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As we all know from our high-school history books, the Russian Revolution of 1917 occurred in the unlikeliest of places: a backward, agrarian, politically unsophisticated society, not in an industrialized country as Karl Marx predicted. History has a way of sneaking up on you like that.
Well, something funny happened on the way to the e-commerce revolution, too: An economic transformation that was expected to be led by “new economy” business-to-consumer (B2C) companies has been hijacked by “old economy” companies for the purposes of improving business-to-business (B2B) processes. More and more old-liners — led by Sears Roebuck, GM, Ford, Chevron, Citigroup, and Honeywell — are rushing headlong to redesign their procurement, supply-chain management, and collaborative-design processes on a new template: the e-marketplace, or Internet-based B2B exchange.
Group Dynamics
The mammoth merger between i2 Technologies Inc. and Aspect Development Inc. (the descriptor “biggest ever” has all but lost its meaning), a burst of activity from Oracle, and the alignment of enterprise-computing companies ranging from IBM and HP to Extricity Inc. and Viador Inc. around a growing “cottage industry” for e-marketplace solutions are symptomatic of this direction. Indeed, e-marketplaces may turn out to be the elusive e-commerce killer app popularly predicted to emerge in the B2C sector; Gartner Group estimates that they will generate more than $2.7 trillion in B2B transactions by 2003, or 37 percent of the B2B market. I’m unaware of any predictions for B2C e-commerce that even approach those numbers.
In an interesting case of cross-pollination, the old-line companies involved here — derided by new-economy zealots as “dinosaurs” not so long ago — are heavily influenced by the unlikeliest of prototypes: dot-coms such as E-Bay and Priceline.com, which have laid waste to the notion of fixed pricing. (I can see the book title now: The Sunday Garage Sale: Forebear of B2B E-Commerce.)
Hundreds of such companies are already pursuing the dynamic pricing ideal in horizontal, portal-driven e-procurement marketplaces powered by Ariba Inc., SAP, and Commerce One Inc.; the largest companies are partnering with Oracle and i2 Technologies Inc. (Commerce One competes here as well) to build massive vertical exchanges that are currently closer in nature to applications. Oracle has been particularly active lately, entering into engagements with leaders such as Ford, Sears, and Chevron to build e-marketplaces in their respective verticals. (And look out for VerticalNet Inc. investor Microsoft.)
These efficiencies, however, are only the baseline. I2’s acquisition of Aspect Development — and the fact that analytic software companies are watching this sector closely — indicate we are on the cusp of a new phase in e- marketplace development in which information-rich processes will play a greater role.
Aspect owns a database containing information about more than 17 million manufacturing components; in i2’s vision, this “content” will be a major distinguishing feature of its TradeMatrix e-marketplace platform, letting individual designers identify the parts required for a given product, and then analyze each product’s impact across the total supply chain. The goal is true collaboration at the level of a designer’s desk, not simply high-level procurement and order management.
The next step, says i2’s VP of product lifecycle development, Bruce Jacquemard, will be to let customers capture “noncommerce” content as well as transactions — the total customer experience — for analysis, a daunting goal that vendors such as “analytic app server” company AlphaBlox Corp., SAS, and i2 itself are poised to pursue.
New Business
E-marketplaces are an excellent venue for business intelligence: Companies on the demand side will need to determine the impact of design, procurement, and partnership decisions in real time, while suppliers — forced to offer more value — will have to anticipate the needs of their customers. Now that would be a revolution.
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