From the Editor in Chief

SAN MATEO (04/03/2000) - We have now lived through so many iterations of the Internet that it's hard to keep track of what actual stage we're in. For example, this time last year the hottest topic of discussion was business-to-consumer e-commerce applications that were going to radically alter the way we shopped for everything.

The trouble is that on the way to the bank we discovered that these types of business models are hard to scale.

The challenges come in terms of getting enough people to make the venture deliver on its goals and building the type of systems infrastructure needed to support millions of transactions.

With the bloom of the business-to-consumer model off the rose, most of the true believers are rushing to embrace business-to-business e-commerce models.

This all became the rage with companies such as Ariba and Extensity, which developed ways to help automate the purchasing process.

And of course, anything that promised to cut 10 percent to 20 percent of your purchasing costs was an easy sell to management.

This minor subset of the entire business-to-business equation soon gave rise to the notion of digital exchanges. These exchanges for vertical markets promise to reinvent how companies transact business by letting them essentially bid in real time for business among an established set of buyers and suppliers.

With companies such as Oracle Corp., Commerce One Inc., and Ariba leading the charge, these types of exchanges are now popping up in every major industry segment.

Of course, to participate in one of these exchanges as a supplier, you need to have built a sell-side e-commerce system. Digital exchanges must then be able to tap in to your sell-side system in order to find out how much of any given entity they can get by when and for what price.

Companies leading the charge on this side of the digital exchange equation include Calico, Ironside, and SAP.

So as it stands now, there are no less than four major types of e-commerce systems.

There are business-to-consumer systems, purchasing systems, digital exchanges, and sell-side e-commerce systems for business-to-business e-commerce systems.

Of course, that's probably at least two categories too many.

It's not immediately apparent which of these categories will ultimately fold into one another, but one thing is for certain: The next wave of e-business will be driven by business-to-business-to-consumer systems.

Otherwise known as b-to-b-to-c, these systems will emerge because business models in the digital economy will not tolerate inefficiencies. What that means is that you can expect to see some rationalization of the suppliers in the e-commerce space as the hundred or so companies that play in this space look for a competitive edge.

And the only really sustainable edge a company in this space can truly count on is to be one of the first three companies to provide a full suite of e-commerce applications that span all four major areas of the market.

Customers, of course, will be attracted to such offerings because they now recognize that they will have to deliver services in all of these areas.

Even a company that doesn't sell direct has to create an e-commerce system that connects through to the ultimate end-users of its products by linking the sites of its resellers to its own internal systems.

So how do you differentiate the winners from the hundreds of companies knocking at your door? Well, you can't just yet.

But one sure indicator is any company that can command a high stock price will probably have the necessary capital on hand to acquire the missing pieces it needs to build a true business-to-business-to-consumer infrastructure.

But until those winners emerge, make sure you insure your investments against obsolescence by acquisition by insisting on industry standards such as XML.

And who knows, the actual deal maker that pushes two vendors toward each other may actually be you, the customer.

Michael Vizard is Editor in Chief at InfoWorld.

Three iterations of e-business

As the Internet has evolved, so has the focus for conducting transactions electronically.

* Business-to-consumer: Waves of dot-com start-ups launch sites aimed at generating transactions from consumers.

* Business-to-business: Massive shifts of investment to e-commerce companies have facilitated interbusiness transactions.

* Business-to-business-to-consumer: Real-time integration of e-commerce models link consumers to the entire supply chain.

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