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
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
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 www.blogger.com. 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 www.stratvantage.com/stratlets/.
Let me know what you think.
to Mike’s Take