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Transform Bussines Through B2B Commerce

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Transform Bussines Through B2B Commerce Powered By Docstoc
					 Transform Your Business
      Through B2B e-commerce




Partnership Programs
The Internet, e-markets and
                               The Age of Opportunity
 For enterprises of all sizes, the Internet has ushered in a new age                        process efficiencies, according to For-
                                                                                            rester Research. Gartner (the IT research
 of opportunity. Companies that only a year ago were not ready                              and consulting firm) says that the world-
 to fully embrace new business models or to transfer many of                                wide B2B market will grow from $145
                                                                                            billion in 1999 to $7.29 trillion in 2004,
 their business processes onto the Web are seeing an evolving                               at which time it will represent 7% of the
 picture of the future in which their organizations must play a                             forecasted $105 trillion total global sales
                                                                                            transactions. By contrast, B2C sales in
 role or risk losing out to their competitors. The Internet may                             1999 reached only $20 billion, accord-
                                                                                            ing to Forrester. Deloitte Consulting pre-
 become just another sales channel — albeit an important one
                                                                                            dicts that by 2008, B2B sales will be six
 — for business-to-consumer (B2C) commerce, but it has                                      times that of B2C sales.
                                                                                               In addition to trading between partners
 already become the major channel for communications and                                    as part of a closed network or extranet, a
 transactions in business-to-business (B2B) trade.                                          key component of growth will be e-mar-
                                                                                            ketplaces, which are new electronic busi-
                                                                                            ness-to-business exchanges designed to
   “Many executives who were not con-             And e-commerce continues to grow at       allow multiple buyers and sellers to
 vinced that the Web was the future of         an explosive pace. AMR Research’s latest     dynamically exchange goods and services
 business and felt that most of the focus      study indicates that B2B e-commerce          that reduce costs and streamline their
 was on B2C have begun to recognize            will be adopted at a more accelerated rate   supply chains. Digital markets create new
 that the Internet offers tremendous           than many companies realize, reaching        ways of doing business in traditional
 potential as a way to increase efficiencies   $5.7 trillion by 2004. The firm estimates    industries such as industrial shipping,
 and reduce costs, especially in areas like    that industry leaders will move 60% to       papers and chemicals, where the process
 billing, procurement and supply chain         100% of their transactions to the Inter-     of buying and selling commodity-like
 processes,” says Pat Toole, general man-      net over the next two years. AMR says        products was previously complex and
 ager of B2B solutions at IBM. “The            companies that do not take an aggressive     time-consuming. Buyers and sellers can
 emergence of Net markets in virtually         approach to B2B e-commerce and pre-          meet on a virtual trading floor and trans-
 every vertical industry, plus a growing       pare for digital marketplaces will lose      act as quickly and efficiently as com-
 understanding of how supply chain col-        customers and ultimately fail.               modities traders do, using a variety of
 laboration can save money, have made             Other research firms agree. Most U.S.     market-making mechanisms ranging
 companies that couldn’t imagine a couple      firms will be transacting business on the    from fixed-price such as catalog purchas-
 of years ago how the Web would affect         Internet in two years, drawn online by a     ing to dynamic pricing mechanisms that
 them to re-evaluate their positions.”         host of compelling cross-organization        include auctions, exchanges and barter.
                                                                                     The Internet, e-markets
                                                                                                                                   The
                                                                                                   i2 and Ariba. That combination pro-
                                                                                                   vides a complete solution for supply
                                                                                                  chain management and e-procure-
                                                                                               ment, running on IBM middleware —
                                                                                              which allows integration of the buyer,
                                                                                              seller and the marketplace — and backed
                                                                                              by IBM’s comprehensive services and
                                                                                              support.
                                                                                                 “The alliance is about creating greater
       Gartner estimates                                             in the sense that they   value for our customers,” says Sanjiv
    that by 2004, e-market-                                     can move from a propri-       Sidhu, chairman and chief executive of
    places will capture 35% or                                 etary Electronic Data Inter-   i2. “Right now, B2B marketplaces are
    $2.7 trillion of worldwide B2B                            change (EDI) system to          only addressing about 5% of the trans-
    e-commerce sales. Over 3 mil-                            more open Internet-based         actions businesses do with one another.
    lion sellers are expected to participate in   methods. Business processes are evolving    Money is being left on the table, and
    e-marketplaces by that time. In a Forrester   to the point where some of the processes    there is more value that can be derived
    survey of executives at large companies, a    themselves are actually contained in the    from working together.”
    growing number said
    they expect to both buy
    and sell via e-market-
                                  The real payoff will come as companies acquire both buy-
    places. Today, 26% of         begin adding support for the collaborative, long-running
    these firms use e-mar-
    ketplaces to buy products and 18% use         network. It just makes it easier for com-      In the first three months of the
    them to sell products, but by 2002, 69%       panies to do business.”                     alliance, IBM and its partners won con-
    will buy and 71% plan to sell through this      Although dozens of marketplace “plat-     tracts with ten major industry consor-
    channel. By 2004, 53% of the total B2B        form” vendors have emerged to help          tiums. They include e2Open.com, an
    e-commerce trade is anticipated to take       customers build or connect to existing      electronics exchange backed by such
    place on e-marketplaces.                      marketplaces, few have all the resources    players as Hitachi, Nortel Networks
       “E-marketplaces provide such tremen-       necessary to provide the kind of total      and Toshiba; the World Wide Retail
    dous value to companies in terms of           solution that will be needed as market-     Exchange, a marketplace being built by
    speed and simplicity,” Toole says. “Speed     places assume a larger role in supply       22 of the world’s largest retailers; and a
    in that they can just do so many process-     chain optimization. As a result, many       marketplace being built by seven of the
    es faster through exchanges than they can     market makers have turned to technolo-      world’s largest tire companies, called
    do using traditional methods; simplicity      gy alliances such as that formed by IBM,    RubberNetwork.com.

