Commerce One - Ariba - B to B or not to be - 500 Beiträge pro Seite

[FATIMAÖ.]

E-Procurement: Problems Behind The Promise

Companies find the applications limited, integration troublesome, and managing catalogs difficult. Is it worth it?

By Alorie Gilbert

Send Us Your Feedback ormel Foods Corp. was supposed to be a signature account for Oracle`s E-business software. The $3.4 billion maker of Spam, Stagg chili, and other processed foods embarked in March on an implementation of Oracle iProcurement, an Internet-enabled purchasing suite, to let many of its 12,000 employees buy goods, services, and, eventually, materials needed on the production line from approved suppliers via a Web browser. The Austin, Minn., company expected the new Web system to save millions in administrative costs and capture detailed data on its purchasing activity and suppliers` performance. That knowledge would let Hormel streamline its supply chain and negotiate better deals with preferred partners, yielding greater cost savings.

But nine months later, those objectives are much further out of reach than Hormel had bargained for. Finding the Oracle software ill-suited to its purchasing requirements, last summer the company delayed a planned rollout to 500 employees at 50 U.S. locations. The project remains in pilot mode with just 15 users at eight sites, and deployment to all Hormel employees has been pushed back until the end of next year. "I`m disappointed in this project," says Don Nelson, Hormel`s director of purchasing.

Leading E-procurement software providers such as Ariba, Commerce One, and Clarus, along with business-management consultants, have aggressively pushed the concept of Web-enabled procurement into the corporate mainstream, promising operational efficiencies of the kind sought by Hormel. They`ve also pitched E-procurement as a ticket to the E-business world, as the technical infrastructure needed to participate in online trading exchanges. Indeed, the worldwide market for indirect procurement applications grew 67% last year, according to AMR Research, reaching $259 million in sales. AMR projects 130% growth this year to $583 million in sales.

But many companies sign on for E-procurement without anticipating the long road ahead. They dive into projects only to learn that E-procurement applications are limited in the types and scope of purchasing activity they address. Managing electronic catalogs with thousands of products, providing employees with the right mix of products and adequate information about them, and making it easy to search for items can also be tricky, requiring additional tools and threatening the efficiencies promised by moving purchasing to the Web. And integrat-ing E-procurement applications with existing business systems, such as accounting and human-resources apps, can be more complex than planned, but it`s necessary to enable automated approval and accounting procedures.

A company`s work isn`t done once the software is deployed. For many businesses undertaking E-procurement projects, deployment is just part of a much larger business-process-redesign project. It may take years to fully realize benefits that can be achieved only through the transformation of company policies, processes, and behavior that are made possible by--or required by--the applications. Reworking fundamental business processes and enforcing new procedures may require more user training and consulting than expected.

Sound familiar? It may turn out that E-procurement deployments resemble the challenge-filled enterprise resource planning implementations of the 1990s more than anyone would like. It`s important for companies to realize both the risks and the rewards when they enter into such deployments.

At Hormel, problems began to surface when the company realized that Oracle iProcurement 4 was unable to handle the way the company accounts for packaging and maintenance supplies. Instead of using an accounting method that charges a specific department or project at the time of purchase, Hormel holds these supplies in inventory and charges the various business units as they use them. Version 5 of iProcurement, which became available in May, includes support for inventory items. Hormel is testing the new release, which also features an improved user interface and is able to split purchase orders among multiple cost centers and integrate with Oracle trading exchanges.

Hormel`s project has also been hampered by suppliers` providing inaccurate product data for its electronic catalogs. Hormel had enlisted Requisite Technology Inc., a catalog-management vendor, to aggregate and format data and make it easy for users to search catalogs. But in trial runs with its first supplier, US Office Products Co., Hormel found that product descriptions were incomplete and showed inaccurate unit measures. In one instance, an employee received 12 dozen binder-type paper clips instead of just 12. Hormel is working with both Requisite and US Office Products to resolve the problems. And Requisite says it now gives suppliers a content-management tool to create their own catalogs, rather than trying to create them itself. However, the glitches have delayed until December Hormel`s plans to add five product catalogs.

"At this point, since we have such a small group using the catalog and [because there are] limited items, we haven`t seen the impact we would like" from these E-procurement efforts, says Matt Swigerd, E-procurement project manager at Hormel.

Despite the complications, Hormel isn`t canning the project. It`s still eager for the promised benefits of E-procurement. Analysts estimate that by using Web-based requisitioning systems to aggregate the buying power of their business units, companies can realize 5% to 15% savings on office and operational supplies in six to 18 months of launching an initiative. The savings come primarily from volume discounts and ensuring that employees buy supplies only from vendors with whom the company has negotiated discounts, as well as from reduced administrative work, whittling the cost of processing each purchase order from as high as $150 to $25 or less, says AMR Research. The promise of such gains, companies say, makes it worthwhile to spend $3 million to $4 million at the high end for Ariba Inc. or Commerce One Inc. software or $100,000 for a suite from Remedy Corp. or RightWorks Corp.

When E-procurement works smoothly, it can provide real benefits (see sidebar story, "In A Perfect E-Procurement World"). But that doesn`t always happen. Two of the biggest obstacles--with the potential to diminish the return-on-investment figures quoted by analysts--are creating and maintaining product data electronically and enabling suppliers to support electronic transactions. To eliminate the administrative overhead involved in purchasing, both suppliers and buyers must be able to send and receive purchase orders, invoices, and receipts electronically. It also helps if suppliers can provide electronic catalogs in the formats required by their customers, reflecting custom pricing, product selection, and special contractual agreements, and send updates on a regular basis.

