Enterprise Versus E-Market Models

It is probably safe to bet that, at least in the next five years, neither secure one-to-many enterprise solutions nor third-party sponsored electronic trading communities will completely disappear, nor will they completely dominate the e-procurement marketplace. Although the early successes of the e-marketplace made many enthusiasts predict a complete shutdown of the enterprise-owned, one-to-many model, it seems unlikely that this will happen. To the contrary, fears concerning reliability, security, and overcoming cultural hesitancy to sever trusted trading relationships with individual suppliers have meant that in the U.S.—and to an even greater extent in Europe—senior management has been hesitant to move toward a strategy where there is exclusive dependence on outsourcing firms or on hosted trading communities for purchasing direct, or even mission-critical, MRO materials.

But, equally powerful arguments can be made in favor of the continued growth and popularity of the e-market trading hubs, particularly as auction-type exchanges drive down prices, and market creators and ASPs move to provide a more value-added service. What is more likely is that there will remain two essentially different types of offerings—the buyer-sponsored enterprise model and the third-party-sponsored exchange model—and that each of these two areas will see dramatic changes in terms of focus and consolidation in the coming months.