4
                                                                                                    B2B Marketplace:
                                                                                                    Chemdex
                                                                                                    Chemdex is an online marketplace
                                                                                                    that brings together life sciences

and                                                                                                 enterprises, researchers and sup-
                                                                                                    pliers to efficiently buy and sell


Age of Opportunity                                                                                  products on the Web, streamline
                                                                                                    business processes, enhance
                                                                                                    productivity and reduce costs.
                                                                                                    Acting as a Net Market Maker for
                                                                                                    2,000 suppliers and thousands of
        “What these industry consortia are            alone to gain the market, the trio is part-   researchers in more than 70 enter-
      looking for is a solution that covers all of    nering with other e-business software         prises, Chemdex offers nearly a
      their needs, from up-front consulting           providers and therefore gains more func-      million individual products in an
      to business design and strategy through to      tionality and complexity,” says Gerard.       extensive online marketplace and
      the applications and on to integration to          Experts believe the real payoff will       procurement application tailored to
      the back end, customization and ongoing         come as companies acquire both buy-           the unique business requirements
      operations,” says Karl Salnoske, vice pres-     side and sell-side capability and market      of each customer.
      ident of e-procurement services for IBM         makers begin adding support                                  Building on a UNIX
      Global Services. “Ariba does a real good job    for the collaborative, long-run-                          base, Chemdex chose
      of providing buy-side software for the          ning transactions and custom                              IBM’s WebSphere®Appli-
      indirect spend and marketplace software         business processes that charac-                           cation Server to handle
      for running exchanges; i2 fills in the gaps     terize the trade of direct goods,                         its catalog and pro-
      around that with its supply chain plan-         capital equipment and services.                           curement application,
      ning and management applications. We            Statistics from The Center for                            and IBM VisualAge®
      understand supply chain, we understand          Advanced Purchasing Studies show that         for JavaTM as the development tool.
      their industry. Our middleware is the glue      this currently underserved market rep-        Chemdex’s architecture is designed
      that holds it all together. I also think cus-   resents over 75% of all B2B spending          to easily absorb spikes in growth.
                                                                                                    WebSphere and VisualAge for