The complexity of these tasks has hampered the progress and effectiveness of many E-procurement projects. Ariba, Commerce One, Clarus, and Metiom have built-in support for a process known as "punch-out," "round-trip," or "tap-out" that enables a supplier with a commerce-enabled Web storefront to let customers browse and order directly from its site while automatically routing the order through their E-procurement systems. Few suppliers have created these sophisticated interconnections, however. "It`s a glacial process to get all of a company`s suppliers on board," says Laurie Orlov, a Forrester Research analyst.

Just ask Dell Computer. Nearly a year after the No. 1 direct-sales computer vendor began its implementation of Ariba Buyer, Ariba`s flagship E-procurement suite, Dell has electronic catalogs for just nine of the 1,400 suppliers it deals with. It has been slow going for Dell to get the content it needs from suppliers because Ariba applications require catalogs to be in a file format called Catalog Interchange Format.

Dell is pleased about routing $10 million a month worth of requisitions, representing a broad range of nonproduction commodities, through its Ariba system since going live with it in August. Without electronic content for most of those products, however, 30,000 Dell employees must manually enter data into the system while referring to cumbersome hard-copy catalogs. "It`s very difficult," says Julie Reed, a strategic business manager at Dell. "Suppliers aren`t all tech-enabled. It`s often the first time they`ve created a file in the form we need."

Dell had planned to register all 1,400 of its suppliers on the Ariba Commerce Services Network by last April. The Ariba Commerce Services Network enables secure transaction routing and exchange of transaction information between a company running Ariba Buyer and its vendors via electronic data interchange, fax, E-mail, and XML-based messaging. The registration process requires each supplier to fill out a comprehensive form online, after which Ariba verifies the supplier`s identity and works with the company on security measures and encryption formats to ensure integrity of transactions. If the supplier wants to interact electronically with Ariba, the vendor will work with it on EDI or XML registration and testing. Dell says it takes a lot of hand-holding just to get the ball rolling and that it hasn`t had much help from Ariba. Only a third of Dell`s suppliers are registered.

Nick Solinger, Ariba`s director of product marketing, calls supplier-enablement and content management "a multifaceted and extremely hairy issue," made more difficult by suppliers` fears that E-procurement will erode margins or hurt them in some other way. Ariba does offer customer-implementation resources, including a 50-person content-discovery and services group to help suppliers create electronic content and get on to the Ariba Commerce Services Network. Ariba has done more than other E-procurement application vendors to provide and support a wide variety of tools and services, Solinger says, but he admits it needs to do more. "It`s an area our customers are definitely pushing us on," he says.

For its part, Dell is about to launch a campaign to get more suppliers on board through a series of "summits," in which the computer maker will bring together suppliers in groups of 10 for several hours of presentations and education about the benefits and requirements of E-procurement. When the process of registering all suppliers is complete, the company expects to cut in half the $40-per-transaction cost of processing purchase orders. "The circle isn`t complete," Reed says. "We end up faxing or mailing purchase orders, and that`s not E-commerce."

It`s a similar story at VF Corp., a $5.6 billion apparel manufacturer in Greensboro, N.C. The company is still in the process of deploying Ariba Buyer, a project it started in April, and has found to its surprise that even suppliers registered on Ariba`s Commerce Services Network weren`t able to conduct transactions with VF via the Ariba system. In several cases, suppliers that had set up XML or EDI links to Ariba hadn`t fully tested them and sent botched data or failed to respond in trial runs conducted by VF. Some suppliers are so busy working on electronic links to customers operating in environments other than Ariba, they`ve put VF on an E-procurement waiting list.

Consequently, VF has postponed until next year the completion of an electronic catalog for all the nonproduction commodities it buys--and like Dell, its employees enter requisitions manually. Because most suppliers have been unable to support the Catalog Interchange Format required by Ariba, VF has set up catalogs through Ariba for just six of the 40 vendors it buys from. VF believes there`s enough value in using Ariba to capture and analyze spending activity that it will continue on track. "Suppliers need to get there," says Norm Marttila, an E-business process executive at VF. "It`s a timing issue. But we see enough benefit today that we`re not putting the project on hold."

But be careful what you ask for. Companies that manage to collect electronic catalogs from suppliers face the daunting task of integrating, formatting, checking, and updating them, all while ensuring the data is easy to navigate. To tackle that challenge, Great-West Life and Annuity Insurance Co. in Denver worked out a deal with Remedy, its E-procurement applications provider. Remedy agreed to integrate a catalog-management application from Requisite Technologies that will make searching for products in the catalogs more intuitive, at no extra cost to Great-West Life, says Graham McDonald, VP of finance at the $2.7 billion company. Still, the Requisite project added six months to Great-West Life`s software deployment, which the company began a year ago and was supposed to make available to 4,000 employees by the end of this year. Now it`s looking more like the middle of next year.

The company says it`s worth the wait, as it doesn`t want to trade efficiencies already gained in the purchasing department for the labor required to create a catalog from scratch. So far Great-West Life hasn`t encountered the problems Hormel had with Requisite. "Catalog management is a very important part of E-procurement," McDonald says. Without it, companies could wind up adding people to manage the catalogs even as they reduce their buying staffs.

Companies implementing E-procurement software struggle not just with technology issues, but with creating acceptance of the procurement system by users and purchasing professionals. Many of those employees may have had purchasing autonomy, and may feel impinged on by a corporate mandate to adopt new processes and vendors. "There will be a lot of religious battles," says Pierre Mitchell, an analyst at AMR Research. "Supplier preference is [easier] to resolve around office supplies. But when you get into the plant and say, `You guys will use Snap-on instead of Stanley tools,` there will be backlash."

