B2B exchanges slow to help IT: study
- By Michael W. Bucken
- November 26, 2001
Most large companies are disappointed with the performance of so-called business-to-business exchanges, or partnerships, according to a survey conducted jointly by consultants Giga Information Group and Booz Allen Hamilton. Despite the disappointment, most of the companies still expect to use B2B exchanges for a greater portion of B2B transactions in the coming years.
Nearly half of the respondents reported that exchanges have "mostly" or "absolutely" failed to meet their expectations, and only 10% of respondents felt exchanges met expectations. Most of those surveyed agreed that organizational changes, such as standardizing and developing new procedures, improving and introducing technology systems and introducing integration technology, are needed to capture further benefits from exchanges.
The role of CEOs in developing an exchange also can contribute to disappointing results, respondents said, by limiting the autonomy of business units. The CEO plans are often driven by strategic purpose such as ensuring the firm is keeping up with competitors that are joining B2B exchanges.
Nevertheless the survey also found that despite the challenges, companies still expect to conduct the bulk of direct and indirect materials through exchanges within three years. "While companies are disappointed with the benefits they've gotten from e-marketplaces, they still see great potential for these intermediaries to make inter-business transactions and collaboration easier and more effective," said Giga Vice President Andrew Bartels.
The greatest potential benefit listed by respondents is reducing spending and costscutting the price of purchased goods they buy and reducing the costs of the processes for buying and selling. Respondents also said savings can result from collaborative product development, better demand planning and forecasting.
Booz Allen Vice President, Tim Laseter, noted that "the survey results indicate a growing degree of realism on the part of companies, both in terms of the benefits they can and can't achieve through exchanges, and in terms of the work that is required to achieve these benefits. Companies now realize that exchanges are not panaceas and that hooking up to them is not exactly `plug and play.' Still, it's clear that companies believe the benefits outweigh the challenges."
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Mike Bucken is former Editor-in-Chief of Application Development Trends magazine.