Don't Just Transact - Collaborate

Many B2B e-marketplaces are missing a key component - collaboration.

Fuelled by vendor hype and headlines in almost every trade publication, B2B e-marketplaces are on the minds of most executives these days - and for good reason. B2B e-marketplaces have the potential to radically reduce buyers' costs and allow sellers to reach out to new customers. Unfortunately, recent B2B exchange announcements have been little more than just that - announcements. Suppliers have stayed away, fearing being reduced to commodity players. The first generation of B2B e-marketplaces has not met expectations of either buyers or sellers. One key ingredient is missing.

Simply, B2B e-marketplaces are online channels for selling or buying goods and services. They can evolve from extending an online community into commerce or from placing offline processes online. B2B e-commerce rose out of the far simpler business-to-consumer model, which uses the catalogue-transact metaphor of retail commerce where a customer browses an electronic catalogue of, let's say, books and clicks to buy the items of choice (aka the see-buy-get model). This model worked fine for B2C and early e-procurement systems but does not unlock the real power of e-marketplaces for competitive advantage. What's missing? Collaboration. Because B2B interactions are far more complex than B2C, collaboration - not the transaction - is what B2B e-commerce is about.

Collaborative e-marketplaces go far beyond the first B2B exchanges to add all the business conversations and interactions that surround the catalogue-transact component of e-commerce. B2B encounters are not simple see-buy-get transactions. They are long-lived collaborations involving multiparty discovery, negotiation, supply-and-demand planning, joint product design, shared documents and workflows, change management and the many other facets of real-world commerce. Often, multicompany interactions must occur in real time and cross the political, cultural and legal frameworks of trading partners scattered across the globe.

Boeing provides a world-class example of online collaboration. Boeing designed its 777 in cyberspace by electronically sharing design tools and processes with engineers, customers, maintenance people, project managers and component suppliers across the globe. No physical model. No paper blueprints. The result is the slogan "The 777 is a bunch of parts flying together in close formation". Consequently, Boeing's customers no longer have to wait three years for a plane. Through its private, collaborative e-marketplace, Boeing aims to deliver a plane in eight to 12 months. And the company expects to build 620 planes annually, up from 228 in 1992.

Collaboration does not necessitate revealing all of a company's competitive secrets. Collaboration proceeds to deeper levels as relationships form and deepen. Relationships can be casual and short-term, or highly selective and deeply rooted, as is often the case with long-standing trading partners. Collaborations can range from open information sharing in public e-marketplaces to privileged information and resources shared in invitation-only collaboration rooms.

Once executives recognise collaborative e-marketplaces as strategic business weapons, they can embrace the ultimate form of competition enabled by the Internet. The new competition is no longer company versus company, it's value chain versus value chain. Collaboration makes it possible to create customer-driven value chains by harmonising demand-and-supply channels. Companies can radically reduce the cost of doing business, speed time-to-market, achieve flexibility and tap dynamic markets by making decisions based on who can deliver the required products or services at the right price, quality and place.

Winning e-marketplace strategies centre on collaboration and go well beyond the catalogue-transact model to optimise value chains and the profits of all participants. In the coming wars of value chain versus value chain, the Internet-empowered customer will wield unprecedented clout in an increasing number of transparent markets. Executives must act now to prepare their corporations for this radical new business model. Mastering collaborative e-marketplaces is not an option, it's an imperative - from your customers.

Peter Fingar is executive partner at the Florida-based digital strategy company Greystone Group, and author of the best-selling book Enterprise E-Commerce (Meghan-Kiffer Press, 2000)

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