Training is critical to gaining acceptance among users, yet it`s often overlooked to the detriment of the project. Dell has deployed Ariba Buyer to 30,000 employees and has 3,000 frequent users, but the company wishes it had spent more time training users from the start. Although the company initially provided hourlong training sessions, many users require additional support. "The interface is intuitive," Reed says. "But you have so much visibility into the buying transaction you never had before, it`s confusing and can encourage a lot of questions."

Dell turned off its legacy purchasing system when it went live with Ariba. That gave users no alternative for buying nonproduction supplies and drove the need for intensive training. But it was the right thing to do, Dell says.

Charles Schwab & Co. wishes it had done the same when it turned on its Ariba system in October 1999. The $4.7 billion brokerage says one reason it hasn`t yet attained the return on investment it expected from its E-procurement initiative is that it left open alternative forms of purchasing, namely paper and E-mail requisitions. So although Ariba Buyer is now available to 14,000 employees, and will be available to a total of 25,000 by year`s end, users who don`t like change have been able to thwart the system. "We have lessons we`ve learned," says Beverly Mackey, VP of procurement services at Schwab. "We should turn off alternative forms of requisitioning."

Parsons Brinckerhoff Inc., a $945 million transportation engineering and construction-management company in New York, has had to review the new buying processes it`s instituting with its installation of Clarus` E-procurement suite among more than 18 business units. It`s also using the deployment as an opportunity to revisit purchasing policies, procedures, and vendor contracts that haven`t been touched since the early 1980s. "We evaluated vendors again and hired new staff," says Suzanne Puccino, VP and director of corporate services at Parsons Brinckerhoff. "We`ve basically revamped our entire purchasing system and group. We used Clarus as the excuse to do that."

The hard part has been integrating the E-procurement suite with a cost-accounting system from Oracle. The company began deploying Clarus` suite a year ago and is behind in its rollout schedule because of the prolonged integration effort. Because staffers will use the system to buy computer hardware and software, office equipment, office furniture, office supplies, and printed stationery, Parsons Brinckerhoff had to ensure that detailed project data flowed between Clarus and cost-accounting centers used to track the cost of each project within Oracle to ensure proper billing to clients. The company purchased an additional module from Clarus called Clarus Fusion, which loads project names, job numbers, expenditure types, and cost-center information from Oracle into Clarus. "It has taken time for Clarus to understand connections to the Oracle system," Puccino says. The rollout "has taken twice as long as expected."

Instead of Parsons Brinckerhoff making Clarus available to all 250 domestic offices by midyear as planned, the company is rolling it out initially to just 15 sites. The rest of the project won`t be completed until after next year.

"Back-office integration isn`t as easy as one would like to think," says Steve Hornyak, Clarus` chief strategy officer. That`s why Clarus has taken on the task itself, rather than pointing customers to a third-party enterprise-application integration company. The problem at Parsons Brinckerhoff, Hornyak says, is that the company was an early adopter of Clarus` Oracle Fusion Link product, one of the vendor`s six Fusion Link offerings for linking to major enterprise apps. Parsons Brinckerhoff hit some bumps in building real-time links between the Unix-based Oracle applications and Clarus, which runs on Microsoft Windows NT. Because the project took longer than expected, Clarus footed part of the bill.

Deb Kunkler, a procurement manager at Idaho Power Co., also knows that being on the leading edge of technology adoption has some "nonbenefits." Idaho Power, a hydro utility in Boise serving Idaho, Oregon, and Nevada, deployed an E-procurement suite from Commerce One last year. It figured integration between the system and an ERP suite from Indus International Inc. would be complete by now, but Idaho Power is still working on it, in part because the company had to upgrade to the latest release of Indus Passport, which became available in August. "Integration has been the biggest challenge but will also be the greatest value," Kunkler says.

The utility expects to see its investment pay off in three years. So far, it has deployed Commerce One in standalone mode to 185 employees for office and janitorial supplies. But links to work orders stored in Indus are crucial for linemen and other workers to order hand tools, safety gear, and project-specific supplies through Commerce One.

Another complaint about E-procurement applications is that they`re generally focused on indirect commodity items such as office supplies and computer equipment, and neglect other areas of spending such as services, capital projects, and production materials. A recent Granada Research study concluded that several large expenditure categories, including capital equipment, parts replacement and repair, and professional services, aren`t adequately served by Web procurement platforms. Gartner Group says none of the E-procurement systems available today supports more than 40% of service businesses` purchasing needs. Adds AMR Research`s Mitchell, "The biggest disappointment is the breadth of the applications."

Wachovia Corp., a $6.3 billion banking and financial services firm in Winston-Salem, N.C., would like to expand its deployment of Clarus beyond the 1% of total spending that the system processed this year. The company is awaiting the next release of features from Clarus to enable procurement of professional services, such as technology consulting, staffing, and legal and accounting services, as well as configuration of network and telecommunications equipment. Limited supplier readiness among service providers and network equipment vendors is another factor curtailing the scope of the project, which today covers office supplies, hardware, and desktop software. "I`d like to turn up the gain further," says Bill Huber, VP and manager of strategic sourcing at Wachovia. "Today it`s only a blip on the screen."
Electronics producer Texas Instruments Inc. has also limited its E-procurement project. TI`s deployment, which is based on software from Metiom, addresses only supplies not tied to the manufacturing line, such as spare parts, lab equipment, and computers, which represent a third of the company`s $5 billion of annual spending. The remainder is spent on raw materials and electronics components, as well as capital equipment, and is integrally tied to the company`s SAP manufacturing system.