side and sell-side capability and market makers                                                     Java’s open standards provide flex-
                                                                                                    ibility and portability to the front
transactions and custom business processes.                                                         end of the Chemdex Web site,
                                                                                                    allowing Chemdex to manipulate
      tomers have a lot of confidence in our abil-    across 17 major industries.                   its platforms as necessary.
      ities in consulting, systems integration and      “The dramatic growth in direct pro-           “We chose WebSphere because
      business process change skills. Together, it    curement and emerging e-marketplaces          of IBM’s commitment to building a
      is a complete, seamless package.”               with their growing demand for interop-        platform that is hardware/operating
         AMR Research analyst Greg Gerard             erability with partners, suppliers and        system independent, highly scalable
      says that Oracle and IBM/Ariba/i2 are           customers will necessitate an ability to      and has the portability of Java,”
      the main players in the e-commerce              integrate across software platforms and       says Pierre Samec, Chemdex’s chief
      market space today, having long overtak-        with legacy systems,” Salnoske says.          information officer.
      en the Microsoft/CommerceOne/Ander-             “IBM’s open B2B platform allows
      sen Consulting consortium. Ultimately,          users to engage in widespread, ad hoc
      Gerard predicts that the IBM team will          e-commerce with unlimited trading part-
      win the race. “While Oracle is fighting         ners on the Internet at large.”

                                                                                                                                           5
    Putting the
                            Pieces Together
    The Internet is transforming cross-enterprise processes in the                             wind up being a bunch of stand-alone
                                                                                               islands,” Kilroy says. “No matter how big
    same way that reengineering and ERP transformed the enter-                                 they are, there will be little payback for
    prise. Collaborative commerce is rapidly becoming the norm.                                buyers and sellers that join if they don’t
                                                                                               interoperate. That makes infrastructure
    Over the next few years there will be greater and greater business                         critical to any company’s e-business strat-
    process integration between companies. Many companies are                                  egy. One of our major focuses is on cre-
                                                                                               ating applications that make it possible
    already reaping significant benefits using only the Internet as a                          to communicate with other networks.”
                                                                                                  The growing need for networked col-
    technology enabler. The biggest potential benefit is a more syn-
                                                                                               laboration has made a rather unglam-
    chronized supply chain, which yields better customer service,                              orous application called middleware one
                                                                                               of the most important software tech-
    higher quality products, lower inventory and faster delivery.                              nologies to emerge in the Internet era.
                                                                                               Middleware is the layer of software between
       “We are undergoing a strong surge in       further complicating business integration.   computer operating systems and Web
    business-to-business integration to stream-      “To take full advantage of the network    applications that holds together such serv-
    line workflow, introduce efficiencies and     architecture of Web-based applications,”     ices as identification, authentication,
    reduce costs,” says IBM’s Toole. “But         says Ed Kilroy, general manager of IBM’s     authorization, directories and security and
    business partnerships are changing much       electronic commerce software solutions       allows otherwise conflicting applications
    more frequently than in the past and          division, “companies need to keep their      to work together. But middleware and
    more applications are constantly being        options open and not get locked into         business process integration are complex,
    added. Thus, a dynamic integration strat-     technology so proprietary that it doesn’t    so more and more companies are turning
    egy is needed, as well as an open infra-      play well with others. The winners in the    to plug-and-play solutions like IBM’s
    structure that allows companies to inte-      Internet economy will be those who can       WebSphere software platform, which has
    grate and exploit business processes —        connect best with suppliers, customers       evolved from a family of Web application
    from supply chain management to han-          and trading partners.”                       servers to a complete family of end-to-end
    dling high-volume Web transactions in a          Most marketplaces also need better        e-business software.
    B2B e-marketplace.”                           links with the legacy systems of their          “Today’s customers want faster, more
       A Meta Group report estimates that         trading partners. Few business-to-busi-      cost-effective implementations of their
    this year companies will spend $1.8 bil-      ness marketplaces provide integration        middleware tools,” wrote Sam Albert in
    lion on integration products and services     with their participants’ back-end systems.   ZDNet. He is president of Sam Albert
    and that that figure will grow to $9.1 bil-   Of the 600 exchanges tracked by AMR          Associates in Scarsdale, N.Y., a firm spe-
    lion by 2004. According to Forrester          Research, only 10 have application inte-     cializing in developing strategic corporate
    Research, integration projects sap 30% of     gration built into the exchange. That        relationships. “That’s where I see IBM
    information technology development            means many marketplaces fall short on        picking up the ball. The purpose of IBM’s
    budgets at global 2,500 corporations. In      their promise of huge efficiencies.          WebSphere is to integrate components in
    addition, many companies run on at               “If marketplaces and business Webs are    the Web environment with the rest of a
    least three different operating systems,      built on proprietary technology, they will   company’s business operations, such as

