FRAMINGHAM (07/03/2000) - The arrival of business-to-business exchanges on the Web has created new ways for business partners to work together. By using Web servers as hubs for collaborative commerce efforts, companies are seeking to exchange proprietary data, jointly manage projects and cooperate on the design of new products.
Collaborative commerce should help companies forge long-term relationships while reducing the costs of cooperation, says Lisa Williams, an analyst at The Yankee Group Inc. in Boston. For example, a Web server hub could substitute for distributed groupware for jointly managing projects such as constructing a building. "Instead of all the partners buying the same groupware product, they'll all just sign on to the Web site," she says.
While the Web server wouldn't be as functional as groupware, it could have other advantages. "Groupware might not work for everybody, particularly if you've got a 200-person shop working with a two-person shop," Williams says.
But while collaborative commerce has the potential to be the next big trend in partnering, it's just beginning to take shape, says Stan Lepeak, an analyst at Meta Group Inc. in Stamford, Connecticut.
One barrier is the technology learning curve. "Running a distributed design process among business partners using a Web site as a hub is tough," says Lepeak. "Most large companies are just figuring out how to do that inside the walls of their own corporations. When you go outside the firm, there are lots of issues about technology, security and authorization."
Another barrier is that the idea is new to businesspeople. "Executives are starting to buy into the idea, but it will be years before it's commonplace," Lepeak says.
Some experts say collaborative commerce will make it easier for smaller companies to partner with larger ones, since using a Web server as the data-transmission intermediary may eliminate the need for expensive private networks or electronic data interchange.
Collaborative commerce has "changed who can play," says Anthony Abbattista, a managing director at Chicago consulting firm Diamond Technology Partners Inc.
"You don't need huge IT departments writing interfaces in order to get this information in and out of your computer system."
Collaborative commerce may also speed up business cycle times. A big automobile company that can automate the flow of paperwork among its suppliers might increase its efficiency by dealing with all of them in a uniform way. But it's unclear how well this would work in practice because not all paper-based business processes can be automated.
"If you've got specific guidelines for reviewing a document, that can be automated. But if your document review involves having a team look at the document, it's tough to automate that," Lepeak says.
One believer in collaborative commerce is Nels Wroe, Internet services product manager at SHL USA Inc. in Boulder, Colorado. The human resources company provides job applicant screening information to its clients via collaborative commerce. Web server software from Casahl Technology Inc. in San Ramon, California, allows SHL to share job candidate data through whichever application its customers prefer. The Casahl software handles the translation to the various data formats.
"Instead of having to invest the time that would be required to build our hooks into a lot of other systems, we can use a single tool and a single group of IT people. As a result, our cost per transaction goes down," Wroe says. "The alternative would be for every client of ours to have special software or for us to write hooks into their systems."
SHL also appears to have solved one of the major concerns about collaborative commerce: security. Wroe says the technology lets SHL pull data from client systems to see how well job candidates did after they were hired, while security-conscious customer firms tightly control the outflow of their employment data. So far, it's been working.
Another user of collaborative commerce is Ensco Inc., a Lincolnshire, Illinois-based firm that disposes of hazardous chemical wastes from manufacturing plants. Customers are interested in keeping track of the disposal process because they retain legal responsibility for their waste materials, says Terry Triplet, the firm's electronic business manager in El Dorado, Arkansas.
"We want to share information from our legacy systems with those companies - information customers could never look at before," Triplet says. "You've just about got to do business this way nowadays, because not many companies are going to survive if they don't give the customer this kind of ability."
Collaborative commerce is the use of an online business-to-business exchange to facilitate the flow of information rather than to process transactions.
Business partners can exchange information such as inventory data by using a Web server as an intermediary. In many cases, collaborative commerce simplifies data interchange by eliminating the need for special client software at each customer's site.
Alexander is a freelance writer in Edina, Minnesota. Contact him at firstname.lastname@example.org.