Six months into Carter Holt Harvey’s $1.5 million investment in e-procurement company Cyberlynx, things are looking rosy all around.
Cyberlynx has just completed the pilot phase of its procurement hub in office supplies, travel and monitors in Australia and is about to extend e-business links to customers across a total of 16 categories including print, contract labour and IT hardware using Ariba Buyer software.
Jointly owned by The Commonwealth Bank Group, Woolworths, Lion Nathan, EDS Australia, Telecom New Zealand, Carter Holt Harvey and, most recently, Royal & Sun Alliance, Cyberlynx says it has been saving the companies between 7% to 15% in procurement spending. The plan is now to bring in non-equity customers and expand the operation to New Zealand within the next six months.
“We have been very pleased with the results that we’ve had,” says Carter Holt Harvey’s chief of IT, Russell Jones.
“Proof of it has been in the value of the deals we are getting.”
CHH is planning to put 25% of its $400 million procurement spend through Cyberlynx over the next two years and Stephen Harmer, Cyberlynx’s Sydney-based business development director, says the company is still on target for an aggregated spend of $2 billion for 2001.
“We’re still on track and aiming for a positive cashflow in the second half of this year,” he says. “There is a lot of froth and bubble talked about B2B but we’re just doing the stuff and delivering the results.”
Jones says the decision to join Cyberlynx had more to do with the benefits from being a customer than any profits from the investment.
“The fact that an investment may actually result in value creation longer term is a secondary issue: the investment gave us the ability to play a bigger role than we would have done just as a pure customer of Cyberlynx and the results that we have seen to date have exceeded our expectations.”
CHH’s head of procurement and distribution, Ken Humphrey, believes other organisations’ disappointing e-businesses performance is caused by companies not being flexible enough to adapt to what customers need.
“A lot of B2B companies have tried to clip the ticket without a clear understanding of what the value to the end user customer is. They are coming into the market with an idea which is very good on paper, but in reality is not what the customer needs.”
CHH is planning other e-business ventures and will use other e-business tools in the future as the company goes through “significant organisational changes”, says Humphrey.
“It is not really a question of, should companies engage in collaborative behaviour for the use of e-business: companies must engage in these things. The cost disadvantage of not engaging is too severe,” he says.