Dazed and confused: Understanding the B2B monster

The B2B marketplace has become a weary labyrinth of companies, technologies and partnerships. What's more, hugely disappointing sales have thrown many vendors into defence mode. Sonya Rabbitte wades through the marketing guff.

There is some confusion over just how lucrative B2B will be. According to AMR Research e-marketplaces will be worth $5.7tr by 2004. Forrester is a little less optimistic, predicting a value of $2.7tr by 2004. Ovum is positively downbeat with a forecast of $1.2tr by 2006.

Tacked on to the end of the dot-com gold rush, focusing on B2B was seen as a panacea to the ailing B2C sector.

But 12 months down the road the hype has lulled. The same analyst houses predicting trillion dollar market values regularly produce reports claiming European IT directors are failing to grasp B2B. The major vendors count customers in the low hundreds rather than thousands and recent financial results are proving that B2B is no cash cow. B2B vendors may promise savings of 10 to 20 per cent on e-procurement costs, but customers seem unsure about how much money they need to invest to make that saving.

Mid-tier player Clarus claims given, three weeks, it can create a basic marketplace with two to three suppliers, and a couple of thousand users, for about $500,000. IBM estimates the most basic version of its B2B infrastructure will set customers back $3m and require six to eight months implementation time. A more sophisticated marketplace comes with a price tag in the region of $20m and requires up to a year and a half to set up.

A litany of failed relationships adds to the confusion. B2B players are inclined to resemble squabbling kids in a playground. Ariba, i2 and IBM don't play ball together anymore and Ariba doesn't talk to Agile.

The relationship between Ariba and Commerce One is even more complex. The two commonly battle against each other suggesting they are more alike than either might care to admit. Both are involved in 150 plus marketplaces with about half of the sites live.

Both develop infrastructure for web-based e-marketplaces with a focus on the procurement side. Commerce One offers its customers e-procurement, auctioning, content management, financial services and value supply chain applications.

While Commerce One has a strong ally in SAP the failure of Ariba's Agile deal left many industry watchers speculating Ariba's offering is simply not rounded enough, and Gartner Group has issued a report doubting the company's long term survival.

But Ariba claims it is around for the long term. At its recent user group (June 2001) it unveiled a rebranded offering it calls the Value Management Chain. But analysts say the offering is nothing new, and on the surface it seems to resemble Commerce One's solution.

The barriers between the two major players have blurred further with the launch of respective global networks. Commerce One's Global Trading Web provides a technology platform allowing customers to connect with various marketplaces regardless of the applications they use.

The Commerce One network supports applications from Ariba, i2, Oracle, and a number of legacy systems. Ariba has recently returned the compliment with the launch of a similar platform, the Commerce Service Network (CSN).

Both companies are increasingly using the open networks to target suppliers, a group that B2B vendors have been accused of ignoring in the past. So far Ariba claims to have about 600 users linking up to 20,000 suppliers. Commerce One says it has a combined buyer and supplier figure of over 10,000 on its network.

With its focus on supply chain management former Ariba partner i2 has never been considered an e-market player. But the recent acquisition of Rightworks sees the company move into territory formerly dominated by Ariba and Commerce One.

New features to the i2 suite of applications include content and cataloguing management, order settlement, and freight matrix - the ability to co-ordinate and monitor shipping schedules.

The change of strategy sees i2 inch closer to the direct procurement arena. i2 is also jumping on the global trading network bandwagon with its offering Tradematrix. If i2 plugged a gap on the supply side, and Ariba enabled buyers, IBM provided the glue in the doomed yearlong relationship between the three.

IBM claims it saved $9bn in the past five years through e-procurement and is now eager to share the benefits with customers through its Websphere infrastructure.

In the B2B sector IBM continues its best of breed approach. Websphere is a technology platform, containing various modules, that can be used alone or as a whole suite, to integrate best of breed applications and to link internal back end systems with external B2B operations

Users can access the platform through a web browser, or an application-to-application gateway - suitable for users and suppliers running the same applications. Work is currently underway to develop plug and play adapters to link different applications.

IBM has its own view on the global network model, forecasting private exchanges will link with 'megahubs'. "It's not either or. They're both necessary. It's the hybrid model," says Prem Puri, worldwide director of solutions for the distribution sector at IBM.

Unsurprisingly, Puri claims Websphere is the glue that joins the missing pieces. "It has taken time for companies to realise that work needs to be done internally on B2B, not just on e-marketplaces. Companies also need to web-enable existing internal systems, gather company intelligence and then integrate it with marketplaces," he explains.

So it's not exactly a clear-cut job. And market movements indicate things are set to become more confusing. Clarus claims online settlement differentiates it from the crowd, but i2 includes this in its revamped package. Commerce One says its open network sets it aside, but now Ariba and i2 have established similar networks.

IBM sells itself on the best of breed theory - emphasising the fact that there is no need for customers to change to proprietary software. But in a drive to increase liquidity and capture market share the major B2B vendors now support rival applications.

In the face of cautious customers and a depressed market, B2B vendors seem in a rush to add unique value added services. But with increased convergence and the similarity in offerings the differences are becoming hard to spot.