The problems TI needs to solve in direct-materials procurement are starkly different from the issues it faces in purchasing indirect materials, says Alan Daniel, E-procurement manager. Rather than tracking spending, negotiating discounts with suppliers, and ensuring on-contract buying, which is already tightly managed on the direct side, TI is looking for ways to improve communication with suppliers about inventory levels, delivery schedules, and other information critical to production lines.

Commerce One, i2 Technologies, Nexprise, and Oracle all say that they can deliver software suites that resolve these issues, letting TI and other manufacturers meet online to design products and buy the custom components to build them. But most companies view what`s available as largely unproven. "Most procurement systems today haven`t mastered how to do that," Daniel says. "That requires integration not only with your enterprise resource planning system but with supplier and customer ERP systems. Those things may be coming, but they`re not here yet."

[Moonlight]

Ich glaube auch, daß die Probleme der Systemintegration vielfach unterschätzt werden. Dem steht entgegen, daß einige der großen Plattformen, z.B. Covisint, erst angelaufen sind und somit konstante Fees generieren werden. Dies sollte langfristig genügen, um evtl. Schwächen im Neugeschäft zu kompensieren.

Moonlight

[FATIMAÖ.]

Gotcha!

Traditional industries stole the e-marketplace initiative from dot-coms. Now what?
Rob Spiegel

Mark Holman, CEO of electronics coalition e2open, says industry players were skeptical of independent e-marketplaces from the start.
(Photo by Jamie Tanaka)

At first it seemed like a joke. The B2B dot-coms laughed openly when industry coalition e-markets started to announce themselves in February. Those were heady days for the dot-coms in the pre-April world of higher-than-sky stock valuations. Back then the B2B entrepreneurs were the crown royalty of a new and promising world. But today, the consortia have begun trading and delivering on their technological promises, and it`s their turn to say to the dot-coms: Gotcha!

"As we watched the dot-coms gain their billion-dollar capitalizations, we were envious and angry," says Chip Merritt, director of e-business for Solutia (solutia.com), a St. Louis, Mo.-based chemical company and part of the coalition that launched the petroleum and chemical exchange Envera. "Ultimately, the industry is not going to allow a dot-com to make a lot of money. Instead, they`re going to do it themselves. If a dot-com does make a lot of money, the industry is going to take it away from them."

The plot may sound like something from "The Phantom Menace," but it`s closer to "The Revenge of the Nerds." The prosaic, traditional industry players are simply taking back the initiative from the hot-shot entrepreneurs who grabbed it while the "old timers" were trying to get their enterprise systems to work.

X2X: Exchange-to-exchange gathers steam

As industry consortia switch on their trading engines, many are looking beyond their own exchanges. Often the first move is a reverse auction. When Transora, the consumer-goods e-marketplace owned by 50 major consumer-goods companies such as Procter & Gamble and H.J. Heinz, decided to test its auction capabilities, it turned to FreeMarkets (freemarkets.com) to conduct a honey auction for a number of companies including Heinz. Twenty-five honey suppliers participated.

For its second auction, which involved the purchase of printed materials for Sara Lee, Procter & Gamble and Heinz, Transora asked auction facilitator eBreviate (ebreviate.com), an EDS company, to handle the chore. Twenty-seven suppliers competed for the work.

Auctions, however, are not the only X2X (exchange-to-exchange) options offered by Transora. The e-marketplace also ties into food-and-beverage coalition Novopoint and the independent e-marketplace FoodTrader (foodtrader.com). "Bringing in FoodTrader and Novopoint was really a statement of philosophy," says Rick Herbst, chief strategy officer for Transora. "We want to be a common repository so companies can access their desired trading partners from a common point. You can even come through us to access your Staples account."

Industry exchanges tend to stake out specific ground within an industry. From there, they can use existing e-marketplaces to reach the rest of their industry or reach outside for MRO goods. "Transora`s space is between the manufacturers and the retailers," says Robert Schult, CEO of Novopoint, explaining how the two e-marketplaces offer noncompeting services to the same industry, "We`re in the frontier between the supplier and the manufacturer."

Transora isn`t the only consortium e-marketplace reaching out electronically to existing exchanges. SeafoodAlliance asked independent exchange GoFish (gofish.com) to run its trading engine. The concept of going X2X may turn out to be a hallmark of industry-backed trading systems, much to the benefit of their owners.

Can`t get no cooperation

There are a variety of reasons for this shift in e-market momentum. Part of the problem the dot-coms faced initially was getting industry buy-in. "The independents were not getting the cooperation of the industry players," says Mark Holman, CEO of electronics consortium e2open (e2open.com), based in Belmont, Calif. "When the independents first came in, they said, `Why don`t you help us?` And we were skeptical. `Why should we help you?`"

That skepticism has paid off for the consortia, who now find themselves in the driver`s seat. Holman says, "Now that the marketplace is ours, we`re looking at what we need to do to fill our own needs."

The ability to meet needs relates to one of the most commonly cited complaints among coalition leaders: The dot-com market makers failed to offer industries what they really needed in a trading exchange - a way to automate current trading practices. "If someone had come up with the idea of allowing us to trade with our existing partners, we would have been interested," says Merritt.

