RealTime IT News

Firms Embrace Savings Potential of Exchanges

The Internet, and the B2B opportunities it presents, has propelled a new breed of entrepreneur to the forefront. Each day technology platforms are integrated into new and different businesses -- all designed to quickly, easily and efficiently provide any number of industries with a niche service or product.

Currently, thousands of manufacturers, distributors and retailers are using hundreds of online marketplaces to simplify the traditional supply chain. That trend is only destined to grow, according to market research firm GartnerGroup.

As the Internet revolutionizes the way business is done, GartnerGroup predicts a B2B explosion that will net online businesses 37 percent, or $2.71 trillion, of B2B sales worldwide in 2004.

Yet, every revolution has its casualties. Therefore, the research firm dually predicts that post-explosion reconstruction will form a new business landscape, built on the wins and losses of today's players. "By the end of the forecast period, B2B e-commerce will have produced a fundamental shift in power balances in businesses," according to Triggering the B2B Electronic Commerce Explosion, a GartnerGroup forecast analysis.

The category is indeed facing choppy waters, said Peter Osborne, e-business audit partner at Deloitte & Touche.

"Over the next two years, businesses will need to figure out what sort of model they want to work with," he said. "It is a precursor to future success."

To have a successful site, according to Osborne, businesses need to focus on providing e-solutions while offering domain expertise.

"It's about delivering value," he said. "Further, businesses need to find the revenue model that reflects the value being delivered."

Osborne believes there are two types of models to choose from: the hub and spoke model and the spider web model.

"The hub and spoke model is centric by nature," he said. "The hub and spoke model provides a supply chain and an opportunity for collaborative engineering between buyers and suppliers. This model tends to focus on pricing and, to make this model work, content is an attractive feature to draw suppliers back to the site. Whilst pricing is important, often a committed time of delivery is a crucial decision variable for the buyer."

In the spider web model, customers and suppliers interact with no central hub. "Online transactions are what keep these models strong," he said. "Everyone has the ability to communicate in a bi-directional manner. This sort of architecture allows information to flow up and down the supply chain, which helps in demand forecasting.

"With the flow of information provided, companies can help plan and forecast what is coming down the pike and predict oncoming bottlenecks," he concluded. "This type of exchange is more responsive overall and is more likely to scale as business changes in response to the marketplace."

Insider Review reported that "e-commerce businesses come and go, start-ups, retailers, fads and freaks seem to leave as fast as they enter the arena. But the mainstays, the ones that will survive the test of time, are the businesses that provide the medium for all others to function."

One of the most explosive areas are online exchanges which allow businesses to trade a variety of goods and services. Among them are UnusedBandwidth.com which seeks to help businesses make better use of high-speed connections which may only be in use a portion of the day.

"We help drive prices down," said company President Nicholas Marino. "Our system is good for buyers and sellers. It is easy to use and it is based entirely upon backroom software, which is available at no cost."

The service allows bandwidth from any directly-connected computer to be sold across the Internet.

"Our service is part of a larger trend by several companies towards optimization of the Internet's infrastructure," Marino sai