StratVantage Consulting, LLC — Mike’s Take on the News 04/09/01

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StratVantage Consulting, LLC — Mike’s Take on the News 04/09/01

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The News – 04/09/01

Confidence in B2B Exchanges Ebbs

Here’s one for the “I Told You So” file. In a Computerworld story today, Ariba vice president for corporate strategy, Martin Ryu, predicted the demise of all public exchanges. According to the story, Ryu said industry competitors haven’t been able to agree on marketplace business models and that connecting disparate corporate architectures is a feat beyond the reach of modern technology.

Ryu’s pessimism might have something to do with the 50 percent drop in Ariba’s quarterly revenue and impending layoffs at the maker of indirect materials procurement software. And I think his statement is a bit extreme. I do think, however, that the direction he indicates is valid, and have thought so since I wrote a white paper on public exchanges last summer for my previous employer. In the paper I argued that most public exchanges would wither away, leaving one or two public marketplaces in each commodity industry.

I predicted that private exchanges, one to many marketplaces hosted by buyers, would take their place. GartnerGroup agrees, predicting that, by 2005, “the entire supply chain between suppliers and buyers will be automated.” This rather startling prediction relates to two other Gartner predictions:

· There may be as many as 30,000 private exchanges today in various stages of development. In contrast, the number of Public or Captive Exchanges now in existence is estimated to be around 1000.

· Global corporate spending via exchanges will reach $6 trillion (revised from an earlier $7.3 trillion) in 2004, up from $145 billion last year.

So, on the one hand, corporations will spend $7.3 trillion in exchanges within three years. On the other hand, those exchanges may be private, buyer-dominated extended supply chains rather than the public exchanges popular today.

Businesses need to understand that the role of public B2B exchanges is rapidly evolving and this means caution is advised when committing to exchange participation. There are a number of very successful B2B exchanges, particularly in the energy industry, and others such as network bandwidth exchanges and Covisint, the automotive exchange, that may be successful. My more recent white paper details a number of questions businesses should ask before joining exchanges.

Those businesses with hard goods oriented supply chains should consider supply chain automation and management software to help improve efficiency and communication among supply chain partners. Eventually, everyone’s supply chain will be automated using this type of software. Those who get there early should enjoy a competitive edge.


Too Early for Bluetooth?

Bluetooth, the short distance wireless standard originally developed by handset maker Ericsson, will not be supported by Microsoft’s next operating system release, XP, due out later this year. The software giant said it wouldn’t support the standard due to the lack of production-quality chipsets. Microsoft’s Pocket PC division hasn’t gotten the news, however, and is planning on supporting Bluetooth in its operating system.

Ericsson, meanwhile, is shipping Bluetooth enabled cell phones, using the technology in place of wires to connect headsets. The company predicts 10 to 15 million devices will ship this year, with as many as 100 million shipping next year.

The failure of a planned Bluetooth interoperability demonstration at this year’s CeBit conference is evidence that we are early in the adoption of this standard. In addition, there have been several reports of Bluetooth devices causing interference with other wireless networking products, especially those based on 802.11b, which uses the same 2.4Ghz radio frequency.

Bottom line: the lack of support in Microsoft’s next OS will slow Bluetooth adoption slightly, but the main use of the technology, at least out of the gate, will be to get rid of all the wires that clutter up our lives. (For more information on Bluetooth and other wireless technologies, you can check out my wireless white paper .) I predict that Microsoft will be forced to play catch up with a subsequent service pack release to add Bluetooth functionality.


Can’t Get Enough of ME?

In the unlikely event that you want more of my opinions, I’ve started a Weblog. It’s the fashionable thing for pundits to do, and I’m doing it too. A Weblog is a datestamped collection of somewhat random thoughts and ideas assembled on a Web page. If you’d like to subject the world to your thoughts, as I do, you can create your own Weblog. You need to have a Web site that allows you FTP access, and the free software from . This allows you to right click on a Web page and append your pithy thoughts to your Weblog.

I’ve dubbed my Weblog entries “Stratlets”, and they are available at . Let me know what you think.

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