Europe’s 100 largest manufacturing firms are pouring millions of dollars into developing B2B commerce sites with no clear idea of how those sites will save them money or generate additional revenues, according to a new study by Forrester Research.

In fact, the study found that leading European companies are so fearful of being left behind by their American competitors in the field of B2B commerce that they don’t even have a good accounting of how much they are spending on their efforts. But Forrester estimates that to be successful, a company in the European 100 will invest at least 11 million euros in their B2B efforts, so having a clear plan for generating some return on that investment is clearly justified.

The Amsterdam-based Forrester team, led by Charles Homs, interviewed 42 European executives responsible for their companies’ e-business programs. Surprisingly, 32% of those interviewed claimed that their sites are a success, despite the fact that 55% had no fixed target for determining savings and 74% had no estimate of how much incremental revenue the site will generate over the next five years. Another 18% said they expect no incremental revenue in the next five years, and 9% said they expect as much as 10% incremental revenue in the next five years.

The survey found that, despite their lack of clear objectives, Europe’s leading companies are packing their sites with functionality. Nearly all (86%) said their site offers or will offer a search function, 77% allow users to request information, 60% offer RFP/RFQ capabilities and 54% offer e-mail. About half (46%) offer logistics, 40% offer currency conversion, 40% offer a frequently asked question/answer-back function, 37% offer financial products, 31% offering product configurations, 23% offer hazardous material information and 20% offer customs/excise/tax information.

Integrating these web functions with back-office systems remains the greatest challenge, according to the Forrester report. About a third of those surveyed – 34% -- said they have already connected their B2B site with back-office systems, but 34% said they have not connected, 26% said they are in the process of being connected and 5% didn’t know their company’s status.

“We tried to pass information from our Web site to our back-end system, but the data models of these systems don’t match up,” on oil company executive told Forrester. “The lack of integration capabilities causes big headaches. We have to modify the connectivity aspects, increasing our integration costs beyond our forecasts.” Integration projects also tend to require a substantial amount of custom programming, one food company executive told the team. “We will use middleware, but we’ll also develop some of our own programs to integrate different software. Off-the-shelf software won’t help us because Web-based applications will be patched together.”

Nearly half of the executives interviewed – 40% -- said they don’t have a good handle on what they are spending on software licenses, consulting fees and internal workforce to establish their sites. For software licenses, 43% estimated they have spent less than 500,000 euros, while 18% said they had spent between 500,000 and 2 million euros and 39% had no estimate. For consulting fees, 43% said they had spent less than 500,000 euros while 18% said they had spent between 500,000 and 2 millio euros, 7% said they had spent more than 2 million euros and 32% had no estimate. In terms of internal workforce resources, 38% said they had spent less than 500,000 euros, 15% said they had spent between 500,000 and 2 million euros, 7% said they had spent more than 2 million euros and 41% had no estimate.

Clearly, however, the executives interviewed believe that having a respectable Web presence is a competitive necessity in today’s market. “If we don’t set up our B2B Web site, it is possible that early adopters in the U.S. would increase their market share in Europe dramatically,” one chemical executive told Forrester. “We can’t afford that.”

A pharmaceutical company executive added: “When we built and implemented our Web site, we didn’t expect to process 100% of our orders online. We wanted to be the first in our business trading online, and then discuss with our customers the functionality they would like.”

The Forrester team concluded that this pressure to do something without having a clear plan of what to do or how to achieve a return on the investment puts European firms at risk of “getting mired in B2B Web sites that don’t deliver on allowing customers to perform a simple transaction. As online sales take off and dominate today’s much-hyped eMarketplaces, European firms will be forced to overhaul and invest in sell-side commerce sites.”

By focusing on features rather than functionality, and with no clear plan for integrating the internal islands of applications needed for online trade, the European firms are a tremendous risk of wasting their investment, the team concluded. A muddled mix of features doesn’t prompt customers to buy, lack of integration makes it impossible to use the sites to transact business, and maintaining duplicate information in duplicate systems becomes as crippling nightmare that damages corporate credibility as customers find different or outdated prices and supply information for the same item.

The Forrester team recommends that European companies focus on overhauling their Web sites to accommodate transactions and collaboration and to offer functionality based on its ability to contribute to profitability or to enhance brand image. They should focus on back-end integration – the largest single cost item – and on connecting their supply chain to encourage collaboration. Adopting a well-planned design approach right from the start will minimize ongoing integration costs and avoid a proliferation of “spaghetti code.”

To measure whether their sites are being successful, Forrester recommends mapping new sales leads to customer satisfaction requirements, monitoring premier buyers’ performance and rewarding customers for profitability. For example, companies that succeed in lowering their transaction costs by moving customers online should be prepared to share some of those savings with the customers.

Forrester also recommends that companies seek to share integration costs with their partners, but to include a back-out strategy in the deal. Companies should scrutinize software- and IT-related contracts for 100% UDDI compliance and ensure guarantees are in place to keep up with changes, like the potential integration of ebXML. Companies interested in pursuing site-to-site integration should target key buyers based on level of spend, which top-spending customers receiving priority for integration. And companies should utilize two or three e-marketplaces, provided they use similar software platforms to alleviate burgeoning integration costs.