This song can be heard across industries from consumer packaged goods to aerospace. Coalition after coalition claims that the whole reason for launching an industry-owned site was to create the blend of services that a given industry most needed. Simply stated, most of the consortia owners want to improve connectivity to their current trading partners. "The industry players have the burning desire - between them and all their trading partners - to improve and attack the inefficiencies, and they understand them better than anybody," says Rick Herbst, chief strategy officer for Transora (transora.com), the Chicago-based exchange created by 50 major consumer packaged goods companies.

Granted, industry players have the motivation, but can die-hard competitors cooperate? "The easy part has been our ability to come together," says Edith Kelly-Green, interim CEO at Aeroxchange, a coalition e-marketplace serving the airline industry.

"When you have 13 different airlines trying to put together a company, you would expect that would be difficult," she says. "But relative to other organizations that come together with that number of participants, it`s been much easier than I expected. We had a common need, so the process of getting there was simpler."

How many consortia?

In a swiftly moving business environment where online exchanges still are announced almost daily, it`s no surprise that few research firms are willing to weigh in on how many industry e-marketplaces exist. For one thing, it`s difficult to say just what "exist" means. Is a press release sufficient? Or must a site start trading to prove it`s more than just an industry bluff to ward off hungry entrepreneurial outsiders?

Most experts simply say there are 50 to 100 sites launched or planned by a consortium of industry players. Only one of the B2B research firms has attempted to create a list of consortia initiatives, Jupiter Research`s Net Market Makers. A recent report on consortia by Net Market Makers pegs the total at 58.

Here at eCommerce Business during the past eight months, we have listed more than 165 coalition e-marketplace announcements as of our Dec. 4 issue. For many of those exchanges, that`s as far as they`ve gone.

For this analysis, eCommerce Business counted the exchanges that sport a name and an announcement, and show some signs of life - not particularly stringent criteria. Some of those exchanges are trading, most provide some industry information and nearly all have Web sites. We come up with a slightly higher number than Jupiter: 62 consortia.
Robert Schult, CEO of Novopoint, says even though Transora and his e-market operate in the same industry, they serve different markets.

Owning the domain

A key to meeting those industry needs is bringing crucial domain knowledge into the e-marketplace. Once again, industry consortia have the advantage. "We`re loading ourselves up with folks who have electronics-industry domain expertise across many dimensions," says Holman. "So I think it will be a challenge for a company like FreeMarkets to develop the same level of domain experience across all its verticals. I think the guys like FreeMarkets will be searching a bit for where their sell point is and where their value add will be."

"Domain knowledge is tremendously important," adds Herbst. "If you look at the state of technology, there`s a real fallacy that all you have to do is buy the technology and you`re ready to do these sophisticated operations. You start out with a kernel of capability, and then deep domain expertise has to be built-in to optimize the collaboration among the needs of the industry players."

One of Transora`s trading affiliates is the food-and-beverage coalition, Novopoint (novopoint.com). This consortium also stresses its domain knowledge. "We`re taking the domain expertise of the food industry and coupling it with people who have banking experience and logistics experience," says Robert Schult, CEO of Chicago-based Novopoint. "When you create something new like this, you have to put people with different backgrounds together to solve this puzzle. One of the critical pieces is the experience with the food business."

Big growth for e-market services

Worldwide demand for e-marketplace services is expected to grow from $2.5 billion in 1999 to more than $15 billion in 2004, according to Framingham, Mass.-based research firm IDC. And with that growth will come a significant shift in the market`s customer base as e-marketplace participants replace the e-marketplace itself as the service industry`s biggest customer.

The report covers three types of services: consulting, implementation and operations management.

"There`s a steep growth curve for these kinds of services for the next few years with the pace slowing by 2003-2004," says Leo Lipis, senior analyst for IDC`s eMarketplace Services research program. "The estimates show a lot of growth over the next few years because of the initial ramp-up period marketplaces have to go through if they`re ever going to take off."

"The greatest opportunity for e-marketplace services firms will be in integrating participants` internal systems with those of the e-marketplace," says Lipis. "Integration with an e-marketplace will tighten integration between suppliers and purchasers, and help participants streamline processes and reduce costs."

Nowhere will the change in customers be more apparent than in North America. In 1999, nearly all the region`s e-marketplace service revenues were generated from the actual e-marketplaces. By 2004, that share will be less than 50 percent.

It`s about relationships

An additional reason the dot-coms didn`t stand much of a chance was, ironically, the importance of the role they hoped to play between suppliers and buyers. The industry players were not about to allow a third-party enterprise to step between them and their suppliers or customers. A major purpose of most of the industry consortia is to bring connectivity to their current partnerships. "Envera is what you use when you`ve met your match and you`re ready for transactions," says Cyndi McAlpine, director of e-business at Borden Chemical, one of Envera`s investors. "We`re not talking about auctions. What we`re really doing is strengthening our relationships with our strategic partners."

"Most of the marketplaces that exist today are dealing with price discovery," says Merritt. "CheMatch says, `I introduced you, now do your trading.` And the trading goes the old-fashioned way. Envera is not about price discovery. Instead, you work with people you have been doing business with for years. Ninety percent of what we do is base contract trading. Less than ten percent is spot purchasing."

Companies want direct connections with their trading partners to gain efficiency. But essentially they`re happy with their given set of partners. "The supply chain has been going on for many, many years, and we want to utilize the Internet and the new technology to make improvements," says Schult. "The industry players don`t need anybody to get in the way. They need someone who is one step off of those relationships to be able to help the flow of transactions to move more rapidly at a lower cost."

Edith Kelly-Green, interim CEO at Aeroxchange, says getting competing airlines to cooperate has been easier than she expected.
(Photo by ©2000 Dan Bryant Photography)

The technology edge: Who has it?

