Making successful B2B a reality

eConnections CEO Robert Rodin offers a sober but upbeat appraisal of the future for the supply-chain management and business-to-business software sectors.
Written by Erich Luening, Contributor
For Robert Rodin, the Internet wasn't a fad. It was a new tool to transform the business world.

The chief executive of eConnections, a maker of supply-chain intelligence software and the developer of one of the first successful business-to-business portals in the industry, has long been a believer in the real-world impact of the Internet on the ways companies can communicate and buy and sell goods.

Rodin started touting the Internet back in 1994 when as president of Marshal Industries, a distributor of electronic components, he launched one of the first business-to-business portals that provided managed spot-buys and Web seminars for the industry.

In addition to being CEO of a successful software company--eConnections was listed in Upside Today's Hot 100 companies in the business-to-business sector--Rodin is a director of RosettaNet and CommerceNet, industry groups trying to develop e-commerce standards and protocols.

In a recent interview, Rodin described the success of his earlier Internet venture, the challenges facing the technology industry, and the future of the supply-chain management and business-to-business software sectors.

Q: As an early Internet evangelist, how do you see the Internet? How would you assess the current high-tech downturn, and how long do you think it will last?
A: I never saw the Internet as a fad. I've always viewed it as a facilitator of robust communications. In the electronics sector, the Internet could provide supply-chain connectivity and the ability to deal with extended environments and the supply chain's global issues. I think the Internet has only just begun to show the power of this connectivity. It's going to be as pervasive as electricity. The Internet will be always on, reactive and proactive, and ever present in our lives.

As for the downturn, it's bad. We've traditionally seen peaks and valleys in this industry about every 10 years, and this is another one of the valleys. I think it's exacerbated by the fact that companies have not been able to manage their extended supply chains. They weren't able to effectively mesh demand with supply and manage their supply-chain partners, so the dip has been deeper and more sudden than in the past.

In the electronics industry, we see supercompressed product life cycles multiplied by build-to-order, made-to-order and cut-to-fit demands, which have produced tremendous complexity and time pressures. We're now beginning to see a new trend in outsourcing, and companies like ours are ready to help others ride out the downturn by taking that increased complexity out of their supply chains and helping them to create new efficiencies.

How has your company been affected by the downturn, and what are you doing to navigate through the storm?
Our company was designed to deal with all market conditions: downturns, upturns, and more steady-state environments. We are in an optimal position to assist companies because we offer hosted extended supply-chain intelligence--meaning the transparency, knowledge, visibility, and command and control for them to get the right product to the right place at the right time in the most efficient way possible.

In a downturn, where demand for customer satisfaction is greater and earnings are under pressure, companies can see the value of using our solution. And we'll steer our growth to help them navigate through current and future market conditions.

Many analysts say the early promoters of B2B e-commerce got it wrong when they said the new technology would transform the whole way business is conducted, and that the marketplaces that failed were the ones that set up and tried to change proven business practices that worked. Do you think the hype of B2B e-commerce may have presumed too much and over-assumed the failures of existing business practices?
I remember when the buzz about B2B started. People didn't give it the proper gravity it merited. Everyone jumped on the B2B bandwagon happy to claim they had a B2B solution, but they didn't always have a business with infrastructure, process, services and vendors in place. They had transactions but not processes. However, B2B is about process, not just transactions. Companies didn't realize how the power of intelligent connectivity to the extended supply chain would transform business.

As it relates to the extended supply chain, B2B is complex, and solutions have to be robust. Solutions need to focus on deep process, providing ways to minimize transactions and maximize time, quality and competitiveness.

How did you first envision the Internet's role in automating business processes?
Throughout history, people have been plagued with inefficient communication, from blowing smoke signals to Morse code. On a relative basis in 1995, most people did not have email. Now, most people have an Internet connection. Why did the Internet proliferate? Because it was so easy to use. We envision the Internet enabling the same ubiquitous connections in the supply chain. Today, we have a robust dialogue to automate the process for global networks to instantly collaborate, allowing anyone, anywhere to participate in the supply chain.

How has your vision of the Internet's role in business changed over the years?
Just six years ago, no one had an email address or a URL, and now if you don't have a Web site or intranet, you're behind the curve. I've witnessed complete transformations in companies where slow dinosaurs became nimble competitors.

In fact, before starting eConnections, I led one of these reinvented companies, Marshall Industries, an electronics distributor. We created a B2B operation despite the fact that in 1994, many companies in the industry saw the Internet as a disruptive technology and wanted it to go away. The B2B platform we developed at Marshall now serves as the basis for eConnections' extended supply-chain intelligence solutions for the electronics industry.

People think they understand how to harness the power of the Internet. But this is just the beginning. I've always said that the biggest enemy of time is work. The more work in the system--hand-offs, phone, fax, reports, meetings--the more complexity and greater the challenge to get work done fast. Creating efficiencies means creating systems that can bolt on to existing systems quickly and cannibalize work. A hosted solution enables this bolt-on in weeks or days. It connects supply-chain partners to the community and makes it easy for them to coordinate, communicate and collaborate.

Where has business-to-business e-commerce worked, and where has it failed?
B2B commerce is in its nascent beginnings, so I think it's too early to say where it has succeeded or failed. However, it's clear that some things don't work. It appears that simple pricing auctions and public marketplaces don't offer the complete personalized, private and secure extended supply-chain solutions that are mandated in a world where supply chain competes against supply chain. The successful solution will be one with rich domain expertise and an authorized, connected community that can be trusted.

What does your company do differently from marketplaces and exchanges?
I've learned that enemies will collaborate in an authorized community if--and only if--the source of the collaboration is an independent company, which complements their areas of expertise. That company needs to promote confidentiality, privacy and security in both IT design and business relationships.

Our domain expertise in electronics has enabled us to design our systems to complement suppliers and distributors and make us that trusted source. We are independent, and industry authorized and endorsed. We don't get in the middle of a deal; we don't interfere with buyers and sellers; we don't touch parts; and we don't charge transaction fees. We have clearly defined that we are different from an exchange, a spot market or a dot-com.

Where does collaborative e-commerce have a place in supply-chain management?
I think it's the other way around. With supply-chain management, the deepest definitions of the "supply chain" and "management" dictate that collaboration is key. Yet no one understands the true meaning of collaboration. It sounds nice, but the devil is in the details. How do competitors in the supply chain collaborate? Do they even want to talk to each other? It will take trusted tools and solutions for crisp and standard communication, along with the syncopating and synthesizing of data, for companies to quickly collaborate.

The key is giving competitors the confidence that they can sing off the same hymn sheet without seeing each other's personalized, private data. I believe we've achieved an unprecedented level of trust within the electronics industry because companies are putting their whole business processes online with us.

Where do you see your company in two years?
Two years isn't a long time, but it's definitely as the undisputed leader in extended supply-chain intelligence for the electronics industry.

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