When they first emerged a couple years back, B2B exchanges were supposed to streamline everything from procurement to planning, providing new opportunities for businesses to forge partnerships, tap new markets, and save money.
Since then, roughly 90% of all trading exchanges have vanished, an attrition rate that is normal for any new business or product sector. But the B2B implosion taught a few other lessons as well, such as:
* It wasn’t going to change existing 20-year old trends of organizations consolidating–not expanding–their trading relationships to a few trusted partners.
* It wasn’t changing the brute economics of procurement. Promises of savings by eliminating the middleman sounded all too much like “I can get it for you wholesale.”
* Post 9/11, the idea of using trading exchanges to open up business processes struck the wrong chord.
But the death of B2B marketplaces is exaggerated. Instead, the ones making the cut are reinventing old private EDI (Electronic Data Interchange) trading hubs, where a single behemoth–say GM or Sears–creates a trading ring for its own suppliers. This time, substitute “Extranet” for “EDI Value-Added [read: Private] Network.”
The advantage on this go-round is that the technology (based on XML web services) is far more flexible and less expensive. But web services technologies are works in progress. Today’s standards–such as SOAP (Simple Object Access Protocol) messaging, WSDL (Web Services Definition Language), and UDDI (Universal Description, Discovery, and Integration) registries–are just the beginning. We still need standards for all those services that normal transaction systems provide to make trading safe, like security, authentication, prioritization, acknowledgement, and rollback.
Regardless of whether the economy recovers or sputters, B2B marketplaces will play incremental roles, making it a bit easier for smaller trading partners to link electronically with their big brothers, while providing the starting point for some industry sectors such as automotives to increase collaborative product development or similar processes.
The Internet didn’t change everything, and going forward, neither will be B2B. It will simply allow enterprises to consummate partnerships that would have happened anyway.