A wide-open field
The changes in directionâ€"-from public to private, direct to indirect goods, pure procurement to collaborationâ€"-have leveled the B2B software playing field. Ariba and Commerce One may have won the first battle, but there's no guarantee they'll win the war. Expect a lot of consolidation, especially in the coming year, as smaller companies run out of money and the bigger players continue to look for opportunities to round out their arsenals. "Agile is not our last acquisition," notes Jon Corshen, Ariba VP of corporate strategy.
"This game is far from over," seconds Aberdeen's Brandel. "There is enough time for other vendors to enter and have a lot of impactâ€"-IBM, Microsoft, the ERP vendors."
There also is room for lesser-known vendors to make their marks. Take Netrana, for instance. The company was founded by Rusty Braziel, who previously founded Altra Energy Technologies, a successful online energy trading exchange. Altra is what Braziel calls a classic centre-based exchange that provides the technology and sets the rules for buyers and sellers. "A centre-based model requires some sort of revenue model to pay for the infrastructure," says Braziel, Netrana's president and CEO. "With SpotDealmaker, there is no exchange, so there's no need for the revenue model."
SpotDealmaker is the trading platform Netrana expects to have ready later this year. It will enable buyers and sellers to transact business directly without going through an exchange, and it's based on peer-to-peer technology. "We don't want to get hung up with people thinking of Napster because underneath, it looks quite different," says Braziel. "SpotDealmaker has the ability to be machine-to-machine, a directory, store and forward service on an ASP basis."
FirstPeer is doing something similar. In January, the company unveiled its Personal Servant P2P ASP service, and in February it launched GnuMarkets, which it classifies as a peer-to-peer marketplace. "In the real world, many markets have tens of thousands of participants that are already interacting," says Brent Gutekunst, FirstPeer's president. "Instead of saying, 'Let's change the way you do business,' P2P is a technology that reflects how people do business already."
It remains to be seen whether P2P technology will banish the need for an underlying exchange. "In Ariba and other platforms, it is peer-to-network, and participants follow the rules of that community," says Extricity's Kraemer. "But you can use P2P after you agree to adopt the prevailing standard, whatever that is."
"P2P will not obviate the need for Ariba and Commerce One," says Val Sribar, senior VP at the Meta Group. "They'll start building it in."
Another interesting company is Viacore, started by the founder of RosettaNet and funded by Arrow Electronics, Avnet, FedEx, Ingram Micro, Softbank and Tech Data. The company has developed what it calls ProcessTone, a managed collaborative infrastructure for connecting hundreds of trading partners to one another. The hub in the middle does all translation betweenâ€"-and validation of-â€"documents. The technology is currently being tested at a number of customers, including one that's processing a million documents in a three-hour daily period.
"A lot of our customers have [enterprise application-integration software maker] webMethods and a systems integration partner," says Fadi Chehade, CEO and chairman. "WebMethods provides the middleware, the SI connects all the apps, but then how do you connect to all your partners? You need a network and infrastructure to do all the routing, translation and management."
Viacore's only real competitor right now is GXS, which has a similar model. The exchange is talking to "many, many players," says Campagnoni, to provide translation software and services. "We call it our liquidity play," he says, alluding to GXS's one billion transactions annually, worth US$1 trillion. "We leverage that to help them provide liquidity."
"We think Viacore has the right model," says PricewaterhouseCoopers' Porta. "Integration is the complexity in all this."
Long, laborious integration is what it will take. "We understand the technology we provide is nothing more than an enabler," says Kevin Shick, VP of product marketing at Commerce One. "It's bringing together the technology and the professional services that will provide a much richer solution."
That's why systems integrators are counting on Net markets, whether public, private or something in between, to surpass the ERP boom. The Net market business, says Porta, "is the most strategic initiative at the firm."
