Industry-sponsored marketplaces - online business-to-business supply chain marketplaces principally run by large traditional companies - have proved to be a bright spot in an otherwise disappointing online market this year, according to a study released Friday by market researcher Jupiter Media Metrix.
More than 50 large ISMs have been formed this year, of which 41% already have the ability to conduct transactions online, while another 33% are expected to go live by year-end, Jupiter said in a statement summarizing the report's findings.
These ISM superportals are designed to replace the linear supply chain, which exists between suppliers, manufacturers and retailers with a more efficient and transparent networked model.
The fast ISM ramp-up is partially due to their ability to leverage inherent advantages of money, talent, transaction liquidity and gains of their market participants - things that independent Internet markets cannot achieve, according to the study.
Compared to complex systems such as enterprise applications, which historically have taken nine to 12 months minimum to reach an operational state, ISMs are on track to become the fastest-growing of all Internet markets, according to Jupiter.
Jupiter identified five major milestones to measure the progress that an ISM must achieve before going live, including:
ISMs have made strong progress along these lines, and have overcome the early perception that industry leaders would focus on the relatively simple processes of forming a legal entity or choosing a technology vendor instead of establishing ways to share business processes that are slowing down their industries, Jupiter said.
A typical ISM is Covisint, an online exchange where automakers Ford, General Motors, DaimlerChrysler AG, Renault SA and Nissan converge to buy parts - a business expected to be worth $750 billion annually, according to Covisint.
Around 50 global companies in the consumer goods business also recently formed an ISM known as Transora and will invest $250 million to launch the service by year-end.
In Australia, meanwhile, a cross-industry ISM in Australia called CorProcure, formed by 14 of the country's largest companies, is expected to account for over 1% of the nation's industrial expenditure over the next 2 years.
Jupiter Media Metrix, in N.Y., is at www.jup.com/.
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