Some high profile CEOs question the value of e-marketplaces in the latest
issue of Fortune. Herein, Giga Research (somewhat) agrees with the
sentiment. Bottom line = the hype is over, and now we need to be rigorous in
measuring the market opportunity here, if we intend to commit engineering,
marketing, and sales resources...

Does this confirm the company sponsored exchange belief? (I'm making the
distincction here between company, industry, and neutral)

Aiaz


Read the full article
"The Odd Couple," Fortune, May 1, 2000
http://www.fortune.com/fortune/2000/05/01/wel.html


Relevant piece follows...

 Question

Are all CEOs convinced of the value of e-marketplaces?

 Answer

In a wide-ranging interview on Internet issues in Fortune, General Electric
CEO Jack Welch and Sun Microsystems CEO Scott McNealy both voiced doubts
about the value of e-marketplaces. According to the interview, their primary
concern is allowing another entity to enter the value chain between them and
their customers and suppliers. McNealy is quoted as saying, "the question
is, do companies want to outsource purchasing and control over their own
supply-and-demand curves, and thereby put another layer between themselves
and their customers?" When asked why the automotive and aerospace industries
are creating purchasing exchanges for the key parts and components for their
businesses, Welch answered, "some of us older companies think this Internet
stuff is more difficult than it really is." He went on to say that it "makes
no sense" to hand the responsibility for creating business-to-business
platforms and services to another organization.

Giga Position

These are not the ramblings of out-of-touch, "stuck in the mud" executives.
McNealy is a highly visible Internet CEO and evangelist who has been
preaching the value that the Internet can bring to businesses for years, and
we have previously identified Welch as a CEO who "gets it" due to his
efforts to jump-start GE's internal usage of Internet technology (see
IdeaByte, B2B E-Business Strategy Requires CEO Support, Ken Vollmer). As
these two executives have a solid track record when it comes to Internet
issues, we believe their comments may cause some companies to question their
B2B strategies if they focus solely on Net marketplace options.

We do believe that there are good business reasons for organizations to use
e-marketplaces (see Planning Assumption, E-Markets: A Natural Evolution of
E-Procurement, Erica Rugullies). However, these efforts should not be
pursued to the exclusion of other B2B integration options that do not
involve a third party. In particular, business process integration (BPI)
projects may have a higher potential for improving business operations,
internal productivity and customer satisfaction (see IdeaByte, B2B
E-Business Strategy Options: A Road Less Traveled, Ken Vollmer, and Planning
Assumption, Business Process Integration: A Key Component of B2B E-Business
Strategy, Ken Vollmer).

Recommendations

Organizations must not assume that an e-marketplace joint venture will
necessarily be the best (or only) way to implement Internet-based technology
improvements in their organizations. Clients should consider the pros and
cons of both e-marketplaces and BPI when developing their e-business
strategy.




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