6
                                                                                             Middleware:
                                                                                             Whirlpool
                                                                                             When Whirlpool, the $10.5 billion
                                                                                             global appliances giant, wanted to
                                                                                             build a B2B trading partner portal
                                                                                             for its middle-tier trade partners —
                                                                                             which comprise 25% of its total part-
                                                                                             ner base — it turned to IBM for help.
                                                                                             These are the sellers who generate
                                                                                             10% of the company’s revenue but
                                                                                             aren’t large enough to have dedicat-
                                                                                             ed, system-to-system connections
                                                                                             with Whirlpool, so they typically sub-
                                                                                             mitted orders by phone or fax.
                                                                                               To make the portal work, the com-
                                                                                             pany needed to integrate it with its
                                                                                             SAP R/3 inventory system and Tivoli
                                                                                             systems management tools. Follow-
                                                                                             ing the guidelines of the IBM Appli-
                                                                                             cation Framework for e-business,
                                                                                             Whirlpool built its portal with IBM
                                                                                             WebSphere Application Server, Ad-
                                                                                             vanced Edition, IBM Net.CommerceTM
                                                                                             (now part of the IBM WebSphere
inventory, ordering                                            to search out the pieces or   Commerce Suite family), IBM HTTP
and so forth . . . IBM                                         worry about how they’ll all   Server, IBM VisualAge for Java and
has what it takes to                                      fit. WebSphere already has the     IBM Commerce Integrator with the
help customers run sophisticated applica-       industry’s broadest, best-integrated mid-    IBM MQSeries®of middleware tools.
tions while preserving legacy investments;      dleware package. We can supply the entire      Working in concert, these tech-
or in other words, integrate and connect        infrastructure. Spend your time and          nologies have enabled a fast, easy
new applications with their existing ones.      money on the applications that will make     Web self-service ordering process
The desired result, of course, is ‘e-enabled’   your market the industry leader.”            that has cut the cost per order to
operations at every level of a business.”         “Ariba, IBM and Cisco recognize the        under $5 — a savings of at least
   WebSphere combines two of the indus-         need to help mid-sized suppliers compete     80%. Whirlpool has also gained an
try-leading middleware technologies —           within the global e-commerce market,         unexpected benefit — an extendable
Web application serving and integration         and we are the first to meet that need       e-business platform that it plans to
— as well as a cohesive array of e-com-         with a single integrated solution,” says     leverage for other applications.
merce, Web development and manage-              Cindy Elkins, senior director, global sup-     “IBM e-business solutions run on
ment services under the WebSphere brand.        plier and content solutions, Ariba. “With    many different platforms that scale
Companies building marketplaces will be         the addition of our Ariba SupplierLive       from the very small to the very
able to pick and choose the modules they        solutions for mid-tier suppliers, we now     large,” says Jim Haney, vice presi-
need and quickly get something to market.       have a complete set of solutions to meet     dent of architecture and planning at
   “What we are saying is, don’t try to go      the needs of all suppliers, regardless of    Whirlpool. “When you’ve got that
out and build your own stand-alone mar-         their size or level of e-commerce experi-    level of scalability as well as flexibil-
ketplace,” Kilroy explains. “You don’t have     ence and requirements.”                      ity, that’s pretty powerful.”

