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A reasonable assumption might be that startup companies would have a significant advantage over conventional established companies with regards
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B2B Exchange
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to B2B However, two fallacies occur in that kind of thinking First, B2B requires a solid business model and good strategies Large companies, such as IBM, Ford, GE, and GM are experts on building solid business strategies when they recognize an opportunity Past failures were due to pride, not business planning And the big companies recognize the profit potential of B2B Once pride is overcome, these industry leaders can turn on a dime The other issue with B2B involves the new technologies, such as the Web and XML Again, many companies have been involved with the Internet for much of its 30-year lifetime, longer than the lifetime of dot-com employees Although they may not have superior XML skills, these traditional companies may be able to leverage their SGML expertise to rocket up the XML learning curve Many of the humble SGML experts are proficient programmers who pick up new technologies as rapidly as a linguist picks up new languages A good C programmer with SGML experience can pick up Java in a couple of weeks and XML in a couple of hours of training The dotcom startups don t have the years of application experience stored at the conventional companies In fact, the biggest shot in the arm for XML came from the automotive industry with the announcement in February 2000 of the Covisint B2B collaboration among the Big Three automakers, Ford, GM, and DaimlerChrysler Although many other B2B efforts were in progress, the $300 billion worth of products and services from the 30,000 automotive vendors really put B2B on the map Before that announcement, both Ford and GM were working on separate B2B activities In fact, Ford has announced a plan to become e-Ford, a virtual company that leverages digital transactions and integrates (rather than manufactures) automobiles, products, and services Ford will still make cars, but it will outsource as much of the work as practical If it works, an apt comparison will be that Ford is the Dell for cars Established companies can take an exploratory approach to entering the B2B market, using a phased approach to learn quickly what works and what doesn t Their advantage is that they do not put all of their products and services into one B2B basket, as the dot-com startups are forced to do Established companies can fall back on their current business models if needed And they can gradually transition more and more of their business from the conventional approach to an increasingly B2B approach The point is that corporations should be planning to do B2B e-commerce
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and e-business; this capability will soon be the cost of staying in the marketplace and staying competitive Managers should not think that even big companies can play The business leaders should be thinking that B2B is growing because the big companies are building the business models at the forefront Cooperation is a necessity B2B requires greater cooperation with partners and competitors Again, consider the auto industry Ford and GM are clearly competitors, yet they cooperate in their B2B venture This is not really that difficult to understand The Covisint B2B venture is not really a sharing of critical information and corporate secrets It is a collaboration on procurement, vendors, and suppliers Any company worth its salt already knows about the vendors used by its competitors So there is no chance for loss of competitive advantage What these companies are doing is sharing standards The auto industry shares many obvious standards All major US cars use the same fuel, the same oil, the same sizes of tires, the same batteries, etc They also use a similar design for automatic transmission, for bumper heights, and for seatbelts The look, feel, handling, and brand are the discriminators So, the B2B collaboration merely creates another set of standards for the auto industry to agree upon These standards are XML-based descriptions of all parts and services and also of data transactions in the procurement supply chain The standards make life easier and information transfer less expensive XML enables the creation, collaboration, and extension of these standards It is really a simple concept, somewhat as if all companies spoke a different language and then agreed to all speak English That reduces costs involved in one level of translation XML reduces costs related to shuffling paperwork among 30,000 different vendors and their supply chain applications The single standard may help the vendors, because they won t have to keep a separate system for each automaker In theory, the consumer should see some sort of cost reduction along down the line One of the potential outcomes of the B2B leveling of the playing field is that goods and services become commodities that are available from different vendors In addition, a B2B exchange simplifies the process of comparison shopping for the best price Therefore, companies will have to differentiate based on best value for the target customer For example, if a vendor sells to the automotive industry, then the ability to delivery high volume goods may be an important factor The automotive vendor may have an
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