Despite these advantages, the independent e-marketplaces have maintained that they have the edge technologically. That may have been true once, but this edge seems be getting dull, thanks primarily to companies such as Ariba, Commerce One and i2 Technologies who have developed super-slick, off-the-shelf trading platforms that can be customized for the needs of individual industries. New York-based Jupiter Research weighed in on the functionality of industry coalition e-marketplaces in a recent report, "Industry-Sponsored Marketplaces," finding that "most have surpassed initial expectations."

"The nature of the technology has changed," says Tim Clark, senior analyst at Jupiter Research. "The off-the-shelf offerings are working better than the unique technology of the earlier companies. Seventy percent of the consortia will have an advantage over the early companies in collaboration and supply-chain project management."

This revelation deals a blow to some of the dot-coms that are struggling to remake themselves into technology companies to survive in a world where consortia sites are consolidating their industries` online connectivity. "I`m not sure how successful the independents will be at marketing themselves as technology providers," says e2open`s Holman. "I think four or five years ago their technology was unique. When FreeMarkets developed the reverse auction, it was new. But now it`s available in everybody`s package. Ariba off-the-shelf does reverse auctions. So there`s no unique capabilities in these technologies."

In addition to their technical functionality, consortia have another ace in the hole to back up their already strong hand: the credibility of their industry-leading owners. Solutia`s Merritt puts it plainly. "The power is in the consortium, not the technology."

Cyndi McAlpine, Borden Chemical, says the primary purpose of the Envera e-marketplace is strengthening relationships with strategic partners rather than matchmaking.
(Photo by Ted Rice)

Alternative to private exchanges

With so many advantages, why wouldn`t an industry player set up its own private exchange? In most cases, the answer lies in one word: money.

For many of the coalition partners, an industry-based public exchange is an alternative to the expensive proposition of building a private exchange. Most of the corporations building private exchanges, including GM, Ford, Intel and Cisco, are well funded and can foot the initial expense of developing connections to their trading partners. But to continue the march toward efficiencies, more and more participants must be connected.

For example, Ford started three years ago with connections to 16 suppliers. During the next two years it increased that number to 320. The next step may be 3,000 and then 15,000. As long as the exchange stays private, Ford foots the bill. It`s no wonder the automaker is seeking a third-party vendor to spread the responsibility and expense. A third-party host means the trading partners share the cost. Financial analysts already are pressuring the automakers to start pushing these expenses down the supply chain.

So an industry coalition seems to be the reasoned response to the dilemma of funding an ever-expanding platform that enables trading partners to take their private transactions and collaboration to the Internet. "A lot of folks talk about private versus public marketplaces," says Holman. "I look at the investment it has taken some leading-edge companies such as Cisco, Dell. What did it cost them? Quite a lot. How long did it take them? It took them quite a while. Does it provide all the functionality you can get in a public marketplace? The answer is, probably not."

The consortia were launched in part to solve this problem. Industry leaders were convinced that connectivity would deliver the coveted efficiencies, but they also wanted to outsource the solution and spread the cost across the entire supply chain. "They`ll make the outsource decision rather than trying to build what took Cisco and Dell a long time and a lot of dollars to get to commercial functionality," says Holman. "They`ll say `Let me buy it by the drink and let me buy it through an outsource company that`s doing this for many, many companies - so therefore he`s best in class, and he`s able to leverage that investment against many, many companies.`"

Independent e-markets try new business models to survive

As the consortia exchanges begin trading, many independent sites have changed their business models to survive under new market conditions. There seems to be a growing recognition that many, if not most, of the consortia will offer their industry partners a compelling menu of trading services, not to mention industry liquidity.

The independents are taking three basic paths in the face of these developments. Some are becoming service companies, providing Internet applications to users and e-marketplaces. Others are aligning themselves with consortia sites. Yet others are bonding with other independents in an attempt to become more robust and more liquid. In the middle of all this, even some coalition sites have decided to join forces.

Here`s a quick glance at some recent consolidations:

- Construction e-markets Cephren and Bidcom merged to form Citadon.
- Cephren allowed industry utility e-marketplace, Pantellos, to use its construction planning online.
- PartMiner added its parts catalog to electronics industry e-marketplace e2open.
- GoFish lent its trading engine to industry site SeafoodAlliance.
- Two industry e-marketplaces, MyAircraft and AirNewco, agreed to work together.
- Industry consortia Transora and Novopoint decided to cooperate.
- FoodTrader decided to cooperate with Transora e-marketplace.

VerticalNet, Ventro and Commerx have announced moves to the service model rather than the transaction-fee model. Ventro also plans to shut down its two wholly owned e-marketplaces, Chemdex and Promedix. Commerx nudged founding leaders, Tim and Nick Stojka, out of their roles as CEO and EVP respectively, though the brothers retain their positions on the company`s board. Meanwhile, eSprocket has started letting go employees to cut operating expenses.

These trying times for noncoalition e-marketplaces will likely continue as more and more industry consortia sites rev their engines and claim back their industries.

The prized fruit: collaboration

Despite the initial emphasis on transactions, collaboration is the highest goal of e-marketplace activity. Most companies spend only about 10 percent of their procurement on spot buying. With the other 90 percent of their trading, they want the connectivity, even if they`re not seeking new partners. Most industry players have worked out their contract pricing with MRO suppliers such as Staples and Grainger. But they consider their direct-materials purchasing to be sacred ground. So their highest trading priority is automating their current supplier and customer mix.

