Wednesday, May 22, 2002

B2B exchanges morphing into enterprise system vendors. In this article in CIO Magazine, Mohanbir Sawhney, argues that for most companies, e-commerce efforts are best spent on automating and optimizing business processes with individual trading partners, as opposed to participating in large anonymous trading exchanges that are struggling to achieve liquidity. Therefore, B2B service providers should "build their business one customer at a time, instead of building marketplaces with no customers." Indeed, the only sector where pure electronic trading exchanges seem to be successful is in financial exchanges and commodity markets. Sawhney observes that some B2B providers -- such as Celarix in logistics services and Instill in the food service industry -- are transitioning from their original vision of setting up trading exchanges to offering software and services to enterprises for optimizing existing trading relationships. To us, it is becoming clear that in formulating e-business strategy, companies should focus on specific, practical, capabilities that add value to existing relationships, not some futuristic vision of anonymous abstract electronic marketplaces.

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