More e-exchanges seen to merge

ELECTRONIC exchanges (e-exchange) are heading toward a consolidation and possible mergers as more of these sites are popping up.
Written by ZDNet Staff, Contributor
Electronic exchanges (e-exchange) are heading toward a consolidation and possible mergers as more of these sites are popping up.

PHILIPPINES (Manila Bulletin) - Several issues have to be addressed like security, settlement or payment system and the implementing rules on E-Commerce Act which have some flaws.

In a recent forum on e-exchanges organized by McKinsey & Co. Philippines, Danny Pido, chief executive officer of Catering Exchange, Asia's first catering exchange, said he expects a consolidation and would result into a few exchanges.

The company is using Oracle's exchange software solution, developing a supply chain and expanding into the Asean region with a holding company based in Singapore.

"In a few years, there would be a few exchanges because running an exchange is very expensive," Pido added.

BayanTrade, a consortium composed of six big conglomerates has infused an initial P2 billion to develop a Philippine e-exchange. Charlie Villasenor said BayanTrade is in charge of operating the exchange and the challenge is how to build this online procurement.

With the large volume of these six conglomerates, Villasenor said he foresees this exchange to be up and running within the next two to three years. "We are preparing some online services to be available and a public launch on Nov. 28."

He said the success of an e-exchange would depend on the critical mass, value proposition and the right partners. Bayan- Trade has partnered with Compaq and Commerce One.

Jay Ennesser of IBM who has been working with E2Open said that mergers of exchanges have started and he expects more consolidations.

"There's nothing cheap in building an exchange; you are building an infrastructure like any other company with a whole bunch of costs and getting it done," Ennesser said.

According to Gartner Research business-to-business (B2B) e-commerce will grow at aggressive rates through 2004, causing fundamental changes to the way businesses do business with each other.

The catalyst for B2B e-commerce is e-market maker activity. E-market makers are projected to facilitate $2.71 trillion in ecommerce sales transactions in 2004, representing 37 percent of the overall B2B market.

Gartner predicts companies that focus on the scope rather than the scale of their ebusiness solution - one that most effectively relates to its customers and partners and consequently provides the greatest flexibility of transaction - will become the big e-business success stories over the next five years.

Key to this will be the successful integration of business-to-business and business-toconsumer infrastructures by the end of 2002, which Gartner states will offer companies a 25 to 50 percent competitive advantage over those who manage them separately.

It is crucial to view the changing technology landscape alongside the rapidly changing needs of the customer. As expectations of e-commerce continue to grow and customers begin to question the value of web-based transactions, he urges companies to dedicate time and money to improving the customer experience. < P> To successfully make the transition through the ebusiness hype cycle, Gartner advises businesses to invest in the following five actions:

* Establish outsourced call centres that can deal quickly and efficiently with queries that cannot be dealt with over the web.

* Provide customers with a foolproof returns mechanism - a key element to the value chain that cannot be provided for over the Internet.

* Invest in the physical infrastructure ensuring that delivery and storage facilities can meet customer demand.

* Invest in the data centre and consider outsourcing its management to a data-monitoring specialist.

* Make sure the complete experience, from the moment a customer enters the web site, through fulfillment, delivery and return, is as easy as possible from the customer viewpoint.

Gartner also advises brick and mortar companies to view the fall in dot.com stock prices as an opportunity to acquire and gain dot.com expertise.

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