IT Systems Dec 2010 B2B

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These are Virtual Market Places that were built up approx during 1995 to 1998. It was based on internet technology with 4 Generation Language codes. Therefore these Virtual Market Places were platform independent. Revenue streams: 1 Revenue generated was on the basis of transaction fees defined as completed procurement processes on this system. Means placing of Purchase Orders on the system, concluding of Auctions/ Reverse Auctions on the system, commodity trading on the system in a real time on line manner Revenue stream in designing, creating, maintaining, enhancing, modifying and hosting the content management for each vendor who wants to be registered on these Vitual Market Place. Registration Charges to be registered on these Virtual Market Places Annual Maintenance Fees Annual subscription fees Advertisement revenues

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What does it offer: 1 Content Management here all the vendors who want customers to access their sites, see their offerings and want to to show what all they can trade in. This content management can show pictures of the products and description/ features of the products. List prices can be shown here. However you can hide all types of special prices offered to different customers. 2 All types of business processes that are connected with procurement. All these are listed below. Though this technology was initially for procurement, later, it was also used successfully for Customer Relationship Management. Today it is available in modules are have now become a part of leading ERP systems lioke SAP, Oracle, Peoplesoft . However there are smaller players offering suite to purse packages for different levels of players. A B Supplier Relationship Management Customer Relationship Management

The B2B started initially to address the Supplier Relations Management. The Initial 2 Big players to start this in the world were: 1 2 CommerceOne Ariba

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IT Systems Dec 2010 Both these are from US.

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CommerceOne had these 5 customers initially: 1 2 3 4 5 General Motors Swiss Telecom British Telecom Duetsch Telecom Singapore Telecom (called SESAMi.com). This was the most successful MARKET Place operating out of Singapore. It was processing procurements of 550M Sing dollars each month in 2000-2001.

Objectives: 1 2 3 4 5 6 7 8 9 10 reduce cost of procurement improve speed of procurement immediate contact with supplier buyer can quickly understand and access the availability buyer can quickly understand what is available where and in what form etc help buyer investigate/ collect information by sitting in office Procurement processes like: RFQ, Quotations, Enquiries, Auctions, Reverse Auctions, reminders, GRN, Invoicing, Payments etc could be done through these Virtual Market Places It was internet based procurement application and hence was paperless office Payments were made to these service providers if and only if the final Purchase Orders/ Purchase Transactions were placed through these systems of the service provider (this virtual market place) There were payment fees for using these services. They were a percentage of the value of the transaction concluded on this system and had payment gateways to account and credit/ debit the money to the respective bank accounts directly Integration through auto triggers with other external systems: logistics suppliers, Railway systems, port systems, airline systems, catering systems, trucking systems, commodities trading system Sales and Purchase orders creation and auto dispatch to the business partners systems directly without any manual interventions. Further on line real time integration with banking systems to effect online real time payments.

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Basically one could operate/ ensure that procurement was completed sitting in office without making a site visit to the supplier. Cost of employing people for these procurement activities, in the advance countries, is very high and hence these Virtual Market places were patronized. Page 2 of 4 Vasudev.Kamath 7/19/2011Created by Vasudev.KamathCreated by Vasudev.Kamath

IT Systems Dec 2010

Bayer Ltd

We School

Virtual Market Places are always highly Capital intensive and needed a lot of money to initiate and establish them. Further there is a lot of maintenance work to be done on regular basis. It needs a lot of IT savy work force on one hand and strong domain expertise in procurement processes/ business processes in all dimensions on another hand. These 2 types of work forces must seamlessly integrate to migrate the business processes knowledge from domain knowledge to IT coding so that the processes are not left to any individual interpretation but are seamlessly automated and conduced smoothly Why did SESAMi and others fail. 1 2 3 Lack of business proposition and governance They came into the market much ahead of time. Further there was a dotcom bust in the year 2000-01. A very bad period for IT world and IT spending globally. Lack of professional discipline (ways and means) to ensure that the buyer and seller who utilized these Virtual Market places to come to know each other and conclude business, to make it happen on this system. Doing on system would mean giving a % of the PO value. Instead the buyer preferred to courier the physical purchase order to the vendor at a very very small cost. Internet technology was growing and more and more talents were easily available globally The cost of hardware and connectivity were continuously dropping down, thereby improving the affordability of the same. Hence more and more people looked at owning/ installing these systems on their own. Utilizing these Virtual Market places was like utilizing hired services. The significant improvement in the Quality & Availability of internet security product was a big boon. Setting up one own such direct facility with existing vendors could be possible and economically viable. ERP vendors have incorporated these services into their regular products as a regular offerings/services. These are now available as Portals.

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Currently there are some service providers in this space who are working very closely with SAP AG, Walldorf , Germany. They are: 1 ccHubwoo 2 Wellogix Whilst the offerings are good: steady and reliable, the revenue streams are finding it difficult to meet the costs in a year on year basis. Further there is always a fear of some

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IT Systems Dec 2010

Bayer Ltd

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customers dropping out to be on their own to get integrated with their vendors systems directly rather than the portal. I will provide some more names for looking into web sites: CommerceOne, ARIBA, ccHubwoo, Wellogix.

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