E-marketplaces are down, but not for long

What I like about the dot-com stock crash is the misconceptions it has brewed. For instance, there's notion that business-to-consumer e-commerce is dead (there will actually be tenfold growth in four years) or that brick-and-mortar companies will no longer invest in e-business (they'll actually spend 25 percent more on e-business technology this year).

Take electronic marketplaces, those once highly touted Internet sites where companies in an industry can buy or sell their goods and services to one another. The bursting of the dot-com bubble has people thinking this concept will go away, too.

Not so. International Data Corp.'s big "eWorld 2001" survey conducted in 27 countries earlier this year found that businesses around the world are surprisingly interested in e-marketplaces. In fact, in Europe and the U.S., about 75 percent of IT managers and CIOs are familiar with the concept (Japan lags with only 45 percent awareness), and about one-third expect to participate in an e-marketplace this year either as a buyer or seller. Small companies tend to want to buy over these exchanges, while large companies tend to want to sell.

There's a reason why IDC believes that these exchanges will host half the Internet business-to-business commerce by mid-decade, despite the dot-com crash and the industry consolidation that's under way. Right now, there are two main methods of business-to-business Internet commerce. The first is procurement-centric, by which companies buy over the Net by linking their ordering systems to multiple catalogs or suppliers' Web sites. The second is sales-centric, by which a seller links to customers through an extranet. Both are point-to-point.

But because most companies are both buyers and sellers of goods, it makes sense for them to migrate to a multipoint-to-multipoint setup like these e-marketplaces. If I'm right, most companies will be ill-prepared for the transition. Here's what you need to do and what you ought to factor into your IT planning:

- Prepare your internal systems to speak to the outside world something you need to do regardless of which B2B commerce method you employ. If you're going to share information on your products, such as stock numbers, descriptions or prices, you'll need them to be rationalized and collected into a database, unless you're an airline, where each seat on a plane is sold at a different (and mysterious) price.

- Understand the technical requirements of collaborating over exchanges. Support for multiple document exchange formats, such as XML, cXML, RosettaNet and BizTalk, will be required, at least for big companies.

- Get really organized about security. I know you're picking up the pace here anyway, but you'll need extra care when dealing with multiple unknown buyers and sellers.

- Expect the unexpected. Resistance to change can come from any quarter, from salespeople who don't want trades over exchanges to eat away at their commissions to marketing managers who don't want competitors to see product data to managers who don't want to settle on a document standard on which they haven't already standardized.

The tide will start to move toward e-marketplaces by the end of this year. Expect to be carried along with it.

John Gantz is a senior vice president at IDC in Framingham, Mass. Contact him at jgantz@idc.com.

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