From: FatButterfly@lists.dynapolis.com on behalf of Andrew White [awhite2@ix.netcom.com] Sent: Sunday, August 26, 2001 12:30 PM To: Fat Butterfly DTE Forum Subject: RE: [FB] Neutral eMarketplaces Vinod, I am not sure that your last comment would be accepted by those provider of net market technology. We provide some that is focus on serving the relationship side of the B2B process (collaboration) versus the transaction side (finance, order management, e-procurement etc.) Even that last comment will no doubt upset someone! Those providers of the core transaction stuff would suggest that they have built solutions to manage complex products and those products that have many variables or characteristics that might influence the transaction. There are also those that support non-standard procurement - where a buyer is buying a standard product (like rolled steel) but they are actually buying the same thing each time that is subject to a slightly different quality or characteristics (e.g. grade) - such as tensile strength in the case of steel. My point is not related to the complexity or the ability to handle it in software. My point is fundamental to process and competitive strategy. The point made in these papers (referred to in a string of messages this last week) is that if you were the CEO of these companies, what would you do? What you would do and should do is dictated to by your place on the pecking order. Where you are actually located is often different to where your last customer has you! If you are a leader (or perceived leader in your strategy) you want to do things that perpetuate that status quo. Wal*Mart will join a trading exchange, whoever is the owner, if they thought that it would threaten their position. If you are a number two or three, heading for battle to defeat number one, then you will, for a period, forsake the threat of a number five or second tier player, and corroborate for a while in order to catch up the big guy. If you see that the second tier guy is catching you up faster than the joint offering is catching the big guy up, you had better kill the business model else you will soon have smaller fish eating your lunch. If you are a second tier player, you will bend over backwards to share in the investments that any larger players will offer. Which CEO or VP of e-Commerce will voluntarily risk competitive advantage (core) for the savings realizable in a non-core (context) business model? Who gets fired for buying IBM? There are some places where exchanges work well. If the product or service is so undifferentiated and price is a simple communications device to clear the market, a centralizing model is way cool. Any industry (that does not service pure commodity-type products) that succeeds in installing a centralizing model will struggle to provide public services (that make any money: liquidity) unless and if they can deploy, in a mode acceptable to members, private services. Noting that by definition, those provide services have to be available to all members (neutrality) hence they cannot offer any major strategic advantages. The point is the level of commoditization and need for competitive advantage. And pecking order. With those three aspects in hand, its easy to see (long term) which centralizing models will survive. Just pretend to be CEO for a day and think about the next shareholders meeting. I agree with the theme of your response but I thought it might be more fruitful to drill down on the details. I don't think that the complexity side of a product has all that much to do with the success of failure of a centralizing net market. If the technology cannot handle, then I am sure you are right. I am assuming that there are vendors out there that can support it. AW -----Original Message----- From: FatButterfly@lists.dynapolis.com [mailto:FatButterfly@lists.dynapolis.com] On Behalf Of Vinod K Dar Sent: Thursday, August 23, 2001 9:01 AM To: Fat Butterfly DTE Forum Subject: RE: [FB] Neutral eMarketplaces it is clear that public exchanges work when there are only a few variables to the product; standard contracts and delivery terms; major liquidity; counter-party credit comfort; strong dispute resolution protocols; robust technology; and good user interfaces, data feeds, and analytics: conditions not satisfied w/intellectual property, fashion, highly structured products, professional services, lacy undergarments, toy soldiers for instance; it seems to me that for anything that is consumer facing or non-commodity products and services aimed at SMEs closed private clubs work better; for concentrated industries w/many moving parts i suspect extended enterprise networks with a corporate hub may also be sound notions; for those interested , skim thru our commentary titled "what kind of e-marketplace will prevail?" archived under Daily Read on www.Energye-comm.com -----Original Message----- From: FatButterfly@lists.dynapolis.com [mailto:FatButterfly@lists.dynapolis.com]On Behalf Of White, Andrew Sent: Wednesday, August 22, 2001 6:20 PM To: Fat Butterfly DTE Forum Subject: RE: [FB] Neutral eMarketplaces Vinod, Excellent comment. The paper itself, "The Rise and Fall of the Trading Exchange" describes all the hype that surrounded the misapplication of what worked for pure commodity products and services for non-commodity type products and services where there are fewer buyers and/or sellers, and/or where demand and/or supply aggregation is detrimental to the process that is seeking to be improved through centralization. The paper was written at the end of 1999 when the market was on the up - still. So it is very heartwarming to see some real successes - there are too few. And at that time, too many other people forcing a square into a round hole. I know of several profitable exchanges in the vertical space you mention - which is a good fit in many cases with this model. Branded, jeans are not a good fit. And so we could go on. Cheers, Andrew -------------------------- This discussion forum is sponsored by Dynapolis Internet Services . 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