As the new economy frenetically spawns new business models, marketplace strategists are looking ahead to online exchange integration, e-to-e, as a way of creating dynamic marketplaces.
Although exchanges have barely achieved profitability, third parties such as Ariba, Commerce One, Ironside, and Powerway are busily launching the next wave of solutions for e-to-e integration.
Vendors are lining up to offer such products and services as network on-ramps for suppliers to reach multiple exchanges at once; e-procurement portal services connecting users to suppliers and exchanges; and hosted exchanges targeted at large buyers and their supply chains, offering indirect procurement services as well as special functions such as auctions.
This week Ironside Technologies, in Pleasanton, Calif., will unveil its Ironside Network at the Gartner Internet & E-Business (iEB) conference in Anaheim, Calif.
J. L. Hammett, a $180 million paper supply company, will use the Ironside Network to simultaneously publish its catalogs on as many as eight exchanges.
Even at a $1,000 per month per-exchange-plus negotiated transaction fee, Hammett will lower its cost of doing business by finding new markets, said Derek Smyth, COO of Ironside.
"When the electronic world gets fully integrated, you will have this dynamic marketplace where buying and selling decisions are based on who can deliver at the right quality, right product, [and] right time," Smyth said.
Proponents believe marketplace integration also will reduce product development costs and offer companies a "faster time to market," said Scott Crompton, CTO of EAI (enterprise application integration) vendor SeraNova, in Edison, N.J.
Although exchange-to-exchange integration may be in the offing, enterprises are still sorting out whether to join an exchange or find a single point of access to many exchanges at once, which is the predominant trend, said analysts.
Powerway.com, an Indianapolis-based company with a $15 million investment from DaimlerChrysler, launched its integration pilot program earlier this month for the global car giant. Powerway's content exchange will integrate Daimler's supply chain into its legacy ERP (enterprise resource planning), inventory, and logistics systems, and then integrate with other public exchanges.
Finding the right information for buyers and sellers is the driving force behind the move to integrate marketplaces, according to Dallas-based i2 CTO Jim Mackay, who said, "It is all about exchange services and the ability to find services wherever they are."
To that end, Microsoft, Hewlett-Packard, IBM, and others last month launched the Universal Dynamic Discovery and Integration (UDDI) consortium, which will focus on creating an industry protocol for registering, publishing, and finding services that are readable by humans and computers.
SeraNova's Crompton believes there may one day be a so-called uber-exchange, with all buyers and sellers coming to a central location to do business.
Such a superexchange might allow buyers and sellers to create unique portals that could handle collaborative product development, link to external component suppliers, and link internally to EAI systems.
For example, a pharmaceutical exchange may want to strike a deal with a transportation exchange to manage its transportation needs.
Such links are likely to be fee-based, according to Dan Quinn, a senior manager in e-business, trading exchanges, and e-procurement at Cap Gemini Ernst & Young's McLean, Va., office.
But not everyone sees exchange integration as a trend with legs.
"It's a short-term phenomenon," said Grady Means, a managing partner and global leader for strategic change consulting at PricewaterhouseCoopers and co-author with David Schneider, another PwC managing partner, of MetaCapitalism.
"Over time, either a consortium exchange [such as Covisint] or one company [such as Cisco] will dominate," Means said.
If that happens, cross-exchange information will not be the driver and companies running exchanges will want to control the flow of information to control their competition and remain dominant, Means said.
Additional reporting by Eugene Grygo
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