© 2001 Jupiter MMXIJupiter
Visions and Trends of Visions and Trends of Tomorrow’s B2BTomorrow’s B2B
James MacAonghusAnalyst, Jupiter MMXI
© 2001 Jupiter MMXIJupiter
AgendaAgenda
• Sell Cost Savings and You’ve Missed the PointSell Cost Savings and You’ve Missed the Point
• Replace Custom Build With Packaged SoftwareReplace Custom Build With Packaged Software
• Where Now For Net MarketsWhere Now For Net Markets
© 2001 Jupiter MMXIJupiter
Sell Cost Savings and You’ve Sell Cost Savings and You’ve Missed the PointMissed the Point
© 2001 Jupiter MMXIJupiter
Integration Requirements Will Integration Requirements Will Drive Infrastructure Investment …Drive Infrastructure Investment …
$2.6 $8.2$17.1
$43.6
$85.3
$137.3
$0
$20
$40
$60
$80
$100
$120
$140
$160
2000 2001 2002 2003 2004 2005
Infr
astr
uct
ure
In
vest
men
t
Source: Jupiter Net Market Infrastructure Forecast (11/00)
(in billions)(in billions)
Page 3 of 18
© 2001 Jupiter MMXIJupiter
… … But Still Early Stages of But Still Early Stages of Marketplace DevelopmentMarketplace Development
Source: Jupiter Research
AdolescenceAdolescenceInfancyInfancyAmbitiousAmbitious
ClimberClimberTeensTeens Young AdultYoung Adult MaturityMaturity
Basic Basic Exchange Exchange FunctionsFunctions
Expanded Expanded ContentContent
Advanced Advanced SearchSearch
CollaborationCollaboration
Systems Systems IntegrationIntegration
GlobalizationGlobalization
LocalizationLocalization
Multi-MarketMulti-Market
MechanismsMechanisms
Transactional/Transactional/BehavioralBehavioralAnalysesAnalyses
Adjacent Market Adjacent Market CollaborationCollaboration
Highly IntegratedHighly IntegratedFeaturesFeatures
Net Market progress to dateNet Market progress to date
Remaining phases to maturityRemaining phases to maturity
Page 4 of 18
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Sell to Early Adopters – Rest Sell to Early Adopters – Rest Will FollowWill Follow
Early Adopters
Late Followers
Early Followers
Laggards
Effectiveness Cost
Page 5 of 18
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Selling Cost Savings Is Self-Selling Cost Savings Is Self-LimitingLimiting
Efficiency
Effectiveness
Page 6 of 18
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Value Propositions for Value Propositions for Competitive AdvantageCompetitive Advantage
• Cycle timeCycle time• Brand substantiationBrand substantiation• QualityQuality• CapacityCapacity• Capital utilizationCapital utilization• Customer satisfactionCustomer satisfaction• ProductivityProductivity• RegulationRegulation
Page 7 of 18
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Risks, Cost, ROI Make Competitive Risks, Cost, ROI Make Competitive Advantage More AttractiveAdvantage More Attractive
Source: Jupiter Research
++
--
-- ++
Co
mp
etit
ive
Ad
van
tag
eC
om
pet
itiv
e A
dva
nta
ge
Cost SavingsCost Savings
Current Phase of B-to-B Current Phase of B-to-B Value MotivatorsValue Motivators
2003 Phase of B-to-B 2003 Phase of B-to-B Value MotivatorsValue Motivators
Page 8 of 18
© 2001 Jupiter MMXIJupiter
Cisco’s B-to-B Investment Cisco’s B-to-B Investment RoadmapRoadmap
Source: Jupiter Research
• 80% of orders 80% of orders done onlinedone online
• Customer Customer satisfaction satisfaction now 4.25, up now 4.25, up from 3.4from 3.4
• Substantially Substantially fewer errorsfewer errors
• Cycle time Cycle time down from 6-down from 6-8 weeks to 1-3 8 weeks to 1-3 weeksweeks
• Lowered Lowered inventoryinventory
• 55% of Unit 55% of Unit Volume Volume Shipped Shipped Without Cisco Without Cisco TouchTouch
• 25 Days to 10 25 Days to 10 Days’ Days’ Reduction in Reduction in Engineering Engineering ChangesChanges
• New Product New Product Introductions Introductions Accelerated Accelerated by 25%by 25%
Customer Customer FacingFacing
Connecting to Connecting to the Supply the Supply
ChainChain
New Product New Product LaunchLaunch
Page 9 of 18
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Replace Custom-Build with Replace Custom-Build with Packaged SoftwarePackaged Software
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Custom Build v Packaged, Over Custom Build v Packaged, Over TimeTime
Source: Jupiter Research
++
--
-- ++
Fu
nct
ion
alit
yF
un
ctio
nal
ity
TimeTime
