic marketplaces and private hubs, as well as online RFPs, surged.

Significantly, the fraction of large buyers that used procurement tools increased by a third to 54 percent. Also, for the first time more than half of both manufacturers and non-manufacturers reported collaborating with suppliers online, pushing the overall fraction of firms that collaborated with suppliers to 53 percent.

"Companies are progressing at varying speeds in the eBusiness journey. For example, we see increases in the use of procurement tools – such as ERP, web-based procurement, and extranet applications -- while at the same time there is a reduction in the number of companies that have changed their procurement processes as a result of the Internet," said Edith Kelly-Green, spokesperson for ISM and vice president and chief sourcing officer, FedEx. "This is mostly due to economic concerns. One respondent commented that 'companies are "still trying to find the right mix,' while several mentioned they were waiting for standards to be developed before implementation."

"Despite the flat adoption of online purchasing we saw this quarter, more firms are seeing the Net as critical to overall purchasing," said W. Daniel Garretson, senior analyst at Forrester. "Companies appear to be figuring out what works best for online buying and focusing their efforts on those activities that provide the most value."

For the Report on eBusiness, ISM and Forrester Research received survey replies from supply management executives from both manufacturing and non-manufacturing organizations. To understand the difference in online behaviors of these organizations, the Report analyzes three areas: the results of all organizations; the comparison of manufacturing and non-manufacturing organizations; and the comparison of organizations that procure more than $100 million on direct and indirect materials per year with those that purchase less than $100 million per year. To track the adoption of different activities over time, ISM and Forrester created the eBusiness Adoption Momentum (eBAM) index.

The ISM/Forrester Research Report on eBusiness, developed in fall 2000, measures the adoption of Internet-based procurement. ISM and Forrester Research developed the survey jointly and will issue the Report every three months in a manner similar to the monthly ISM Report On Business®.

About ISM

The Institute for Supply Management™, established in 1915, is the world's leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. ISM has provided a rich history of economic data for over 67 years on the U.S. economy with its Manufacturing ISM Report On Business® and the PMI. Since June 1997, ISM has also been publishing the Non-Manufacturing ISM Report On Business®. Both surveys can be found at www.ism.ws.

About Forrester Research, Inc.

Forrester Research identifies and analyzes emerging trends in technology and their impact on business. Forrester's WholeView™ Research, Strategic Services, and Events help Global 3,500 clients understand how technology change affects their customers, strategy, and technology investment. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional information, visit www.forrester.com.

Information concerning the quarterly release of the ISM/Forrester Research Report On eBusiness may be obtained via the ISM Web site at www.ism.ws and the Forrester Research Web site at www.forrester.com under "Press Resources."

The next release of the ISM/Forrester Research Report On eBusiness will be January 15, 2003.

©2002, Forrester Research, Inc. All rights reserved. Forrester, Forrester eResearch, Forrester Wave, WholeView, Technographics, TechStrategy, and TechRankings are trademarks of Forrester Research, Inc.



ISM/Forrester Research Report on eBusiness

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