Not surprisingly, all of the coalition e-marketplaces interviewed for this article stressed the importance of hooking up existing partners. "A lot of folks think the biggest bang for the buck would be setting up a trading hub and creating a liquid market for commodities," says Holman. "The more important thing needed in the electronics industry is establishing connectivity and collaboration among partners in the industry."

The same is true when the major airlines buy their parts and catering. "The overriding principle of this exchange is that we`re going to create lasting value for both buyers as well as suppliers," says David Holleman, VP of business development at consortium-backed Aeroxchange (aeroxchange.com). "We`ll be doing that through some primary leverage. There`s opportunity to improve the process for suppliers as well as buyers. And there`s supply-chain management efficiencies that can be gained through better demand planning, better forecasting, as well as tools to optimize the supply chain."

Some industries, such as food and beverage, seek electronic efficiencies as an alternative to cutting staff and pressuring prices down the supply chain. "If you reduce the cost of that supply chain, you can fuel two things," says Novopoint`s Schult. "You can fuel growth, which is really necessary in the food industry that gets tagged for being a slow-growth industry, and it can fuel financial performance. I think it`s motivating for an organization to focus in on these things rather than cutting jobs. It`s a better battle cry."

Ideally, the supply chain can get so efficient that it becomes a demand chain: A consumer buys a product that sends a set of replacement signals down the chain. "It`s a big dream that someone buys a car and that triggers increased rubber production, but that`s 20 years down the road," says Merritt.

Chip Merritt, director of e-business for Solutia, a partner in the coalition exchange Envera: "Ultimately, the industry is not going to allow a dot-com to make a lot of money."

What about profits?

But in the near term, what will be the dominant financial model for industry coalition e-marketplaces? Will they exert their independent, entrepreneurial possibilities or morph into utilities? One of the main themes among consortia initiatives is that their goal is to become profitable, independent companies that emerge from industry parents and mature into valid enterprises able to head, ultimately, down the IPO road.

Because many of the consortia are partly financed by the venture community, this is no small part of their mission. "We`re an independent company," says Herbst of Transora. "We have investors. No investor owns more than five percent of the operation. Currently all of the investors are manufacturers, but that doesn`t necessarily have to be long term.

"Nobody working at Transora is doing it because of an IPO option," continues Herbst. "It`s about creating economic value. But if our economic value suggests that an IPO will give us the operating capital to do what we need to do operationally, then sure, we`ll do an IPO."

e2open, the electronics coalition, also puts a premium on creating value. "e2open was always structured to generate value and create a profit," says Holman. "What`s been created is a hybrid between a pure industry consortium where everyone gets around the table and creates it, and a pure entrepreneurial effort where the venture capitalist gets an independent management team. We try to balance the elements of both."

Creating an enterprise is important to the consortium managers, but creating functional value is the highest priority. The leaders of these enterprises are acutely aware they are remaking the way their industries buy and sell goods and services. They see their participation as important and very exciting. "I want to look back after 20 years and say, `Hey, there was this revolution going on, and I was on the top of the wave as it was going on,`" says Holman.
Aerospace and defense

- Aerospan (aerospan.com)
American Airlines, All Nippon Airways, Continental, United, Boeing, 5 others

- Aeroxchange (aeroxchange.com)
Air Canada, All Nippon Airways, FedEx Express, Northwest Airlines, 9 others

- AirNewco (airnewco.com)
American Airlines, Air France, Continental, Delta, United, 5 others

- MyAircraft (myaircraft.com)
Honeywell, BF Goodrich, i2

- Exostar (exostar.com)
Boeing, Lockheed Martin, Raytheon, British Aerospace

Agriculture

- Pradium (pradium.com)
ADM, Cargill, Cenex Harvest States, DuPont, Louis Dreyfus

- Rooster.com
Cargill, DuPont

- The Seam (theseam.com)
Dunavant, Allenburg, Cargill

Automotive

- Covisint (covisint.com)
Ford, General Motors, Daimler/Chrysler, Nissan/Renault

- Rubbernetwork (rubbernetwork.com)
Goodyear Tire, Cooper Tire, Bridgestone, 4 others

Chemicals

- AllianceChem.com
Biesterfeld, Brenntag, Ellis & Everard, Penta, Solvay

- Elemica (elemica.com)
BASF, Bayer, Dow, DuPont, 17 others

- Envera (envera.com)
Castrol, BF Goodrich, Occidental, Solutia, 9 others

- ElastomerSolutions (elastomersolutions.con)
AES, Bayer, Uniroyal, DuPont, 6 others

- Omnexus (omnexus.com)
DuPont, Dow, BASF, Bayer, 5 others

- PolymerAdditives (polymeradditives.com)
Albemarle, Cytec, GE Specialty Chemicals

- Trade-Ranger (trade-ranger.com)
Conoco, Dow, Mitsubishi, Phillips Petroleum, 10 others

Computers

- e2open (e2open.com)
IBM, Canon, HP, Hitachi, Samsung, 9 others

- Ec4ec (ec4ec.com)
Babcock Borsig AG, SAPMarkets

- eHITEX (ehitex.com)
AMD, Agilent, Canon, HP, Gateway

Construction

- HomeBuildersXchange
Centex, Kaufman and Broad, Lennar, Oracle, 3 others

- Mercadium (mercadium.com)
BPB, Hammer Architects, Glauser, 5 others

Energy, oil and gas

- C-StoreMatrix (c-storematrix.com)
Anheuser-Busch, National Association of Convenience Stores, 9 others