                                                                                                                                         7
    Weaving
                   the Wireless Web
    Ask Dave Cassano, vice president of wireless solutions at                                and other Web-enabled devices to carry
                                                                                             out their business and generate revenue
    IBM, what the next big breakthrough in e-business will be,
                                                                                             wherever they are and whenever they
    and the answer is immediate: mobile commerce.                                            want.
                                                                                                “In a few years, more than 60% of all
      “Start with the idea that there are already about twice as                             Web transactions will be triggered by
    many people in the world who use cell telephones as there are                            wireless devices, making mobile e-com-
                                                                                             merce a tremendous opportunity for
    people with PCs who access the Internet,” Cassano says. “Not                             businesses to provide new personalized,
    only that, but the number of users is growing twice as fast                              location-based services over the Internet,”
                                                                                             Cassano says. “There is a whole set of
    and the technologies are changing so rapidly that you really                             new applications being developed for
                                                                                             these small, portable mobile devices —
    could have three quarters of a billion devices connected to
                                                                                             that are always on and in your pocket —
    the Internet literally within the next two to three years.”                              that will ultimately make them practical-
                                                                                             ly indispensable for a wide range of
                                                                                             transactions.”
       Cassano is hardly alone in his view of     to grow 55.9% in 2000, up from 26.6%          For example, Cassano says, the kinds
    the market. Aberdeen Group, a leading         growth in 1999 and the 27.8% annual        of things users can do now with an Inter-
    provider of marketing strategy and IT         growth rate expected for 2000 to 2004.     net-enabled phone — read the news,
    consulting, predicts that in 2004, 74 mil-      Out of all this activity, mobile elec-   sports, weather, get a stock quote — may
    lion users — one-third of all wireless sub-
    scribers — will access the wireless Web.      When you can be notified, before you leave for the
    The figures are even higher if you listen
    to research firm International Data Corp.
                                                  point, or that the Rolling Stones are coming to town
    (IDC). It puts mobile phone usage at          tronic commerce (m-commerce) has           not be all that interesting. But when you
    1 billion by 2003, with all phones Inter-     emerged as the next big thing. M-com-      can be notified, before you leave for the
    net-enabled by 2001.                          merce is being made possible by new        airport, that your flight has been can-
       Add to that the number of Internet-        technologies that allow mobile phones      celled, or that a stock has reached a sell
    enabled personal digital assistants (PDAs)    and other handheld devices to access the   point, or that the Rolling Stones are
    and IBM’s pioneering “pervasive com-          Internet. This creates a vast new poten-   coming to town and you can buy a
    puting” vision seems about to become a        tial channel for e-commerce. People will   couple of tickets right then online, it gets
    reality. IDC expects the market for PDAs      soon be able to use their mobile phones    a lot more exciting.

8
                                                                                                                           tops, servers, PDAs
                                                                                                            and phones to keep in touch,
                                                                                                             access corporate data and update
                                                                                                              business processes. Workers
                                                                                                               communicate just once and
                                                                                                               the message is delivered just
                                                                                                               once — no retries by the
                                                                                                               worker, no lost messages and
                                                                                                             no duplicated messages.
                                                                                                               Other technologies provide
                                                                                                            users of handheld devices and
                                                                                                            wireless phones with direct access
                                                                                                            to corporate networks using Palm
                                                                                                     OS or WinCE-based devices as network
                                                                                                     companions, connecting them to back-
                                                                                                     end systems through existing digital
                                                                                                     mobile phone technology.
                                                                                                        “The Internet and value-added services on
         “All of a sudden the notion that you        phones and PDAs to communicate from             mobile phones and devices have revolution-
       have to wait until you get to your PC to      the network to a company’s applications.        ized access to information for millions of
       respond becomes old news,” says Cas-          Middleware for pervasive devices enables        people,” says Cassano. “We increasingly