Packaged ApplicationsPackaged Applications
Custom BuildCustom Build
Page 11 of 18
© 2001 Jupiter MMXIJupiter
Most Important Value-Added Services Most Important Value-Added Services Depend upon the Market Being PursuedDepend upon the Market Being Pursued
MediationMediation
Chat andChat andCustomer Customer ServicesServices
Buying From New Suppliers Buying From New Suppliers Buying From Existing SuppliersBuying From Existing Suppliers
RatingsRatings
CommunityCommunityInspectionInspection
GuaranteesGuarantees
InsuranceInsurance
ContentContent Supply ChainSupply ChainIntegrationIntegrationSecuritySecurity
NegotiationNegotiation
ShippingShipping
CreditCredit
CollaborationCollaboration
Product Product ExplanationExplanation
TrackingTrackingTrainingTraining
CriticalCriticalValuableValuableLess ValuableLess Valuable
Buyer Buyer MarketMarket
Value Value Added Added ServicesServices
EscrowEscrow
Source: Jupiter ResearchPage 12 of 18
© 2001 Jupiter MMXIJupiter
Technologies Map to Market Technologies Map to Market MechanismsMechanisms
Source: Jupiter Research
VendorVendor ExchangeExchange AuctionAuction Catalog Catalog AggregatorAggregator
Reverse Reverse AuctionAuction
AribaAriba XX XX XX XX
BizBotsBizBots XX
CommerceOneCommerceOne XX XX XX XX
IdaptaIdapta XX XX
MoaiMoai XX XX
OpenSiteOpenSite XX XX
RightWorksRightWorks XX
TradeMatrixTradeMatrix XX XX
VerticalNetVerticalNet XX
Page 13 of 18
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Reasons to Use Packaged Reasons to Use Packaged ApplicationsApplications
• Despite team growth, competitive advantageDespite team growth, competitive advantage• Time-to-market for new functionalityTime-to-market for new functionality• Net market makers should focus elsewhereNet market makers should focus elsewhere• Post-merger integrationPost-merger integration• Scale and expansionScale and expansion
Page 14 of 18
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Where Now For Net Markets?Where Now For Net Markets?
© 2001 Jupiter MMXIJupiter
ISMs First to Define Future ISMs First to Define Future Value PropositionsValue Propositions
• Reduce cycle times – table stakesReduce cycle times – table stakes• Increased capacity and utilizationIncreased capacity and utilization• Industry-wide demand/supply viewsIndustry-wide demand/supply views• New financial instrumentsNew financial instruments• The Network EffectThe Network Effect
Page 16 of 18
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Industry Sponsored Marketplaces Industry Sponsored Marketplaces and Independentsand Independents
• Technology acquisition - GHXTechnology acquisition - GHX• Creation of turnkey solution - GoFishCreation of turnkey solution - GoFish• Acquisition of liquidity services – e2openAcquisition of liquidity services – e2open• Supply chain efficiency - MetalSiteSupply chain efficiency - MetalSite
Page 17 of 18
© 2001 Jupiter MMXIJupiter
Where Do We Go from Here? Where Do We Go from Here?
• Massive consolidation – liquidity, Massive consolidation – liquidity, partnerships will determine survivalpartnerships will determine survival
• Value-added services move focus Value-added services move focus beyond matchmaking to completing beyond matchmaking to completing entire life cycle of transactionentire life cycle of transaction
• Don’t ignore local and SME marketsDon’t ignore local and SME markets
• Private trading networks emergePrivate trading networks emerge
Page 18 of 18
© 2001 Jupiter MMXIJupiter
Custom Build Way More Common Custom Build Way More Common Than Package SoftwareThan Package Software
0% 20% 40% 60% 80%
Package
Custombuild
Fig 5: What technology solution(s) did you use to create your Net Market?
© 2001 Jupiter MMXIJupiter
No15%
Yes85%
Transactions Within Standalone Transactions Within Standalone Marketplaces Will Shift to Inter- and Marketplaces Will Shift to Inter- and Intra-Marketplace TransactionsIntra-Marketplace Transactions
No76%
Yes24%
Are you linked or do you plan to Are you linked or do you plan to link to other net markets?link to other net markets?
Percentage of Markets Percentage of Markets Linked TodayLinked Today
Percentage of Markets Percentage of Markets Linked in FutureLinked in Future
Source: Jupiter Executive Survey (10/00); n=90, (US only)