To: Americo Burgos III who wrote (19611 ) 6/7/1999 2:16:00 PM From: allen v.w. Read Replies (1) | Respond to of 40688
This is interesting. 'Cybermediaries': The Net's new kings By Margaret Kane, ZDNN May 31, 1999 9:18 AM PT URL: zdnet.com The e-commerce revolution may have gotten a lot of press for the way it has eliminated the middleman standing between buyers and suppliers, but at the same time it has enabled a whole new class of middlemen. Who will rule the new middlemen? HP: Riding the next e-wave You've got a new friend on the Web These new market makers go by a variety of names: "cybermediaries," info intermediaries, netmarkets, e-markets. But get used to them; Gartner Group Inc. predicts around 100,000 of these online marketplaces will be in operation by the year 2001, up from around 300 now. "They are doing what old-time marketplaces did -- they're bringing buyers and sellers together. But there's not a single solution. The value they bring is making sense of the market in many different ways," said Kevin Jones, an analyst at newsletter and consulting firm NetMarketMakers.com. "These sites are going into places were there's a particular point of friction -- either there's not good information, or shipping is too expensive, or something like that." Solving the point of friction is what makes the markets work, he said, not just making the buying process electronic. Bringing needs together The Web has removed much of the friction felt by Hank LeClaire, director of auxiliary services at Marriott Calusa Harbor, a senior living center in Fort Myers, Fla. LeClaire used to spend hours buying products for his janitorial staff. Because the food service industry doesn't use standardized bar codes, he had to deal with seven or eight different suppliers, looking through each vendor's catalog, filling out a purchase order, and then calling them to make the order. Now, he logs on to his computer once a month, makes a few clicks, and he's done. Behind the shift is a system from Instill Corp. that allows food service companies like restaurants and hotels to electronically connect to distributors and vendors. Instill has made a business for itself by matching up buyers and sellers in a highly fragmented, non-technical industry. Andy Cohen, Instill's vice president of marketing, said that one in three orders contains mistakes, and record-keeping is spotty at best. "They all recognize that it's a waste of time for chefs to have to pick up the phone and call," he said. "The hurdle has really been having the hardware in the restaurant. A lot of them had older computers or hadn't been connected." Driving the Net revolution With the National Transportation Exchange, using the Internet allows truckers with unsold capacity to find a shipper who needs to send something along the same route. While the two could have found each other with out the Internet, the logistics made such deals all but impossible. Who will rule the new middlemen? HP: Riding the next e-wave You've got a new friend on the Web NTE doesn't just find a load that's going the same place as the trucker, it confirms that the two loads are compatible -- so chemicals don't get shipped with food, for example -- and resolves other issues for the companies. Filling up empty space on individual trucks may seem like small potatoes, but NTE officials say it adds up to at least $31 billion in lost revenue for the industry. So why are all these markets emerging now? There are many reasons, but a key factor is the emergence of open standards surrounding the Internet. In the past, companies that tried to set up online marketplaces had to rely on proprietary technologies, and then convince companies it was worth it to shell out for the new systems. How 'cybermediaries' came about "It's only in the last few years that the corporate intranet and the browsers have become mandatory. So everyone has access," said Dave Rome, vice president of marketing at Ariba Inc., a company that sells software intended to help buyers streamline the ordering process. Ariba also hooks up buyers and sellers through an Internet database. Lack of standards may have been the reason that earlier attempts to computerize the process didn't work out. EDI, electronic document interchange, has been around for a while as a method for companies to talk to their suppliers electronically. "I remember people thinking it would be revolutionary. But it had issues; formats needed to be standardized. And it was really a one-to-one communication, so you'd have to create new protocols, standards and translation for virtually every partner," said Chris Davis, vice president and co-director of the e-business program at Computer Sciences Corp. "What the Internet enables is many-to-many. And organizations need to agree on a many-to-many basis."