airport, that your flight has been cancelled, or that a stock has reached a sell
and you can buy a couple of tickets right then online, it gets a lot more exciting.
       sano. “All of these new services will be      reliable transactional capabilities to access   require complete access to time-sensitive
       highly personalized and location sensi-       mainstream business applications and            data, regardless of where we happen to be.
       tive. In the next two to three years, we’re   corporate data via handheld devices,            We expect devices — mobile phones, per-
       going to see a groundswell of new appli-      wherever mobile users happen to be.             sonal digital assistants, office PCs and home
       cations that will make m-commerce a           That allows mobile workers to commu-            entertainment systems — to access that
       major business driver.”                       nicate with enterprise IT systems just as       information and work together in one seam-
          Once more middleware plays a critical      dependably as office staff. Wherever they       less, integrated system. That’s the dream that
       role in allowing Internet-enabled wireless    are, a traveling workforce can use lap-         m-commerce can make into a reality.”

                                                                                                                                                      9
                                            The

     Internet-Based
                                                Open Future
     Procurement
     Many Internet-based procurement
     solutions are “buy-side” applica-      Doing business today requires a flexible approach and the
     tions, focused on indirect pur-        ability to act and respond on the fly. In a networked economy,
     chases — office supplies and rou-
     tine products and services not         a key to success is open and scalable technology that supports
     used directly in production. To par-
                                            multiple channels and allows customers and trading partners
     ticipate, companies need to plug
     in to someone else’s selling appli-    to connect with you however they choose.
     cation by joining one of the big
     supplier networks, like those oper-
     ated by Ariba, or connecting to          The Internet is challenging all enter-     ciency. This will quickly evolve into the
     third-party net markets.               prises to adapt and master new environ-      next phase in which companies will
       To make it easier for companies      ments of change. Networks must extend        develop new products and services a lot
     to begin selling online, IBM and       on demand. Partner and product additions     faster by learning how to collaborate with
     many other vendors created a           must occur at will. Business rules must be   one another through e-marketplaces. The
     number of “best-of-breed” alliances,   quickly customized. Support for business     third stage will be developing true
     such as the IBM Start Now e-com-       processes should be comprehensive and        knowledge management among compa-
     merce Solutions for Ariba Suppli-      include content management, marketing,       nies, which involves sharing their experi-
     erLive package for creating e-com-     merchandising, order process-                          ences in the marketplace.”
     merce sites linked to buyers and       ing, fulfillment, payment and                              By implementing a solution
     marketplaces that are part of the      customer service.                                        that integrates e-commerce as
     Ariba Commerce Services Net-             “We’ll see three levels of e-                          part of your overall business
     work. The SupplierLive solution        marketplace evolution over                                 strategy, you can begin to
     includes B2B connectivity to the       the next decade,” says IBM’s                               meet customers’ needs, and as
     Ariba platform, Cisco Systems’ net-    Toole. “The first stage                                      a result, differentiate your-
     working products, IBM’s WebSphere      involves companies devel-                                     self in a crowded market-
     Commerce Suite, IBM’s Netfinity®       oping true, intercompany                                      place while transforming
     and AS/400®servers, middleware,        business processes that allow                                your company into a win-
     services and financing.                them to raise operational effi-                         ner in the Internet economy. I




10
                                     About          IBM
IBM is a global leader in the development and implementation of
e-business solutions in strategic areas such as e-commerce, customer
relationship management, business intelligence, supply chain
management, enterprise resource planning and product design
and management. For more information call 1-800-ibm-7080,
extension b2b020 or visit ibm.com/e-business/b2b.


Created by: Forbes Partnership Programs
Writer: Jerry Bowles
Design: Suzanne Simpson
Illustrations: Kyle Dreier
© Copyright IBM Corporation 2000

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Description: For enterprises of all sizes, the Internet has ushered in a new age of opportunity. Companies that only a year ago were not ready to fully embrace new business models or to transfer many of their business processes onto the Web are seeing an evolving picture of the future in which their organizations must play a role or risk losing out to their competitors.