Mixed messages offer fuzzy picture for e-marketplaces

Commerce One Inc. customers and prospects listening to a keynote presentation at the company's annual eLink conference here on Tuesday were presented with mixed messages about whether companies will have difficulty deploying an e-business platform and about what type of e-business marketplaces, public or private, will dominate.

Although Mark Hoffman, CEO at Commerce One may have been stating the obvious when he said no company will deploy an e-business platform unless it has value for them, he gave no clear definition of why a public marketplace would create more value than a private exchange. All marketplaces, public and private, create value by reducing costs and increasing business, Hoffman said. But he did not delve any further into benefits of one type of exchange over another.

Private marketplaces are a "new but interesting area" where companies are automating their own internal processes, Hoffman said.

"Where we have focused on public marketplaces, now we are seeing the emergence of single entities that want to automate intra-company transactions," Hoffman said.

However, over time, according to Hoffman, companies deploying a private exchange for intra-company transactions will by some form of natural process morph onto public exchanges to conduct business, rather than continuing on what some call a "one-to-many" model of one buyer to its many suppliers.

"[Open] exchanges are not consolidating but will expand into multiple distributed marketplaces. They will start internal but go beyond," Hoffman said.

Hoffman, however, never explained why he believed the private exchanges would eventually evolve in this direction.

The degree of difficulty for companies to participate in online exchanges was another major theme of his talk. Hoffman referred to the requirements for companies to participate in online marketplaces as "hard to do" and said the goal of Commerce One's alliance with Microsoft Corp. was to make it easier for suppliers to get online.

"Takeoff has been slower than expected. This stuff is hard to do," Hoffman said.

Beyond the difficulty, Hoffman also sighted the fear on the part of suppliers who are worried about being "marginalized" and having their products turned into commodities.

"Now it is changing. One year from now suppliers will look to be part of marketplaces. It will increase their margins," Hoffman said.

The theme was mostly centered on getting suppliers to buy into the public exchange concept, with Hoffman stating that although there were hundreds or even thousands of large corporate buyers who are anxious to e-enable the procurement process, there are millions of suppliers who are not yet ready.

"We will work with [Microsoft] to go after suppliers to help them connect to the business Internet," Hoffman said.

Although Hoffman appeared to recognize the difficulty of doing so, Steve Ballmer, Microsoft CEO, who was on screen from Redmond, Wash., claimed that for suppliers it is "easy to participate," but added, "not trivial, but easy."

But Ballmer also said that perhaps the hype and expectations over business-to-business e-commerce "was a bit over the top," but that there was no question that in the "medium run" every business will connect to its partners.

Meanwhile, Hoffman also admitted to the "huge amount of hype" over the success of b-to-b just as the business-to-consumer market was collapsing. Now it is b-to-b that is being hammered by press and analysts alike. Nevertheless the "fundamentals of b-to-b are extremely strong," Hoffman said.

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