CorProcure feeling the strain, insiders say

E-marketplaceplayer corProcure is feeling the strain of trying to hit a moving target, according to insider reports. They paint a picture of a company burning up precious time and money while zig-zagging uncertainly toward a workable business model.

Staff morale is said to be low, a key player on the executive team has resigned and the company is reportedly cutting back on consultants to stem its outflow of cash. Less than a week ago, staff were given what amounts to an ultimatum, one source claimed. "They were told they had three months to get their act together or it is finished."

CorProcure CEO Len Ward denied any ultimatum was delivered to staff. They regularly receive messages about business objectives and performance "but there is nothing sinister about that", Ward said.

Concerning staff morale, "there are always some individuals who feel threatened. But corProcure is an exciting place with people working long hours. I don't understand how that can be seen as low morale ... it is exactly the opposite."

Although corProcure won't divulge its cash burn, an accepted industry average for developing e-exchanges of its scope is about $1 million a month. On that basis, corProcure will have churned through about $8 million since its formation last August.

In recent months it has progressively whittled back the number of consultants, with PricewaterhouseCoopers absorbing most of the cutbacks. It is believed the consulting contingent has been reduced by about 20 per cent and there are now only 10 to 15 among corProcure's approximately 50 staff.

Consultants tend to occupy the high end of the payroll and the reductions could be construed as attempts to conserve cash. The reductions could also be explained as the typical replacement of consulting talent by permanent employees in a business moving out of its startup phase.

Meanwhile, some gaps have appeared in corProcure's executive top-order batting line-up. Operations general manager Nichola Milne resigned a month ago although she is still listed on corProcure's website in that position. In fact, her functions have been divided between remaining executives.

Formerly a McDonalds Australia executive vice president, Milne was one of five general managers for whom corProcure conducted a global headhunt last year. She could not be contacted for comments on reports she left the job because of disillusionment. Company sources described her departure as "entirely amicable". Ward she was not replaced because the company was at the stage of reviewing its resource requirements.

CorProcure won't say how many suppliers it has signed up, but on March 16 it went live with online purchase orders as its first e-marketplace feature.

In terms of e-market technology achievements, that's far lower on the scale than hosted catalogues and reverse auctions, observers point out. "Integration of catalogues is where the money is and they are a fair way from that," according to one source familiar with corProcure's technology.

E-market pundit Aseem Prakash says the genesis of corProcure last year was "more or less a knee-jerk reaction" by its 14 large corporate stakeholders to the appearance of electronic exchanges. "Since then the role and scope of public consortium-based e-marketplaces has changed considerably," says Prakash, CEO of Interactive Knowledge Online and moderator of the influential online discussion forum, e-hubs Asia.

"So a lot of the assumptions they made might not have been validated. What corProcure needs to recognise is that when you have multiple industries involved, you not only have the unique processes of each company but all the characteristics and dynamics of each industry as well.

"That makes the task of consensus building, governance and implementation of a horizontal business model harder than other consortium-based markets which are vertically aligned. They made the classic mistake of going straight to the technology and then tried to figure out the business model.

"In my opinion, corProcure should be focusing on creating its own private mini-marketplace for each of its individual stakeholders while sharing a common technology platform."

According to corProcure's Ward, Prakash is "wrong about the first (committing a classic mistake) and right about the second".

- Courtesy of the Australian Industry Standard

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