- Enporion (enporion.com)
Alleghany, Ameron, Keyspan, 5 others

- Intercontinental Exchange (intcx.com)
Amoco, Shell, Duke Energy, 11 others

- Pantellos Group (pantellosgroup.com)
Duke, Edison, PG&E, Sempra, 18 other utility companies

- PetroCosm (petrocosm.com)
Chevron, Texaco, Ariba, KPGM

- Tradespark (tradespark.com)
Coral, Koch, Williams, Entergy, 5 others

- Upstreaminfo (upstreaminfo.com)
EDS, Raytheon

Financial

- MuniCenter (themunicenter.com)
Morgan Stanley Dean Witter, Merrill Lynch, Salomon Smith Barney, Chapdelaine

Food and beverage

- Avendra (avendra.com)
Marriott, Hyatt, ClubCorp, Bass

- CPGMarket.com
Henkel, Danone, Nestle, SAP

- Dairy.com
Dairy Farmers of America, Kraft, Dannon, 5 others

- Electronic FoodService Network (efsnetwork.com)
Cargill, SYSCO, Tyson, McDonald`s, eMac Digital

- fsXchange (fsxchange.com)
Adams, Burch, Atlanta Fixture, 8 others

- Novopoint (novopoint.com)
Ariba, Cargill, Crosspoint Venture Partners

- RetailersMarketXchange (retailersmarketxchange.com)
Chevron, McLane, Phillip Morris

- Seafood Alliance (seafoodalliance.com)
Barry Group, Coldwater IFPC, Pacific Seafoods, 9 others

- UCCnet.com (uccnet.org)
Hershey Foods, Frito-Lay, P&G, Tyson, Ralston Purina, 10 others

- Worldwide Retail Exchange (worldwideretailexchange.org)
Albertson`s, Best Buy, J.C. Penney, Kmart, dozens of others

Health care

- Global Healthcare Exchange (ghxonline.com)
Johnson & Johnson, Baxter, Medtronics, GE Medical Systems, Abbot Laboratories

- NewHealthExchange (newhealthexchange.com)
AmeriSource, Cardinal Health, Fisher Scientific, McKesson HBOC, Owen & Minor

Legal

- Lawcommerce.com
More than 60 major law firms

Manufacturing

- Manufacturing Central (namb2b.com)
National Association of Manufacturers

MRO (maintenance, repair and operations)

- CorProcure.net
BHP, Coca-Cola, Pacific Dunlop, 14 others

- Cyberlinx Procurement Services
The Commonwealth Bank, Lion Nathan, Woolworths

Metals and mining

- Global Steel Exchange (gsx.com)
Cargill, Samsung, Duferco, TradeARBED

- MetalSite (metalsite.com)
Bethlehem Steel, LTV Steel, Weirton Steel, Ryerson Tull

- MetalSpectrum (metalspectrum.com)
Alcoa, Kaiser, Reynolds, Atlas, 5 others

- MiningXchange (miningxchange.com)
Oracle, PriceWaterhouseCoopers

- Quadrem International (quadrem.com)
Alcoa, De Beers, Alcan, 16 others

- ScrapSite (scrapsite.com)
MetalSite, Metal Management, Phillip Services, Bethlehem Steel

- WorldMetal (worldmetal.com)
Cathay Pacific, Hyundai, Wugang, 14 others

Paper

- ForestExpress (forestexpress.com)
International Paper, Georgia-Pacific, Weyerhauser, Mead

Real estate

- Constellation Real Technologies
Octane, Facility Pro, Equity Residential, Trammell Crow, 10 others

- Octane
Trammell Crow, CB Richard Ellis, Jones Lang LaSalle, Insignia Financial

- Office Technology Consortium
Boston Properties, Hines, Oxford Properties, 10 others

Transportation and freight

- Freightwise (freightwise.com)
Manugistics, BNSF, General Electric

- LevelSeas.com
BP Amoco, Cargill, Shell

- OceanConnect (oceanconnect.com)
BPMarine, Fuel and Marine Marketing, Shell

- Transplace.com
J.B. Hunt, M. S. Carriers, U.S. Xpress, 5 others

- TruckXchange (truckxchange.com)
Paccar, Commerce One

Source: eCommerce Business research

 

Copyright © 1997-2000 Cahners Business Information, a division of Reed Elsevier Inc.

Cahners® is a registered trademark of Reed Elsevier Inc.
The Cahners logo and eCOMMERCE BUSINESS are registered trademarks of Reed Elsevier Properties Inc.

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Für FATIMAÖ.

[FATIMAÖ.]

robbe_IIII, die Antwort ist ..... nicht da draußen, ... sondern hier http://www.wallstreet-online.de/ws/community/board/threadpag…

FATIMA Ö.

[FATIMAÖ.]

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FATIMA Ö.

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Fatimö, deine liste muß angepassst werdem :

MÜNCHEN (COMPUTERWOCHE) - Der von den US-Mineralölkonzernen Texaco und Chevron sowie vom B-to-B-Softwareanbieter Ariba <http://www.ariba.com> gegründete Online-Marktplatz "Petrocosm" hat seinen Dienst eingestellt. Nach Angaben der Chevron-Sprecherin Nancy Malinowski ist das Angebot der Plattform für Unternehmen der Energieindustrie kaum auf Resonanz gestoßen. Es sei zu wenig Umsatz erwirtschaftet worden, um die Geschäfte fortzusetzen. Erst im Februar 2001 hatte Chevron bekannt gegeben, den Internet-Marktplatz für kommerzielle und industrielle Mineralöle "Silicon Valley Oil" zu schließen