Two big revolutions have been still-born in the last couple years: first, the b2c ecommerce revolution, and then the b2b one. In the first case, the thinking is that if Amazon itself cannot survive, how can anyone else? (The exception is eBay, but then Indians aren’t much of the auction-types.) In the second cases, hundreds of exchanges and marketplaces were created, and most are now dead, having failed to achieve any liquidity. However, the innovation spurred by these two revolutions-that-were-not is now leading to the next wave, and that is what Indian companies need to look at.
The two opportunities here are the creation of private marketplaces (where a single enterprise interacts with its suppliers, customers, dealers and partners) and industry-backed marketplaces (like Covisint set up the auto companies and Transora set up the consumer goods companies), which Goldman Sachs has termed as “Industry Operating Systems”. Both of these build on the fundamental strength of the Internet which is to connect enterprises together, and thus lower communication and interaction costs. Says Brian Kelley of Ford Motor:
Today, it’s easy to believe e-business is not all that impactful. The reality is that e-business is a tremendous tool for cost reduction. It’s a tremendous tool to help you get closer to the customer. It’s a tremendous tool for what used to be called Old Economy companies to apply to our current processes. The winners will be those that view the Internet as a complement to, and not a cannibal of, their traditional way of competing.
This is where the opportunity lies for Internet companies aspiring to play in the b2b space. So-called Old-Economy companies are the ones which need the help to leverage the Internet and its potential to transform the way they do their business. They need people who understand the Internet, and can help them make this transition. This creates opportunities for hardware and software companies, along with consulting companies.
A Business Week report on “Rethinking the Internet” (March 26, 2001) puts it thus:
Over the coming decade, the biggest gains will come from restructuring the way work is done within companies. The Net can become the communications backbone for everything from linking supply chains for speedy product turnarounds to storing employee expertise so that workers can tap into ready-made knowledge instead of starting from scratch.
This is where the opportunities lie. For many Indian companies, especially those facing the threat of lower-priced Chinese products, this is the time to leverage technology and the Internet to rethink fundamentally business processes ad interactions, rebuilding them around the Internet. Enabling them do so is where the sweet spot will be for the technology companies and service providers.