Extensity Levels the Exchange Playing Field

SAN MATEO (06/05/2000) - As the CEO of Extensity Inc., Bob Spinner has been at the core of the revolution in procurement practices that has changed the way companies such as Cisco Systems Inc., America Online Inc., and NEC Corp. manage their purchasing departments.

In an interview with InfoWorld Editor in Chief Michael Vizard, Spinner talked about the role he sees Extensity playing as a neutral point of access to diverse digital exchanges.

InfoWorld: Extensity started out as a basic purchasing application for travel.

How has the company evolved?

Spinner: We were founded in 1996 and started off in the travel area with expense reporting and travel planning. We then added a wide set of employee-based applications, such as time sheets and purchase requisitions. In addition to supporting all these high-touch applications, we extended that model to provide access to relevant content and e-commerce. And that's been a really unique positioning for Extensity. What that means is an employee planning a trip can book a ticket online and make a hotel reservation, or an employee creating a purchase request can then gain access to an online marketplace.

InfoWorld: What kind of architecture are these applications built on?

Spinner: We run on a very thin client, so we can run on all sorts of devices.

On top of that, our applications integrate with other content; we provide business intelligence across multiple processes so you can see what you've billed a client and how much expense you have to offset that billing. You can also take a look at your specific vendors from multiple online marketplaces to see how much you spend with them.

InfoWorld: So are you aggregating content from multiple portals within your applications?

Spinner: I'd say that's fair. The only thing I don't want to minimize is there's so much benefit in the applications we provide, which then naturally extend themselves to other content. We're not just kind of a focal point where you go to get other places. People do most of their day-to-day processing in Extensity, and then we'll give them an option to which marketplace they want to gain access to.

InfoWorld: Why is control important in this context?

Spinner: The one thing I would say about marketplaces is that the one thing that our customers are assured of is that are tons of them. And one of the things that they're struggling with is 'How do we limit access to some so our employees aren't all over the place? How do we make sure if they go to these marketplaces that they abide by the contracts we've put in place with the right business policies?' That's what we're doing. We're different from many of the other players because we're not trying to build our own online marketplace. Our focus is large corporations that have thousands of employees that want to build the applications and then neutrally provide access to the marketplaces.

InfoWorld: How will all this be accomplished?

Spinner: It needs to be much more seamless as to whatever you're running so you can get access to multiple types of suppliers and marketplaces. What isn't going to work is if you need to go procure from one type of marketplace or one type of supplier, and you have to run a separate application for each one of those. It has to come from a single entry point to multiple suppliers, and that's what our model is. You should be able to get to multiple marketplaces, multiple suppliers; and standards have to play a big role in this.

InfoWorld: Once you install the applications, how do you manage all the relationships on an ongoing basis?

Spinner: What we're implementing is Extensity Connect, which integrates our applications and the content in e-commerce. That is the whole focus of it, to ensure you're using the right applications and providing access to the right partnerships, and then integrating those. So once again, an employee who's planning a trip can go to Sabre, transparently book the ticket online, travel on United, making reservations more than seven days in advance, and stays at the right hotels with a 13 percent discount in New York. I think that Extensity Connect is the single best user interface for managing Internet processes on the market.

InfoWorld: When is this available, and is it based on XML?

Spinner: Extensity Connect is what we're releasing this summer. It is absolutely, completely XML-based, so all the integration to the other services is XML-based.

InfoWorld: One new e-commerce model that has recently emerged is called employee-to-business, where companies are negotiating special discounts for their employees in return for corporate alliances. What role does a company like yours play in that process?

Spinner: The approach we've taken allows us to be a real extension to the natural business processes. What we help do is reinforce the proper behavior with rewards. What controls people's decisions in the corporate world to do certain things? Frequent-flier miles. So we built a relationship with Netcentives. For an employee who does a presentation over the Internet rather than incurring $3,000 in expense traveling to New York, we give them frequent-flier miles if they set up a relationship with Netcentives. For the employee at McKenzie & Co., [where] it's so critical that they submit their time sheet every Friday so they can bill their client, we give them 200 frequent-flier miles. What we're trying to do is [offer] better [incentives] so employees have more rewards for abiding by company policy.

InfoWorld: So at the end of the day, how big of a space is this?

Spinner: The market opportunity is very, very large. If you think about it, every large corporation is going to want to automate these processes. And very few of them have really automated these processes to date.

InfoWorld: What other processes can you automate?

Spinner: There are some other things we're going to be doing over time in terms of providing more full-service solutions that we won't do ourselves, such as some of the back-end services, the payment services, and a certain amount of auditing of some of the procurement and expense-related functions. We'll look to partners for that.

InfoWorld: Is there an ASP model for your service?

Spinner: We signed up a very strong partner in the midmarket. We built our architecture to support hosting and we also host directly now for large customers. I have to tell you from dealing in this world every day that large corporations with large IT infrastructures and big IT staffs talk about hosting right now. But more often, they take advantage of the infrastructure they have in place, and install it on their own data center.

InfoWorld: What are the implications for mobile computing as it relates to your applications?

InfoWorld: So when all is said and done in the new Digital Economy, will the power in business relationships belong to the buyer, middlemen, or sellers?

Spinner: I believe to a great extent, except in some very specific areas, it won't be with the intermediate marketplace. I think large buyers always command a great deal of power, and large suppliers that offer unique services can provide a great deal of power. But I think it's unlikely that middlemen will have the power. I'm not sure that a lot of these exchanges can survive at all.

They have to be either really supplier-based where the suppliers can afford to say 'This is the only way you can get to me,' or it has to be really buyer-based, like GM, that's saying that all its suppliers have been coming through this exchange. I think what's going to be really difficult is the intermediate play, where neither the buyer nor the seller has a great benefit, and the guy who's setting that exchange up is getting such a small transaction on it that I'm not sure they're going to exist for long.

Bob Spinner, Extensity

Age: 42

Title: President and CEO

Biggest success: Recognizing the market opportunity based on an already built product; growing and scaling the organization to take advantage of the opportunity; securing the funding needed to growKey challenges: Finding and hiring top-notch peoplePersonal note: Enjoys biking and spending time with his wife and 8-and 9-year-old daughters

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